Posts Tagged ‘Growth’


When Will the Next Recession Be?

9-4 recession smallThe next recession may have started on August 24, 2015 when the Chinese stock market dropped another 7% and for a total of a 40% loss from its peak. That day, U.S. stock markets followed suit and plunged 1,089 points within minutes of the start of trading. The markets slightly recovered, but are still down 12% year for 2015.

This is a troublesome indicator since many times the stock market predicts the coming of the next recession. Although as Economist Paul Samuelson retorts, "The stock market has predicted nine of the last five recessions". Even so, from March 1961 to now, the average growth period following a recession has been about five to six years. If the last recession ended June 2009, the economy is now past the six year mark and is in one of the longest periods of expansion ever. This may also mean that a new recession is about to start.

After the stock market crash, most economists publically said not to panic. A conference call that I listened to with financial advisors repeated that all signs of the U.S economy are strong. Ron Lieber at The New York Times wrote that the average investor should take a deep breath and do nothing. But for most small business owners, it’s hard to do nothing when their investment portfolio loses 10% of its value in a week. Investment savings is what many times “backs up” the owner’s confidence if their company fails.

This psychological fear creates havoc in the life of the small business owner. Their lack of confidence in the economy drives them naturally to pull back from hiring people and making new investments. Bad news reports can also make a recession a self-fulfilling prophecy.

If the next recession is coming this year, how can you prepare?

1. Grow profitably. Make sure that any sales growth has the same profitability as the rest of the business. Don’t sacrifice profitability for sales growth. This will help to ensure strong cash flow which is the bedrock of survival during any recession.

2. Preserve cash. Recession proof companies always have positive cash flow positions. Don’t let investments in the company get too far ahead of sales. Focus on reducing credit given to customers and getting them to pay on time. Keep stock levels as low as possible and inventory turns as high as practical.

3. Get a bank credit line now. Secure a line now before the company needs it.  Draw on it as low rates to ensure the business has six months' worth of cash in the bank.

4. Boost the gross margin. Ask if business can be done another way. Cockroaches thrive during disasters because they know how to adapt or die. For example, if margins had to increase by 10%, how would this be accomplished now?

5. Cut costs even if revenue is stable. Don’t be lazy. No owner ever regrets cutting costs too soon. Examine where the value does not exceed the expense.  

According to Mark Zandi, chief economist at Moody’s Analytics Inc, since 1950, the U.S. has experienced a recession at the start of every decade except the current one. He states that “If that bit of economic astrology holds, the next one will be in 2020…and I wouldn’t argue with that.”

We should only be so lucky.


Seven Steps Toward Customer-Focused Culture Change

Changing the culture at your company isn’t easy (It’s not that it’s necessarily complicated, it’s just an awful lot of work). But culture change done right can transform your company into a customer-centric and employee-embracing company. Here are seven steps that will help get you there.

  1. Make the decision.  If you don’t make the decision to drive cultural change at your company, make it loudly, proudly, and in a way that’s hard to turn back from, it’s not going to happen.
  2. Spell it out. Take a very, very few words–really, just a handful!–to say what your decision looks like. For example Mayo Clinic’s “The needs of the patient comes first.”  Seven words, none of them consultantese, only one of them longer than a syllable.  If you need more words than this, that’s OK.  The Ritz-Carlton not only has the timeless “We are ladies and gentlement serving ladies and gentlemen” but also “The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission.
  3. Start talking about the change at every orientation. If you waste orientation talking about the employee fridge and how it’s emptied out on Fridays, how to file for vacation time or sick leave and such, you’re blowing it.  Orientation is a time when employees are (ironically), disoriented, and as such it’s a crucial time to have someone at the very highest level in the organization (at the Ritz-Carlton it’s the CEO, every time a new hotel opens; at Danny Meyer’s restaurants it’s Danny Meyer) talk about what is central and immutable in the organization’s culture.  Its purpose, in other words.
  4. Overhaul your hiring and personnel practices. Every single employee, from this moment forward, needs to be hired for reasons that are congruent with your newly stated values.  This is very, very important. And as far as personnel policies, no more docking people for coming in late from the lunch break to assist a customer they found in distress.  No more ranking based on average handle time on phone calls.  And so forth.  The CEO can make the highest of high-minded values statements, but here is where the rubber hits the road, where your culture can be supported or sabotaged
  5. Standardize (in the right way). Everything that can reasonably be expected to occur between you and your customers deserves to be standardized, explaining (to your employees) both what to do and the reason behind the suggested behavior (so that they can deviate from it when the situation calls for a different approach)
  6. Commit yourself to employee empowerment, including employee-directed job design. Jobs should not by default be considered activities that are done by employees but designed by their so-called superiors.  While, of course, to some extent this has to be true, especially in life-threatening situations–your employee can lead an evacuation down a fire escape but can't necessarily design standards for what is an acceptable or unacceptable level of smoke inhalation–it's important to simultaneously push against it, to let your employees know what they need to get done but not necessarily how they should go about designing their day and carrying out their duties.
  7. Keep the momentum going. Ongoing reinforcement is crucial.  Consider how the Ritz-Carlton has maintained its culture for decades, even in the face of leadership changes and some very challenging economic times.  The centerpiece is daily lineup approach:  a few minutes every day discussing just one of your list of cultural values or service standards, with the meeting led by a different employee every time. The result, added up over a year or years, is a lot of reinforcement. And it makes every single one of those days of that year or years better on its own.

Four Ways to Apply Brainstorming to Your Small Business Meetings

To avoid idea freeze, small businesses need to take advantage of the brain power of every person connected with a product or project. If you have experience or knowledge of brainstorming, you already know that the techniques can be a great way to solve problems and generate new ideas … if you can get past a few downsides.

Good news: whether you need ideas from your employees, your vendors or your clients, brainstorming sessions do not have to require excessive and costly time commitments to develop workable solutions for your business issues. The following four techniques can help you use group-think to efficiently generate ideas and solutions.

1. Prepare in Advance to Keep Meetings from Becoming Overnighters

The cardinal rule of brainstorming sessions is that there are no bad ideas. But, there is no rule that says that you have to use meeting time to develop your initial idea list. Loran Nordgren, a professor at Northwestern University's Kellogg School of Management, has a practical approach that saves valuable time. When issuing invitations for the meeting, ask participants to propose their ideas in advance.

A prepared idea list instantly eliminates the most time-consuming portion of the meeting. Once participants settle in with their coffee and sweet rolls, they are ready to assess the merits of each idea and build solutions that make sense.

For the record, Nordgren offers an app to help brainstorm participants decouple the idea-generation phase from the evaluation phase. While he stresses that the app can be helpful, he maintains that it is not absolutely necessary.

2. At the Onset, Separate the Wheat from the Chaff

Even if there are no bad ideas, there are impractical ones, so don't get into any serious discussions before you apply a clear set of objective criteria to the list. You can quickly reduce the list by eliminating the unworkable ones. If you know up-front that an idea is too expensive, takes too long or requires resources that you don't have, then you probably don't need to discuss it further.

But, keep in mind that brainstorming sessions can reveal surprising solutions. For example, five people in the meeting might agree that you would have to hire three new employees to assemble a proposed new product. The sixth person, on the other hand, might know how the existing team can do it with minor modifications to the process. This kind of thinking is what brainstorming is all about.

3. Leave Power Trips at the Door

As a small business owner, you may be both co-worker and boss. And, if your brainstorming session involves outside participants — such as vendors or even clients — you might have several bosses in the room. Other participants sometimes remain silent when their ideas conflict with those of the power players.

Highly-ranked meeting participants need to leave all arrogance at the door — and actively encourage conflicting opinions and ideas. Of course, this is not as simple as it sounds. You probably know the attitudes of all of your invitees. If you believe an attendee cannot take an objective look at the ideas of others, it may be best to have them invite a knowledgeable representative who can better embrace the spirit of brainstorming.

4. Avoid Meeting Domination

Even if everyone in the meeting is at the same level, some people are more vocal than others. They instantly have more to say about any topic and they often interrupt when others attempt to voice their thoughts. Clearly, the facilitator needs to gain control over these situations, but it is vital to understand that the outspoken participants are no more at fault than the reserved ones.

This is not the time to reprimand rude behavior or teach conversational courtesy, but you don't want to revert to school days by putting the quiet individuals on the spot ("What do you think, Tommy?). Naturally, the personality profiles of the individuals at the table will drive how you handle any given situation. A great option is to use an extrovert's monologue to solicit other opinions (“George made some great points. Let's spend some time discussing them.").

Rules and Creativity Go Hand-in-Hand

It may seem counterintuitive to equate any form of structure with a free-flow of creativity, but without structure, creativity cannot exist. A brainstorming session based on a few logical rules provides the direction necessary to unleash meaningful ideas.


6 Ways to Fix What’s Broken in Your Business

When you’ve been in business a while, it’s sometimes easier to bury your head in the sand than to deal with the issues at hand. You’re not doing your business any favors, however.  Look at these 6 scenarios, see what you can relate to, and take action to make positive changes for your company.  These are 6 ways to fix what’s broken in your business.

8-26 broken business small1. You Have Staffing Issues

One situation is that you’re a solopreneur and need help, but you can’t quite afford to hire a full-time employee. In this case, consider hiring a freelancer (great for design or marketing help), an intern (though you’ll have to do some hand-holding), or a part-time employee to fill the need. Consider hiremymom.com, to find a great stay-at-home mom great to get back into the workforce.

If your problem is more with the staff you have (especially true for those of you who hire teenagers), it’s time to firm up your discipline. Create an employee handbook to ensure that everyone knows what’s expected of them. If they’re unwilling to follow the rules, tell them to hit the road.

2. Cash Flow is a Problem

If you are biting your nails until your clients pay you so you can pay your team or your vendors, you have a cash flow problem. Sometimes, clients pay late, but you need to make sure you have a contingency plan. Here are a few strategies.

First, you can enforce either a late fee or offer an early discount for your invoices. The idea is that those late paying clients will be motivated — either to save money by paying early or to pay on time to avoid a late payment fee. Another idea is to take out a line of credit so that you can access cash when you need it, then pay it back when you get paid.

3. You Don’t Have Time to Market Your Business

You’re too busy dealing with those staffing and cash flow issues to hop on social media and update your profiles or write any new blog content. With only a trickle of customers coming through your door, marketing should be a priority.  Consider hiring a consultant or freelancer to take over some of your marketing efforts. You can pay a flat monthly rate or per article, and it may be more affordable than you’d imagine to hire a professional. The important thing is to get those customers coming back in, and then that expense won’t even matter.

4. You Haven’t Put Money Back into Your Business

As soon as you’ve paid everyone, you take out your cut. But your computer is on its last leg, you need to reorder inventory, and your business insurance is pats due. You feel like there’s just not enough money to go around. While paying yourself is critical, it’s just as important to reinvest in your business. Set aside a percentage of your profits — say, 20% — so that when you need to buy a computer or software, you’ve got the funds.

5. Your Yelp Reviews are Going Downhill

It started with a nasty review on Yelp months ago that you ignored, and now it’s snowballed. It seems like every other review is negative, and you don’t know what to do about it. It’s hurting your business. First, take action. Ignoring a bad review is like bleeding in shark-infested waters. Even if things aren’t so bad at your business, potential customers will move on after reading the negative review. But examine the complaints in those reviews. They might give you the opportunity to straighten up an attitudinal employee or polish your product.

6. You’re a Workaholic

If you’re working on the weekends, every weekend, please stop. I get it; sometimes you just need more time to get things done. But remember that you need downtime in the evenings and on weekends to recharge your battery. Otherwise you will burn out and eventually hate your business.  If you must work after hours, set a timer so you don’t end up eating an entire day that you should have been spending with your family. Set rules for yourself so you don’t check your email when you should be doing something more relaxing.


Starting Small: Why It Might Be Your Best Bet for Business Success

8-19 business growth smallWhile you may have a large-scale idea for a new business, sometimes it’s better to take just a small segment of your plan and focus on starting your business on a small level. If this is your first business, you may want to target an endeavor that will help you build skills without wiping out your nest egg. A business that can succeed on a small level gives you great training wheels for building the experience, knowledge, and competency you’ll need to take your company to the next level. Here are several reasons why it might be your best bet  to start small for business success.

1. You’ll Save Money

Starting with a narrow scope of business means you can run it out of your extra bedroom or den. You won’t have to rent office space or furnish a suite. There are even tax incentives or deductions you can take to save money as you build your business on the small side. If you do need specialized space for your endeavor, you can investigate subleasing space from other entrepreneurs, which reduces costs.

2. You’ll Need Less Capital to Get Started

Bootstrapping is an effective strategy that allows you to grow into your business and keep initial financial outlays on the low end. Instead of stressing over technology requirements and phone systems, you can concentrate on creating your sales funnel or refining your product. The fancy phone system can come later (if at all). A lean business structure keeps you flexible and focused.

3. Learn as You Go

When you base your business on a hobby, you can start by making a handful of products, selling them, then growing when you’re ready. As your business takes off, you can educate yourself in other areas of running a business, creating a formal business structure, managing employees, and meeting regulatory requirements.

4. You Can Start Today

If you set your sights on a small enterprise, the barriers are lower and you can get going more quickly. You don’t need a huge infrastructure, massive staff, or complete line of products to get started. You have no excuse for not starting your business today.

5. Your Sweat Equity is Valuable

By doing everything yourself, you learn all that's needed to keep your company going. Of course, it’s great to hire out those things that you are not able to do, but if you have direct knowhow those experiences inform your executive decisions down the road. It will also help you make better decisions that impact your customers. While financial investment is necessary to building a business, your sweat equity is just as necessary to growing your endeavor. 

6. It’s Simpler to Run

Smaller companies are lean machines and often have higher profit margins because they are simpler to run. There are fewer costs associated with overhead and administrative requirements with a small-scale business, and you can reassess market changes frequently and pivot when necessary. When big jobs come through, you can team with other small companies or hire contractors to deal with the workflow if it’s more than you can handle.

Slow and steady wins the race. Start small. Test the market. Grow with intention. Sample the cheese before you bet the farm on your idea. When it comes to small business success, the truth is: scaled-down, slower growth companies do just as well as their big sisters.


6 Customer Service Trends You Need to Know About

A lot has changed in the business world since 2007, but perhaps what’s changed the most is how rapidly customer service expectations have risen. As customers evolve, your customer service has to keep pace. Just how are customers’ expectations changing? Customer2020, a new study from Accenture, has some insights every business owner should know about.

  1. They want it now. Accenture dubs today’s consumer the “Nonstop Customer”—which should give you a clue as to what type of service they expect. Customers don’t just want rapid resolution and minimal hassle—they expect it. If your business doesn’t deliver, they’ll move on to your competitor. Slightly more than half of consumers polled say they have become more impatient with the buying process since last year; two-thirds say they turn to online channels for customer service because they’re seeking speed and convenience.
  2. They have more options. Not only are consumers today more impatient, but they also have more places to go if they’re not happy with your customer service. Two-thirds report that the number of companies or brands they consider when making a purchase has increased significantly compared to 10 years ago.
  3. They care about what others have to say. Word-of-mouth has always been important to growing a business—but never more so than today. Last year, Accenture reported that 78 percent of consumers used at least one online channel when prospecting. Today, 88 percent do, which means they have many more opportunities to hear good (or bad) things about your customer service. More than half of respondents say they rely “much more” on other people’s experiences or reviews when making a purchase decision than they did 10 years ago. If bad word-of-mouth about your service spreads, either offline or online, you’ve got to turn it around.
  4. They’re itching to switch. Consumer loyalty isn’t quite a thing of the past, but it’s definitely become much harder to come by. Two-thirds of respondents say they have switched providers in at least one industry as a result of poor customer service. Six in 10 say they are more likely to switch providers now than they were 10 years ago.
  5. They want you to fix it the first time. Of those respondents who switched providers because of poor service, over 80 percent say the original company could have kept their business if their issue had been resolved the first time they contacted the company about it. In fact, first-contact resolution has been consumers’ number-one source of frustration for the past five years of the study—which suggests that companies aren’t getting much better at it.
  6. They still like human contact. While some consumers have “gone digital,” seeking to interact with customer service via online channels at every opportunity, many others of all ages still prefer traditional channels for resolving issues. To keep everyone happy (isn’t that the whole point of customer service?), your best bet is to provide a wide variety of ways for customers to resolve service problems.

By incorporating these six trends into your customer service systems, you’ll be able to step ahead of the pack and provide the kind of service today’s customers expect. 


Is a Cloud-Based Phone System Right for You?

Many businesses are beginning to realize that in addition to the economic advantages, cloud-based phone systems are more powerful than traditional phone lines. Cloud-based phone systems, often called VoIP, leverage broadband Internet connections instead of the standard phone line. The technology transforms voice singals in to a digital form that can travel over the Internet, which enables a low-cost but powerful way to make and receive phone calls from a variety of devices. Is a cloud-based phone system right for your business? Read through the infographic below to learn more about the business advantages of cloud-based communications solutions. 

Cloud-Based Phone System Infographic


To Win the Hearts of Today’s Consumer, Stand for Something and Mean It

A business that wants to win the hearts of today’s consumers benefits from standing for something and meaning it.  “Meaning it” is key: Customers are always on the lookout for corporate hypocrisy. One test for gauging an organization’s trustworthiness is whether it engages in greenwashing, the practice of merely paying lip service to environmental issues. Greenwashing is considered bad enough on its own, but customers also feel it likely to indicate hypocrisy at the company concerning other ethical issues as well. These knocks include the more general phenomenon called “causewashing,” where companies put up a façade of sympathetic labor practices, community involvement, ethical dealings with vendors, humane treatment of animals and more. One millennial I interviewed told me, “People my age are especially attuned to and adept at figuring out if a company is being pro-people or pro-environment in its marketing, and anti-peopleor anti-environment in its actions.”

With social media ubiquitous and “inside information” a Google search away, an organization can’t hope to hide its hypocrisy for long. A causewashing company, or any company that appears to differ between its words and its deeds, can find itself flayed online before it knows what happened. When Lululemon showed reluctance to take responsibility for a see-through yoga-pants debacle, it turned off customers, who had previously considered the company a paragon of New Age virtue, to the tune of a massive drop in share price. You’d do better as a company to emulate Starbucks and strive for honest marketing practices, walking the talk of your corporate philosophy. The coffee giant spends more than it needs to spend on coffee beans to buy only the most ethically sourced beans. It also famously shells out (heh) more on employee compensation by insisting on giving health insurance to every part-time worker, not just to the company’s full-timers

Transparency is a corporate attribute that today’s customers particularly value. And transparency is inherently an attribute that a business can’t superficially slap atop its brand. “I look for total transparency in a company I buy from—or, for that matter, work for,” says Adriana Dunn, a customer behavior and marketing expert and a youthful consumer herself. “I want to know what’s behind the brand.” Two brands that Dunn singled out for making transparency a cornerstone of their business practices are Everlane and Honest by. Everlane offers designer goods with transparent pricing and sourcing: Vendor practices, markup, and materials and production processes are laid out online for all to see. Honest by sells luxury brands with complete sourcing transparency. Its openness corresponds to its lengthy ethical statement, so lengthy in fact that I'm not going to strain your eyesight reprinting it here.

This phenomenon is significant, and extends to all demographics.   Three years ago, a study of consumer habits confirmed that shoppers are becoming “more deliberate and purposeful” in their purchasing decisions, and another study showed that 87% of consumers in the United States believe that companies should value the interests of society at least as much as strict business interests.  Today, with the rise of millennials (born circa 1980-2000) as customers, this commitment to values-based purchasing is becoming more pronounced than ever.  So getting ahead of the curve is key. 


Creating a Spinoff Product Business From Your Service Business

Service providers deal in the commodity of knowledge. Your lawyer knows the intricacies of small business law. Your marketing consultant is well-versed in content marketing and social media. Your accountant knows how to minimize the hurt come tax time. All of them get paid for a transfer and application of their knowledge. But sometimes there’s an opportunity beyond providing services to create a complementary product business.

For me, as SmallBizLady, I get paid to work one-on-one with small businesses who need guidance and consultation. They pay for my knowledge and experience. But not everyone in my network can afford to hire me for a consultation. And that’s why I also offer information products at a much lower price point. People with tiny budgets can still afford to learn to be social media ninjas or become their own bosses through my books, mastermind groups and ecourses.

Catering to Two Markets: More Money for You

If you’re in a services industry, there are only so many people you can serve, especially if your prices are high. But what if you could also connect with another market, one who wants to read what you’ve learned and use it themselves to DIY whatever you’re teaching them?

What I love about having a product business is that once it’s created, I don’t have to worry about it. My products sell through my website and Amazon, and I don’t have to do anything to fulfill orders because they’re all digital products. So I’m making money on top of making money! Sound good to you?

Consider Who You’re Not Serving Currently

If you’re ready to spin off a new products business, start by considering who calls you but doesn’t end up becoming a client. What are they looking for? You’ll likely find several topics for ebooks, webinars, and courses immediately.

Do you attract a crowd of do-it-yourselfers? How can you share your knowledge to empower them to take care of specific tasks on their own? The more hands-on and detailed your instructions, the more successful your products will be.

See What’s Already Out There

You know what they say about not reinventing the wheel. Look at your competitors and see if they sell products, then figure out how you can fill a gap that isn’t currently served. Maybe you gear your content to a specific industry that you know is interested, or provide samples and templates that don’t already exist to help people.

Price Accordingly

Coming up with the perfect price point is always a challenge. You don’t want to alienate people who can’t afford your products, and you don’t want to charge so little that you don’t recuperate your expenses. Again, do some research to see what others charge and base yours on what you think you can get.

Where to Sell

Naturally, if you sell your products on your own website, you’ll get 100% of the profit, but setting up your site for ecommerce can take time and money. A quick solution is to sell on Amazon or on a digital products site like Gumroad. Yes, they’ll take a commission, but the traffic is so much better on these sites than your own, that you’ll likely make up for that chunk taken out in volume.

Adding a product business to your existing service business is the perfect balance: you provide in-real-time consulting, but you also make money while you sleep.




 
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