Why You Can’t Find Employees

Today’s Highlights: The Case for Advisory Boards. These are boom times for designers and pool contractors. And yet, businesses are closing at peak-pandemic rates.

MANAGEMENT

On a recent 21 Hats Podcast episode, we talked about whether small businesses should have advisory boards. Here Steven Wilkinson, a 21 Hats contributor, makes the case in favor: “This is not the place to go into how decisions made in committee can produce banal outcomes, how boards can be manipulated by dominant CEOs who know how to play the game or can morph into battlegrounds for personality conflicts. There are good and bad boards just as there are good and bad anythings. The question here is whether the establishment of some form of board-like structure can mitigate the feeling of isolation for the owner of a small business and what, if anything, large company boards can teach their smaller cousins.”

• “It is absolutely crucial that the list be kept free of people who are considered simply because they might be hurt or insulted if they were not included. These folks somehow always manage to end up on the board, and they are mostly disastrous.” READ MORE

We got some interesting responses to our Saturday Survey question, Can you be friends with employees? Here’s one from Sarah Segal: “There is a difference between being friendly and being friends. I was given the good advice by a colleague to go for drinks with the team but duck out before the 2nd round. This has served me well in my career. It’s hard enough giving constructive feedback to staffers, adding the emotional aspect of hurting a friendship just makes it more complicated.” LEAVE A COMMENT

THE COVID ECONOMY

Small businesses are closing at rates close to their pandemic highs: “The report, which surveyed over 35,000 small and medium-size businesses across the world, found that 22 percent of U.S. small businesses were closed in February. Those figures were up from October’s 14 percent. At the peak in May, the pandemic saw 23 percent of small and medium-size businesses closed — only 1 percentage point higher than the current closure rate. While the overall closures are nearing Covid highs, the report found that different areas of the country were experiencing varying degrees of difficulty. Some states, like Maine, Idaho and Colorado, were seeing 9 percent-10 percent closures, while others like New York, Pennsylvania, and Massachusetts were seeing at least 30 percent closed.”

• “‘So while larger companies with larger capital reserves may be doing OK, small businesses can’t just take the risk to stay open, and I think we’re seeing that play out with these high numbers,’ he added.”

• “‘We have to remember, PPP was a bridge program,’ Stanford said. ‘It was meant to keep people on the payroll, it wasn’t meant necessarily to keep businesses open.’” READ MORE

Young people are driving the rise in Covid cases: “Five states—Michigan, New York, Florida, Pennsylvania and New Jersey—account for some 42 percent of newly reported cases. In Michigan, adults aged 20 to 39 have the highest daily case rates, new data show. Case rates for children aged 19 and under are at a record, more than quadruple from a month ago. There were 301 reported school outbreaks as of early last week, up from 248 the week prior, according to state data.”

• “Driving the overall uptick among younger people in Michigan, and more broadly, is a confluence of fatigue from the pandemic, which is leading some people to engage in more close contact, and the spread of the more transmissible U.K. variant, known as B.1.1.7.”

• “Epidemiologists and public-health authorities have pointed to school sports as a major source of Covid-19 transmission.” READ MORE

HUMAN RESOURCES

There’s a reason so many businesses are struggling to find enough employees: “When her employer, after letting staff work from home, called them back to the office in early May, Ms. McLaurin didn’t go. Although she wasn’t aware of any outbreak at her office, her job involved going door to door at businesses, and she feared what would happen if she caught Covid-19 and grew too ill to take care of her two-year-old daughter or infected her wife, an essential worker with a warehousing job. A year after the pandemic burst onto the U.S. economy, 8.4 million fewer Americans hold jobs. There are many reasons, but one of the most important and least appreciated is the one that keeps Ms. McLaurin at home: fear.”

• “A U.S. Census survey conducted in the second half of March found that about 4.2 million adults aren’t working because they are afraid of getting or spreading the coronavirus.”

• “The large number helps explain why some companies say labor is scarce even though the unemployment rate is 6 percent.”

• “It suggests that even with generous fiscal and monetary stimulus, the U.S. labor market might not fully heal until the virus is tamed.” READ MORE

In Massachusetts, businesses confront a surprise fee for unemployment insurance: “Lawmakers didn’t address what’s known as a solvency assessment, a surcharge that’s normally used in part to cover the costs for employers who go out of business. Companies are starting to get their bills from the state Department of Unemployment Assistance, and the picture is not pretty: The solvency assessment for this year is 9.23 percent of a worker’s wages up to the first $15,000 that they earn, compared to 0.58 percent last year. That means many companies will pay roughly 16 times more per worker than what they paid last year for the solvency portion of their unemployment bills, as state officials project a deficit in the unemployment fund of $4 billion to $5 billion.”

• “For many businesses, this could translate to an extra $1,000 or more per worker this year.” READ MORE

On Tuesday at 3 ET, I get to turn the table on the irrepressible force of nature that is Ramon Ray. It’s usually Ramon, who happens to be the first-ever entrepreneur in residence at OracleNetSuite and the founder ofSmartHustle.com, who gets to ask the questions, but Ramon has built a real business primarily by supporting business owners. We’ll talk about how he did that.

OPPORTUNITIES

These have been boom times for design firms catering to wealthy clients: “Despite its dire human consequences, the pandemic had the effect in the design trades of sparking a gold rush, a development perhaps more surprising when you consider the fact that in the internet age everyone is a D.I.Y. expert in décor. ‘Insane is the word,’ David Netto, an interior designer in Los Angeles, said of a surge in business noted in interviews with more than a dozen decorators and designers. If at the start of lockdown, Mr. Netto had assumed ‘brace position,’ anticipating a career crash, he now finds himself in the midst of an extraordinary speedup, with far more offers for work than his firm can realistically take on. ‘I’m a boutique shop, and we never had more than four jobs at a time before,’ he said. ‘Now we have 12.’”

• “‘It’s bananas,’ [said Hollywood designer Brad] Dunning. ‘As long as I’ve been doing this — over 25 years — I’ve never been busier or heard contractors or real estate agents I work with say the same.’” READ MORE

It turns out there is a market for peer-to-peer camper-van rentals: “Jeff Cavins will never forget a prospective investor’s words from six years ago: ‘It’ll be nothing but crickets chirping on your website.’ Cavins and his partner in business and life, Jennifer Young, were rejected by no fewer than 60 investors when they first started pitching their idea of a peer-to-peer camper-van rental marketplace called Outdoorsy in 2015. Some shortsighted tech bros in Silicon Valley and New York even escorted the pair out of meeting rooms only fifteen minutes into the duo’s hour-long presentation. The doubt in investors’ voices was thick: Who would want to spend their vacation in a stranger’s motor home? A lot of people, as it turns out.”

• “Young and Cavin’s belief in Outdoorsy hinged on market research, which they say revealed that more than 20 million recreational vehicles—RVs, pop-top campers, motor coaches, and Westfalias—in the U.S. and over 54 million worldwide sit idle in people’s driveways for an average of 350 days a year.”

• “For every reservation, owners keep 80 percent of the total cost and Outdoorsy gets the other 20 percent, plus a daily service fee from the renter, which ranges from $10 to $15 depending on the size of the rig.”

• “During the first quarter of 2021, privately held Outdoorsy reported $1 billion in transactions.” READ MORE

Pool contractors are enjoying skyrocketing demand and unprecedented shortages: “Pool construction has become elaborate, with some homeowners adding pergolas and outdoor kitchens to present the pool area as almost another room to the house. Such projects, said [Tom Casey, VP of sales for Anthony & Sylvan in Doylestown, Pa.], can run up to a half-million dollars and are not an undertaking for those seeking instant gratification. Pool contractors have to obtain municipal permits to build, dig out space for the pool, and allow two to three months to finish construction. ‘It’s a very personal thing for folks for why they find themselves in the market,’ he said. ‘The COVID restrictions have thrust a bunch of people into that space where they weren’t there before. ... People still don’t feel quite confident in taking some of those vacations and are still inquiring in great numbers about backyard swimming pools.’”

• “‘It is out of control,’ said Michael Neri, the owner of Artistic Pools in Cinnaminson, [N.J.]. ‘We’re booked until June 2022.’” READ MORE

Last May, a group of business leaders created a fund to offer grants and forgivable loans to small businesses: “Jeff Brown, who owns a dozen supermarkets in the Philadelphia region, said he and other fund founders took the vetting process personally. They phoned applicants themselves. ‘We’d ask them how things were going,’ Brown said. ‘People were in tears. You know, it’s their life savings, and the stories were very similar. Their businesses were shutting down. They had nothing coming in.’ Among the people on the end of the line were many Black Philadelphians who owned nascent food businesses and knew Brown from their neighborhoods in West, South, and North Philadelphia. ‘A lot of them would say, I’ve always wanted to talk to you. Do you think there’s an opportunity to do something with you?’ Brown said. This was a lightbulb moment.”

• “Brown decided to bring some of these entrepreneurs into his 10 ShopRite and two Fresh Grocer stores, offering them retail space, kiosks, and areas in which to do pop-ups and sell their products in person. It’s something that large grocery chains rarely do because of scale.”

• “One of Brown’s early callers was Tamekah Bost, 26, a former EMT who had recently opened her second location of The Better Box, which specializes in Philadelphia-ized versions of Chinese takeout food, such as General Tso chicken cheesesteaks and ‘Cajun jawn’ egg rolls stuffed with grilled shrimp, crabmeat, onions, and peppers.” READ MORE

RETAIL

Dick’s is opening its first House of Sport store concept in Victor, N.Y.: “The experiential store elements include a 17,000-square-foot turf field and track, a 32-foot rock-climbing wall, golf pro shops that include simulator-equipped golf hitting bays, a putting green, a batting cage, wellness services like yoga, and equipment services like baseball glove steaming, racquet stringing, tune-ups and others.”

• “CEO Lauren Hobart said in March that the concept will serve as a test-and-learn space, and the company will roll out the ‘most successful elements’ into its core Dick's Sporting Goods stores ...” READ MORE