A lack of leadership
A lack of grit. A lack of funds. A lack of plans.
Hi there!
The news this week hasn’t been…great. In fact it’s been hard to dig into the business side of the past seven days without wondering what the point is, when so much senseless tragedy begat by unfathomable zealotry has unfolded in such a short amount of time - and looks certain to keep unfolding. If you’ve felt like your head is not in your business right now, just know that you’re not the only one. Maybe you’re struggling to help some of your staff deal with some of the difficult issues being raised.
As businesses become more global in their outlook, the shockwaves from global conflict can hit unexpectedly close to home - and complex international discussions inevitably need to be had at the local level.
Take time to check in with your staff, suppliers and partners. You don’t need to have opinions or take sides. Sometimes all you need to be - and can be - is present.
It’s Canada Small Business Week
Despite the difficulties of the last week, Small Business Week has once again popped up in the diary, which means it’s time for (a) an annual statement from the Prime Minister about how important Small Business is to the economy, (b) an annual reminder that BDC trademarked ‘Small Business Week’ for some reason, (c) an annual Provincial level appeal from various local press offices to ‘shop local’ and ‘move here’, (d) a negative poll - this time bizarrely via BDC themselves - that suggests entrepreneurship is in decline due to a lack of ‘grit and leadership’ (rather than, you know, poor accessibility to business support and capital) and (e) an observation that Small Business is just ‘not dynamic enough’ these days.
If this is your first Small Business Week as a Small Business owner - let us welcome you to the annual week of disappointment. If you’re a seasoned pro in all of this, don’t waste your time, move along, we guarantee you’re ‘dynamic’ enough already (whatever that means).
We’d hoped, just perhaps, given the year we’ve all had, that Small Business week would extend finally beyond equal measures of platitude, self-promotion and knee-jerk critique - and move into the realm of solutions and support. It wasn’t to be.
Retirement
Perhaps not the hottest topic in the world right now, but it’s certainly worth noting. We’ve talked about succession before on The huuman Layer, and about how the retiring boomer population has been struggling to find exit strategies for their businesses. Recent numbers suggest 75% of Small Business owners are looking to find an exit in the coming ten years due to age. In any terms, this can safely be described as a ‘mass exodus’, but it’s certainly compounded by the fact that many financial advisors are in the same boat - with 40% looking to retire themselves inside the next decade, an incoming cohort of young talent hitting qualification failure rates of 75%, and an advisory industry therefore in something of an unmanaged decline.
If you’re new to Small Business ownership, get yourself in a conversation about your long term plans with an advisor as soon as you can. If you’re a huumans customer, reach out for free and have a chat. It can often feel like Small Business ownership is about building something great, but it’s also - lest we not forget - about building wealth that we can access later in life.
See this is a stark reminder to consider your future options now - before those options are decided for you.
Lack of money
Keeping up the energy today, and in no way doom-spiralling, we bring you the obvious news that the percentage of business loans awarded specifically to Small Business (as tracked by the OECD) has fallen from 44% to 12%. While the post-COVID surge of the newly self-employed across North America as a whole has not abated, the appetite for risk has not kept up. There are numerous theories that can be thrown around here. An expanding government sector. Banks not backing up policy. A lack of entrepreneurial education support for a new class of Small Business owner. Differing cultural attitudes to risk.
What is clear though, is it’s not about a lack of ‘grit and leadership’ - it’s about a lack of support. A lack of a coherent ecosystem that can tackle the - often basic - challenges that Small Businesses face each and every day. A lack of coherent accessibility - from incorporation to taxes to finances and beyond. Looking at the current Small Business support ecosystem, it’s no wonder that the risk vs reward ratio currently seems out of whack for a whole bunch of talented people. It’s time for that to change.
We’ll be back next week - hopefully with a more chipper round-up of Small Business insight and the usual (bad) jokes. Until then, do - at all costs - and this is really, really important - try to find some ‘grit and leadership’.
BTW - did you know you can reply to this email? We always read the responses and welcome feedback. Let us know what you like, what you don’t and what you’d like to see more of in the future!
If you find this report useful, why not share it with the other small business owners in your network? They’ll join hundreds of subscribers in accessing the best Small Business insights in Canada - for free!
The Data Room 🤖
The Data Room is sponsored by Quota, the AI co-pilot for Small Businesses, their Accountants and their Advisors. Get instant compilations, smart budgets, intelligent predictions, personalized benchmarks. For every business, in every industry, in every location.
Join the waitlist now, and access industry reports and exclusive discounts!
No Free Rational Rides
This week Jay Dort delves into the airline industry and its apparently random approach to pricing.
I read an article recently that talked about flight pricing and how it’s not following an efficient economic model. This is weird, right? Flights are big business, and, maybe the most publicly flamed for their operations screwups. Every minute a plane is taxiing and not in the air is money down the drain for airline execs, so there’s a lot of pressure on the whole system to work as fast as possible. We hear all kinds of stories about how new improvements to planes and airports are making things better for customer travel, and when you think about it, there are 8,000 - 13,000 planes, with an average of 100 passengers in the air at any given time. So how is it that ticket pricing is stuck in the past?
The team of economists found that the way airlines set prices doesn’t maximise short-term revenues, and are set somewhat arbitrarily. This runs counter to a lot of conventional wisdom that I’ve run into over the years;I’d been setting my browser to incognito mode and checking prices at odd hours. Apparently that’s mostly bunk. It makes sense to purchase early, but aside from that, it’s all just guesswork.
The gist of the research shows that airlines aren’t looking at 2 factors that are make-or-break for most other services: consumer preferences and competitor behaviour. The way ticket price decisions end up being made is largely arbitrary, airlines will sell off the first tranche of tickets for an individual flight at a predetermined price, then sell the next group of seats at the original amount plus a bit extra. This layered approach carries on until all the seats are sold, with only a bit of variation.
So then why does the seat price fluctuate at all? Seat prices are somewhat affected by demand forecasts, but the results –again– aren’t rational. The research showed that price variations based off of the forecasts were almost always inflated, and this resulted in 60% fewer cheap seats than they would have expected. It’s almost never worth it for airlines to take off with empty seats, even if they had to sell tickets at a hard discount.
Turns out this simple statement is lost on the airline industry.
It seems like funding for startups is diverted by the latest political trends rather than focusing on regional and community needs.