4 News Stories Not to Miss This Week
I'm sure you, like me, have read nearly everything there is to read at this point about the Boston Marathon tragedy. There's nothing like such sad headlines to put things in perspective.
So with this edition of your weekly round-up of news, a small personal note: Entrepreneurs, use what you learn to make the world safer, better, cleaner, and kinder.
1. What to Expect From the Budget (Hint: Pain)
As President Obama and Congress try, more or less, to agree on a budget, the only point of certainty is that someone will feel pain. According to the Washington Post and its "everything small business owners need to know about Obama's new budget" article, entrepreneurs may think they've been transported into a dental chair.
Small business owners frequently want to avoid entitlement spending cuts. It looks like spending may grow at a slightly slower rate, both raising some premiums and cutting payments to providers under Medicare. Taxes still have a chance of going up, funding for the Small Business Administration will go down, and the administration is still pushing for the minimum wage to go up.
2. Retail Finances Get Tighter
Retailers are having an increasingly tough time. Sales shrunk in March, the second time in three months, showing weaker-than-expected consumer purchasing in the first quarter. Some are blaming it on the end of reductions in payroll taxes, but weaker spending might also have something to do with a general drop in consumer confidence.
But if you think you have it bad, just ask J.C. Penney. Although the company won at least a momentary victory over Macy's selling Martha Stewart-branded products, it ousted Ron Johnson as CEO (maybe his success at Apple had something to do with the iPhone and iPad?) as it tries to find a suitably profitable direction. Furthermore, Penney is drawing down $850 million from a credit line to buy inventory. In other words, cash is a bit hard to come by. If your business sells to J.C. Penney, expect your check in the mail to come later rather than sooner.
3. PCs, Software Companies' Hopes Plummet
Of course, retail has nothing on the personal computer industry when it comes to painful times. Sales dropped 14 percent, the biggest drop in 20 years, even though there is plenty new on the PC front. Gartner pegged the drop at 11.2 percent. Not that much of an improvement.
The combination of Windows 8 and new form factors, like combination tablets and notebooks, may have slowed sales. Another factor: More people favoring smartphones and tablets over PCs for their basic computing needs. And it's not clear that working on a touch-enabled wrist device will suddenly change the company's fortunes. Some say that Microsoft finally has an Apple-beating vision of dissolving the barrier between mobile and desktop. Maybe there will still be some desktops by the time they get it to work.
Microsoft and its hardware partners aren't the only ones whose business will smart from this. So will third-party developers. Windows software tended to sell for significantly more than smartphone or tablet apps. Sales of apps are highly concentrated, and the chance that most developers will make significant money is pretty low.
But for at least the elite cadre of programmers in Silicon Valley, the future is very bright. In fact, the demand for their skills is so high that there are now agents for software developers.
4. Moving Up the Food--or Drink--Chain
The general direction of tech might drive many to hit those early happy hours, and that would be fine by craft beer brewers moving into fine spirits. In a way, the companies that started with ales and lagers are following a strategy often seen in technology: Start at one end of the spectrum and drive up into higher value, and more profitable, products. (No disrespect intended for a noble drink.)
Then again, you could just move into a commodity market in an unusual way, like the Dollar Shave Club. From running a YouTube video that went viral (10 million views) to nailing down a $9.8 million venture investment, the company is taking on established giants by further building on the commodity nature of the product--razor blades--by delivering it to customers automatically at a truly commodity price. There's a New York Times interview with CEO Michael Dubin that shows some interesting details of the business, including Dubin's background in making online videos as well as his thoughts on why the company's initial campaign did so well (funny promotion of a smart business).
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.