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Even without the tariffs, manufacturing in China can mean headaches for small businesses: “Danica Lause manufactured knitted hats in China for four years and struggled the whole time. ‘I was unable to achieve the level of quality control our brand requires in any of the factories we worked with in China,’ says Lause, whose company, Peekaboos, makes hats with openings for wearers to pull their ponytails through. To begin with, the factories were unable to make the hats on machines. Lause then had the hats knit by hand, but the sizing was often off or the openings were in the wrong place—problems she only learned about when shipments of the hats arrived.
“Small businesses without the resources and bargaining power that larger companies have can struggle as they deal with issues like poor quality, missed production deadlines and legal disputes. Most companies soldier on and find solutions, but some end up moving their manufacturing to the US. In 2016, Lause began moving the work to a facility in Germantown, Wisconsin. She found engineers who figured out how to get the hats knit on machines, and she discovered it’s not as expensive as she thought to manufacture in the US.”
Indiana-based Kombucha company Circle has enjoyed substantial growth this year because of a branding overhaul and selling its product in cans: “‘Along with [an HQ] move and employee count growth, the company’s brand name adjusted too over time, dropping a few syllables to simply ‘Circle’, [from Circle City Kombucha] ’ Circle has a whole new look, stepping away from the glass bottles they originally sold their kombucha in. ‘For us as a brand, it is one where we are community-focused and also we are a Midwest company,’ Whiteside said. ‘And kombucha is a product where we want everybody to enjoy, which means it needs to be financially approachable. So cans have been able to allow us to improve our price point further to make this more of a drink that you can enjoy every day. Plus, aluminum cans are much better for the environment.’”
HubSpot, a customer relationship management tool, is adding features for its free users, who “will now be able to send up to 2,000 emails to would-be and existing customers at no cost each month. … The Cambridge, Massachusetts company will also let its users manage up to $1,000 in ad spending on Facebook, Google, and LinkedIn each month as part of the free plan. It’s part of HubSpot’s strategy of offering free services to small and midsize businesses, with the knowledge that some will ultimately upgrade to its premium paid offerings, according to co-founder and CTO Dharmesh Shah.”
Startups like Ampaire are pushing to modify older, smaller airplanes with electric motors: “‘It’s kind of like a plug-in hybrid car,’ said Kevin Noertker, the co-founder and chief executive of Ampaire, which used some parts initially designed for automobiles to modify the plane. ‘We are really riding the coattails of ground electric vehicles here.’ … Ampaire said its planes could be ready for customers by the end of 2021. Ampaire and others are betting that regulators will approve modified planes more quickly than new electric aircraft, and that retrofitted planes will still offer significant savings on fuel and maintenance for small airlines and charter companies. The first retrofitted aircraft, which could be either hybrid or fully electric, will likely carry fewer than 20 passengers and fly between 100 and 200 miles on a single charge. That is enough to connect small airports in regions where traffic or natural obstacles make driving time-consuming, Mr. Noertker said.”
Data analytics startup Versium wants to bring consumer-targeted marketing strategies to business-to-business companies: “The explosion of consumer data … completely changed how companies target their customers, … but the world of business-to-business marketing remains behind the times. … Versium creates profiles of advertising targets that include both professional and personal data. That means advertisers can deliver ads to their targets as they scroll through social media as well as more traditional means like direct email and cold-calling. … The service also employs artificial intelligence to create lists of people who are similar to the ones that advertisers have identified.”
Members of a startup community that’s betting on a “quantum revolution” in computing have raised hundreds of millions of dollars in capital: “For decades, physicists have theorized that quantum computers—machines that rely on interactions among subatomic particles to perform now-impossible analytical feats—could one day leap ahead of traditional computers and transform the business world. Their potential uses sound like something out of a science-fiction novel. It has been widely suggested that functional quantum computers could cut through data encryption; predict stock market swings by analyzing millions of variables at once; improve drug development by simulating interactions of subatomic particles, or enable communications systems that work faster than the speed of light. … An industry website, QuantumComputingReport.com, lists 117 private startups that claim to be working on quantum technology.”
One of the biggest reasons marijuana won’t be legalized on a federal level by 2021 is because of the other thing guaranteed in life besides death…taxes: “US businesses that sell marijuana are constrained by US tax code 280E. In short, this tax code disallows pot companies from taking normal corporate deductions, save for cost of goods sold, which is often only a small portion of total sales. This can lead to profitable marijuana companies paying an effective tax rate of more than 70 percent … However, if marijuana were legalized at the federal level, these businesses would no longer be subject to Section 280E. Or, to put this in another context, the federal government would lose its ability to levy a really high effective tax rate on profitable pot businesses.”
A new business policy meant to combat drug dealers and terrorists may, in fact, hurt small businesses: “The [Corporate Transparency Act] requires corporations or limited liability companies of fewer than 20 employees or $5 million or less in revenue to disclose details about their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). A beneficial owner either exercises substantial control over a company or enjoys substantial economic benefits from it. The idea is to make it more difficult for money launderers to hide behind anonymous shell companies. …
“The National Federation of Independent Business (NFIB) calls the legislation a ‘real threat to more than five million small businesses in America.’ A mom and pop shop can’t afford teams of lawyers to parse the many permutations of ‘beneficial owners.’ … It is also far from clear that criminals would be affected. Terrorists and drug dealers are already breaking the law. What’s to stop them from giving false information, or setting up their company in one of the many ways—e.g., a partnership or business trust—that’s exempt from these reporting requirements?”
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OXFORD STRATEGIC ADVISORY DEAL OF THE DAY
Komae, a babysitting and pet-sitting app, has been acquired by Wana Family Network, a babysitting co-op: “When Komae founders Amy Husted and Audrey Wallace announced in April their popular babysitting and pet-sitting co-op app was shutting down, they thought their dream had ended… But just days after announcing the app would end service for its 19,000 account holders on May 30, the Akron-based duo received several emails from competitors interested in acquiring the company.”
Fenty by Rihanna’s launch in 2017 exposed an opening in beauty brands, which has led to a rise of startups and established brands giving more makeup options to people of color: “Estée Lauder introduced its new Double Wear Matte Powder foundation in 41 shades this year, after expanding its Double Wear Stay-In-Place foundation from 42 to 56 shades last year. Nars Cosmetics increased its sheer glow foundation to a ‘global shade range’ of 40 hues, up from 20, in December. CoverGirl launched its TruBlend Matte Made foundation with 40 shades last year. ‘I think brands have gotten into a little bit of an arms race with how many shades can you say you have,” said KJ Miller, co-founder and chief executive of Mented Cosmetics, one of several startups owned by and catering to women of color. Ms. Miller and her fellow Harvard Business School graduate Amanda Johnson began Mented in 2017 after they couldn’t find nude lipsticks for brown-skinned women in stores.”
Belle Harlem is a 275 square-foot restaurant in New York City’s Harlem that, unlike many successful restaurants, operates without a manager: “One of the peculiarities of dining in the city, circa 2019, is that the more high-functioning a restaurant is, the less likely you are to encounter a proprietor. There are exceptions, of course, but often the most successful restaurateurs are very busy people, so they leave their dining rooms in the hands of professional managers. Proprietors aren’t always as smooth as professionals, but they are as attuned to what goes on in their dining rooms as new parents are to the noises coming from a bassinet. …
“The margins must be tight. At times you almost hear them squeak, as when Ms. Burnette anxiously reminds you that you were a few minutes late and suggests you order quickly so she can turn the seat in time for the next reservation. A professional manager might have brought a more soothing manner to the exchange. But a manager might not be as genuinely happy to see a party of three walk in without a reservation just when three seats had opened up…”
Abigail Disney, the heiress to the Disney fortune, recently went to Disneyland and says she discovered that “‘The Happiest Place on Earth’ is a façade: ‘Every single one of these people I talked to were saying, I don’t know how I can maintain this face of joy and warmth when I have to go home and forage for food in other people’s garbage, she recalled, adding that this was not the work environment her grandfather Roy O. Disney sought out to create. … The company has also been accused of sexist pay practices. Earlier this month, four new women joined a major pay-gap case against it, according to the Guardian. They are part of a larger class-action lawsuit, filed in April, alleging that the company systematically underpays its female employees.”
A bar in Philadelphia is trying to claim profits from “Play Gloria” merchandise: “The St. Louis Blues’ Stanley Cup championship run had a ubiquitous soundtrack: Laura Branigan’s 1982 disco classic ‘Gloria’ became the team’s post-game victory song, and ‘Play Gloria!’ became a rallying cry found on T-shirts, hats and other trinkets sold inside and outside the arena during the postseason. The Philadelphia bar that inspired the Blues’ ‘Gloria’ craze believes it’s only fair that it share in the profits from those items.
“The Jacks NYB, a bar in South Philadelphia, filed a trademark application May 8 with the US Patent and Trademark Office for ‘Play Gloria’ that covered usage on T-shirts, then a second one for ‘Play Gloria!’ on June 1 that covered an assortment of items from hats and shirts to blankets and beverage cans. … The Blues were inspired to adopt ‘Gloria’ as their victory song after watching the Eagles’ NFC wild-card game against the Chicago Bears on Jan. 6 at The Jacks NYB. ‘We got together with some friends and watched the game with a bunch of Philly guys who grew up there,’ Blues defenseman Joel Edmundson told StLouisBlues.com. ‘They had a DJ in the bar, and whenever there was a commercial break, they would crank the tunes, and all these guys from Philly would get up and start dancing around.’ …
“Rob McKinley of Lauletta Birnbaum LLC, an attorney specializing in intellectual property who is representing the bar, ‘said that origin story and the subsequent where it all began coverage of the bar in St. Louis media and on NBC bolster the bar’s trademark claim. … ‘I’ve been doing this for over 20 years. One of the things you have to establish under common-law trademark rights is you have to establish that you own the trademark. That’s easy in this case.’”
And that’s what’s ahead.