Category Archives: Business Trends

October 7, 2014

What Do Small Business Owners Fear the Most?

Small Business Fears

Wondering what keeps small business owners up at night? Conventional wisdom aside, things like recent government legislation, time management, and Internet marketing are all important concerns, but they’re not giving the majority of small business owners the jitters. The following eight things are the real ghosts and goblins of running a small business. How many can you identify with?

Getting and keeping customers

If few people or businesses come to buy your products or services, you won’t be in business very long. On the other hand, if you are constantly bending over backwards to please the customers you already have in the fear that they’ll defect to another company, you can easily exhaust vital energy and resources, hinder growth, and have little to show for it. Instead, focus on targeting your ideal, best paying customers and on building your brand with quality products and services.

Weak sales

Following on the heels of the point above, a sales slowdown can bring a good business to a screeching halt. Part of what makes poor sales so scary is that it can come from a number of unexpected occurrences, such as an economic downturn, bad weather, a natural disaster, or a sudden shift in consumer trends. The best way to cope with this fear is to have an “emergency” plan in place for dealing for the most likely scenarios. Depending on your business, this could include setting up an emergency fund and having multiple sources of income.

Not having access to credit or capital

Even if you belong to the bootstrapping camp, to sustain healthy business operations and growth, you will likely need access to some kind of outside credit or capital along the way. You don’t want to pass up on an opportunity to buy inventory in bulk at a great discount, or be unable to cover a sudden cash short fall, or put off buying the equipment, hiring the workers, or making the renovations that will increase your sales. While getting access to financing through traditional means, such as via your local bank, is extremely hard for small business owners these days, there are other alternative financing options out there, such as business cash advances, invoice factoring, micro loans, and even peer-to-peer lending. Just make sure you do some research before settling on the product that makes the most sense for your business.

Not being able to pay the bills

Many small business owners are so focused on increasing sales and ultimately their bottom line, that they don’t pay enough attention to their cash flow. This can cause a lot of operational issues, not to mention a huge load of stress and anxiety for the small business owner. The most important thing that small business owners can do is to create and monitor a weekly or monthly cash flow statement. Most accounting programs will do this automatically. Even business owners who are relying on Excel to keep track of transactions, can download a simple cash flow statement template. They are many kinds available online for free.

Loosing key employees

A small business’ employees can often be one of its biggest assets. After all, think about all the time, energy, and money that goes into recruiting, hiring, and training these people, not to mention compensating them for their work. One of the biggest fears that small business owners have is loosing their key employees to their competitors- especially those that have the size and the resources to offer better compensation and more opportunities for education and advancement. While this is certainly a real concern for many small businesses, business owners should focus on the positives that they offer aside from compensation, such as their unique work environment, more intimate setting, and perhaps the ability of employees to have more of an impact on business decision making than they would in a bigger business.

Not keeping up with the competition

Many businesses these days are being overwhelmed by their competition- whether their competitors are big brands that can slash prices and conduct flashy and pervasive marketing campaigns, or they are small, scrappy companies with a knack for drawing market attention. Add to this the reality that the Internet and the technology that supports it all is rapidly evolving, and businesses are having to deal with an increasingly impatient and demanding customer-base. It’s little wonder why many small business owners are in constant fear of loosing their customers to their competitors. The real solution to this starts with properly defining your ideal customer, developing your brand so that it highlights your company’s strengths and your customers’ needs, and then figuring out the most effective places and ways to reach these people. In other words, getting back to the basics of running a successful business.

Not being able to retire

Though many small business owners enjoy what they are doing and aren’t necessarily thinking of retirement, nevertheless, nearly two-thirds of small business owners fear outliving the money they need to retire, according to a poll from the Guardian Life Small Business Research Institute. But it’s more than that. Many business owners may not have a clear succession or sales plan for the business when it comes time for them to leave. It’s for this reason that even new small business owners should hash out a strategy for both retirement savings and for passing on the business to others.

The fear of failure

Every single person on the planet has failed at some point or other, yet the fear of failure can be one of the most debilitating sources of anxiety for small business owners. When a business owner hits a road block in the business, the worst thing he or she can do is to spend too much time on what went wrong without spending valuable time analyzing what went right and what was gained from the experience. Small business owners should also make sure they’ve got a strong support group to help them through the down times. Plus, taking care of physical needs such as proper diet, exercise, and sleep, can significantly affect both mood and performance.

So, where do you fit in this list? Are you dealing with other fears not listed here? How are you coping? Let us know in the comments below.

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Why Are Small Businesses Struggling With Hiring?

While so many Americans are still struggling to find sufficient employment, it seems small businesses are having a particularly hard time filling their available positions.

interview-861513-mIn a recent survey conducted by Robert Half, 60 percent of small business owners responded that their biggest challenge in hiring or managing staff is finding qualified workers to do the job. This response came out way ahead of the next biggest concern, maintaining employee morale and productivity, which received only 19 percent of the responses.

These findings mirror the results of a Wells Fargo Gallup Poll conducted earlier this year. The poll indicated that 53 percent of small business owners were finding it very (23 percent) or somewhat difficult (30 percent) to get the qualified employees they need, and 27 percent responded that the difficulty in hiring qualified employees has hurt their business over the past 12 months.

On the surface, this all seems counter-intuitive. But this trend is likely due to two reasons:

1. The majority of small businesses are relying on out-of-date recruiting and hiring processes. According to the Gallup poll, a mere 15% of small businesses are using the Internet to recruit new hires. The two biggest ways smaller companies are finding talent are via word of mouth (63%) and employee referrals (47%). Depending on the nature of the business, this can seriously limit the pool of potential hires.

Why are small businesses reluctant to use popular online recruiting platforms such as LinkedIn? It could be many have tried it, but were unsuccessful, and those yet to stick their toes in the water are probably overwhelmed by it all. This is a problem because today’s workforce relies on the Internet heavily for many things, including finding a job.

2. There has been a shift in workforce attitude. The fallout from our chronically under-performing economy is that people’s priorities have changed when it comes to what they are looking for in an employment situation. Numerous surveys point to the fact that today’s workforce is primarily concerned with their career advancement. It’s a trend that many small businesses may not have caught on to. Small businesses also have fewer resources than their bigger competitors to offer a desirable benefits package, such as health care benefits and retirement plans.

The bottom line here is that small businesses need to be aware of the changes that are happening among today’s workers if they really want to put all their struggle in hiring behind them.

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E-commerce: The New Royalty of Retail

ecommerce-150x150Online transactions are the preferred shopping method of today as this generation spends most of its time online. The prevalence of smart phones has only increased this phenomenon. In the past few years mobile payment services have become a norm increasing the already high volume of online sales. FastPivot Ecommerce states that online purchases from mobile devices increased from 2% to 8% within a two year period. According to statisticbrain.com, there is a steady, annual increase in online sales with time saving as the number one reason consumers choose to shop online. 83% of internet users have purchased one or more items online in 2012! So how can you cash in?

Having an online store you will guarantee that you reach a much wider and varied clientele. A recent survey by Lab42 Market Research revealed that:

  • 73% of online shoppers do at least half of their shopping online.
  • 66% prefer online shopping to store shopping.
  • 4 out of 5 online shoppers feel they have access to a broader selection of items online.
  • 45% of shoppers bought items online that they would not have bought in person.

If you have competitors (who doesn’t?), odds are that they already have an online presence. If you find them on Google your potential customers can find them as well. Make sure that your business turns up and stands out online. It’s relatively easy, inexpensive and quick to set up a basic fully functioning e-commerce site. The top e-commerce software packages come with all the features you need to set up an online store with a mobile version to boot and various options to help spread your online presence with social media. So if you are technically proficient, you can probably set up an e-commerce site on your own. If not, you will probably need a web developer to get your online store up and running.

What do you need?

A domain & Hosting Plan
The domain name should be as similar to your store as possible. Domains usually cost between $10 and $15 a year and can be purchased from several online registrars. Hosting plans generally cost between $4 and $6 a month. There are hundreds of hosting companies. Choose one with good customer service and you’re in good hands.

Shopping Cart Software
There are dozens of free shopping cart software packages. The packages that are most commonly used have the most features, better online assistance and helpful user forums. Magento, OS Commerce and Open Cart are just a few examples of widely used e-commerce platforms. E-commerce platforms also have a built-in option to hook up to various payment gateways. Most small businesses start off with PayPal as it is the simplest and safest payment method. Once your site reaches a high rate of sales you might want to consider other payment options such as direct credit card payments.

Images

Once your system is ready, you will need to insert images of all your products – with a digital camera or smartphone this should be a breeze.

 

Content is King
You want potential customers to find you by searching online for products that you can provide them with. Search engines like websites with compelling and relevant content so it is well worth your time to write good descriptions of your store and your products. The content you write must be authentic and not copied from a similar website. In order to stay on top of search engines, your website has to constantly be updated with new content. The best practice for writing about your store items is to use a short yet catchy headline in order to capture the attention of the reader. After that, use a professional yet conversational tone to further describe your product using as many key words as possible. There are professional content writers and bloggers who can be hired to perform this task. As we mentioned in the first section, online shoppers often end up buying products they hadn’t intended on. Good content and exciting images are the best way to draw shoppers to new and unexpected products.

Social media
Once you have customers, they can help promote you by liking a Facebook page dedicated to your store and by clicking on share, tweet and other share buttons that you can easily display on your site. Your Facebook page can contain coupons and information on new products that will encourage customers to visit and revisit your site.

In this day and age e-commerce sites are a must, especially for small businesses. As long as you put together a quality, customer friendly site you are guaranteeing an additional source of monthly income. If you already have a site, make sure to keep it up to date and interesting as well as offering the same kinds of promotions you would in your brick and mortar site.

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Small Business Owners Still Fumbling Online

According to research by SMB Digital Scape, the majority of small business owners are still fumbling when it comes to their online presence, and we’re not just talking about maintaining social media accounts. Many small business websites are missing the basics. It seems that though many businesses have an online presence, they still aren’t investing enough time, money, nor attention to optimizing it, and this is likely costing them a lot of business.

Here is a rundown of the most telling omissions:

  • 78% of small business websites do not provide an email address on their homepage. Even if the business technically has a contact email account, visitors to the site have to search to find it.
  • 90% do not provide either a map or directions on their homepage. Interested customers either have to search for the information elsewhere on the site, or they have to make the effort to access a third party service, such as Google Maps, where they can be exposed to local competing businesses.
  • 94.5% of websites provide no means of conducting a transaction online. There is no way to make and pay for an order. This can turn away people who would otherwise do business online.
  • 76% of websites do not have a privacy policy. Visitors to these sites have no way of knowing what data is being collected from them and how that data is being used.
  • 98% of small commercial websites have no spam protection. There are no captcha fields included in the site’s web forms.
  • 92% of websites do not have a blog. This means there is very little new content being uploaded on to the site. This can affect how the site gets ranked in the search engines.
  • 98% of websites are not optimized for the mobile web. This fact alone can be cutting off many potential customers. According to a recent study by the Pew Research Center, 35% of American adults own a smartphone and 44% of them use their phones to serf the web.
  • 74% have no location in their meta-title. Putting location data into a website’s meta-title improves website visibility among potential customers looking for locally based businesses.

 

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Concerning Health Care Costs: It’s Up Up and Away

Many small business owners these days have been smarting from a health care headache as they try to offset the rising cost of care in the midst of a sluggish economy that has eaten away at profit margins and stymied growth. Now, a recent study conducted by PwC Health Research Institute suggests that the headache may be developing into a persistent migraine. According to the study, medical costs are expected to increase 8.5% in 2012, up from a hefty 8% recorded in 2011.

 

The researchers named three factors that are likely to contribute to the trend in medical cost increases:

1. More consolidation in the health care industry means less competition and higher costs. As smaller health care providers are either absorbed into bigger health care entities or are forced out of the market, that means fewer choices for consumers and small business owners alike. With less competition, health care providers have more room to raise prices when and where they want.

2. With more people on Medicare and Medicaid coupled with payment reductions, hospitals and health centers must foot the bill. According to the report, patients who receive care backed by a private insurer compensate hospitals above the actual cost of care (on average 134%), while the Medicare and Medicaid reimbursement is below actual cost (approximately 90% of the total actual cost). As more people join the ranks Medicare and Medicaid patients and their expected contributions to these programs decline (thanks in part to the recently approved health care reform act), hospitals are shouldering more of the cost. This added burden will be passed on the those with private plans.

3. With more stress, more problems… As the number of Americans fighting depression, anxiety, and stress increases in response to the recessionary fallout, stress-related health conditions have been on the rise. This trend is coming at a time when many have put off seeking care in an effort to keep health care costs to a minimum. Both factors will no doubt increase the demand for costly health procedures and claims in general and thus raise the cost of health care across the board as insurance companies and hospitals try to reclaim some of their “loss.”

Aspirin anyone?

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Why Co-Working Communities are Good for Small Businesses

One of the positive fallouts of the recent economic crisis has been the insurgence of entrepreneurism among those who would have otherwise worked for others. Along side this trend has been the emergence of a new phenomenon called “co-working.” For those who are unfamiliar with the term, co-working refers to an arrangement where budding entrepreneurs and current small business owners share a common workplace in exchange for a monthly fee.

 

 

What are the benefits of co-working for entrepreneurs? According to co-working small businessmen, the advantages are many. Here are several benefits to consider:

 

  • Save on overhead expenses. Co-working members pay a monthly membership fee and work in a communal office space. The deal includes the work space as well as all the equipment required to run a business- from wireless Internet and faxes, to conference rooms. Savings on rent and other overhead costs are significant.

 

  • Collaboration and partnerships. Many small business owners are forced to spend a lot of time on areas in their business that may not be their expertise, such as web site development or marketing. The co-working community is often based on the principle of barter. So, for example, an accountant may cooperate with marketers who are able to promote his services, while the former will handle the marketer’s accounts. This kind of interaction provides fertile ground for partnerships and greater chances of success for all the parties involved.

 

  • Mutual feedback. Bouncing ideas off other people and brainstorming are highly effective ways to develop in new directions. Even if only part of the community is active in your particular field, you still stand to benefit and you can pick up new ideas and areas for development. You can even create a unique business agreement in which each party chooses to deal with a different side of a particular business.

 

  • Business/Home Separation – Many businessmen who work from their home find that the business encroaches on their private lives. Often, no line is drawn between business life and home life. By joining a co-working community you can get your private life back and put your work where it belongs – at the office.

 

Co-working communities are rapidly gaining in popularity mainly due to the empowerment they offer each individual member. At a time of financial uncertainty, few businesses can afford to turn their backs on this kind of stability.

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A Key to Small Business Longevity? Find a Niche!

It’s well known that small retail businesses often struggle against their big corporate competitors. And with the rise of Internet-based retail, the economies of scale are tipping even more in favor of the mega firms that have the resources to invest and can offer a wide range of merchandise at cut-rate prices. But a new study by economists at the University of Chicago offers small business owners a ray of hope. It suggests that by providing niche goods or services, the smallest of businesses can not only survive, but thrive.

 

“E-Commerce and the Market Structure of Retail Industries” (Economic Journal, June 2010) examines how the marketplace has changed due to the internet. The researchers reviewed three aspects of commerce: prices, industry structure, and jobs.

As expected, all three arenas have changed in ways that support large firms. Customers who are savvy about price comparisons have caused retailers to drop prices in order to compete. Large firms have increased their numbers, while numerous small ones have seen their doors shut. Accordingly, employment rates have dropped within industries that gravitated toward online sales.

Fortunately, these changes do not spell doom for all small businesses. The study also found that informed consumers turn to retailers who best cater to their needs. By offering specialized or high quality goods and services and by focusing on good old fashioned customer service, small businesses can gain and hold on to a loyal customer-base.

E-commerce may squeeze out some small businesses, but it also offers unprecedented opportunity to create a niche and reach potential customers.

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A Look at How Retailers Can Weather the Recession

According to recent research, retail sales have fallen over the last month even as the back-to-school shopping season gets into high gear, and industry forecasters claim that this does not bode well for the upcoming holiday season either.

 


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So the looming question for retailers big and small continues to be how to maintain or even increase sales in such a dismal economic environment.

A month ago I posted this article that briefly examined how some restauranteurs were managing to succeed despite the weak economy. In a similar vein, although the retail industry as a whole is suffering, there are several hot pockets of consumer spending that continue to draw brisk sales. A few big discount retailers, such as Wal-mart, have been able to capitalize on these trends and are focusing on several strategies to keep these consumer dollars rolling in.

Though small retailers may be more limited in their scope then the big discount chains, by studying their strategies, there are several valuable lessons that small businesses can learn and implement. Perhaps the most important of these strategies is that retailers are paying close attention to shifts in consumer attitudes and behavior and then adapting to them.

Here is a brief look at what some of the successful retailers are specifically doing:

1. Focusing on value. Today’s consumers are tech-savvy, bargain hunters looking for the best bang- i.e. value- for their buck. Retailers are concentrating their inventory on what people still need to buy, and then providing it at a low-cost or with some other added value, such as extensive customer support.

2. Promoting a unique brand. It has become increasingly important over the past two years for retailers to differentiate themselves and/or their products and services from those of their competitors.

3. Using aggressive, low-cost marketing tactics. The role that the Internet is playing in consumer decision-making and spending has not been overlooked by retailers, and it is all the more attractive given its low cost. Successful online marketing campaigns include: sending out emails, maintaining a website, offering online coupons, and registering with online directories and Point of Interest databases.

4. Offering promotions. The goal of a successful promotion is to get customers in the door where they will either spend money on other items or services or they will remember the experience and be more likely to frequent the business later on. Some promotion ideas include hosting or promoting events, offering a themed sale, or providing free products or services.

5. Focusing on customer convenience. Retailers are paying attention to how customers are choosing to make their purchases and then building up these areas. Are customers, for example, using cash as opposed to credit or shopping online as opposed to physically showing up at a brick and mortar location?

6. Initiating cost-cutting tactics and tight inventory management. Even the most profitable retailers out there these days are paying close attention to wasteful or redundant spending and are making sure that capital is not being tied up in unnecessary inventory supplies.

7. Forming partnerships. Some stores are forming partnerships with each other, whether banding together to pool resources or reduce overhead costs or offering discounts to each other’s customers.

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July 1, 2009

Which Industries are Thriving in the 2007-2009 Recession?

There is a lot of difficult news out there these days. With all the talk about pension cuts, pay freezes, layoffs, bankruptcies, and government bailouts, the fact that some industries are not only surviving the recession, but thriving in it, may seem hard to believe. But the truth is that in the midst of all the economic turmoil, there are industries that are prospering. Some of these businesses are typical recession-busters, others are particular to the current recession.

1. Sweet Treats

When the going gets tough, the sweet tooth gets going. Inexpensive candies, snacks, and treats become the comfort of many as people try to deal with hard times. In addition to a number of candy manufacturers and distributors around the country reporting a significant increase in sales, Nestle and Cadbury have both reported profits. Ice cream sales are also up among independent parlors as well as name brands, such as Häagen-Dazs and Ben and Jerry’s.

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2. Entertainment

Hollywood is profiting from the recession enjoying one of its biggest years ever in box office sales to the tune of $10 billion. The video gaming industry is also are experiencing a surge in demand. Most notably, in the first week of sales Grand Theft Auto IV, produced by Rockstar Entertainment raked in some $500 million.

 3. Technology

This one seems a bit counter-intuitive at first. As the recession drags on, one would expect the sales of consumer electronics to drop across the board. While there has been a slowdown in some areas, several companies are reporting a surge in sales. Sales of Apple’s iPhone 3GS out-performed analyst expectations by as much as 50%. Sales of netbooks have also been brisk.

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In general the IT sector is going strong specifically in areas of data storage, processing, and management as well as software design and development, networking and systems administration.

4. Life’s Little Pleasures

A little indulgence can go a long way. While high-end consumer products are having a hard time moving in the recession, a range of cheap, feel-good items are experiencing brisk sales. Low-cost cosmetic lines for products such as lipstick and lip balm, anti-aging creams, and self-tanning creams are predictably on the rise. Wholesale beer sales are also doing well. Most notably, Anheuser-Busch, the biggest brewer in the United States, has been reporting a profit despite concerns that rising costs for raw materials like glass, barley, wheat, and fuel would undermine any gains. Finally, tobacco sales across the nation going strong.

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5. Profiting from the Damage

As people across the nation try to get a grip on their mounting debt, it is no surprise that repossession firms, auctioneers of foreclosed homes, debt consolidation companies, debt consultants, collection agencies, and bankruptcy lawyers all have plenty of work these days to keep themselves busy. There have also been a surge in the creation of companies that handle the clean-up and refurbishing of foreclosed homes and their surrounding property. Though these industries may be looked upon as scavengers profiting from the downtrodden, who is going to argue with the fact that someone has to do it.

6. Payday Loan Industry

Call them loan sharks or predatory lenders… but they are still legal. And right now business is booming for the payday loan industry as consumers try to cover their cash shortfall with these high interest, short-term loans.

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7. Health Care

Though the health care industry as a whole is experiencing cutbacks, as the baby boomer generation gets older there has been an increased demand for home health care services and specialized medical procedures generally performed in small outpatient clinics and doctor’s offices. This has increased the need for qualified nurses and specialized doctors.

8. Discount and Second-Hand Retailers

As household budgets get tighter, consumers are flocking to discount retailers, such as Wal-Mart and Dollar General. Thrift stores and Goodwill stores across the country are also drumming up traffic even as sales among other retailers have plummeted .

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9. Re-education

The demand for online degrees, professional certification, and continuing educational programs have all increased. As more and more American workers are laid off (or fear being laid off), many are are seeking re-education opportunities. The trend is also likely due to the increasing cost of higher education that has out-paced inflation for several years in a row. Although quality online degrees still require a significant investment of money, when you factor in the savings from room and board as well as scheduling flexibility, in the end an online degree comes out much cheaper.

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Employee Theft in Your Small Business: Tips for Theft Investigation

This is the final post in a four-part series on employee theft.

If you suspect that theft or fraud has occurred in your business, then you should promptly follow up with a thorough investigation. When done properly, an investigation can help you limit your loses and quickly resolve the situation.

First you need to determine what is missing or which reports or systems seem inaccurate This will help you to get a handle on the extent of the loss. Take stock of your inventory and check your financial accounting system for any unusual entries or changes in cash flow.

Second, you should try to figure out approximately when the theft(s) occurred and by whom. Make a list of all employees who could have had access to the missing items or information. In some cases, if you have surveillance cameras, it may help to review the tape to get an idea of who was around when the theft occurred

Finally, your investigation should end with either an employee interview or survey. Basically, you are looking to gather information from two distinct groups of people: those who you suspect may have been involved in the theft or fraud and innocent co-workers who may have some knowledge or suspicions as to who committed the act.

The interview and/or survey should be confidential. Employees should be informed that no co-workers will know what was said about them and that there will be no repercussions for sharing information.

Some questions to consider asking:

1. Do you know any employee(s) has stolen something from the business? What was stolen? When?

2. How do you think the theft might have occurred?

3. Has any employee acted differently before or since this theft that makes you think he or she might be involved? Who? How did they act?

4. Are any employees reluctant to participate in this investigation or encouraging anyone else not to participate? Who?

5. Which employees do you think might have committed this theft? Why?

6. Which employees do you trust? Why?

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