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What Do You Do If You Own a Gas Station?
As the climate economy prepares to explode, the survival of gas stations is far from assured.
Here are today’s highlights:
As usual, health insurance rates are headed higher, but Gene Marks has some suggestions for saving money.
Job openings fell sharply in August, but businesses added more jobs than expected in September.
These are happy times for consultants who say they can cure “quiet quitting.”
Smaller businesses are getting squeezed at the warehouse by big retailers with excess inventory.
A new Credit Suisse analysis suggests the climate economy is about to take off: “First, the [Inflation Reduction Act] might spend twice as much as Congress thinks. Many of the IRA’s most important provisions, such as its incentives for electric vehicles and zero-carbon electricity, are ‘uncapped’ tax credits. That means that as long as you meet their terms, the government will award them: There’s no budget or limit written into the law that restricts how much the government can spend. The widely cited figure for how much the IRA will spend to fight climate change—$374 billion—is in large part determined by the Congressional Budget Office’s estimate of how much those tax credits will get used.”
“But that estimate is wrong, the bank claims. In fact, so many people and businesses will use those tax credits that the IRA’s total spending is likely to be more than $800 billion, double what the CBO projects.”
“By 2029, U.S. solar and wind could be the cheapest in the world at less than $5 per megawatt-hour, the bank projects; it will also become competitive in hydrogen, carbon capture and storage, and wind turbines.”
“Companies should no longer worry that they might be unprepared for future climate regulation, such as a carbon tax. They should be scared of missing out on the economic growth that the energy transition (and the IRA) will bring about.” READ MORE
What would you do if you owned a gas station right now? “For more than a century, gas stations have been the heart of California’s car culture, offering fuel, food and friendly directions along our back roads and byways. But our rush to EVs is leaving them in the dust. Quintessential small businesses that are often owned by immigrants, as many as 80 percent of stations could be unprofitable by 2035, when the state stops all new gas car sales. Already, fewer cars are gas-guzzlers, reducing demand for fuel. A growing number of cities are banning new station construction. ‘It’s going to make this industry extinct,’ predicted Sanjiv Patel of the Milpitas-based American Petroleum and Convenience Store Association.”
“To survive, gas stations are testing more sustainable sources of revenue, adding car washes and expanding their store offerings. Increasingly, they sell not just coffee and cigarettes but also fresh sandwiches, organic juices, Korean tteokbokki or Punjabi tandoori chicken.”
“The other obvious move — add EV charging — is not as simple as it looks, said Chris Bambury of the California Fuels & Convenience Alliance, the Sacramento-based trade association for independent gas marketers.”
“It requires a redesign of a station site. It demands much more power than traditionally needed by a service station. And owners aren’t sure how much to charge consumers, because electric rates fluctuate.” READ MORE
Gene Marks suggests ways businesses can offer their employees health insurance without breaking the bank: “One option is self-insuring, or self-funding your health plan. Instead of buying a health plan from an insurer, companies that self-fund their health plan pay directly for employees’ health care costs. Most hire a third-party administrator to manage the plan and process claims. In the past, self-insurance has been most common among companies large enough to accommodate risk, but the approach is increasingly appealing to small businesses looking to provide health benefits while saving money. Level-funded plans are a type of self-funding that may be particularly appealing to smaller businesses.”
“Under these plans, employers pay for employee health costs up to a certain amount — maybe a few thousand dollars per person per year. After that, a group insurance plan kicks in.”
“‘A level funded plan is like quasi-self-funding,’ says Noah Glassman, the President of Philadelphia Life and Health, a benefits advisory firm. ‘If you have a young healthy group or even a larger group that has a good health history this may be a good option.’”
“Another strategy I like to recommend to my clients is to consider paying a greater share of employees’ health insurance — even increasing their family coverage contribution — instead of just giving employees a raise.”
“As an accountant, I like that there are significant tax savings to be realized because healthcare premiums are usually non-taxable to employees (and deductible for the company).” READ MORE
Consultants who say they can make “quiet quitting” disappear are getting as much as $15,000 a day: “If you’re running a company now, chances are your inbox is full of messages from experts claiming they can goose morale, foster connection, boost buy-in and make various other jargon-studded dreams come true. The people who claim to know the most about quiet quitting are real go-getters, it turns out. The extent of the problem these consultants aim to solve, and whether it’s new, is debatable. Many of them say that’s beside the point. Getting people to care more deeply about their jobs and colleagues may be a perpetual corporate mission, but it’s an important one, the argument goes. So what if it took a meme to intensify the sense of urgency?”
“Data is a main selling point for Rising Team, the venture-funded startup that Facebook, Google and Yahoo veteran Jennifer Dulski launched in 2020. Her young company starts by polling a client’s staff to measure the likelihood they’ll stay, and says in a few months it can deliver a meaningful increase in the share who plan to stick around.”
“Ms. Dulski, who teaches management at Stanford Graduate School of Business, aims to get co-workers to know and like each other—and without resorting to hackneyed exercises like trust falls.”
“Rising Team’s ‘kits,’ as she calls the software, lead groups of employees through virtual or in-person discussions every six weeks or so. A kit for a 10-person team costs $99 a month, and companies with many teams can get discounts for buying in bulk.” READ MORE
Here’s what California’s new pay-transparency law requires companies to do: “California companies with more than 15 employees will be required to list salary ranges for jobs and make that information available to existing employees thanks to a new law signed last week by Gov. Gavin Newsom.”
“Companies in California were already required to provide pay scale information for job candidates upon request, but after the new law takes effect on Jan. 1, 2023, companies with 15 or more employees will have to do so for all postings, both internal and external.”
“Companies with 100 or more employees will also be required to report detailed pay information to California’s Department of Fair Employment and Housing annually. Updated pay data reports will be due starting May 10, 2023.”
“Colorado, Connecticut, Maryland, Nevada, Rhode Island, and Washington have enacted some form of pay transparency laws. New York City has a law taking effect Nov. 1, while New York state’s law is awaiting the governor’s signature.”
“Only California’s law gives existing employees the ability to access the same information, according to Greg Selker, managing director at Stanton Chase, a global executive search firm.” READ MORE
The founders of PR firm Kirkland say their own experiences with maternity have shaped the firm’s policies: “It was 2018, I was four months back from my own maternity leave, and my co-founder, Kristina Kennedy, who had returned from her first maternity leave three weeks before, was planning for another leave. And that wasn’t all. Over two years, we navigated four maternity leaves and the addition of six children, where we doubled the size of our business and our families. Guiding the growth of our fast-growing public relations agency, Kickstand, at the height of our hustle years (and on a startup founder’s salary) required many serenity now moments.”
“We provide 18 weeks of parental leave to be taken anytime during the first year following birth or adoption.”
“Working parents at Kickstand get a $500 monthly stipend to help offset costs and help them be the best at their jobs and parenting.”
“You may come back from parental leave and have growth aspirations that are just as ambitious, or you may decide your growth timeline needs to stretch a bit to accommodate parenthood. Both are okay.” READ MORE
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Job openings fell sharply in August: “Employers’ total job openings fell 10 percent in August to a seasonally adjusted 10.1 million from 11.2 million the month before, the Labor Department said Tuesday. The 1.1-million drop in openings is the largest decline since the early months of the Covid-19 pandemic in 2020, leaving job openings at their lowest level in a year. Openings dropped the most in healthcare, retail and other services industries.”
“The 10.1 million job openings in August far exceeded the 6 million unemployed people looking for work. The openings also remained well above their pre-pandemic level in 2019, when they averaged 7.2 million.”
“On Friday, the Labor Department is to release the number of jobs added or lost in September and the unemployment rate for that month.” READ MORE
Businesses added more jobs than expected in September: “The U.S. labor market showed strength in September, with private companies adding more jobs than expected, payroll services firm ADP reported Wednesday. Businesses added 208,000 for the month, better than the 200,000 Dow Jones estimate and ahead of the upwardly revised 185,000 in August. Those gains came even as goods-producing industries reported a loss of 29,000 positions, with manufacturing down 13,000 and natural resources and mining losing 16,000.”
“However, a big jump in trade, transportation and utilities helped offset those losses, as the sector saw a jobs gain of 147,000.” READ MORE
Mortgage demand hit its lowest level in two decades: “Total mortgage-application volume dropped by 14.2 percent in the week ended September 30 compared with the previous week, and overall application activity fell to its slowest pace since 1997, the industry group said. Refinance activity also fell, logging an 18 percent weekly decrease. The Refinance Index was 86 percent lower than the same week a year earlier. The slowdown in activity occurred as the 30-year fixed mortgage rate reached 6.75 percent, the highest since 2006, up from 6.52 percent in the prior week.” READ MORE
A warehouse crush is squeezing out smaller businesses: “Logistics and real-estate specialists say many large retailers are demanding extra room to store excess inventories, driving up costs for smaller companies and in some cases driving them out of spaces. Karen Galena, president of First Logistics, which has four warehouses in the Chicago area that provide space for retailers and manufacturers, said bigger customers are willing to pay higher prices for increasingly scarce storage space. ‘It’s tough for the small guy,’ Ms. Galena said, noting labor and other costs are rising for warehouse operators.”
“Ashley Epperson, co-founder of Springfield, Va.-based e-commerce retailer Salacious Drinks, struggled to find storage for her small business selling bottled water.”
“Ms. Epperson toured spaces already brimming with goods from bigger companies that were looking for even more storage. Eventually, she got her goods into a shared-space warehousing operator.”
“‘It’s hard to find that specific thing that’s not going to be, you know, upfront cost needed, you need about $15,000,’ she said. ‘You’re just like, Holy smokes.’” READ MORE
THE 21 HATS PODCAST
Are You Hitting Your Numbers? This week, Karen Clark Cole, Jay Goltz, and Sarah Segal discuss whether their businesses are meeting expectations and how that’s affecting their plans for next year. They also talk about how to handle an employee who doesn’t deliver, whether now is a good time to hire, and—in an answer to a listener question—how to make the transition from using contractors to hiring employees. And Karen explains why employee utilization—that is, the percentage of her people actually billing clients—is the most important metric she tracks and one she tracks on an hourly basis. Plus: Notebooks or Notion? All three owners tell us how they try to stay organized.
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Thanks for reading, everyone. — Loren