Something’s Happening in the Job Market

[Music] Hello everyone. Welcome to the 21 Hacks podcast. I'm your host, Lauren Feldman. This week, Paul DS tells Kate Morgan and Liz Picarazzi that he recently posted a job on Indeed and got 153 resumes, more than he's ever gotten before, which prompted some interesting questions. What does this mean for business owners? Should a job posting be more about what the company expects from a candidate or more about what the company has to offer? Do the owners ask candidates to take personality tests? If the owners get 150 resumes, do they ask Chat GPT to review them? And doesn't it seem as if more people are looking to switch careers? When I look at someone who's working as a graphic designer in an ad agency, Paul tells us, I'm thinking, this person realizes AI is coming for their job. Plus, Liz gives us a surprisingly upbeat update on her tariff situation. And the owners respond to a Reddit post asking whether it would be crazy to start a business in the current economic environment. Paul's response, "Don't do it." Even in good times, owning and running a business can be a lonely pursuit. Our hope is that these weekly conversations will let owners know they are not alone in facing challenges. In fact, that's the whole idea behind the 21 Hats community, engaging with other owners to get the kinds of insights only another owner can offer. If you're interested in learning more, step one is to sign up for a free trial of the Morning Report newsletter, which helps you navigate this interesting world in which we live. Every day, it highlights the most important news for business owners and shows you how other owners are coping and finding opportunities. Step two is to get on our Slack channel where you can ask questions, get vendor recommendations, and tap the wisdom of a very impressive crowd. Just search the 21 Hats Morning Report to subscribe. Joining me this week on the podcast are regulars Paul DS, CEO of Paul Downs Cabinet Makers, which is based outside of Philadelphia and makes custom conference tables, Kate Morgan, who is CEO of Boston Human Capital Partners, which is based in Boston and offers recruiting and fractional HR services, and Liz Picarazzi, who is CEO of City Bin, which makes trash enclosures and package bins, and is based in Brooklyn, New York. The episode is titled Something's Happening in the Job Market. Before we get started, I want to let you know that Jackie Russo, co-founder of Brand Russo, is back with another special offering for the 21 Hats community. As you probably know, Jackie recently offered one free webinar on marketing and artificial intelligence and another free webinar on marketing and social media, and they were great. But now she's back with something even bigger and better. Jackie, you want to tell us about it? I would love to, Lauren. Uh, last year we partnered up and did a 21 hats marketing workshop that I thought was a ton of fun and so we got good feedback so we're doing it again this year. It's a fiveweek brand building boot camp. It's 2 hours of instructional time with an hour of optional office hours Q&A. And we're going to go step by step through creating a strategic brand plan so people can learn how to be more proactive with their marketing. And it's a chance to in a very safe space really do a better job with your marketing. Less effort, better results. I mean, that's the goal, right? That's the goal. As you said, it's a fiveweek plan. It's going to be on Fridays at 12 Eastern time starting Friday, July 11th. And you know, I sat in the last time you did it. The thing I would emphasize that I love about it is the workshop format. It's not just sitting in on a lecture. It's a bunch of smart people uh going through the process that you put them through, but with the ability to ask questions, to tailor things for their own individual needs. I think that's what makes it really special. I do too. This isn't um you know, for everybody who had the opportunity to attend college. I always felt there were two kind of classes in college. There was the auditorium, somebody talks at you or the small setting, sharing of ideas, brainstorming, working together, and those always felt very energizing to me. This is the second. Gee, if only we had a paying customer here who could tell us what it was like to sit in on this workshop. Oh, wait. Lena Magguire, are you there? I'm here, Lauren. Lena, you know, we we try to keep it real here on the uh 21 Hats podcast. So, tell us the the real story. Do you think you got your money's worth out of Jackie's workshop? Absolutely. It was a fantastic experience. Like Jackie said, it was more of that workshop scenario, one of your favorite classes in college where you got to sit down with people that you vibe with. So, um everybody was there with the same purpose. they wanted to learn how to improve their marketing efforts. Um, really get something from it and Jackie was the perfect teacher. Focused us on a particular topic and guided us through it. And then we were able to sit back there just like when I was in art school and uh we called it the brainstorm session. You sit there in the bullpen there and you're throwing ideas back and forth and no idea is stupid. So we were playing off each other and riffing ideas and it was it was just great. It was very invigorating. I came out of there with tons of great ideas. Jackie, I just want to re-emphasize, as you said to us at the beginning, the goal is everybody leaves here with a real marketing plan tailored specifically to their business for the coming 12 months. Correct. Well, that's the thing is I provide a deck that we go through together with the instruction. There's a workbook and I'm here to guide everybody through the filling out of the workbook. So, some people are going to leave with a crazy complete full colorcoded highlighted version, and some are going to leave with some high-level notes just to remind themselves of what they were thinking every step along the way. It's customized. There's no teacher assigning grades. We're all in this together, so this is going to be what everybody wants it to be for themselves. That workbook was amazing. Um, it it's like gold. Um, it is step by step. It covers everything you need to do. It sparks ideas. There's lots of spaces to write in it. I have so many notes in there that I've got years worth of things that I could do, campaigns I can build, great ideas that we've started to implement. It's just wonderful. I'm so glad I took the class. All right. If you want to know more, if you want to register, just go to 21st.com. Uh, you can also find more info in the morning report or you can simply email me at lauren l o rn21hats.com and I'll make sure you get everything you need. Thank you, Jackie. Thank you, Lena. And now back to the podcast. Welcome, Paul, Kate, and Liz. It's great to have you here. Paul, we spent a good bit of time earlier this year talking about why you were forced to lay off a third of your workforce. Last time you were here, you told us that you'd been able to hire a few of your folks back. And lately, I gather you've actually been soliciting applications on Indeed. Tell us about that. Well, uh, I hired a bunch of people back and then two of them have turned in their notice and for reasons that really don't have anything to do with the layoffs. One is also in the military and he's just being torn too many directions by home life and being deployed at random and trying to maintain the job here and he just decided it was too much. So that's fine. You know, he was a great guy to have in the shop, but I understand these these issues. The other one was someone who' worked for me for 16 years and he's just basically retiring. So, we had two openings on the shop floor for skilled labor, you know, skilled woodworkers. And I put an ad out on Indeed and got 153 responses in the first week and a half. Wow. And out of that found nine who I was willing to interview. And we've been doing the interviews all week. And you know what was interesting about it to me in sort of a horrifying way is is having to go through 144 people who are basically rejected on site and spending maybe 2 minutes looking at their qualifications and their resumes and coming to the a very fast conclusion like if if there's any doubt at all I'm not bringing them in for an interview because I can't do 144 interviews. But I'm always cognizant that I'm looking at somebody's life and that in most cases if they came to work for me, they would be improving their life situation considerably because the jobs a lot of these people have speak to a pattern of people who don't get a good education and then enter the workforce sort of as the cannon fodder of uh capitalism. And these are the ones who would have been uh what we call them essential workers during co you know people who are normally underpaid and ignored but they're actually doing something important and they want to do better in in their life and so it's just a tough feeling to have to say I'm sorry no and uh and that that doesn't make me feel good. Now, of all the hiring rounds I've done in the last, say, 10 years, this is the most applicants we've ever gotten and the most qualified applicants. In other words, a higher number that I would be willing to bring in for an interview. So, I'm not exactly sure what that means. We saw people who were both uh sort of on the upand cominging starting their career and then also a number of mid-career professionals who were switching out of other sectors. When I looked at someone who's working as a graphic designer in an ad agency, I'm thinking, "This person realizes AI is coming for their job and they're they're looking to make a switch." So, it's uh it's a data point. I know that in my industry, the normal complaint is that you can't get anybody to apply, can't get anybody to show up, can't get anybody to do a day's work. And that really hasn't been my experience with people I hire. Uh, and it'll be interesting to see how these new hires when when we make them, how they integrate into our shop environment. From your conversations uh with the people you've started to interview, do do you get any sense that this could just be a matter of the job market shifting and that suddenly jobs are harder to come by? It's certainly possible. It's hard to know because what we're advertising for is basically do you want to be a professional woodworker, which is something that a lot of people like to do as a hobby and if they could get themselves into some situation where they were doing it all day, it's attractive to people. And so I think it's hard to know exactly what's motivating all this. But part of it is certainly that it's a cool job and we also have a great reputation in the area as a quality employer, which is something I've tried very hard to do and to to get that reputation and to maintain it so that when time comes to hire, I want to have the choice of who I'm hiring, not just have to get warm bodies because I've been in that mode in other years and that's not so great. Paul, correct me if I'm wrong, but I seem to recall you're saying in the past that you had doubts about uh Indeed as a platform for you. Uh and I think part of it was some concern that it might not be the right place to find uh the kind of blue collar workers that that you're talking about. Am I right about that? Well, in the past, yeah, but obviously I'm not experiencing that now. You know, like Yeah. Thanks indeed. you sent me a million people. And I didn't even really want to go down the road of their um they have a service where they look at what you're offering for the job and then they identify candidates to invite. I had I did try that a couple years ago and I really wasn't very impressed with that. But people who were looking for a job, yeah, there were a lot of them. And uh I don't know. I mean, I'm not a job seeker, so I don't know whether there's come to be some kind of consensus of where everybody looks for a job or is it just Indeed is doing great or you know, like the other thing that I've used in years past is Craigslist. But I'm not that interested in dealing with Craigslist applicants because the Indeed has a in the interface there's it's a little bit easier to manage the steps that people are at and uh so I feel like yeah pretty happy with them. I think the whole thing is going to cost me like 200 bucks. That's nothing. Yeah. I mean, I set a I set a budget for the ad and a time frame and then the applications were pouring in, you know, like we were getting like 20 to 30 a day through the whole course of the thing. I if that math works out right, maybe 10 to 20 a day. Um, anyway, they were sending me people and uh yeah, so happy with Indeed at the moment. I I'd say Paul, you you think you got inundated with your role, try and put a a wreck for uh data scientists and see how many you get then? It's crazy. Crazy. Are you saying there would be a lot or there would be a few? Yeah. Yeah. We we um you know, because we do more actual direct sourcing, but we will post roles and this was really funny. Um, this was just a couple of months ago. We had posted for at the same time for one client. They were looking for basically an administrative assistant and I used to panic when we'd post those kind of roles because inevitably we'd have 500 people respond. Well, we posted that one and then we posted a data scientist and at the exact same time we got six admins and we got 76 data scientists and that was just in one night. What do you think that means? Uh don't go to school for data science. What about the admin thing? I mean that's that's kind of if you only got six, why? Yeah, that that's actually interesting as well because we looked at um the the challenge with the admin uh role was that they wanted to have uh five days in the office. Ah, and nobody nobody wants to go into the office anymore. Well, 144 people wanted to come to my office. So, I mean, we're pretty clear you can't do a factory job from home. You you got to show up. It's very clear. Yeah. Yeah. Well, I I have to say that I have never had much luck with Indeed, but I haven't used it for many years. I used to recruit handymen for my home improvement company from Craigslist, and that was actually pretty effective because most of those are bluecollar. Um, but one of the things that I have found with Indeed, and maybe that's why I haven't posted any jobs there in years, is that there's awful people that have very good resumes or seemingly good resumes, but aren't as interested in working for a small business where they can work their way up. you know, if I can find people that are between like 25 and 30, maybe 35, who aren't as seasoned, but you know, are entrepreneurial, like working for a small business, um, they're going to fit in a lot better because someone who's coming in from Indeed, in many cases, if they've had a lot more years in the workforce, they've sort of been, say, a little bit spoiled by sort of corporate America or their perception of what they want um, is a lot narrower. Like if you're hired into marketing, you want a very narrow slice of the marketing that you do. Whereas in a small business, you don't have that sort of specialization of roles. And I've always done well with people that are very adaptable and trainable. And I've yet to find that on Indeed. It's a lot of it has been word of mouth. You know, I do have a couple of friends whose businesses aren't doing so well right now and they've had to lay people off. That's often a good place to find good workers. But one thing I do dread is as we grow more, I don't want to have to use Indeed because I feel like it's never been effective. But maybe I should have a little more open mind now about it. Paul, well, I think part of it is also how you present the job. So I go to great pains to talk briefly about who we're looking for and extensively about who we are. And I see the opposite approach in most help wanted ads, which is we're looking for a person with x years of experience and they should be able to do this and that and whatever. Call us. And thinking about it from the perspective of a job seeker, you have no idea what that company is all about. Yeah. Are they hiring people cuz nobody can stand to stay there or look on the website, all you're going to get is sort of the Instagram version of whoever they are. And I I write my job descriptions with quite a bit of information about our culture, what we expect of people, you know, a promise you're not going to be working with idiots. And that seems to be in my mind has been effective in in attracting a lot of candidates cuz people are taking a risk when they take a job. I think that, you know, I haven't taken a job since I was 19, but it's pretty clear from my experience over the decades that people are afraid of going to a new workspace. They would much rather deal with the devil they know. And so I've seen that when I thought people would be quitting right and left because of whatever was happening in the shop. They just didn't. And then when you were talking to new applicants, if you started talking about here's who we are as a company, they were always very appreciative that someone was addressing these these things. Well, that's it exactly, Paul, because people people really don't take jobs, they take companies. And so the best way to look at writing a job description, personally, I I think most job descriptions suck. you know, they they really are designed to be marketing fodder. At least they have been. But if you can really distill it down to who you are, like you just described, but it's it's should be designed to attract the people you want and repel the people you don't want. And if you can build out, you know, more even more flush it out with all right, the expectations are and what we practice is the success stage job description of what success is going to look like. It helps people to actually envision who they will be within your company and then you're wrapping it with more about the the culture. That certainly will help. So I got a question about what you just said. What are the words you use to scare people away you don't want. For my company, when we have our success stage job description, it's really about listen, you're you're not going into an office, which is sounds super appealing, but we have a a high level of accountability within my team. And so you you have to be really self-disciplined. So when not only are you looking at it from the job perspective of hey expect to be working alone, it can you're going to be remote. It can be uh lonely at times. Just understand that the expectations are still there that you're going to deliver. And then when we bring them in for those interviews, we're drilling on those specific areas. Well, my interview process consists of of a shop tour because uh I want them to be excited about the opportunity to work for us. So, we show them all the things we do and the cool clients we work with and then I sit them down and give them a 50 question test, written test of mathematics, uh fractions, plan reading, ruler, all the things they actually need to do on the shop floor. And so of the nine that I'm interviewing, six of them have done poorly on the test. Even though they had enough of a resume to get me interested, but the test is absolutely weeding out some of the people just don't know what we need them to know. Yeah. And I'm curious about if you're hiring for a remote position, like do you bring them in for an interview or what is that okay or is that like oh no, we're not getting out of our house for anything. I I mean I just like what what do you do then to take the next step? What does your interview process look like? Well, but you know, first if I can just address one thing. So what you're talking about the work product I am a huge advocate for because it really is you don't have time to waste hiring, making a bad hire. And so having having something that will really help gauge what it's going to be like when they're working for you is huge. So, for us, yeah, we're we're all remote. Um, most of the folks that are working for me now, uh, I I didn't meet in person until after they were hired. And I'm okay with it because we're we're giving them work products. Um, we do work products. We do, uh, an assessment and multiple rounds of interviews, not only on sort of their background because I don't I don't want to hire people from my industry. So, we have to be super creative on how we're going to screen them because it can't be like, "Oh, give me your history here." And that's where we start drilling into our core values because we look at it from the perspective of if they possess these core values, the chances of them being successful go up astronomically. So, what's a core value that's not obvious that you're like, "Are you a big liar?" No. And tell me tell me how you tease out whatever you're after there. Yeah. Well, one of them is intellectual curiosity. Intellectual curiosity is really a critical skill for for my team. So, having that attribute, you can't fake intellectual curiosity. So, we we take multiple rounds of interviews. So we'll we'll circle back on these core values um not just with myself but my my team leads. And so that question could start very easily with tell me about something that you explored on your own or within your last position and walk me through that. The folks with intellectual curiosity and who are really data driven they light up. they light up and then we can just uh do follow-on questions about that. Have you had any failures with this uh with this process? Well, if you Yeah. So, for for us, we're super successful with our core values because the way we look at our core values is you go from core values to edict and edict once you have it really well established, then it becomes your ethos. And my team is so drilled on on this ethos that they're protective because I think in society we do all want a level of norms norms that we can subscribe to. And so for that it it's it becomes uh a critical tool because we can we can only gauge roughly if they're going to have the skills to to do it because again we're hiring from outside of our industry. Kate, how many core values do you have? Five. Liz, do you have core values? I don't. Paul. Oh, yeah. I mean, we've got an extensive set of of we don't call them core values. It's cultural statements. And I mean, they they encompass all the basic ones. Be honest, be productive, blah blah blah. But it's more a more detailed approach to laying out what we expect from our employees. But it also includes what the employees can expect from the company. And so I think there's something like 45 different statements. They have some explanation attached to each one. And that's an approach that I learned in Vistage. And I think that it's actually more effective than just having some core values cuz like Kate, could you describe your core values in five words or what what's the minimum? Each core value we have descriptions underneath so people really understand what it means. So when we say intellectual curiosity um one of those points is we seek to go beyond buzzwords. Another one that's sort of nebulous is uh awareness of the moment and that's when we're looking always looking for unspoken cues. So, we have those those descriptions because we want them to understand it. But the way I look at core values, if you're hiring to them and you're going to fire to them, well, you need to manage to them. So, our our performance reviews are all based on if they're demonstrating uh to to a high cap capability of those core values. Well, I think that that what you said that's key is that you follow up and talk about them later. And that's I think something that a lot of companies, they've got something on the wall in the lobby, but then when you walk through the door, it's a different world. Well, yeah, because they're aspirational. And this is sort of the things that make me just apppoplelectic when I when I talk to HR people particularly if you look at the economy uh when it was booming it was all really really focused on trying to find people not to repel them but that's part of the basis. So HR became just glorified marketers rather than actually figuring out how to uh attract and retain the top echelon people that are going to, you know, be custom fit not for every company, but for yours specifically. You asked for um to describe like your values in five words. I've got four for you. Act like an owner. act like an owner. That is something that while we don't have like written um values or train on that which I do know that we need to the act like an owner has been a principle that we've sort of reinforced with everybody and currently I would say I don't have even one employee who doesn't act like an owner. They're not know they always act in the benefit of the company. They do have intellectual curiosity. They want us to be successful. I know that I'm in a lucky position right now and I haven't always been in that, but the sort of cultural thing that is common among my employees is they do act like owners and they know that they're expected to. So, it's sort of simple, but a lot of candidates are not going to act like owners. So, when I go out to the job market and I'm looking for people um someone that requires a lot of direction or someone that doesn't seem to really get it or someone doesn't seem to care about the mission or the culture that can be detected and those sorts of people don't ever act like owners. Do you ever get push back from employees on that? Yeah, I would say occasionally when someone doesn't want to work past like we're a 9 to6 company. Um, I rarely ever ask people to work past 6 or on weekends if we do, we pay them time and a half. But some people, they don't like last minute things coming up. But I've never gotten the amount of push back also because it's within reason. Like I'm not going to make someone work installing, you know, city bins in Time Square until 10:12 p.m. But I may ask them to end work at 7 and not at 6. So that's not like exactly an act like an owner, but I would say it's an action that would show that at the moment you might not be thinking about what the company needs. I have heard from some owners that they're reluctant to ask employees to do that unless they actually treat those employees as if they were owners in some sense uh with profit sharing or something like that so that they actually do have a stake in the outcome. Yep. Well, and my employees, all of them, from the installers all the way up to my main salesperson, they all get bonuses based on profit. So, if they do things that help the company, which you know, increase revenue or decrease expenses related to mistakes, then they know there's going to be more bottom line at the end of the year, which makes up a larger bonus pool. Yeah. I don't really use the framing of act like an owner because the flip side of what you just described would be when the company's in trouble, you get the money back from them. That's what an owner does. And my employees have no illusions that they're the owner. And what they are is they working for a company that's dedicated to to delivering prosperity to them, but they're in a different situation than an owner. And I think that uh expecting people to actually act like an owner is not likely to lead to success. That doesn't mean you can't ask them to do things. You can certainly make clear when the company needs something to be done and why they would do it, but I would never frame it as you're some version of an owner. I I just don't see people thinking in any way like that. Well, maybe it's not that I train on that necessarily, but it is something that is a characteristic of people that are successful at my company. Well, that's fair enough. I mean, it's your company, too. You can run it however you want, and if it's working, go for it. So, you could kind of morph it into really having a heightened sense of purpose. If you have people who really look beyond themselves and they want to have a purpose and feel integral to an operation, that's saying the same thing without having to convolute it with actual ownership. We actually hear act like an owner a lot. We hear that. And then we have the I think this is probably dying out. Work life balance. That's work life balance is not a core value. That's that's a that's a perk. That's a benefit or an aspiration. But again I I mean I remember having an accelerator tell when I asked her what her core values were. She one of them was work life balance. And then 6 months later, she was super frustrated when the market started to go a little sour and she's like, "Yeah, so this employee left at 300 p.m. and I thought she'd get back online after she got her kids home, but she didn't do anything until the next day." I'm like, "Well, that you encourage her to have white work life balance. She she put life as a priority over work. That's on you. You can't even be mad at the employee." I want to move on to a couple of other things, but before we leave this, Paul, I'm curious. When you got those 150 plus applications, did you consider throwing them into chat GPT or another chatbot and getting their analysis? No. Uh that's the world we're heading to and that's a world I I will be happy to not experience because well you you you just let some I mean who who the hell knows what's going on under the hood with chat GPT and also these are human beings. Yes, I'm looking at at rums. Yes, I'm just doing it on the web through an interface. These are human beings and they've taken the time to apply to my job and I feel like I owe them at least, you know, 60 seconds to take a look at them and judge their life. And if I decide that I want to outsource that one day to some robot, you know, like what am I even here for? My company is not in any way suitable towards our robot future. We do things by hand. We talk to each other. we're in the same space and it would be a violation of my approach to doing things to automate that. As a matter of fact, I was going to ask Kate, do you use personality tests in your hiring? So, for my own team, yes, we have it as an option for our clients. We strongly recommend for executive hires, but not everybody opts for it. I yeah I don't like those things. We've had various people come to our Vistage group and say hey we're going to give you a couple months trial and see how you like it. And uh one company in particular we were given access for a whole year. So I tested all my people and to see whether what it had to say about them and some of them it was right on and some of them it was not. It was saying that people who were successfully performing a job that hey they had been doing for years that I was familiar with their performance. It was saying well the these people can't do that job. I'm like well I got news for you. So I contacted the company and I said okay you're telling me who to hire and you're actually giving me very specific hints about how they should be managed. And when I ran this through my own reality filter, your ideas don't match my reality. In other words, I have a bunch of people who are successfully performing a job that your algorithm says they can't do. So my question for you is, what's your feedback mechanism? How do you improve your model? How do you make sure your algorithm is actually true? And they were flabbergastic because nobody had ever asked them the question and they didn't have an answer. They didn't have an answer. They basically said, you know, our founder did research back in the late60s. You know, some complete nonsense irrelevant and they just would not address the idea that their algorithms were not a great fit for reality. and they had not not even occurred to them to figure out some way for me to report back about what their algorithm said as opposed to what I had experienced. They just had no way to do it. So, they're firing out all these tests and all this recommendation and all these companies they're dealing with. And owners like me love it because it's just it saves a ton of time and it also gives you something to point to to make a decision. Like I didn't make a decision. The algorithm says you suck. It's not my fault, it's your fault. And so I just hate that. Kate, do you disagree? I actually have no idea what test would actually say that they wouldn't be specific to a position. The one I believe in talks about the communication style and the motivation. It doesn't tell me a yes or no. It just gives better a deeper dive on who's going to be coming into that position. I want to hit some other topics, Kate, before we move on. Do do you use AI to review resumes? Absolutely not. And why not? So, how we operate, we're we're not just posting and praying. We actually go in and we direct source to find people. Anything that has to do directly with people, I do not believe should have AI wrapped around it. Look at your inbox to see how many spammy uh sales bots are attacking you on a daily basis. Now, I tell my team, figure out a way to incorporate it 30% of the time, but all of our our reachouts are, you know, they're real. They're we're writing our prospecting emails specific to that particular candidate. All right, next topic. Liz, how are you doing? What's going on with your battle with the tariffs? So, um, there has been a lot of ups and downs, as there always is. uh since we last spoke. Uh the most recent thing that happened that I was very surprised by, but I probably shouldn't have been, was that on May 30th, Trump announced at a rally in Pennsylvania that he would be raising the tariff on aluminum and steel, doubling, right, from 25 to 50. Doubling. I went to bed on a Friday night. It was 25. I remember thinking that day like, "Wow, you're you're doing a lot better. Things are really leveling out. We've got a plan now for Vietnam at 25." Went to bed that night with that feeling. And then woke up Frank, who is my husband and also COO, didn't want to wake me up to tell me, but the the change had happened overnight from 25 to 50. and we had a container coming in within the next week and didn't know if it would be tariffed at 25, which we had budgeted for or at 50. Luckily, it came in on June 2nd and the new tariff amount went into place on June 4th. So, um, we absolutely dodged a bullet on that. Um, we have four more containers coming in in July and August. And if those tariffs at 50 50% continue, we're going to have another very large tariff bill. You know, at this point last year, if we were at the 7 12% um I would have spent, let's see here. Well, between the two, 110,000 I've already spent on tariff. 120,000 I'm going to be spending. If things were like they were last year at 7 and a half%, I would have spent 51,000 on tariffs. um by August, which is when our last containers come through. So, it's been a huge amount and um definitely unexpected. I would say a couple of things have helped us. One of them, and I wouldn't have expected this to have such a big effect on me, is that I actually joined an online tariff support group and it has about 600 people on it. Um most of us are members of EO u worldwide. There's been this community of manufacturers, American manufacturers that are trying to figure out what to do. Most of them were still in China. And so I may be griping and feeling bad, which I very much do, about my own situation. I literally met like hundreds of people that are in or were in the 145% tariff in China. And that comparison just it made things feel a little bit better. You know, people are doing a lot of different things to um mitigate that. Some people are keeping their shipments in Asia and just waiting and not bringing them over. I know quite a few people who are doing that. Some people are redirecting it once it arrives in the US. they'll redirect it to a warehouse in like the Philippines or there are bonded warehouses in the US where you can stash them and then once you retrieve them you pay the tariff at that moment. So needless to say there are no more warehouses to be able to stash things. Um, luckily I don't need that. But I would say I am down. But I also have started to view this as a moment in our history that is hopefully an outlier. Unfortunately, it's impacting me and my business and my employees a lot. Um, but I know that we're going to get through it. I know that my tariff cannot possibly stay at 50%. you know, the American economy, the worldwide economy can't afford a 50% tariff on everything that comes into the US that is aluminum and steel. It's just not sustainable. But then on the positive side, what I can say is that I do have higher volume. I do have I'm having a growth in my business surprisingly. So, um, with municipal clients, um, we're at about 30% increase in sales this year. um even up to the present date with the tariff higher and with my prices having increased um the place where we've definitely lost sales is in the residential area. So for people who have homes and they want to beautify their trash situation, if they feel like this is sort of an expensive purchase, they might wait until all this tariff stuff feels like it's gone or it is gone. Whereas a city or a park or a library or any of the places we now work in, if they've had beautifification budgeted for several years, they actually have the budget to implement. And so in New York City in particular, some of the city budget that has been in the works to be approved um for beautifification and containerization is now happening. And so we're getting a lot of orders from commercial districts, from parks, and you know, I'm not a religious person, but the timing of that could not possibly be better for me because that increase in that segment of business is probably going to save me. Will it save you even if you have to pay the 50% tariffs on those orders that you have already placed? Um, yes, because I'm playing the long game. You know, even if I need to decrease my salary, even if I need to increase my prices more, I don't think this is going to last that long. And then I'm burying the lead here, Lauren. You know what the real thing going on is? Please tell me, is that I I have begun the search for uh manufacturers in the US. I did another RFP process. It is my fourth that I've done in the eight years since I outsourced uh manufacturing to Asia. And I had did not have any luck with all those past rounds. But this one, I sent an RFP out to eight companies, some of them in the US, a couple in other countries. and I have two factories that have pricing that should work in my range and in fact is are probably going to be even less expensive when you consider the 50% tariff that I'm now um getting. So I this was very unexpected. We're in the process of doing samples. We plan on doing small production orders with a couple of them, but the plan is not to move everything out of Asia. I actually think Asia is always going to be a partner. Um, I've had a great experience there. Um, I built relationships over eight years with factories, with various people who have just done a great job in helping me grow my business. So, I'm looking this as a diversification of my supply chain where a proportion of it will be made in Asia and part of it will be made in North America. Um, and that is something I could not have said on this podcast two months ago. Um, but that's also part of the reason why I'm feeling a little better about things because I really propelled the move from China to Vietnam after the election. And then as the tariffs have gone up and up and up, I propelled trying to diversify and work in the US. So I have I basically have three options now. Do those domestic options would they still make sense if the tariffs just went away? Um, I would say yes because I want permanent diversification. I just do. I don't like this vulnerable feeling. My price overall are going to need to come up, but it's going to be a blended rate of Asia and US. You know, if I get some sort of like a big purchase order and I give them the choice, I can produce in Asia for you or the US and like this is what the price difference is. there's going to be a much narrower price difference which will make us if they really want to do that a better option. Um, usually it's very easy for my clients to make the Asia decision and now they're going to have some choice and it's not going to be such of a stark difference. All right, we only have a couple of minutes left. I want to throw kind of a case study situation at you as I sometimes do. This comes from the uh small business subreddit. It's an uh a former owner who wants to be an owner again who wrote in basically asking the question, is this an okay time to start a business or am I crazy? Uh let me read it to you quickly. I'm a bit paranoid about the economic implications of our current administration. I don't know what to expect and things feel very uncertain regarding the future/ everything. Am I being overly paranoid? I want to start a food service business. I ran the numbers on the conservative side and they look great. I'm passionate about the concept and it feeds into a longer term goal I have. I had a successful small business for about 7 years until co hit. The summer before co I went allin to scale that business and well everything went to It was a business that heavily correlated with the travel industry. I lost it all. So now I'm a bit trigger shy. My new idea is much safer to try and I plan to scale it slowly and responsibly. But am I an idiot to go at it now or am I just overthinking it looking for problems? Anybody? Um yeah, don't do it. That would be my why. Paul when he tried to scale a business and before co came sound like it didn't go well and if you make up a bunch of numbers that show your business is going to be a huge success and then take that as an indication you should go allin that's also a bad idea. I think that what would have made me more confident that this person could succeed would be maybe a little bit more information about what the local market is, what the business is. I mean, it's not like food service is the an industry with a enormous amount of competition. So maybe no, don't do it is a little harsh, but I would I would want I would want to know a whole lot more before I was putting my own money into something like that. Yeah. I would also run the business plan by someone who has started restaurant businesses because what I found with them is often they're not good business people. He doesn't sound like he's a chef, but there's often people that are chefs that want to start a business, a restaurant business, because they like to cook, but then they don't cook. We all know if you're not going to cook, if you're in the restaurant business, you're going to be doing everything else. So, assessing your ability to function in that role. Um, and then also, it's all about location. you know, if if one has a very good location and can see that there are other food service places that are killing it, then that's pretty good evidence, but it's it's highly risky. So, I actually had a food service idea before I launched Boston Human Capital Partners, and I I took it to a CEO who I really respected. I had crunched all of my numbers and everything and I will tell you this was two uh 2010 so it was on you know we were still in the recession and he looked at me he goes well this is interesting he goes but don't be dumb don't ever start a business you don't know anything about and I said good point I ripped up that business plan wrote my uh business plan for Boston HCP and within two and a half years I was over 2 million so Yeah, I think now is actually a great time to start a business as long as you really understand it. Well, that was the the question I was going to ask next. I if you take aside the specifics to this business and obviously as you've all pointed out, that's tremendously important. But the other aspect of this question is just right now assuming he had all his ducks in a row, would this be a good or a terrible or it doesn't matter time to start a business? bad time. And I'll tell you why. When I was writing for you, Lauren, I would get all kinds of emails from people who were failing because that was sort of what I was talking about. And I came to think that there were three ways to fail. And the first one is you just you do dumb things. You don't understand the business. You make decision bad decisions, hire bad people, whatever. Things that you are in control of that you do poorly. Number one. Number two, vast forces. In other words, you launch your business. It's like throwing a a little tiny boat in a big river. And if the river is is raging or the ri river is drying up, you know, nothing that you're in control of like tariffs, like interest rates, uh that can kill you pretty thoroughly. And then the third thing is just bad luck. You could be in a great position running your business great times are fantastic and you get cancer. And those three things are what you should think about. How would I survive any or all of them? And everybody's convinced they're going to make the right decisions. And sometimes they do. There's really nothing to be said about that other than if we knew more about this person and had some idea of are they a sensible person who you know can execute a plan or are they do they suffer from uh manic depression and this is just the manic phase. These are real things but I mean the guy's already been through this with co he was doing whatever he was doing and then co just comes and wipes him out. that can happen. And we're in the most unstable government situation I've seen in my entire life. And so I just think that this is a bad moment to be betting the farm. And leaving aside bad luck cuz good luck and bad luck happen at random. And they can help you and they can hurt you, but they do cause damage when it's bad luck. So that's that's how I think about that. And I think this is a not a great time to start a business. See, I'm in a very different boat because, you know, I coach founders and I I you particularly like student entrepreneurs that are graduating that are running on their their business ideas. I look at it from the perspective of yeah, the moment is testing the souls of founders across the board, but the very things that make this time so damn hard, the ambiguity, chaos, and the fear are also the things that can push us onto the other side. So, if you're trying to build a company that's going to be competing, there's a lot of founders out there that are just fatigued. And if you're bringing a new a new perspective, a new different light to uh how they approach the the business uh and and their customers and clients, there's actually a huge opportunity to get sharehold. Uh maybe let me just throw out a different path for this person. If they have such a great idea, then first of all, talking to someone who's operating the same business is a pretty good idea. And you're correct that there are a lot of businesses with very tired owners, but those businesses are up and running. They have premise. They have customers. They have a business model that's been successful. Why isn't this person looking at acquiring an existing business with an owner ready to retire? That to me strikes as a much higher percentage success play because you've got someone who's motivated to show you how the business works. And if you're if you're a nice person, maybe you can get them to hang around and show you the ropes a little bit. When you just are going off your own faith, it can work. It worked for me, but uh it was a very very difficult journey and I would have been much better off if I had worked for someone in the industry for a few years. figured out what was actually going on. I would also say to talk to people who have been successful at it, like in food service, like in your own neighborhood. Um, but just as importantly, talk to some people who have failed at it. So, we all know which restaurants are in the neighborhood that come and go if there's a way to get in touch with anybody who had something fail and they find out, oh, it had to do with the landlord. It had to do with the cost of goods going up. you know, I wasn't able to hire the right people. Whatever the reasons are, they're going to get a taste of what can go wrong rather than just talking to people about, you know, what can go right and how they were successful. I will say I've had numerous conversations with business owners who started a business during a difficult time like the great recession and ended up thinking that that actually had been an advantage that if the economy had been stronger they might not have been ready to handle an additional flow of business. It was good for them to have the opportunity during difficult time to try different things, get their feet on the ground and then when the economy picked up, they were prepared and ready to run with it. When I started in 2011, the recession was winding down, but the job market actually didn't come back until 2014. And so there was a lot of people who were too timid to be doing what I was doing. So I used it as a competitive advantage. That's what I'm talking about. Mhm. All right. Good for you. I'm glad you succeeded. It sounds like you're biting your tongue, Paul. Well, we're not talking to the one who started at the same time and failed and they're out there. We have no idea, right? And uh I mean, this is just a constant problem with business communication is you only hear from the winners. You don't hear from the losers. And so it's difficult to to really evaluate what happens when you just are missing half the story. That's a great point. But that's one of the things I admire about you guys. You guys have all had your ups and downs. You've you've survived difficult times. And best of all, you've been willing to discuss them so that other people can learn from your mistakes, which I know I appreciate and I think everybody listening to this appreciates. My thanks to Paul DS, Liz Picarazzi, and Kate Morgan. Really appreciate it. Guys, one thing before you go, everything we do at 21 Hats is created by entrepreneurs for entrepreneurs to help us all learn together. If you get something out of listening to these podcast episodes, consider joining the conversation. You can do that by joining the 21 Hats sounding board, a Slack channel where you can tap the wisdom of a very smart crowd, or by becoming a founding member and joining our monthly Zoom forum, where you can be part of conversations much like the ones we have on the podcast. You can sign up for both by subscribing to the morning report. If you have any questions, you can email me at lauren21hats.com. And if you get something out of this podcast or out of the morning report, please tell a friend, tell an enemy, tell every business owner you know. Your word of mouth owner to owner will always be the most effective way to build this community for all of us. Thank you. It means a lot. This episode was produced by another entrepreneur, Jess Stubberon, founder of Blank Word Productions. Thanks for listening, everyone. [Music]