When Business Owners Burn Out
In our latest podcast episode, we talk about why business owners are increasingly feeling burned out and what they can do about it.
Good Morning!
Here are today’s highlights:
Michael Girdley on how to keep your best employees.
Small companies face a tough choice when a bigger company steals their IP.
In Massachusetts, a new law is making it harder for small businesses to offer dental insurance.
Even “the reddest state in the country” is embracing renewables.
THE 21 HATS PODCAST
This week, Shawn Busse and Jay Goltz discuss a recent Business Journal report that a lot of business owners are feeling burned out: Why is that, and what can owners do to avoid it? And have either Shawn or Jay been there? Plus: Shawn brings us up to date on the leadership transition he’s initiated, and—believe it or not—Jay has had another revelation about ESOPs. Also, do business owners need better regulation or no regulation? And which regulations are annoying Shawn and Jay the most right now? For Shawn it’s the nightmare of having employees in multiple states and having to figure out and comply with the various rules of each of those states.
“Today, nailing the fundamentals means you need to have an employer brand. You need to have clear communication in the hiring process. You need to articulate your values and your mission and your purpose. You need to actually coach and elevate team members so they grow in the role.”
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HUMAN RESOURCES
Michael Girdley suggests 15 rules that will help you keep your best employees:
INTELLECTUAL PROPERTY
Small companies can face a tough choice between rebranding and litigating: “In the fall of 2021, an acquaintance of Alex Norman, the founder of a cannabis apparel and lifestyle brand called Budega NYC, reached out to congratulate him on making a deal to open several dispensaries in Southern California. There was just one problem, Mr. Norman said: ‘It wasn’t me.’ Instead, an international conglomerate had claimed the Budega name, which Mr. Norman, 50, said was a nod to the longstanding role of New York’s neighborhood bodegas in supplying weed before legalization. It was the first of a series of copycats that have forced Mr. Norman, who lives in Brooklyn, to decide whether to wage costly legal battles to defend his brand, work out deals to coexist, or start over with a new name.”
“Most small businesses don’t have the money or manpower to wage legal battles that can drag on for years, with costs rising into the millions; rebranding involves finding new names and overhauling websites, social media and product packaging.”
“What in another industry might be blatant trademark infringement is becoming more common in cannabis sales for a simple reason: dispensaries and greenhouses are excluded from federal protections because marijuana is still illegal under federal law.”
“Industry analysts say the state-federal divide on cannabis is fueling a rise in trademark disputes that is driving many small companies out of business, threatening efforts to draw consumers and entrepreneurs out of the illicit trade and into emerging legal markets like New York’s.” READ MORE
RESTAURANTS
The heat and the smoke waves are sending diners back inside: “Customers are avoiding patios during heat waves, cutting into a key source of summertime sales for many restaurants, owners said. Visits in July and August declined from earlier in the year, industry data showed, with chains including Chuy’s and Cheesecake Factory reporting a decline in outdoor business this summer. ‘No one’s sitting out in the patio at 100 degrees,’ Steve Hislop, chief executive of Texas-based Chuy’s, said during an Aug. 3 earnings call. Utility expenses are also rising as restaurants run air conditioning at full blast for long stretches of time, operators and industry groups said.”
“Many restaurants set up patios in the early days of the Covid-19 pandemic, and have come to rely on them to drive summer sales. New York City, for example, is poised to make expanded outdoor dining in roadways permanent from April to November, and supporters say patios have helped restaurants maintain sales and jobs. Now, some restaurant owners said those patio sales are drying up when temperatures surge, or wildfire smoke blows.”
“Avram Hornik, owner of the FCM Hospitality group of restaurants, bars and outdoor pop-up venues in Philadelphia, said his sales are down 30 percent this summer because of weeks of heat and rain. Smoky conditions in June didn’t help, he said. ‘I look at it such as being a farmer. The weather controls all,’ he said.” READ MORE
HEALTH INSURANCE
In Massachusetts, dentists and insurance companies have gone to war: “Don’t say we didn’t warn you. That’s the dental insurance industry’s message to the rest of us after Guardian Life told some 1,500 small businesses in Massachusetts that it will no longer sell policies to companies of their size come January. Guardian points to a ballot question that requires that at least 83 percent of revenue from dental insurance premiums be spent on patient care. In November, Massachusetts voters overwhelmingly approved this new law, then-known as Question 2. Dentists poured millions into the campaign to promote it in the months leading up to the vote. The insurers fought back with millions of their own. The dentists won.”
“To Mouhab Rizkallah, the orthodontist who led the charge, Question 2 represents nothing less than a revolution, one that will drastically improve dental insurance for patients and serve as a model for other states.”
“Guardian is informing customers that it will no longer sell dental insurance to Massachusetts businesses with fewer than 25 employees after Dec. 31, though it will continue to provide them with other insurance products.”
“In a memo last month, the insurer blamed the 83 percent ‘loss ratio’ imposed by Question 2, saying the ballot question would require Guardian to cut back on product innovation and other expenses, to the point that smaller groups simply would no longer be profitable to serve.” READ MORE
COMMERCIAL REAL ESTATE
Wall Street is preparing to pounce on distressed properties: “Wall Street firms are raising new funds to acquire office buildings, apartments, and other troubled commercial real estate, looking to scoop up properties at a fraction of the price investors paid a few years ago. Cohen & Steers, Goldman Sachs, EQT Exeter, and BGO (formerly known as BentallGreenOak) are among the prominent names raising billions of dollars for funds to target distressed assets and other real estate with slumping values, according to regulatory filings. ‘The last few weeks, I’ve been saying, Holy mackerel, they’re coming out of the woodwork,’ said Kevin Gannon, chief executive of Robert A. Stanger & Co., an investment-banking firm that tracks real-estate fundraising.”
“Commercial-property sales have been moribund until recently because most sellers haven’t been willing to cut their prices to the levels that buyers are demanding. Now, a small but growing number of office owners have begun to capitulate, unloading distressed properties.” READ MORE
ENERGY
The transition is happening faster than many expected: “Delivery vans in Pittsburgh. Buses in Milwaukee. Cranes loading freight at the Port of Los Angeles. Every municipal building in Houston. All are powered by electricity derived from the sun, wind, or other sources of clean energy. Across the country, a profound shift is taking place that is nearly invisible to most Americans. The nation that burned coal, oil, and gas for more than a century to become the richest economy on the planet, as well as historically the most polluting, is rapidly shifting away from fossil fuels.”
“A similar energy transition is already well underway in Europe and elsewhere. But the United States is catching up, and globally, change is happening at a pace that is surprising even the experts who track it closely.”
“The cost of generating electricity from the sun and wind is falling fast and in many areas is now cheaper than gas, oil, or coal. Private investment is flooding into companies that are jockeying for advantage in emerging green industries.”
“Tulsa, a former boomtown once known as the ‘Oil Capital of the World’ where the minor league baseball team is the Drillers, is immersed in a new energy revolution.”
“‘We’re the reddest state in the country, and we’re an oil and gas state,’ said J.W. Peters, president of Solar Power of Oklahoma. ‘So it took a lot of time to convince people that this wasn’t snake oil.’” READ MORE
CYBERSECURITY
Want to save $4.54 million? “The data is clear. In 2020, researchers from Stanford University found 88 percent of all data breaches were caused by an employee mistake. A 2022 follow-up to that study by Tessian Research found that 52 percent of employees surveyed said they fell for a phishing email in which someone impersonated a senior executive — up from 41 percent in 2022. About 56 percent said they had received a scam via text message, and 32 percent of those complied with the scam request. An Egress Insider Data Breach Survey in 2021 found 94 percent of organizations have experienced insider data breaches in the last year, with human error being the top cause of serious incidents, according to 84 percent of IT leaders surveyed.”
“The average cost of a ransomware attack is $4.54 million, according to a report from IBM Corp., a sum that's enough to end many small businesses. But these attacks are often only successful when a person working for the business makes a mistake. So how do companies and owners manage employees who might be weak links in a cybersecurity chain?”
“Matthew Corwin, managing director at Guidepost Solutions, a global security, compliance and investigations firm, said cyberattacks that prey upon human social norms are called ‘social engineering attacks’ and are often difficult to prevent.”
“He said there is no training program that can entirely prevent these human errors, which is why employers should use technical controls such as malware scanning, malicious website filtering and multi-factor authentication and password-less authentication wherever possible.” READ MORE
STARTUPS
More startups are turning to venture debt: “This type of loan, which is specifically designed for venture capital-backed companies and can be obtained through a specialty bank or non-bank lender, has served as an attractive alternative for entrepreneurs who want to raise cash without relinquishing further company equity or control to investors. ‘The use of venture debt has gained in popularity as many startups look to remain private longer and seek creative forms of financing that minimize dilution,’ wrote Pitchbook analysts Vincent Harrison and Kaidi Gao in a 2023 Q2 report. Over the past decade, Pitchbook found that the amount of venture debt issued each year more than tripled from $8.1 billion in 2013 to $33.5 billion in 2022.”
“Earlier this year, venture debt faced an uncertain outlook after Silicon Valley Bank, the sector's largest lender, collapsed in March. The bank failure left a $6.7 billion hole in the market, and industry-wide, venture debt financing declined by 38 percent year-over-year during the second quarter of this year. Demand for venture debt, however, has continued to grow.”
“Mercury, a financial technology company that provides banking services to more than 100,000 startups through its FDIC-insured partners Choice Financial Group and Evolve Bank & Trust, also began offering venture debt last year.”
“‘It was something that customers were asking for,’ says founder and CEO Immad Akhund, whose company focuses on early-stage venture debt with deals ranging from $2 million to $10 million. ‘There is basically unlimited demand compared to supply right now.’” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Gene Marks says artificial intelligence is the biggest story in small business and highlights a slew of AI tools that business owners can put to use right now. Gene also issues a warning that owners who do not start paying attention to AI are taking a much bigger risk than they may realize. Plus: Gene also talks about team-building platforms that can help owners engage their employees, especially those working some or all of the time from home.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren
Excellent episode. Love the open dialogue and willingness to share different perspectives. Highly recommend for anyone in a small business leadership role.