Entrepreneurial News®

Colleges and Universities, Heal Thyselves

The colleges and universities in the US are in trouble.

They don’t for the most part, offer a relevant education, meaning something that students need to know.

I have one grandchild who’s in the Naval Academy Prep pipeline, and I hope she gets a good education. Naval Academy is about as good as it gets, and she’s got all the right background. We’ll see.

I have another who’s training people in AutoZone branches, and he has no use for college. It’s not relevant to him. He gets more relevance to talking to me about his employees and taking courses at our Small Business Success School.

A third grandchild is a pastry chef, and college has no relevance to her, either. She’s not really into supervising anybody.

The other two grandchildren don’t have to make advanced schooling decisions yet. Maybe by the time they have to, colleges and universities will make themselves relevant again.

The point here is that college isn’t really relevant to any of them, where it could be and should be.

Even my undergraduate college, Antioch, with its work/study program, isn’t making itself relevant. And Wharton has been silent, when the Penn leader has been in the dock.

The campi aren’t secure, either; the schools need to do a better job at figuring out who can and can’t be on campus, without violating free speech and assembly.

So, here we are, an advanced society, with an unadvanced education system. It’s gotta hold us back at some point.

Elon’s Oops

Elon Musk reportedly cut 10% of his workforce this week, presumably at Tesla.

He gets an oops because he probably could have avoided the layoffs.

It’s good that he’s opened Tesla plants around the world, but the openings probably consumed some funds that could have been used for new model development.

The purchase of Twitter probably didn’t help the cash flow situation, either, and certainly consumed a lot of management time to make it profitable.

And there’s SpaceEx; mostly government capital, but certainly lots of management time.

So, we have a financial drain that could have been avoided, and a management drain.

How does he fix it: 1. Don’t further develop the cybertruck, because Ford’s already ahead of you; 2. Get the baby Tesla to market ASAP, because Ford might beat you at that, too. 3. On the span of control issue, stay off of Twitter at least, and don’t give so many interviews.

All of these things are fixable, and we wish Elon well. He’s one of the world’s all time great entrepreneurs.

An Interesting Pricing Approach

My wife went a couple of weeks ago to Spencers, which is a ten-store chain of appliance dealers scattered over Maricopa County, to shop for a new washer and dryer, since our 13-year-old Kenmore washer gave up the ghost.

Normal purchase, would have been about $1600 or so for the washer and dryer.

But Spencers threw an interesting curve into to the equation: my wife wandered over to mattresses, because we had been thinking about buying one of those, too.

The Spencers salesman said, if you buy the Beautyrest mattress you’re looking at for the $4200 list price, we’ll throw in the washer and dryer.

Say what? This is about 25% off on the whole package.

Done deal. She didn’t even text me (I was at an appointment) to tell me what she’d done. No matter; she’s got excellent financial judgement.

For you entrepreneurs, this might apply to those of you who sell durable goods; is there a way you can create bundles of goods, and improve your profits? (Even though Spencers margins went down, the profit per customer went up) And help secure lifetime customers?

If you’re Whirlpool, the appliance maker, do you spiff your dealers for doing this?

Same question to Beautyrest on the mattress.

Think about it.

The Universal Sales Tax

This is a novel concept I found hiding in the back of a book entitled “Winning America’s Second Civil War”. It’s more important, potentially, than the rest of the book.

Basically, our tax rate is levied on all transactions upon sale, at the level of 1.13%. All corporate and Indvidual taxes are eliminated.

The rate was developed by taking government expenses in total and dividing it by gross transactional volume, including all financial and home sale transactions.

All the tax infrastructure (IRS, CPAs, tax planners) is eliminated. No savings are mentioned, but they would probably be huge. Presumably, the other government agencies will take a share of the total, and they’d have to submit their budgets to a central authority, like the Office of Management and Budget (OMB). No congressional fights. No side deals, unless approved by congress. If the executive wants to spend $400 billion on school debt relief, submit it to Congress, approve it and out it goes. Or not, since the Supreme Court ruled that the request had to go through Congress.

State and local taxes would remain unchanged, so states still compete for businesses to locate.

The authors, DeBacker and Jensen, think that the tax might be a real draw for industries to locate somewhere in the US. By extension, world tax rates could also lower to this level.

Another big question is implementation; the authors recognize this, but don’t really have steps in their short article to address this question.

Tantalizing, eh? I plan to let Trump know, as well as some economists outside the two authors. And, I plan to talk to Encounter Books, their publisher to see if the weak areas can be expanded into an entire standalone book.

The Good, Bad and Ugly of Service

I haven’t written one of these posts for awhile, but some stellar service from Chewy prompted me.

Good service: Chewy, which has consistently gotten our Shi Tzu prescription pet food to us in a couple of days, tops. And the ordertakers speak excellent English, are cheerful and even ask how our two fur babies are doing. And their prices include shipping, and they’re consistently under retail pricing on this hard to find pet food.

Bad service: Sears (again). I think this is their second or third award. They couldn’t get us a washing machine repairman for two weeks (even though we bought the units from them), and the ordertaker didn’t speak very good English, and kept trying to upsell my wife on a warranty and wanted her credit card, even though she’d decline to use them.

We were fortunate to find a local firm that has worked on the washer before and could make a service call in two days. Their service has been good in the past, but they haven’t always fixed the whole problem. In the meantime, we look like the poor relations with towels and such drying out in the Arizona sun.

Ugly service: we hope it left town last Tuesday. Care Credit might get this award for the way they process credit card payments; we’ll see.

So, kudos to Chewy for following our end to end  service guidelines.

Stay on Course

The CEO of Hertz recently overcommitted his company to purchase EVs, well beyond what his company and market could absorb, and the company sold a bunch of them at a loss.

The CEO probably misread his market in that he does local rentals, and the Teslas are more suited to distances. Ford is doing a smaller EV that might be better suited to local rentals, but it won’t be here until 2026 or so.

These problems aren’t unique to Hertz: Bud Lite and Target made spectacular miscues in reading their core markets, with disastrous results. Both have fixed the offending ads, but at considerable cost in reestablishing their brands in customers’ minds.

Much of current advertising is more dedicated to being cute than reinforcing a company’s product or service message, and having been an account executive, there’s constant temptation to do what’s ‘current’ rather than what makes sense.

We are currently doing a project for my college, Antioch, designed to give entrepreneurs the tools to correctly define and read their market from a customer viewpoint. The customer viewpoint is important, because many entrepreneurs think that, just because they and their friends think an idea is cool, that the market will agree.

We have a similar business startup course in the Small Business Sucess School, www.bizsucess.school, which we’d commend to you. Better to spend $87 and avoid mistakes that could cost thousands.

AI for SMB?

The title might sound like too much jargon, but there’s a question in my mind as to whether artificial intelligence (AI) is going to be useful for a broad range of small to medium sized businesses (SMB).

AI is neither artificial or necessarily intelligent, because it’s based on data scans of large information databases, driven by the questions you ask, which you can submit via Chat/GPT. It’s a cool process. Keep in mind that the information given by Chat/GPT might be as much as 2 years old, having been updated through 2022. But the updating process is continual.

We have used Chat/GPT to benchmark our courses in our School, www.bizsuccess.school, because we want to make sure that we are out front on our course offerings to you.

We know of a couple of law offices and medical practices that are using Chat/GPT to provide information for patients and clients, which enhances their work.

But none of only one of our current clients has used it, and he runs a big digital marketing firm. He has enhanced his marketing using AI.

When we put the question about usage out on Twitter, and to a list of former clients, no one was using it. So, we wonder how broad usage is.

Go set up your Chat/GPT account, just for fun. Shouldn’t take more than 10 minutes. And it’s free, until you get into heavy usage, more than 20 questions per month.

NIVIDIA Nosebleed

Years ago, one of my cooperative work jobs was researching and writing short pieces for Barron’s in New York, where my favorite uncle, Dave Loehwing, was the editor.

In addition to editing, he wrote the lead article for the paper occasionally, and he delighted in puncturing inflated stock prices.

He’s in heaven now, but he’s probably saying what’s all the fuss about NVIDIA? Yes, they’re cool, because they design the CPU and GPU chips that power AI platforms. In fact, their chips are produced here in Phoenix by Taiwan Semi.

A year or so ago, I decided to invest in AI in my self governing IRA retirement portfolio, which is sort of limited by my broker to ‘prudent man’ investments. We looked at NVIDIA, but it got ruled out as too speculative, so I bought C3AI instead. Didn’t do what I expected (go up), and I found that it had a rather squirrelly corporate organization as a non-profit which would have been ok if they’d distributed the profits on some basis, which they didn’t. Live and learn.

I bought QQQ  after C3AI, and it’s done well (up about 45%), and minimizes the headaches at night.

I still use and like C3AI, and we used it to generate several courses for our Small Business Success School  (www.bizsuccess.school) where we didn’t have anything unique to add to the subject, but at least our business customers can find lots of information they need to know in one place.

Now comes Google with their AI vehicle, called Gemini, which out of the box has laid an egg. But Google will get it right eventually; their first search engines were pretty primitive, too. They’ll get AI right eventually. We’re checking out Gemini.

At some point, Uncle Dave would say, the market has about as much as it can handle, and NVIDIA’s growth will slow down. The QQQ boys and girls will be on top of it. And one of my Wharton profs, Burton Malkiel, will be proved right on prices and multiples (again).

So, don’t pay nosebleed prices for NVIDIA.

 

 

The Service Conundrum

As the economy looks a little shaky this year, I got into a discussion with one of my clients about service levels.

We did a course at www.bizsuccess.school in how to think about your service levels, from zero to extreme, we’ll do anything the customer asks.

In his business, he provides a nice place to work, web support for his stylists, but he charges for it. He actually pays better than the competition, which is key, because his people are the key to his service success, not him.

There’s another little wrinkle that he threw at me this afternoon in a short meeting: the service level is also influenced by what his customers expect. His clientele is older, so they expect more.

In another industry, a client is adding services to his fast casual dining restaurants and tweaking his menu to add quality and price adjusting his price points to cover it. This is sort of unique, since the restaurant business in his segment isn’t known for great, if any, service. Will it work? That’s why he’s a member of our Solutions Forum.

The point of this is outdoing your competition in your segment. We call it zagging when they zig. Or vice versa. Just make sure your customers buy into what you do.

 

 

Solving the Migrant Challenge

We did a short version of this on our Twitter account, but the subject deserves more space than 250 characters., so we’re going to develop our thoughts more in this post.

There might be an entrepreneurial opportunity in solving this, which is why I’m writing about it here.

We have about 10 million illegal immigrants in this country, give or take. No one really knows, because there aren’t much in the way of border controls, but let’s run with 10 million.

I happened to notice a couple of days ago that there are about 9.6 million open jobs in this country listed in the JOLTS report. I believe employers actually submit these jobs to the Labor Department, who develops the total.

If this is so, our genius government could develop a national database of open jobs or have state labor departments contribute or develop the data on a state basis.

Illegal Immigrants could read this database and go where the jobs are, rather than being shotgunned around the country to sanctuary cities. However, we don’t know what, if any skills the illegals possess. They know what they can do, though.

Under Biden, I have zero faith that this database could be developed and used, because none of the Biden Bunch likes business, and they have no imagination about what could be done. Under Trump, it could be done.

However, a large national personnel agency like Kelly Services could do it. And might be looking for another business opportunity. This is what business development professionals do. I used to do it at Ford.

So, let’s say that 7 million of the jobs could be filled by the illegals. That reduces the welfare load on the Feds and the states by 2/3.

We know many migrants get employment as soon as they get here, but many don’t. And many might want a better job than they had and could be apprenticed to learn new trades.   But the illegals can be told to search the databases at any Labor Dept. office, I would think.

So, here’s an entrepreneurial opportunity for someone or some company to develop this database and sell usage. Does it make money? Probably.

Entrepreneurs can figure it out.