Boeing In Crisis! Business Is Struggling!

Boeing is having issues. It's Starliner capsule has Astronauts stranded at the space station. Their planes are facing quality issues. People are concerned about safety across the board.

Plus Leadership changes happening at Starbucks. Starbucks gives its CEO the boot and Chipotle's chief steps in. Will it matter?

Books & the Biz takes a look at these businesses and others, and shares their insights that could impact your business if you are not prepared.

[00:00:00.00] - Alice

Books in the Biz, a podcast that looks at both the financial and operational sides of success. Please welcome our hosts, Dan Paulson and Richard Veltre. Dan is the CEO of Envision Development International, and he works with leaders to increase sales and profits through great cultures with solid operations. Rich is CEO of the Veltre Group and a financial strategist working with companies to manage their money more effectively. Now on to the podcast.

[00:00:33.18] - Dan Paulson

Hello, everyone. Welcome back to Books in the Biz. I'm here with the Books. Richard Veltre, how are you doing?

[00:00:39.13] - Rich Veltre

I'm doing well, Dan. How are you?

[00:00:41.29] - Dan Paulson

You are at home, so you must be doing well. I am doing just fine myself. I have relegated myself to my basement abode. And here we are talking about life, liberty, pursuit of happiness, and why business right now is getting a little rough for some people, it looks like. Yeah, a little bit. So I approached you earlier this week and shot a couple of articles to you. I'll pull up one of them here right now. So for those who are listening and can't see, Starbucks ouced their CEO names Chipotle Boss as replacement. I didn't think Starbucks was going that bad. I mean, you're paying what, seven or eight dollars for a drink. You're in line with 20 to 50 of your closest friends waiting anywhere from 15 minutes to half hour by the sounds It's all in the sense of it. Life's got to be good.

[00:01:33.26] - Rich Veltre

You would think, right? But I guess when you get to be that big, I guess the problems are different. It's not just about the fact that your local Starbucks sells your drink for seven, eight bucks, as you mentioned. But I guess when you have that global overhead, then you have to start thinking, how does my eight bucks actually help pay the global overhead?

[00:01:58.04] - Dan Paulson

Well, and that should be a question I'm asking you, finance guy, is how the heck do we get to eight dollars for a cup of coffee? That has always boggled me. But in all fairness to Starbucks, I've been to some other coffee shops in the area as well. And I don't drink coffee. Personally, I hate coffee. I won't give you my four-letter words of what the stuff tastes like. But typically, if I go in, I'll order tea. So a bag of tea, hot water is usually around five bucks now, Which, again, is pretty obscene. I know there's one coffee shop I visited where I've had a cup of tea and a pastry, and that turned out to be $15. And I just about choked. So I don't think it's just a Starbucks problem. I think there's probably a bigger issue going on here. And I guess from Mr. Finance, what are you seeing on your end that would be driving some of these costs up?

[00:02:54.11] - Rich Veltre

Well, what's interesting is my son, actually, his first job while he's in high school is Starbucks. So he works at the local Starbucks. So what I see is, Starbucks does pretty well as far as taking care of their employees. I mean, he's doing for a part-timer to to have benefits, to have access to 401(k), to have access to all these things that you wouldn't expect for a 16, 17-year-old. I think they're set up to take care of their people, which is very interesting. But I think the other thing is, if their growth investment is really based on expansion, more stores, more, that adds to the expense line of having to support all those people. So I would expect that would wind up being at least part of the reason for the necessity of a company to keep growing. So you think about, not to bring this up because it's taboo. But everything is like a Ponzi scheme, right? I mean, growth is funneled somehow through money that you made, right? You can't keep growing unless you're making profit. So if you're making a loss and still trying to grow, you're borrowing money, which puts you into a bigger hole.

[00:04:22.16] - Rich Veltre

So I'm curious if Starbucks hit that problem because they put in a new CEO who's only You've been there a year, according to this article.

[00:04:32.11] - Dan Paulson

Yes. Sixteen months, I think, was the actual number. But he hasn't been there long.

[00:04:38.26] - Rich Veltre

So it's a very short tenure, right? But in that short tenure, the stock price dropped and the outlook dropped, which tells you, okay, did we miss the point? Did we miss the boat? Are we still trying to grow when maybe there was a point where we had to say, we need to slow this down because it's going to cost us too much? I don't really know the details of the ins and outs of what happened in the numbers. That would be my suspicion, though, that growth was going too fast, and the money wasn't there.

[00:05:11.23] - Dan Paulson

Well, they did talk in the article a little bit about expansion into China. I know Starbucks sees China as a very hot market to grow in. Starbucks has been in China for quite a while, actually, when I was still traveling back and forth over there, I have been to a few Starbucks. They are virtually no different than they are here, other than pricing and everything is, of course, written in Mandarin. Excuse me. But cost-wise, I would think for the Chinese market, comparably eight dollars here, multiply that times eight, and that's what you're paying in China. So you're paying about 64 Taiwan for a cup of coffee. And while Chinese have There's a number of Chinese that have moved closer to the middle class or moved into the middle class. I'm guessing that even in that economy, that's a bit of a bite to be paying that much for a drink. So I just I mean, my experience is, especially in overseas market like that, there are plenty of competitors, and I also have been at several of those competitors. And it was a fraction of the cost to get actually as good a quality or in some cases, better quality than you would at Starbucks.

[00:06:32.19] - Dan Paulson

I'd also be interested in your take, since you actually do have a direct connection with somebody who works at Starbucks. There's been a lot of talk about unionization, not to get this political. And And to say, well, if Starbucks is treating its employees so good, and making all these investments, because they pay well from what I've seen, at least around here, what's the push to unionize?

[00:06:59.26] - Rich Veltre

Well, my connection to a worker at Starbucks is to a 16-year-old. So the question of the unionization, do I know it's there? Yes. Doesn't matter to him? Probably not. I don't see why he would be the one that is going to take up a picket sign and, Hey, we need unionization. No, I don't see that. I see him getting the ancillary benefit. I mean, I don't see it because I remember being younger and working in a supermarket, and you had to join the supermarket union. So you made $50 that week, and a dollar went to the union. You know what I mean? Something like that. So if he's going to get a benefit out of that, okay. I would think, though, for benefits, et cetera, it's for the people that are working there full-time, who are working there for the next level people. Other than that, I have to look at it like, Starbucks is the perfect place for a 17-year-old needs an after-school job, something where he learns a little bit about the world, adds to what he knows before he goes to college, maybe even works there while he goes to college, if he goes locally.

[00:08:19.08] - Rich Veltre

So who knows? But as far as the unionization goes, I don't see him being the one who's going to either benefit or not benefit from it. He's just stuck right down the middle. But I think the full-time worker is probably the one that really I could see why they would necessarily be thinking about it or possibly even wanting it. Just from the standpoint of making sure that everybody gets treated the same way. But I'm not necessarily a pro or non... I'm not a pro or con when it comes to your guidance. I don't really have I go one way or the other.

[00:09:02.28] - Dan Paulson

Well, if you're not working at Starbucks- I don't have a preference. Yeah, it probably doesn't matter so much if you're not working at Starbucks. From the operations side, I could see added costs due to unionization. Maybe it pushes again for higher wages or more benefits. Those are some of the different things that I've heard through the articles I've read on the coffee shops that have unionized. They wanted better schedules and typically higher wages for it. But there's a cost that comes to that. There's a cost that comes with negotiation. There's a cost that comes with arbitration if that becomes an issue. Plus, if you're paying more in benefits because it's now negotiated into their agreement, that also affects it as well. Same with if you now have to adjust their hours. Well, maybe now you have to hire more people because you got to fill certain gaps that you didn't have to do before because of the way the employee structure So there's a lot of that. And if you look at over the last 16 months is when really all that started popping up. So under the new tenure is mostly when we started seeing a lot of this push to unionize.

[00:10:13.18] - Dan Paulson

And maybe that is part of the issue as well. I can't speak to it personally. I'm, again, not involved with anyone at Starbucks, but you look at all the different factors that goes into that, and it makes you wonder, what's causing this? I I don't remember seeing anything about any major groups of Starbucks closing down. So I think for the most part, any attrition on stores is probably through normal growth cycles or changes in neighborhood, things like that. But yeah, I'm just wondering if we're seeing something bigger on the horizon here that maybe those eight dollar drinks are getting to the point where people are not going to want to spend that money anymore because it's... I mean, we are dealing with inflation no matter what as anyone says. And it's getting harder and harder to justify certain elective costs, like a eight dollar cup of coffee versus maybe gas in your car, paying your rent, or just getting the basic food necessities over anything else.

[00:11:17.11] - Rich Veltre

Agreed. I think the other question or piece of this that I've been thinking about since I read the article, they're looking at the new guy coming in. And he has, apparently from the article, it says he has a history of being able to bring in innovation that he's done with other brands that have either kept them in a survival, in a better place, and then in a growth place. He specifically had a successful track record at Chipotle.

[00:11:54.10] - Dan Paulson

Yeah. And for those who are watching the video, or if you want to watch the video, by all means, go to YouTube and you'll be able to catch us either live now or later. But if you look at the track from Starbucks and Chipotle from basically about the same timeline, Starbucks has been relatively flat. Growth, there's been some ups and downs. Currently, I would say they're on a downward cycle, where if you looked at Chipotle, they've had some pretty meteorite growth, especially when their new now old CEO came on board, which I believe was around 2021, '22, somewhere in there. I don't know. Chipotle's Nico came on in, looks like 2018. So he's been around since 2018. They've seen growth, roughly around 700 % growth from that point till now. And Starbucks, Their CEO came on in 2023. And for the most part in that timeline, they've actually lost growth. From 74 % growth in 2023, now to overall cumulative 26 % growth. So they've lost about 50 % of their growth in just the past year.

[00:13:21.22] - Rich Veltre

Yeah. And the question becomes, to be able in a year or so to be pegging that on the CEO, the question becomes, does the CEO not have a connection? Does he not really understand the product? Where clearly in Chipotle, he knew what he was doing. So when you go and you look at some of the customer complaints, they talked about increased prices, but smaller size portions. Okay, we hear that everywhere, just anyway. So not surprised there. But it worked for the chain. It worked for the company. It's making sense, he didn't have a detrimental drop. Now, Starbucks, I know, had increases in drink prices. I don't know that they dropped sizes. But clearly, you look at this chart and you say, well, that didn't necessarily work, did it? It costs more, which means you alienated customers, and now we didn't get the growth out of it that we needed to. But we are now known in the market as being 25 % higher in cost.

[00:14:28.14] - Dan Paulson

Yes. When you were It's already considered expensive. Right. I mean, $4 a drink, people were still complaining, but they would suck it up and buy it.

[00:14:37.15] - Rich Veltre

And the other thing is about these charts, this is a public company, so you can't hide this. It's not like, oh, well, that's just in my private file. No, this is in public. You're getting this chart because somebody looked it up on a on a service. So a lot of the stock market is perception, right? And your stock price can go up or down based on what happens. As much as everybody wants to say, well, you go buy the financials. No. Stock market is perception. And perception right here says people are perceiving Starbucks as not being a good risk, not being a good investment. That's what I see.

[00:15:21.26] - Dan Paulson

Yeah. And I would agree with you on that. I think any time, again, you're in what I would call, again, a more luxury item, and that luxury item comes with a premium price that a lot the masses tend to enjoy, you start eliminating people when that price starts creeping up and you see other inflationary aspects rising as well, because now people for that same dollar, they have to make a choice. It's not like I can go here and I can go there. It's like I can go here or I can go there. And if going there means that, again, you can't have dinner that evening or you can't go to the grocery store and pick pick up goods, that affects us all. And I think we're seeing this across the board. So I wanted to bring up a couple other things here. Again, we talked about Boeing, again, is top of news, and they've been top of news, it seems like for the last two or three years. They definitely have a quality issue. And while Airbus should be handing them the keys, it's really not. Airbus has their own set of problems. It might not be related to doors falling off planes or anything like that, but they're still struggling.

[00:16:40.01] - Dan Paulson

It looks like from the operations guy here, they're struggling on the supply side, just getting the components they need. And I'm curious from what you see and what you've read, is this a US versus Europe issue? There's different dynamics going on overseas, obviously. And it's really, in my opinion, they haven't come back from COVID yet, at least from a market supply side of things. I think there's still some challenges there. I believe there are also some challenges with their energy policies over there. They're not really industry friendly when they're implementing some of the energy policies that they are. And I'm just curious from a financial side, is that what you would be seeing in the numbers, or what are we missing here?

[00:17:32.17] - Rich Veltre

Well, I think aside from reading this article, so anybody who's listening, go ahead and read this article because it's a good article. But I think the other thing is, too, I want to say it was Netflix had a documentary on Boeing, which was around the 737 max crisis when they had airline crashes. And if I was anybody who really wants to understand Boeing and understand the topic that we're talking about today, I would go watch that, because that documentary shows that there was an awful lot of criticism of Boeing for the lack of leadership and the allowance of Boeing to be changed from a safety-conscious understanding where they came from and where they wanted to go. There was a clear message of, This is Boeing, and this is our company. This is what we do. But It got to the point where Boeing became more of a capitalist company, and it became about profit. It became about bottom line. It became about chopping off certain managers and management, and losing layers of people that were there that caused leaks in the quality, leaks in the expectations, leaks in just the overall vision of where the company is going.

[00:19:01.19] - Rich Veltre

So the leaks are the problem more so, I think, than anything else. I think the leaks are the problem in that. I used to be one of those fliers who would be like, Am I going on a Boeing? I want to be on a Boeing. I don't want to be on an Airbus. I was very much a Boeing guy. Now, I start to wonder. Now, it's the opposite. Guys, there's hatches fallen off. I think I want to know that I'm going to be okay, and there's going to be no Technical issue.

[00:19:37.12] - Dan Paulson

You're still there.

[00:19:39.02] - Rich Veltre

Okay. As long as I'm still there.

[00:19:40.09] - Dan Paulson

There I am. No, we did lose Did you? What happened?

[00:19:46.20] - Rich Veltre

Something happened on this end. Anyway, so I get a little bit questionable now because I've seen what they did. You went and you wanted to change because you went to the 737 max, and you went to bigger engine. And in order to do that, you had to put in a computer software program that you didn't tell anybody you put in. And then said, Don't worry about it. Don't tell anybody. It's going to cost too much money to go do that. Wow, bad answer. I think that happens more often than not.

[00:20:19.05] - Dan Paulson

The difference is you're not at 30,000 feet when you realize there's a problem. That to me, is the issue right there. I mean, cars do this all the time. They do updates you may or may not know about, you're supposed to know about, but I don't think you always do. But yeah, when there's nothing beneath you and all of a sudden your engine's quit, it's not the fall that gets you, it's the sudden stop. And none of us ever wants to be in that situation. No, no. But I like what you said. I personally think capitalism is a very good thing. I think for the most part, you do as well. Yeah, I did. But when you dishonor your brand as a result of trying to make the Almighty dollar, Do you really get ahead? And I think whenever we talk about these things, we want to apply them in a way that the average business owner is going to look at this and go, why are we talking about Boeing? This has nothing to do with me unless, of course, you're an aircraft parts builder. But if you look at these companies, very large companies, very public companies, you got a great snapshot of why these companies get into trouble.

[00:21:26.04] - Dan Paulson

And if you look at your small business saying, well, I got to make some extra money here, so I'm going to cut corners, cut costs. Well, essentially you're doing the same thing at a more microscopic scale compared to a multi-billion dollar company like Boeing. So be careful what you wish for, because The short term game might lead to some greater long term losses. And I would say that's probably where Boeing's at right now, is they're spending millions upon millions of dollars to try and rebuild trust within an entire infrastructure. And I don't know how well that's working right now. Personally, I think they're sucking at it because there's two astronauts in space that can't get back on their Starliner because that's got issues. So it seems like everything Boeing is touching right now is not working that well.

[00:22:16.19] - Rich Veltre

Exactly. And then I was reading also that the 777 is now got questions about structural issues with it. So you just, wow, it's an awful That's an awful large number of problems to have to deal with all at once.

[00:22:34.19] - Dan Paulson

But these problems didn't happen all at once. And I think that's the other key that we need to get across here is that this stuff is probably going back 10 years, you think, Rich? Maybe more than that, that we've seen this progression happen?

[00:22:49.04] - Rich Veltre

Yeah, I would say 10 years is probably a good number. It's probably a good number. But, yeah, to your point, though, to To really drive this home, I mean, I worked with a smaller company that was doing orthopedic shoes. Probably heard me talk about it a thousand times on the podcast. But when I worked with them, one of the reasons I wound up getting the job was that they hired leadership in the management that didn't understand how the company worked. They were selling orthopedic shoes. So it was for people with foot problems. And they went out and got all these athletes to sign off on pictures showing, we support orthope. I just use their name. Okay. Anyway. All right. But what's an orthopedic shoe have anything to do with a sporting person. Somebody who ran in football doesn't have the problems of a guy who's a chef who can't stand at the stove for more than a couple of hours without having pain in his feet. The disconnect Connect there led that company to having a drop because everybody said, you don't know what you're doing. You don't have a clue. And then people were making bad decisions.

[00:24:09.04] - Rich Veltre

And when management left, we realized how bad the decisions really were. They just didn't have a connection to the company. So here you go again. You're looking at bigger companies that instead of it being in small millions of dollars, you're probably talking billions of dollars. So it affects It's smaller companies just the same way as it does the bigger companies.

[00:24:33.29] - Dan Paulson

Oh, yeah, definitely so. Definitely so. And that's why all of us, when we look at our business and we look at changes that are either we want to make happen to our business or are happening to our business, we're taking a step back and really realizing what's going on. We're analyzing more than we're reacting. And I think it's so common for business owners when they see a change happen to just react. Now, sometimes, honestly, yes, you do have to take advantage of an opportunity and jump in right away. But that's a little bit different than, usually when we see sales leveling off or we see sales decreasing, that's when the panic sets in. So then people take drastic action, heavy discounting, dramatically changing product quality, quantity, surprising the customers with that customer service goes down. There's a number of things here that happen that we all perceive will cut costs. Well, nobody's ever cut their way to growth that I'm aware of. Usually the cutting cost is to preserve cash in the short term. Hopefully that you're then turning around and reinvesting in future growth. All too often it's that slippery slope. Once you start going down that path, it's just more and more cutting until eventually there's nothing left.

[00:25:50.14] - Dan Paulson

And now you're stuck. You got to figure out a different way to grow out of it. Yeah.

[00:25:56.05] - Rich Veltre

And I think to flip back to the other part of the conversation we were talking about, you look at that chart between Chipotle and Starbucks, right? And you start to think, okay, strategy, no strategy. Strategy is the growth. No strategy is, hey, I'm flat. I'll be here tomorrow That's it. So again, I'm not blaming any of these guys. I'm not in their shoes. I don't know what they see or what they don't see. But you would hope that if I'm looking at that chart, I see that Chipotle is the one with the strategy that, here's what we're going to do that's going to drive growth, where Starbucks didn't have that. And now maybe Starbucks will. So it'd be interesting in a year from now or so, or maybe two years from now, we'll look at the chart and maybe it'll be opposite. Maybe Chipotle will go flat, and Starbucks if it's your past then?

[00:26:47.15] - Dan Paulson

That could be. I would say both probably have a strategy, but is it a working strategy? I think Starbucks strategy, again, is tap into foreign markets because, let's face it, if you're in any fairly large size community here in the US, there's probably at least one Starbucks in your community, if not two, three, four, a dozen. I hate to say how many are in New York City.

[00:27:11.17] - Rich Veltre

I was just going to say that.

[00:27:13.18] - Dan Paulson

You can walk down a block and you probably pass three of them. So it's not like that they have a shortage of sales points to go to. And obviously, a lot of them are busy, if not all of them are busy. It's just, again, is that future growth supported by the strategy that you're implementing? And yeah, I'll be very interested to see if the CEO of Chipotle can bring in some newer technology that maybe betters the service experience or speeds up your order or whatnot. I think it's also going to be just as critical, though, that they somehow try to maintain quality while lowering that price. And that gets to be a little bit more challenging, as you know on the finance side, because usually to lower price means you have to change ingredients, or you have to change the quality of ingredients or you have to change the quality of ingredients to get to the numbers that justify you dropping an eight-hour drink, maybe get back down to six bucks. But that's still a challenge that they've got to face. Maybe, again, on the labor side, because you're two biggest, outside of real estate, your two biggest costs are your labor and your materials.

[00:28:14.29] - Dan Paulson

So you got to find something within that triad to figure out how to lower costs. Real estate is going to be the hardest one, in my opinion. Labor, more automation could potentially eliminate one or two baristas. Now you might say, well, gosh, we're not trying to eliminate jobs. But again, if you're paying that, and you're paying more, and you're paying benefits, and they're unionized, maybe that's going to be an issue that they've got to face. And then the last one is, again, quality of products. So now you got to figure out how to lower your food costs down to get back into that sweet spot, which, again, I've worked in the restaurant industry at eight dollars for a cup of coffee. I'm looking at going, your food costs should be like three %. Now they They have better ingredients than most places do when it comes to coffee. But still, it's amazing how low that should be, and how it probably is not. I looked at the restaurant industry when I was in it. If we were at 20 to 25 %, that was pretty good. We were a smaller chain, so we didn't have the economies of scale that somebody like Starbucks does.

[00:29:22.27] - Dan Paulson

But that's always going to be an issue, and it's an issue that faces every business. Materials, costs, labor, and usually equipment or real estate is your third bucket. So that's something that we all have to watch for. So let's touch on, and I don't have anything up for those, but as we wrap up here, I thought it was interesting. Jobs Market Report came out with an adjustment, and this might be a further discussion for another day. So we aren't here talking for four hours. But as As of this recording, the US has dropped their new job creation by what? 818 million? No, thousand. Thousand, excuse me, not million. That would be bad. That would be everybody. Eight18 1,000. Almost a million. That's where I get wrapped up, because most of the news always say, Almost a million employees. So they were overstating by almost a million people, which to me, also hints that maybe Maybe the economy isn't as robust as some would like it make it out to be. Now, what does that mean to us, Rich, to the small and medium-sized businesses out there? What should they be watching for with this labor report?

[00:30:43.19] - Dan Paulson

Does it make any sense?

[00:30:46.04] - Rich Veltre

I think the difference is we've been talking to people that we've done guest podcast. We've had people come in. We've talked to them, how are you feeling about what's going on in your business? And I think we all knew that the jobs reports didn't make a whole lot of sense because that's everything that they were saying is not how it felt. Right. So that old saying of trust your gut. I think everybody's really trusting their gut and looking at it and saying, there's nothing for us to look at in this jobs report because we don't believe it. It doesn't fit what we're seeing. So are we in The biggest thing is everybody's saying we're not in a recession, but now you go change the number like this. Are we in a recession? Have we been in a recession? What else happened? They try to fluff it off like, somebody made a mistake. Somebody left the zero off. But it has a major effect, because everybody's been looking at it. I think we had a conversation on tape, that we said, what is actually happening out there? And why is Why is it that it feels this way?

[00:32:00.23] - Rich Veltre

Why is it that it seems like nobody's signing on for everything? We're talking about the possibility of people don't want to go into Starbucks to buy an eight-hour, eight-dollar drink, which is shocker, because people who buy eight-dollar drinks will still find a way to buy the $8 drink.

[00:32:17.25] - Dan Paulson

Exactly.

[00:32:18.25] - Rich Veltre

But the complaint is, well, then they won't do the other things. They'll still get the $8 drink and complain about everything else. So the The worry I have is you come at me with a mistake like that, and everything that I've been telling people up to this point has been based on the numbers you gave me before. So what am I supposed to do? Go back and change? Well, remember I told you that two weeks ago? We got to change that now. I can't do that.

[00:32:50.00] - Dan Paulson

Well, yes, yes, you can, by all means.

[00:32:52.21] - Rich Veltre

I mean, to a certain extent, I have to, right?

[00:32:54.11] - Dan Paulson

I mean, I'm forced to.

[00:32:56.13] - Rich Veltre

I can't not have the conversation with a client and say, Hey, by the way, I just want to let you know that report was wrong. So everything we planned before, based on that had anything to do with the way the economy is running, we get to throw that out. But I think the only good part here is that everybody already had it in their gut. And I think most of the conversations in the past have been, that isn't how we feel. That isn't what we're seeing. So we're not going to go by that. We're not going to assume that everything is fabulous. We're We're still paying 13, 14 % cost of capital. We're still coming out of pocket for numbers that is just amazing. And we can't pull the same profits we did before. So something's got to give, and something's got to change. Those conversations won't change just because the government screwed up a number, and I won't suddenly have a different outlook. So luckily, the mistake is okay for us. It doesn't cause me an issue.

[00:33:58.16] - Dan Paulson

Well, I think And this is probably going to be a discussion for our next episode, because I believe there is a deeper discussion on inflation and the fact that, I'm not going to call it, I won't say it's greed, but it's definitely profitability. We went through a time where people weren't working, but they were getting money, and then they were turning around and spending that money. And that in turn increased the cost of a number of goods, everything from houses to cars to whatnot. And I think business leaders looked at what was going on in the marketplace, and they'd up their price by 10 %, and sales didn't slow down. They'd up it by another three %, sales still didn't slow down. And I believe we're now on the crest of that wave, where where everyone's gone to the premium route and increased their prices for maybe to cover costs, maybe it's for profits, whatever it's going to be, don't care, but you failed to look at what's really happening in the marketplace. And again, I want to talk about this more, and here's why, because I saw somebody post online that they were talking about mortgage rates for houses.

[00:35:07.11] - Dan Paulson

And they're like, well, mortgage now is anywhere between six and eight %. And they remember when they bought their first home in the early '80s and paid 18 %. I'm like, yeah, I understand that. That's accurate. But here's the part you're missing. That hasn't only gone up. Your cars are now, the average price of car is 50 grand. On top of that, your food prices, the things that you buy daily and weekly have gone up 30, 40 % in a lot of cases. I know they'll say, well, it's only been two or three %. No, when you look at what the staples are that people buy, which they don't include in the inflation report anymore, most people are spending 20 or 40 % more. So there's a huge difference when you look across the board. It's not just the home interest rates. It's everything across the board has gone up so much that it leaves little room to wiggle. I think that would be a good discussion for our next- I think that would be a great discussion, because then on top of that, throw one more line, which is the wage growth line.

[00:36:09.23] - Rich Veltre

Okay, so the wage growth line doesn't have the same increase. And on top of that, the house that they bought in the '70s is now 10 times more expensive than it was in the '70s.

[00:36:22.18] - Dan Paulson

Exactly. So there's definitely- You're not at 18 %, but you're paying it on the front loaded end because now you're paying that equity on that house That was even five years ago, was probably $200,000. It's now closer to $500,000. Great if you're selling, not so good if you're buying.

[00:36:39.17] - Rich Veltre

Right. Agreed. I think it's a great conversation for the next one.

[00:36:43.13] - Dan Paulson

Yeah, let's save that for next week. In the meantime, though, there are some things that we can do to help you. We've been hinting on this in some other podcast, but we are doing an internal audit report, assessment report. You're looking at the finances. I'm looking at the business side. We come together. I know it's getting into be strategic planning time, so that's why we're bringing it up. Maybe you need some help gathering all that data, especially with what we're talking about today, getting a head start on being proactive towards some of these issues that we know are going to pop up So you can talk to either one of us about that. It's a great product and it's flat fee, so best way to go. Rich, if they want to ask you about it, how should they contact you?

[00:37:27.10] - Rich Veltre

Best way, send me an email at rveltre@veltregroup.com.

[00:37:31.04] - Dan Paulson

Excellent. And if you need to get a hold of me, it's at danpaulsonletsgo.com. Set up an appointment, and both Rich and I will be happy to talk to you about what we can do for you and how we can help you with that report. Rich, thanks again, as always. Thank you. Vibrant, entertaining conversation, at least for the two of us. I don't know about anyone else, but we'll go with it. Sounds good. And we will be talking about inflation next week. So we're pre-empting you already. Get ready for it.

[00:37:59.17] - Rich Veltre

Awesome.

[00:38:00.22] - Dan Paulson

Right. Thanks again.