Small Businesses raise concerns over proposed vaccine mandates

Mehtab Bhogal, Forever Floral Co-CEO, joined Yahoo Finance Live to discuss vaccine mandates and why he is concerned of the impact they may have on his small business.

Video transcript

- President Biden mandating vaccines or that workers be tested at least weekly, for companies that employ hundreds or more people. So we want to talk about what this could potentially mean for some of these employers and for that, we want to bring in Mehtab Bhogal. He is a co-chief or co-CEO, excuse me, of Forever Floral.

Mehtab, it's good to see you. Your company employs just around 130 people so you're one of the companies that will be affected by the President's mandate. I know you've raised some concerns about this. What are some of your worries?

MEHTAB BHOGAL: Yeah, absolutely. I mean, ultimately in our opinion, It's really the job of the government to enforce policy. We've been very good about following CDC guidelines in general, since 2020 when they were first established. And we've endured the associated costs with that. That come along with those guidelines and enforcing them. And for us, this is just really going to be-- it kind of crosses the line in terms of what small businesses are expected to endure, as far as costs go, in an already very difficult and bumpy year.

- To makeup, are you looking for-- are you looking for funding from the government in order to enforce this? Or what would you like to see done?

MEHTAB BHOGAL: Yeah, ideally, it would be something that the government enforces outside of work, really. We're happy to-- we always comply with anything the government's wanted, including mask mandates, with a smile on our face. But I think expecting a floral producer-- and we make artificial flowers-- out of what-- expecting us to kind of set up testing, et cetera, is a bit of a leap. Especially in a warehouse or production environment.

- Have you thought about outsourcing some of this? I know you were saying in a recent article that you were quoted in, there was some concern just about your HR division being able to handle some of these tasks, that they would now be responsible for. Would hiring a third party, would that help resolve some of these issues?

MEHTAB BHOGAL: Possibly. But again, it comes back to cost. It just drives costs up unnecessarily. We'd always rather invest in our people and keep putting capital behind our people, which we've done very aggressively over the last two years. We grew from about 20 employees to where we are today at 130. So for us, putting capital back into the company, growing it as aggressively as possible, is critical. And it's just another thing that's going to slow us down.

And we've looked at a few different alternatives, but the core issue is that there's not really enough clarity yet. It reminds me of a lot of what the last administration did with suddenly tariffs that appeared out of nowhere, with very little advance notice. And we kind of see that happening again where clear guidelines aren't laid out and it's just kind of being sprung on us.

- Do you have employees back in the office? And I guess, what then are you doing? What are some of the policies that you do have in place currently to keep your workers safe because we know that's so important, obviously, especially at this time.

MEHTAB BHOGAL: Yeah, absolutely. So we have the majority of our employee base is on the production, warehousing and fulfillment side. We do have a small office there as well, as well as a remote team. But for our team on the production side, they've obviously been at the facility throughout the pandemic. Otherwise, we wouldn't be producing stuff.

With that team, we followed CDC guidelines very carefully. Everything from cleaning and hygiene best practices that the CDC had put out, alongside with following any relevant mask mandates in the county that we operate inside of.

- Mehtab, your business, you obviously, have probably, you're talking about expansion efforts. I'm sure that you have been looking to hire. More recently we've talked to a number of CEOs, a number of business leaders, about the labor shortage and the difficulty that that's presenting them over the last several months. Are you facing this, and I guess what are you doing to address this challenge?

MEHTAB BHOGAL: Yeah, absolutely. So it's been really big for us. I spoke to "Wall Street Journal" about it recently and really our strategy has been to move towards more of a Trader Joe's and Costco model, where we have fewer employees and fewer heads per dollar of revenue effectively, but we're paying everyone more and providing what I feel is better employment opportunities. As opposed to the kind of traditional Walmart model, where it's the exact opposite. So we've moved towards that. Made heavy investments in machinery, automation, et cetera, as well as technology, to kind of offset that and really work towards training our existing team more doubling down on our winners.

- We also had the supply chain disruptions. We've talked to a number of CEOs about that. Certainly, I guess the situation has improved a bit, but it is a headwind, especially heading in to the holidays? How have you navigated this?

MEHTAB BHOGAL: Yeah. The supply chain disruptions have been, I think surprising for everyone. We never saw freight-- we never expected freight to go from-- when we started before COVID, freight was maybe 3,000, 3,500 to get a container from India or China, stateside to where we are. And now we're looking at that cost really exceeding $20,000. I am seeing quotes for around $22, $25.

We're hoping it drops off after the Q4 window is over, but it doesn't really look like it will. If you look at port congestion in LA, I believe there's around 50 ships there right now. Just a few-- I think about a month ago, it was closer to 30. So it doesn't really seem to be improving. We've unfortunately, just had to bear the cost. We don't feel it's worth slowing the company down as far as growth goes. For us, our ultimate goal is always to grow the company as aggressively as possible.

- Mehtab, we got the retail sales numbers that were out this morning. Better than what the Street was expecting. You have an inside look at the strength of the consumer. What are some of the trends that you noticed? Are people spending more now than they were maybe say, at the start of the pandemic?

MEHTAB BHOGAL: Yeah. So the bulk of our sales are driven by e-commerce channels. So surprisingly, even though, despite 70% of our sales being wedding focused, we actually doubled year over year from 2019 and we've seen similar growth this year. When stimulus-- It was a little bit of an odd mix given where e-commerce focused and e-commerce saw a huge surge in growth last year. So we've seen sales really continue to spike. Haven't noticed a slowdown in our growth, really. So still quite strong.

- Mehtab Bhogal, co-CEO of Forever Floral. Thanks so much for joining us today. We wish you all the best.