Would You Hire a Former Business Owner?
Research suggests hiring managers are reluctant—and they just might have.a case.
Here are today’s highlights:
A federal judge blocks an SBA program.
At the end of the month, a lot of employees will lose child-care support.
In Maine, lobstermen are shifting from lobsters to seaweed.
Here’s how AI is already matching shoppers and merchandise: “When Danielle Schmelkin went shopping online for something special to wear to her niece’s wedding in 2021, she was looking for ‘a very specific type of dress based on trends I had seen recently.’ To her delight, Bloomingdales.com came through like a personal shopper. The menu filter for ‘formal dresses’ prompted her to choose from 15 criteria like dress length, color, neckline, sleeve length and embellishments. Moments later, she was sorting through 200 desirable options. ‘It was quick and really focused,’ she said. ‘I had no problem going from one page to the next, because there were meaningful results for me.’ She found ‘the perfect dress,’ and bought it.”
“Months later, Ms. Schmelkin — in her role as the chief information officer at J. Crew Group — was introduced to Lily AI, an artificial intelligence-powered platform that began working with fashion retailers in 2019. Bloomingdale’s, she learned, was already a client. Intrigued, Ms. Schmelkin did a test run on its product catalog from the company’s Madewell brand.”
“Madewell provided photos and product descriptions for its garments. Lily AI’s artificial intelligence was able to then assign about 13 attributes to each product — from more than 15,000 tags that a team of fashion domain experts started curating in 2016, three years before Lily AI had retail clients. By the time Madewell tried it out, Lily AI had run more than one billion searches, each helping the algorithm become more sophisticated.
“So it was able to accurately match merchandise to colloquial terms — ‘quiet luxury,’ ‘study hall,’ ‘boho chic’ — that online shoppers typed in the search bar, rather than just to stock descriptions of the goods.” READ MORE
A judge struck down a provision of an SBA program intended to help minority-owned businesses: “Thousands of Black, Latino and other minority business owners are scrambling to prove that their race puts them at a ‘social disadvantage’ after a federal judge declared a key provision of a popular federal program unconstitutional, extending the U.S. Supreme Court’s recent retreat from affirmative action. The Small Business Administration’s 8(a) Business Development program was meant to open a pipeline to billions in government contracting dollars for historically disadvantaged groups. But in July, a federal judge in Tennessee struck down a provision of the program that equated race with social disadvantage.”
“The decision — one of the first to affect the private sector in the wake of the Supreme Court’s June decision upending race-conscious college admissions — throws into disarray an SBA program that has served minority-owned small businesses for about five decades.”
“Legal experts said it could signal trouble for other programs meant to help underrepresented groups win federal contracts, including veterans and women.” READ MORE
Would you hire a former business owner? “If you’ve been thinking about starting your own business lately, you’re not alone. Americans began launching ventures in record numbers during the pandemic, with an above-trend pace continuing through 2023. Unfortunately, many of these enterprises won’t last long: 30 percent of new businesses fail within two years, and half don’t last past five, according to the Small Business Administration. While some of these unlucky founders will pursue new ventures, many others will try to rejoin the traditional labor force. ... So we surveyed more than 700 hiring professionals to determine whether founders really can get new jobs that easily, as well as seven former entrepreneurs who successfully made the transition back into the workforce.”
“We found that former business owners were actually less likely to get interviews compared with applicants with only traditional experience. This was true regardless of whether they had sold or closed their businesses. And the longer they were out of the traditional workforce, the worse their chances of success were.”
“Why do employers hesitate to take a chance on former business owners? It starts at the earliest stages, with the recruiters who screen people into – or out of – consideration for interviews. We found that recruiters worried that entrepreneurs would jump ship to start their own companies as soon as they can. This is a problem for employers, since hiring is a long, expensive process that can take months or even years to pay off.”
“Recruiters were also concerned that former entrepreneurs may refuse to take directions. Spending time as your own boss can make it difficult to adapt to a lower place on the organizational hierarchy. As one recruiter in our study put it, former business owners ‘are used to being the one who makes all the decisions.’” READ MORE
There’s a “child-care cliff” looming: “Now, more than three years since the onset of the pandemic, employers and business owners should be aware of a new threat that could wreak havoc on parents' schedules, drive up costs for workers and push some employees out of the workforce entirely. The American Rescue Plan Act, passed in 2021, gave states nearly $40 billion in funding for child care relief funds, and the Department of Health and Human Services found that the money went to 220,000 child care providers, saved more than 1 million early educator jobs and enabled 9.6 million children to continue receiving care. That funding is set to run out at the end of September — and a new report by The Century Foundation detailing the possible economic and social fallout is a warning bell for workers and employers alike.”
“Julie Kashen, senior fellow and director for women’s economic justice at The Century Foundation and an author of the report, spelled out the potential impact: The likely closure of 70,000 child care programs, and the loss of 3.2 million child care spots.”
“‘Some people will leave their jobs, some will reduce their work hours, but some people don't have that option and need to work to support those families. They will do what women have always done: They will figure it out and make it work. But that cost is borne by the kids,’ Kashen said.” READ MORE
Large companies are bracing for and lobbying against a 15-percent minimum tax that went into effect this year: “The new corporate minimum tax was one of the most significant changes to the U.S. tax code in decades. Its logic rested on the idea that rich companies should not be able to find loopholes and other accounting maneuvers in order to pay lower tax rates than their workers. But making the tax operational has become a mammoth challenge for the Biden administration, which has faced intense lobbying from industries that could be on the hook for billions of dollars in new taxes. Those groups have been flooding the Treasury Department with letters asking for lenient interpretations of the law and trying to create new loopholes before their tax bills come due next year.”
“While the corporate tax rate stands at 21 percent, many large companies pay far less than that to the federal government. For years, big companies such as FedEx, Duke Energy and Nike have been able to take advantage of various deductions and tax strategies so that they effectively owe nothing in federal taxes.”
“A 2021 report from the Institute on Taxation and Economic Policy found that 55 of the nation’s largest companies had paid no federal income tax the previous year.”
“An analysis by the Joint Committee on Taxation last year found that about 150 companies with tax rates below 15 percent would be subject to the new tax.” READ MORE
In Maine, lobstermen are moving from lobsters to seaweed: “Lobsters have long been a staple of the Maine economy, worth roughly $388 million last year alone, but climate change is putting the catch at risk. Now lobstermen and women, along with local entrepreneurs, are turning to a new and potentially even more lucrative staple: Seaweed. Roughly 90 percent of seaweed is currently grown overseas, but the U.S. seaweed market is expected to grow to over $5 billion over the next six years, according to research and data provider Fact.MR. Seaweed is most commonly used in foods and supplements, but it has recently branched out to cosmetics, clothing and bio-plastics. Seaweed is also a natural carbon sink, helping the ocean to absorb excess carbon dioxide from the atmosphere.”
“The Gulf of Maine’s waters are heating faster than nearly every other ocean in the world because of climate change. As a result, the survival rate of lobster eggs laid off the southern coast is dropping, moving the lobster catch north and leaving some lobstermen in a pinch.”
“Dozens are now becoming kelp farmers as a way to diversify. Atlantic Sea Farms works with 27 lobstermen up and down the coast. They seed in the fall and harvest in the spring which allows them to lobster in the summer.” READ MORE
THE 21 HATS PODCAST
In this week’s bonus episode, Dr. Randy Spencer talks about the changes that have been roiling vet businesses: For one thing, that pandemic puppy boom we all heard about has brought additional stress to veterinary workers who had already had more than their share. For another, there’s been a wave of corporate money and private equity flowing into the industry. That sounds as if it could be a good thing, and Spencer says he’s been dodging a constant series of acquisition inquiries for years. But the big money has also engendered considerable turnover and disruption, and in response, Spencer decided to sell 100 percent of his business, 1st Pet Veterinary Centers, to an employee stock ownership plan in 2021. The transition to an ESOP remains something of a work in progress, in part because veterinary people tend to be more focused on pets than they are on profits.
“Veterinary medicine,” Spencer says, “is just the best profession in the world. In a way, it's a service industry, but we get to serve pets. That's why veterinarians get into it.”
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren