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What’s Going to Happen to My Business?
In our latest podcast episode, Jay Goltz talks about why he’s finally come to the conclusion, at 67, that he needs to put a plan in place in case something were to happen.
Here are today’s highlights:
Not everyone thinks it’s a good idea, but it’s now easier to get an SBA loan.
The IRS wants to shut down the ERC more quickly.
An entrepreneur was stunned to realize that mega-convenience store Buc-ee’s didn’t have an online store. So he opened one.
Here’s how one marketing firm dramatically reduced turnover.
THE 21 HATS PODCAST
This week, Jay Goltz tells us that, on second thought, he did learn something important watching HBO’s “Succession.” He still wants to work as long as he can—even if that means dying at his desk—but he now realizes, thanks in part to Logan Roy, that he needs to put a plan in place in case he were to get hit by that proverbial bus. This realization was also furthered by hearing the sad story of a 51-year-old entrepreneur who died in his sleep recently, leaving his wife to figure out how to keep their bank from calling its loans.
As part of his hit-by-a-bus plan, Jay says he’s crossing streets very carefully, but also considering creating a board of advisors that will be able to offer advice to his survivors. But that’s a little tricky because, as you may have noticed, Jay’s not exactly a board-of-advisors kind of guy.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Small business lending is getting easier: “The Small Business Administration is simplifying loan requirements, automating more of the process and expanding the pool of nonbank lenders licensed to issue SBA loans. The moves, many of which take effect Aug. 1, will make it easier for financial-technology firms to participate. SBA officials say they want to boost credit to small businesses that have struggled to get financing as banks favored bigger commercial borrowers. But the changes—and the decision to couple relaxed requirements with new lenders—have drawn criticism from the industry and members of Congress, who say the revisions could jeopardize the program by increasing loan defaults.”
“Under the new SBA rules, lenders can use their own standard credit policies to make SBA loans of as much as $500,000 instead of following government guidelines. Lenders are encouraged to check a box to indicate why borrowers can’t get credit elsewhere, a crucial program requirement, instead of providing a detailed written explanation.”
“‘What we are saying is do not make SBA loans that wouldn’t otherwise fit your general underwriting and credit criteria,’ the senior SBA official said. The SBA is taking over some basic pre-screening tasks, such as fraud checks.”
“Some changes could make it easier for entrepreneurs to qualify for financing. For example, lenders will be able to give more weight to profit forecasts for younger, growing businesses and rely less on past performance on loans of as much as $500,000.” READ MORE
The IRS may push for an early end to the employee retention tax credit: “[IRS Commissioner Danny] Werfel warned about an increase in bad ERC claims amid an ‘onslaught’ of misleading marketing from promoters. So far, the IRS has received more than 2.5 million ERC claims. ‘The amount of misleading marketing around this credit is staggering, and it is creating an array of problems for tax professionals and the IRS while adding risk for businesses improperly claiming the credit,’ Werfel said. ‘A terrible scenario is unfolding that hurts everyone involved — except the promoters.’ He urged business owners that still want to apply for the credit to carefully review the official requirements before applying. He said the agency would urge lawmakers to get involved in the program, and potentially end it early.”
“In March, the IRS spotlighted the ERC as part of its ‘dirty dozen’ list of tax scams, noting various “promoters” are flooding the internet, social media, TV and radio with ads and false promises. But while past warnings have focused on promoters encouraging ineligible businesses to apply or offering poor tax documentation, the latest warning notes some social media and online advertisements exist solely as a way to scoop up large amounts of private information for identity theft.”
“[At least for now] businesses actually have until April 15, 2024, to get their ERC applications in for any quarter in 2020. Businesses would have until April 15, 2025, for all quarters of 2021.” READ MORE
Can an entrepreneur open an online store for an established retailer that doesn’t have one? “Buc-ee’s — which has 46 locations, mostly in Texas — is renowned for its massive sales (an estimated eight figures annually, per store) and sparkling-clean restrooms. Loyal customers are willing to travel an average of 21 minutes just to go to one. But none of this is as impressive as the mammoth array of Buc-ee’s-branded snacks and merchandise inside of its stores. Buc-ee’s signature lemon crisps, beef jerky, BBQ sauce, and ‘Beaver Nuggets’ have earned the chain a cult following. There are dozens of groups on Facebook — some with tens of thousands of members — that are entirely devoted to Buc-ee’s snacks. There’s just one problem: If you’re a fan of these treats, getting them isn’t always easy. Buc-ee’s stores are typically in remote locations, and the chain doesn’t have an online store. So, one Buc-ee’s fan decided to take matters into his own hands.”
“Like many Texas residents, [Chris] Koerner had been in awe of Buc-ee’s from the first time he laid eyes on one of its massive stores. ‘It is an absolutely crazy place. You drive by and see all these pumps, a weird beaver logo, and you’re like, What is happening?’ he says. ‘You walk in, and it’s just a palace of stuff. They have a whole BBQ restaurant. A whole station making fresh fudge. A wall of jerky with dozens of flavors. A wall of candy. Then, you go to the bathroom and it’s like the Sistine Chapel in there.’”
“In 2020, during the pandemic, Koerner was craving some of these Buc-ee’s treats and went to go check out their website. What he found was… nothing. ‘I was like, Wait, what? Buc-ee’s doesn’t have an online store? It was like a lightbulb. There’s a huge opportunity here.’”
“By this point, Koerner already had his ecommerce logistics company set up and was helping other brands distribute products online. He emailed Buc-ee’s to ask if they’d be interested in a partnership. ‘It was crickets,’ he says. ‘So, I decided to do it myself.’”
“As it turned out, Koerner was well within his legal rights to resell Buc-ee’s products on his own website. Under the so-called first-sale doctrine, anything can be resold, so long as they don’t pretend to be the original manufacturer. Koerner changed his website to TexasSnax.com. And in November of 2020, he opened for business.” READ MORE
A marketing firm in Kansas says going transparent has had a dramatic impact on turnover: “Even before the pandemic, Kansas City-based Signal Theory started laying the groundwork to become more transparent with employees. But during the pandemic, the executive leadership team upped their game and became better communicators about company initiatives. The strategy paid off in multiple ways, including a notable jump in employee retention and organic revenue growth. In 2021, Signal Theory’s staff turnover rate was 28 percent, still below the advertising industry’s historic average of 30 percent and 33 percent during the Great Resignation, said Signal Theory COO Jim Vranicar, citing Gallup poll data. Staff turnover over the past 18 months, however, dropped to 6.5 percent, he said.”
“The executive team credits the wins to their focus on driving more transparency. They established equitable salary ranges for every position and communicated them to employees. They also created a skills matrix — which now influences job promotions and performance evaluations — and outlines the necessary skills to excel in each job title.”
“Co-CEO [Ali] Mahaffy teared up as she talked about seeing employees become more engaged. ‘It is the most rewarding thing I’ve ever done in my career without anything coming close,’ she said. ‘Building an agency where people want to be and can do great work — I seriously have goosebumps. It is a dream come true.’” READ MORE
One in six Americans has substance-use disorder: “When a colleague on the warehouse floor of Hypertherm Associates, a New Hampshire–based manufacturer of industrial cutting tools and software, made a comment about ‘junkies’ and complained about the public expense involved in saving them, Jamie Green knew it was her moment to speak up. ‘I’m in recovery,’ she told him, then asked a pointed question: ‘Do you think my life is worth saving?’ It was an awkward moment, to be sure. But after 19 years of moving to new locations and new jobs in hopes of leaving her addiction to alcohol, heroin, opiates, and cocaine behind, Green was finally thriving. She was ready to live her recovery ‘out loud,’ she told Fortune. Her colleague, to his credit, heard her clearly. ‘That really changed his perspective,’ she recalls. The two became close friends.”
“Crucially, Green had no reason to worry about disclosing that history at work; Hypertherm is a global company with 2,000 employees and a pioneer in the ‘recovery-friendly workplace’ movement—a nascent nationwide effort to revolutionize the way American businesses approach issues of substance-use disorder in the workforce.”
“When Green interviewed for the job, there was a ‘Recovery-Friendly Workplace’ sticker on the front door and cards with a list of resources in the company’s restrooms. When she acknowledged that she was in recovery herself, and that she might need certain accommodations, ‘they didn’t bat an eye.’”
“Employers who are taking part say they’re motivated by human decency, but also by self-interest: It’s a bet that supportive workplaces will help them build loyal, stable workforces at a time when labor is distressingly scarce.” READ MORE
Countries are raiding each other’s health systems for health-care workers: “The competition has helped countries such as the U.S. and Australia replace some nurses who quit in record numbers during the height of the Covid-19 pandemic. But it is also leaving hospitals in developing countries and some wealthier nations such as the U.K. worse off, as they lose staff to countries offering bigger paychecks. Australia has been one of the most aggressive poachers, with offers of special bonuses and fast-tracked visas. An Australian advertising campaign in the British Isles this past winter featured workers with sunshine streaming through windows behind them. The campaign coincided with British nurses going on strike over pay, long hours and other concerns.”
“The battle is part of a global resurgence in migration that is reshaping the world economy this year. As borders have reopened since the worst of the pandemic, countries have been welcoming foreign workers in selected industries to address labor shortfalls, helping push migration to record levels.”
“Zimbabwe’s vice president, Constantino Chiwenga, who is also the health minister, in April threatened that his country would pass a new law that would criminalize the active recruitment of Zimbabwe’s healthcare workers. Data released by the U.K. government this year showed that the U.K. alone issued 17,421 health- and care-worker visas to Zimbabwe nationals in the 12 months to March 31—almost six times as many as in the previous 12 months.”
“Speaking at an event on human trafficking in April, Chiwenga referred to the recruitment of developing-world medical staff as a ‘crime against humanity.’ ‘If people die in hospitals because there are no nurses and doctors—and somebody who has been so irresponsible for not training their own nationals, but wanting poor countries to train for them—it’s a crime that must be taken seriously,’ he said.” READ MORE
THE ENTREPRENEURIAL LIFE
Buzz Park commented on yesterday’s story highlighting burnout among business owners: “I think what needs to be pointed out is that clearly these businesses that can't afford vacation and can't have the owner step away for a couple weeks are broken business models. If a business is just an 80-hour-a-week job for the owner, then the business model is neither efficient nor sustainable. Also, these business owners will likely not be able to sell their businesses once they've let the burnout get the better of them. Only 20 percent of businesses that are for sale ever actually sell, and who's going to buy a business that can't afford to send its owner on a two-week vacation?” JOIN THE CONVERSATION
The latest cash crop? Seaweed: “The act of raising sea plants and bivalves — known as mariculture — is accelerating across the globe. Once largely concentrated in Asia, the industry has expanded to Europe and the United States. Everyone from Amazon to the European Union is pouring money into it. As climate change threatens crops and fisheries, some are hailing seaweed as ‘seawheat’ — but with a much lower carbon footprint than its land counterpart. Seaweed is nutritious, rich in dietary fiber, omega-3 fatty acids, essential amino acids, and vitamins A, B, C and E. It does not require fertilizer or added nutrients, like most land crops, and absorbs carbon in addition to nitrogen as it grows.”
“Alaska has already attracted large operators. Seagrove Kelp now ranks as the country’s largest active seaweed farm. There are nearly a dozen other applications pending for kelp farms of at least 100 acres submitted by a mix of Alaskan, out-of-state and overseas players.”
“‘There is a new seaweed economy that can be created,’ said Dan Lesh, deputy director of the Southeast Conference, a regional business group in Alaska that’s helping distribute tens of millions of federal dollars to help develop the industry.”
“Sealaska President and CEO Anthony Mallott, whose tribal corporation invests in Barnacle Foods, said kelp farming will have to generate revenue and jobs now that other industries — like old-growth logging, which dominated the region for decades — are being phased out. But he wants to ensure the economics work before too many people start growing kelp. ‘I have a fear that, what if small-scale farms aren’t viable? I’d rather know that now, than build out a bunch of small-scale farms that then are left.’” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Does Silicon Valley understand that not all startups are venture-backed? This week, Gene Marks says the Silicon Valley notion that startups are threatened with extinction is ridiculous. In fact, new business openings have been surging. The real problem in Silicon Valley is the venture-backed business model that destroys more businesses than it creates. Plus: Gene also talks about a way for small businesses to help their employees get health insurance without having to actually offer health insurance. And Gene also tells us about a lesson in regulation he learned from an eight-year-old entrepreneur.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren