What Exactly Is a Small Business?
Even the Small Business Administration struggles to define small business, and if you’re looking to use an SBA program, the definition can matter.
Here are today’s highlights:
In today’s Dashboard, Gene Marks expresses hope for California’s new fast-food regulations.
If you’re trying to sell to Gen Z-ers, you should know how they search the Internet.
With infections down and economic pressures building, workers are returning to the office.
Derek Thompson writes that “quiet quitting” is a fake trend being spread by bad managers.
THE 21 HATS PODCAST: DASHBOARD
Could California’s fast food regulations actually work? California’s new fast food law creates committees that are empowered, among other things, to set an industry-wide minimum wage. The plan sparked lots of outrage, but Gene Marks explains why he thinks it’s worth a try. He also notes that it could be coming to a state near you. Plus: Gene also makes the business case for paid parental leave while also raising some interesting questions, including this one: If you offer paid leave to new parents, is that fair to employees who don’t have children? Gene also explains why he says buying Salesforce’s new small-business CRM is like ordering a salad at McDonald’s.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Upbounders, a boutique manufacturer of puzzles and games, read about SMBX, a crowdfunding platform that issues small business bonds, in the Morning Report and decided to give it a try: “Upbounders cultivates belonging through play while celebrating cultural and ethnic differences. The company is issuing bonds for advertising, recapitalization, and working capital.”
“Here’s how Upbounders’ raise will work: Investors purchase UPBX Small Business Bonds on SMBX for as low as $10. When the raise closes, investors will receive monthly payout amounts at 9.5 percent each month over a five-year period.” LEARN MORE
The SBA has a hard time defining what precisely is a small business: “In the U.S., where the Small Business Administration helps with loans, determines government-contract eligibility, and provides free business consultants, it pays to have the agency consider you a small business. But determining if you are one is not as simple as sidling up to the are-you-tall-enough-to-ride sign for the roller coaster. Depending on the type of business, the SBA’s litmus test is either a company’s maximum annual revenue or its employee count. Unlike such sectors as manufacturing, farming, and wholesalers, which are evaluated on employees, retailers are considered on revenues.”
“Men’s clothing stores qualify as small businesses if revenues are less than $22.5 million, but the upper limit is $30 million for women’s clothing stores and $41.5 million for family clothing stores.”
“Markets that exclusively sell meat, seafood, or produce qualify if they [have revenue] less than $8 million, but the upper limit is $14 million for baked-goods stores, $32 million for convenience stores, and $35 million for supermarkets.”
“Hardware stores qualify if they make less than $14.5 million, but the upper limit is $30 million for paint and wallpaper stores and $41.5 million for home centers.” READ MORE
For Gen Z, TikTok is the new search engine: “TikTok is known for its viral dance videos and pop music. But for Generation Z, the video app is increasingly a search engine, too. More and more young people are using TikTok’s powerful algorithm — which personalizes the videos shown to them based on their interactions with content — to find information uncannily catered to their tastes. That tailoring is coupled with a sense that real people on the app are synthesizing and delivering information, rather than faceless websites.”
“TikTok’s rise as a discovery tool is part of a broader transformation in digital search. While Google remains the world’s dominant search engine, people are turning to Amazon to search for products, Instagram to stay updated on trends, and Snapchat’s Snap Maps to find local businesses.”
“‘In our studies, something like almost 40 percent of young people, when they’re looking for a place for lunch, they don’t go to Google Maps or Search. They go to TikTok or Instagram,’ Prabhakar Raghavan, a Google senior vice president, said at a technology conference in July.”
“Instead of just slogging through walls of text, Gen Z-ers crowdsource recommendations from TikTok videos to pinpoint what they are looking for, watching video after video to cull the content. Then they verify the veracity of a suggestion based on comments posted in response to the videos.” READ MORE
Canva is introducing a suite of office tools: “Canva, the Australian graphic design business valued at $26 billion, is introducing a new suite of digital workplace products, the company announced Wednesday in Sydney. The startup known for easy-to-use design tools will on Wednesday begin rolling out its ‘visual worksuite,’ a set of professional tools for the creation of collaborative documents, websites, and data visualization. Canva’s new services represent a direct challenge to Google Docs, Microsoft Office, and Adobe, whose digital tools are mainstays of the modern workplace.”
“Its new products, which are web-based, similarly will be free with additional purchase options available. The new worksuite of products is integrated, allowing users to work across formats.”
“A document created with Canva’s Google Docs competitor can be turned into a slide in its presentation tool, for example.”
“The Sydney-based startup was valued at $40 billion in 2021 before investors cut its valuation to $26 billion earlier this year, citing a desire to better match the public markets. Still, the company is the highest-valued female-founded startup in the world.” READ MORE
Workers are returning to the office at the highest rate since the pandemic began: “Office use on average was 47.5 percent of early 2020 levels for workers in the office over the five business days from Sept. 8 to Sept. 14 in the 10 major metro areas monitored by Kastle Systems. The company, which tracks security swipes into buildings, said that was the highest percentage since late-March 2020. Midweek days were especially strong, with office use for Tuesday and Wednesday last week at about 55 percent of the pre-pandemic workforce, also a high during the pandemic for those days, Kastle said. The data through last Wednesday were the most recent weekly figures available.”
“Downtown Houston experienced a 10 percentage point rise after Labor Day to 63 percent after being stuck at about 50 percent for around five months, according to Central Houston Inc., which monitors the movement of mobile phones entering office buildings.”
“Most employees are returning as part of hybrid workplace strategies that allow them to split time between the office and remote work, though even here employees have experienced a recent shift toward the workplace.”
“Now, infection rates are down and the economy is looking shakier, emboldening employers to act more forcefully to bring workers back to the office.” READ MORE
Derek Thompson of the Atlantic says “quiet quitting” is a fake trend being spread by managers who think their employees are slackers: “The sheer number of quiet-quitting articles from the perspective of bosses in The Wall Street Journal and Bloomberg strongly suggests that the term is current among managers too. It offers a convenient explanation for ostensibly lazy workers. Complex questions such as ‘Am I running my team effectively?’ and ‘Is hybrid work actually working out for us?’ can be reduced to the confident diagnosis that young people just don’t want to work. For some reason, news media seem eager to confirm these managers’ worst fears. Earlier this year, several outlets—The New York Times, New York, Teen Vogue, Recode—tried to convince Americans that ‘no one wants to work,’ even as the economy added hundreds of thousands of jobs each month.”
“The best evidence they had wasn’t evidence at all, but rather a misunderstanding of government data. As the official ‘quits rate’ surged to all-time highs and the phrase Great Resignation made its way into headlines, some commentators perceived an overall disinclination to work.”
“But most people weren’t quitting to retire; they were quitting to take a new job. The labor force, total jobs, and hours worked increased throughout a period of time when news organizations were telling everybody that work was dead. It was weird.” READ MORE
Random people are being bombarded by return packages from angry Amazon customers: “Amazon's failure to verify the identities of many of its Marketplace sellers has allowed fraudsters to steal the information of people and businesses everywhere from Vancouver, Canada, to Pensacola, Florida. Insider spoke to six victims whose identities were used by fraudsters selling everything from bargain-bin clothing to counterfeit goods. Some said that when they reached out for help, the company did nothing. The result is a surreal ecosystem of frustrated and bewildered people. Angry Amazon customers are buying and then returning dodgy products — and in doing so, they're bombarding strangers like Andrew with monthslong deluges of mystery packages.”
“The earliest ones started showing up outside his family home in suburban Colorado in March 2021, addressed only to the ‘Returns Department.’ The packages contained cheap women's clothing, scarves, kimonos, and underwear manufactured in China. Inside each was an Amazon returns slip.”
“Despairing at the boxes piling up on his front porch, Andrew called Amazon. It wasn't a mistake, the representative told him. Another seller had listed his residential address as their own: He was saddled with their unhappy customers' returns. Beyond that, the company couldn't — or wouldn't — help him.”
“Amazon's failure to verify the identities of many of its Marketplace sellers has allowed fraudsters to steal the information of people and businesses everywhere from Vancouver, Canada, to Pensacola, Florida. Insider spoke to six victims whose identities were used by fraudsters selling everything from bargain-bin clothing to counterfeit goods.” READ MORE
Falling home sales aren’t just affecting real estate agents: “When people buy new homes, they typically buy a lot to go inside, including furniture, curtains, lighting fixtures, and appliances. Such spending has slowed or fallen this year as many home buyers moved to the sidelines in the face of climbing interest rates and a shortage of homes to buy, according to government data and businesses. Sales declined in August from a year before by a seasonally adjusted 1.6 percent at furniture and home-furnishing stores, and by 5.7 percent at electronics and appliance stores, according to the Commerce Department. Furniture businesses have been cutting jobs in recent months, according to the Labor Department.”
“This is bad for the sellers and their employees but is exactly the domino effect the Federal Reserve expects when it raises borrowing costs to combat high inflation.”
“Although sales are down, prices for household furnishings and supplies–which includes furniture, bedding, curtains and carpets–rose 1.1 percent in August from July, the fastest monthly pace since January, and were 10.6 percent higher than a year before, according to the Labor Department.”
“‘People keep saying, are we going to be in a recession? We’re in a recession. Anybody who thinks we’re not in a recession is crazy,’ RH Chief Executive Gary Friedman said on a conference call with analysts. “The housing market is in a recession and it’s just getting started.” READ MORE
Automakers can’t build electric vehicles fast enough: “A few years ago, auto executives weren’t sure there would be enough buyers for plug-in electric models. Now, they worry they can’t build them fast enough, while they intensify a multibillion-dollar rush to accelerate timelines and bring factories online. EVs account for only about 6 percent of overall U.S. vehicle sales. But that percentage has tripled in the last two years, while sales of other types of vehicles have declined, according to research firm Motor Intelligence. General Motors, Ford, Rivian Automotive, and other automakers say they have waiting lists of longer than a year for their new electric models.” READ MORE
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THE 21 HATS PODCAST
In a special bonus episode, Jason Fried talks about why things got crazy at Basecamp and what it has meant for the software business: As you may recall, in the spring of 2021, Fried, CEO and co-owner, wrote a blog post that, among other things, barred discussion of all social or political issues on Basecamp work forums. The post produced a backlash that culminated in a third of the company’s 60-some employees choosing to leave. The rupture was especially stunning coming at Basecamp, which has long had a reputation for treating employees well, including offering remote work long before it was commonplace. When the story broke, some business owners applauded Fried for taking a stand. Others wondered how any policy that resulted in the departure of a third of a company’s employees could be worthy of praise.
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Thanks for reading, everyone. — Loren