Would You Start Your Business Today?

[Music] hello everyone welcome to what used to be the 21 hats podcast and is now the business Advantage TV podcast I'm your host Lauren Feldman this week we talk about the way some businesses are being forced to confront change Laura Xander is considering moving her wholesale operation from Texas toino Dana White is considering a whole new business model ask yourself says Dana quoting an adviser what kind of business would you start today because that's the only one that has a chance to survive plus we discussed some interesting strategies for raising prices for managing lower paid employees and for balancing entrepreneurship and parenting when I asked Laura how she was coping with having to be away from her husband and her son for two week stretches she asked if I wanted the honest answer or the politically correct answer I requested the honest answer and she gave it even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations will if nothing else let owners know they are not allone in facing these challenges this week's lineup features Jay goz whose businesses in Chicago include a picture frame shop artist frame service and a home furnishing store Jason home Dana White who is CEO of paral Boyd a chain of hair salons based in Detroit and Laura Xander who is CEO of Jimmy beans will a digital version of a neighborhood yarn shop that is based in Reno Nevada and also has a wholesale operation in Fortworth Texas the episode is titled would you start your business today [Music] welcome everyone uh Dana let's start with you uh we haven't talked to you in a couple of weeks if I'm not mistaken you were planning on reopening your salons this week did that happen it did but differently do tell I have opened up pery Boyd and I have um opened up one location I have decided not to work out of my first location the Southfield location we kind of just moved everybody over to to Midtown and and things are looking good so far is this a a permanent decision or uh just for now you only want to have one location open so just for now um I'm looking to potentially move my uh first location um and so that that's kind of in the works right now um a friend of mine named James beegan he's getting ready to write an article and he posted something to Facebook um he's the owner of projects and people here in Detroit he has been really really outstanding in you know getting in touch with business owners giving them resources and access to Capital he said the future is gone and all the business models that depended on it you need to take your plan and run it through a set of facts rooted in the new reality we are coming to understand then ask yourself what kind of business would you start today because that's the only one that has a chance to survive did you do that I did it and that was the information I needed to say okay Dana who is per Lee and you're already starting to see that things are changing people are scared people are nervous and we cannot operate the way we did preco so who will Perry void be going forward and so I'm really starting to focus on retail and selling that online getting to together a subscription service for hair care because of the conversations I've had with guests over the past couple months and their hair care needs and then just making Hair Care easy and accessible beyond the salon I think to operate postco um especially with a potential second wave coming you have to reach people in their homes for my business so for my business I'm looking at haircare kids a subscription service and really drumming up the retail products that'll help them um take care of their their hair has anything changed have you in opening the stores and talking to customers are are you seeing evidence of uh things that you didn't expect to see you know one of the reasons why perly boy works is because a lot of my market they do not want to do their own hair they want to pay you to do it right but when we are not available or when you're afraid because of what's going on or when you can't get to us they're finding that their hair quality diminishes because of protective styles because of wigs because of you know whatever they choose to do or not to do with their hair so for me in speaking with my guest how do I equip my guest outside of the salon to do their hair or to have better hair care and when I had these conversations in the salon there are a lot of things that women just don't know they didn't know you have to rotate your shampoos they don't know you know the type of ingredients you have to look for to keep your hair healthy and why you can tell a difference between peral boid when you're coming from quently and when you're not coming frequently so a lot of education has been going on in the salon Jay or Laura any re reaction thoughts yeah I I'm afraid that I don't know what if he got into detail but it's just not the pandemic that has changed business and I hope he didn't make it sound like that because I don't believe okay good yeah I only there's another paragraph that just kind of shakes you this is what he said so he said a list of things we need right now a smack in the face was one of them he go yes I know we feel like we've had one already friends and fam's lost businesses shuttered balance sheets ruined but that's not what I'm talking about he goes on to say we are all anchored psychologically to a future that doesn't exist anymore our past experiences our historical thinking instincts and sometimes even our trusted information sources are telling us that this will be over soon just hold on just keep trying 90 days a vaccine when the order is lifted when people come back to work the government is going to pass this or that that the future is gone and all that and all the business models that depended on it I think he's getting overly dramatic with the future doesn't exist okay I I don't know how you know well the interesting point there to me was the the question you know is your business the business you would start today um and and and that's an interesting exercise I think Laura how about you is is your business the business you would start today um yeah it probably is and then I'm looking for the opportunity ities as opposed to kind of rebuilding and maybe that's the wrong way to look at it but I keep looking at people going out of business and things shifting and I'm trying to find the gaps I'm trying to find out what's not being filled does that make sense sure and there are opportunities out there Dana tell us about your business model is the primary change the one you mentioned about taking care of your customers when they're not coming to you is is that the the the shift yes and not being walk-in only oh interesting we're not Walkin only according to the state of Michigan we can't be and so on busy days we'll see you know 10 15 women standing outside in a line to come in and get their hair done um and so that can't happen anymore so we're scheduling our appointments and it's an adjustment for us and it's an adjust adjustment for our guest that was kind of your claim to fame yeah and and we do hope to get back to that we do have people who are just walking up um because they're fighting making an appointment so if they walk in and they and we have time then we'll put them on the book If we don't then we'll schedule them for a time that we do as opposed to letting them sit there and we work them in um and that made me nervous I was like gosh will people come to me um if if I'm not offering Walkin only and yes I'm glad to report that yes you mentioned that you are thinking about moving the location that you uh have just closed how big a priority is that is that something that you want to get done soon or you going to wait to see how things stabilize what's what's the Thought there that's a great question when I open my second location I wish I could go back in time and do things differently one of those things is take my time that's what I have the opportunity to do now thank you co I have the opportunity to go back in time and take my time and opening my second location so my priority is getting butts and seats have been Vigilant on marketing um understanding our brand making sure that we're getting in front of people I've talked to customers ladies said I live around the corner I work down the street I've never heard of you said that to me the other day she goes Dana I work with hundreds of women who are me who've never heard of you so that's the priority is getting the word out about perly Boyd um I'd also happy to report prices were up day one oh ladies and gentlemen you did in fact fact raise your prices how'd that go uneventful except for one customer who called there's always one customer always one called always the one but it wasn't bad she said so why did she do that and my manager great you know she did a great job she said because it was time we kept our prices you know the same way for as long as we could but as you know everything goes up and it was time and that was it and she said okay okay and so people have not and she made an appointment yeah she came in that day she came in later that day so yeah it's not and most importantly when you raise prices it's okay if she wouldn't have come in because you can factor into your pricing okay we're going to raise prices somebody's not gonna come in it's okay like maybe you'll lose 2% 3% it's okay yeah most of my guests have been girl it's about time girl it's about time girl think about time right else that means it's time no that means it was time five years ago right exactly I have a call with um the CBD people because I'm starting my CBD line in the salon um there are no CBD lines that cater to women with thick and curly hair black women's hair and there will be now I'm adapting and I think that's what James post was saying I think think about where you are now and think about the future what do you guys think about doing annual price increases and then you have it like you know July 1 is the price increase day you know and so yeah all of June you really push it and you train your customers to know that every year I'm going to increase prices a tiny amount 25 cents a dollar $2 whatever it is something that's not going to hurt the pocket but then all a sudden five years down the road I mean you have increased prices 10 or 20 per. I'm having that conversation at three o'clock with my bookkeeper so I never have to do this again and wor about it again what at what rate do we need to increase our prices right and then you make a marketing event out of it right I mean well I'm gonna tell you what the problem is for for for people like Dana that are in that kind of business in my business the molding goes up the glass goes up people automatically oh the price of materials went up you go ahead and tou your prices the problem with the hair salon business because I've actually done speeches to it is they don't have a bill from a supplier so there's not a direct like oh our cost of you know shampoo is insignificant cost of Labor don't you want to increase the pay of the people that work my people are hourly so there's cost of living increase and that's what she and I are going to talk about today the reason why we will be increasing my prices consistently is to keep my people paid I had a good conversation um with someone I consider a mentor and we sat down and we did the math on if you increase your prices how much business would you lose and we also talked about as I open how much more should I give my people and he said to me wink wink he said if you want good people You' got to pay the money and I want good people with the vision I have for my business so I have to pay the money in order for me to pay the money I can't can't keep my prices at $40 and I probably won't be able to keep them at 50 for long so that's why it will go up win increase at 5% you give everybody a 5% annual raise you know whatever it is I wish I had a mentor like that you did well you know what Jay that's who I had the conversation with it was Jay oh I'm blushing I wish this was on TV yeah all no I've lived through it myself it's it's one of the most difficult things emotionally to do in business is to raise your prices but the problem is in my case as in yours I always want to give the best quality the best service and you cannot simultaneously give the greatest Price the greatest service and the greatest quality and think you're going to be the cheapest place in town those three things don't go together so I feel like there's a lot of Storytelling that has to just go along with it and you can really turn it into something that has a great story behind it yeah absolutely we're raising our prices because we want our employees to continue to have a great standard of living you know or or whatever it is but if you you know if you answer the why people tend to understand okay Laura enough stalling what's going on with your building in Texas oh my building oh interesting question yeah um well we're vacating one space that we have across the parking lot um next week so we're going to reduce our rent anded we don't need the space so we're getting out of that so we have about 20,000 Square F feet here and our lease is up in December December so we're wrestling with the question of you know do we stay in Texas do we move this to Nevada do we um do we keep leasing this building do we buy a building given that the 's let's step back for one second and just remind people this is a company A supplier of yours that you bought in December correct yes so we bought this October 30th and you manufacture yarn there that's that's what you need the space for exactly so we have a kitchen we have a commercial kitchen um a large commercial kitchen where we dye yarn so it's basically it's kind of like Dy you know cooking spaghetti you know you got big pots of boiling water and you put dye in it and you know blah blah blah uh so we need a little bit of space so yeah that's you know where we're at is to make the space there have been a lot of improvements that have needed to be made here to make this space a good space for the people that work here you know one of our goals one of one of my primary goals is to to make work not necessarily the best part of everybody's day but I certainly don't want it to be the worst part of everybody's day um and so to create really really great working conditions how serious are you about picking up and moving to Reno um not very serious I don't want to um for a thousand Reasons um but I am struggling with how much of my reasoning is emotional and how much of it is a good business Choice um I don't want to want because I really like the people that work here and I don't and I know that they are not going to move you know when we were sold to this we were told that kind of they thought a lot of people would move to Reno so originally that was the plan um but coming down here and being here this team is so smart so many of them have been here for 5 to 10 years there's so much institutional knowledge um and so much commitment you know uh that I I don't want to displace anybody you know but I know that could be an emotional decision no those are completely emotional decisions but with that being said correct me if I'm wrong isn't the labor much cheaper in Texas than it is in Nevada um yes yeah the C yes it is and cost of living is about 20% less here in Texas so forgetting about the emotional things my guess is your labor is probably running at least 25% So 20% of that is the 5% bottom line right there plus the occupancy cost of the building the reality is the reason you probably should keep it in Texas is because there's 8% that's falling right to your bottom line that you would lose if you went to Nevada yeah labor actually because we make the product labor is like 36% that's 7% how are you gonna make that up that would be hard to make up if you you know have you thought about what you would do in Reno if you did move there I mean do you by any chance have excess space that you could use we do not so we started looking for buildings in Reno and buildings in Reno right now are $140 a square foot to buy buildings in Texas are $70 a square foot just just to be clear it's not the real estate that makes a difference because at the at the end of the day on her income statement her labor is running 36% and the the occup occupancy costs are probably you know 3 four 5% the real money is in the labor and that's why you can't move it because you're going to pay people a lot more there and it's going to eat up the bottom line yeah but I mean if my rent or my lease is half the price and rent is 10% I mean that's a couple percentage points as well right no for sure but it's mostly the labor is my point I doubt your your occupancy cost aren't costing you 10% of sales are they that's a retail number no you're right as so you can pick up a couple of points on the rent which is fine but the labor is the big number on top of the payroll taxes and everything else we're talking about if you moved it to Nevada you might eat up the entire bottom line by just having higher costs and it's not like it will give you any benefit to sell for more like in retail yeah I can pay a lot more rent because I'll get a lot more customers there and it pays for itself but when you're manufacturing something there's no upside to to paying more rent or for labor for that matter got it that makes a lot of sense we're talking about this wholesale business that makes and sells yarn to yarn shops around country um that you bought in Texas and I'm curious what percentage of the what they make is actually going to Jimmy beans wool you're original company um that's a good question so about uh between 10 and 20% you know will go to Jimmy beans and that's a consistent number that's the way it's been for the last five or six years that's independent of the fact that we're selling it um in fact that percentage is going to go down some because we are selling so much more to other yarn shops and prioritizing other customers above kind of the parent company um we're kind of taking the drgs I just wondering if there'd be any synergies in having the operation all in one place um just from a management standpoint I mean sure we would save some on freight and that's a that's a great point from a bottom line standpoint and I should probably do the math on that like how much would we save on freight annually by not having to ship things between Texas and Nevada uh probably not a significant there certainly are some synergies to being there but I don't think it's going to make up for the 20% labor savings yeah that's a big big chunk so I mean I guess I throw I put a spreadsheet together and kind of throw it together um but again then there comes you know the insecurity and the emotional side of it of do I want do I have the energy to move this you know I mean it's there's so much work to be done down here from an infrastructure and a system standpoint both Doug and I feel like let's tackle one issue at a time you know and right now our issue is we need to we're building a computer system to support the business you know we need to we've got all these other processes that we need to put in place and we already have a fully trained staff of people that have been here 5 to 10 years so at least that's one thing we don't have to struggle with right now of course you are putting energy into spending a lot of personal time in Texas you're there for two week stretches uh away from uh from Doug and from your son uh how does that factor in for you but you want the politically correct answer or you want the honest answer hon answer I got for the honest answer um it's really nice for me personally to have a two week stretch where I can work 14 hours a day uninterrupted and I don't have to cook dinner for anybody speaking like a true workaholic about my friend and I used to go oh wasn't it great my wife's out of town oh yeah I got to work the whole weekend and we laughed about it and like yeah the oh that's so funny you say that Doug gets so mad because I'm like why don't you go up to the cabin and take a couple days off and that way you can work non-stop or Doug doesn't know you on a podcast right he's never going to listen to this yeah my my wife's not either so yeah and he knows I mean we just know like you know that's the end goal the end goal is for us to figure out how to get him out of the business so that he can retire he wants to be a stay-at-home dad um you know his life goal originally was to be a stay-at-home dad with no kids but then you know that happened a stay-at-home dad with no kids yeah that was his goal so you know and his goal is to be able to stay at home and do the fun stuff and take care of things so that I can do I can you know do my hobby which is to work non-stop it just is what it is I suspect there are a lot of people listening to this who uh with whom that resonates yeah I mean I read magazine article one time the guy says he's in a business he was going to a business meeting and his wife went into labor and he had to decide so should I go to the business meeting or go to the hospital and he's telling this to his business group and he said I decided to go to the meeting and he said you could hear a pin drop all the people looking at him yeah I mean I gotta say like this time coming out here Huck cried when I left and it was one of only probably three times that he has ever cried when I left and that that hurt for an hour you know that really bothered me for a little while but now I'm okay ah okay it sounds like have him to say no uh whatever doesn't kill him will make him stronger so it is what it is I mean no you're home a lot seriously you're home a lot it's not like you're you're it's not like you're an absentee mother or something you're home a lot and and I always say the fact of the matter is if you want to be the perfect parent you'll never leave the house and be home with your kids all day long if you want to be the perfect business person you'll spend all your time at work that there are comprom there's compromises to make and um in my kids with little league I went from oh my God I got to go to every game and then I realized no I'll go to half the games we just came off a stretch where I was at home for three months straight every single day like not my guess is he cried every day um there every single day uh but the um but when I'm home I mean I'm home and I'm with him and we spend we get up at 5: in the morning and we're together until 8 or 9 hanging out and you know so it's I I love it but it's exhausting so it's actually quite a break for me to be able to come here and just really hammer in and focus on work um and then I get a lot done and then when I go home next week or the week after actually when I go home we'll take a couple days off and we'll go camping and we'll sleep on the trampoline we'll sleep I think you're okay I think you're good you're fine bottom line is you're going to keep this business in Texas so that you can continue to have your twoe trips to Texas um yeah and they have lakes here and I could buy a lakeh house and maybe have another family there you could have a family there family wor wow that's crazy no I think I'm not close to Waco I've always been raised and taught start and have a family when you can afford to be present that's what I would so I haven't had I don't have a family I'm not married I don't have any kids but what I'm finding is that there are young mothers and you all can speak to this if you've witnessed this who haven't done I don't want to say haven't done the work but they're new in their career and yet they need a lot of time off to be present right and so I found that well Dana we can't work because or such such can't work because I can only work one day this week because and that was an adjustment for me because I had always worked in a climate in my career corporate where it was I have to work so I can get to this point and I've noticed lately it's like no I work but your business adjust to my life versus is my life Ming to work have any of you seen that absolutely and the answer is that sometimes there's a mismatch that I'm not there's nothing to criticize anyone someone once said to me I was hiring a production manager he goes in the summer I need to leave at 2 o'clock to and I I didn't hire him because I need a production manag at two o'clock I'm not criticizing him go find a job you can do that because this isn't the one because I need to get production out and I can't just have a guy walk out so I agree and in my world it's been a matter of adapt and now that I'm not I'm finding that I'm finding new team members that are oh Dana's not going to adapt or Dana's no it's just putting paral first is something that I haven't done in quite a long time that's your job right and that's and I haven't been doing it and so that is where Dana's no longer asking Dana's telling um when I bounced off several new ideas to a manager recently there were all these things of the reason why those ideas won't work and I said mental note right I don't want to have a team where when we start having uniforms it's the manager telling well guys now we have to do this I want a manager or a leadership team that is on board with me as OPP post to being on board with the staff and I is that realistic like is that absolutely all of my people here know don't even use my name no one's none of my key people are GNA go oh well Jay wants us to blank no no no no we agreed as a group here's what we're doing and they're going to No we're going to wear uniforms for whatever the case is that is an extremely weak manager that instead of just saying the way it is they just say oh the boss wants exactly and I've always felt that way even in my background I didn't agree with things that my boss said but when it went to the employees we were a unified front and then the other thing is I find that in the past I've been handled so I'll say hey this is what I want done but because they have key insight into what's going on with the staff they adjust what I want done to fit what the staff can do as opposed to adjusting the staff and that's where I'm at right now or or I would add one other part or adjusting you do you have people that'll go Dana this isn't going to work here that happens all the time here we sit down in the room and we flush out the answer and some and lots of times I'm wrong and they convince me at the end we all okay that makes sense agree exactly I agree but what I don't but what I'm longer takeing consideration for is we're hashing out an answer based on the fact that somebody can get a ride from their mom or not that's why it it it has if you're going to powow and brainstorm with me make it about the business and operations not about somebody's mom and whether they can pick them up for work at a certain time or they're not going to like that because they don't like the color blue well then we need to get somebody in place that will wear the color blue right and it's not to say that you can't make accommodations and try to be reasonable with people and you try to work along but there's a point where it's either you have someone there that's going to take care of your customer and pay the bills or they're not going to be there so it it's it it is it does get down to that sometimes Co took a lot of things and Co took the asking Dana with it the asking Dana when I had this time to sit back and look at my business and look at all that I wasn't doing when I able to reflect on you know what I want versus what I have and why I don't have those things a lot of it is I have not been a strong CEO I have been an accommodating CEO um and I don't and I think the it's been from um my issues with my market you know my issues with black women right being one I have issues with some um and so I've been I have to put all of that aside and put peely first stop asking I'm smart I know what I want for my business and I should be allowed the opportunity to make the mistakes I'm going to make in running this business um and if they're a mistake they're mine and I'll learn from them but I'm smart enough to make some decisions that will you know help me you know navigate whatever I'm trying to do so that's just something I was thinking about when I'm hearing you know with L um Laura saying hey my son and you know the two weeks but I'm finding in my business that people are like no I'm 21 I have a son I can't stay from 10: to 3: I have to leave at 1 because I've got it yet this is not the job for you the other issue is you you just you're paying more now so you're going to have a little more selection as to who to hire you're not paying a lot Jay no so this is what we decided to do I ran and this is so this is a really good thing with my manager right I told her and she said we're going to wait we're not offering them more out the gate because I don't know who's coming back I need to see their performance I need and she was absolutely right some people the day before their shift well I don't know if I can make it well it just kind of flaked some people did and so she said see this is why I didn't want to do it no no wait a second think this out so what does that mean she'll just pay her less money to be a bad employee that doesn't make any sense what do you mean pay her less money you were gonna let's say you're paying what were you paying $10 and you're going to raise it to 12 okay so she's saying no let's keep paying them 10 in case they flake out and my argument is you shouldn't have that person working there so it doesn't matter whether if they and that's what we're finding out right we're finding out that we shouldn't have had that person working there right so it doesn't matter what you would have pck you yeah it does you give them 12 to start if you give them 12 right out the gate you're going to see like shiny eyes and you know that everybody's going to be on time for the first two months two mon exactly you're going to waste some time my manager is like why waste the time we can clean these people out immediately and then just hire new people in ready to go with a standard that's put in place as opposed to bad habits and hire them at what at what rate at the new rate well and then she said well let's wait let's do a 90day because again Jay my industry is very very very very very very fickle they and and they should all be actresses because who they are in the interview they should get an Academy Award versus who the person is two weeks after their employed very different but my point is if they're not worth 12 they're not worth 10 is my point either I know but you may not find out that they're not out you'll find out a lot faster so your theory is you'll be saving $2 an hour until you find out if they're no good basically no the I think what she's doing is she's strategically weeding them out by keeping the rate because if she tells everybody she's going to increase the rate right away of course everybody is going to be on their best behavior and that's a topic that I am sure we will come back to unfortunately we're out of time I got to stop here but thank you all for giving the honest answer as Laura put it not the PC answer I do appreciate that and uh I look forward to our next conversation thank you all thanks for listening everybody this episode was produced by Jess thubron founder of blank word Productions remember we started the 21 hats podcast to help business owners feel a little less isolated to let them know they aren't the only ones fighting these battles if you got something out of this convers ation please help us reach more people tell a friend subscribe and review us wherever you get your podcasts follow us on Twitter at 2or hats and let me know if you have a question or a comment or a topic you'd like us to cover my email address is L Feldman at21 hats.com see you next time [Music]