Business.com |
- 7 Ways to Recession-Proof Your Business (With Case Studies)
- How AI Will Transform the Retail Customer Experience
- How to Build Business Momentum With Limited Resources
- Small Business Optimism Sinks as COVID-19 Rages, New President Takes Office
- How to Manage an Employee Leave of Absence
- How to Pitch Your Business to Venture Capitalists
- How to Lower Your Credit Card Processing Fees
- Text Message Laws Every Business Needs to Follow
| 7 Ways to Recession-Proof Your Business (With Case Studies) Posted: 19 Jan 2021 02:28 PM PST  Economic recessions have happened in the past – the 2000 dot-com bubble, the 2008 financial crisis, and now the COVID-19 pandemic. Recessions are bound to happen. Whether you are a seasoned entrepreneur looking to grow and scale your business or simply looking for ideas to make your first million, the same principles on recession-proofing your business apply. 1. Explore other distribution channels.If you own a store that distributes physical goods, there is no better time than now to dabble in alternative distribution channels such as e-commerce. This is especially true in a COVID-19 world, where shoppers spend more time scrolling on their phones than strolling around supermarkets. In fact, online retail accounted for 16% of all sales in Q2 2020 (up from 11% in Q4 2019). You don't need to be a marketing whiz to open up your first online store. Many of the top e-commerce platforms are feature-rich, code-free and user-friendly. The website is one piece of the puzzle; another thing you need to consider is driving traffic to your online storefront. If you are serious about taking your business online, check out business.com's article on developing a solid e-commerce marketing strategy. Case study: WalmartWhen I think of Walmart, I imagine sprawling physical stores, so it comes as a surprise that Walmart has heavily invested in e-commerce and taken advantage of the changes in consumer behavior brought about by the pandemic. By Q2 2021, Walmart is projected to do $10.7 billion in quarterly sales, more than double the amount in Q1 2020 ($4.7 billion). Walmart adapted to the times, transitioning its brick-and-mortar model to a hybrid model with e-commerce distribution. The company has even created its own version of Amazon Prime called Walmart+, which waives the usual shipping minimums. By creating unique propositions such as this, Walmart is gearing itself up for the digital economy. You may not be Walmart, but if a company of that size is making moves in the e-commerce space, it's a sure sign that it would be smart to capitalize on the trend. 2. Design your business to sell it.It's easy to get attached to your business, but during a recession, one of the best ways to get a cash injection is to sell it off. You always want to have that option in your back pocket just in case. The best way to sell your business is to document all income and expenses so you can get an idea of its value. Business.com has a set of tips for selling your business in case you want to dive deeper. The tricky part is that the valuation metrics for businesses vary widely. If you own a real estate business, valuations are typically in the realm of 10-20 times its annual income, depending on location and market. If you own digital assets such as a blog or website, you're looking more in the ballpark of 2.5-4 times the annual income. Regardless of the model, the principles are the same. Case study: Your Lifestyle BusinessYour Lifestyle Business is a blog run by Jo Barnes, who previously managed a multimillion-dollar Fulfillment by Amazon store in 2015 and hit revenues of $3 million in 2020 before eventually selling the business. This case is definitely not on the same scale as Walmart, but I wanted to highlight the fact that Barnes used the principles of meticulous documentation to showcase the value of her business. Amazon also makes it easier to manage your finances, since its platform can auto-generate reports, meaning you don't have to record everything on a spreadsheet. I like this case study because this type of business success is much more workable for the everyday business owner. 3. Double down on your employees.One of the most critical skills for a leader is putting your people before yourself. This quote from Lao Tzu sums it up best: "A leader is best when people barely know that he [or she] exists. When [the] work is done, [the] aim is fulfilled, they will say, 'We did it ourselves.'" Focusing on your employees means more than offering surface-level perks, like the free lunches every Friday, work-from-home subsidy packages, and unlimited vacation days most tech companies advocate for nowadays. It's about your company culture and how you make your employees feel on a day-to-day basis. Case study: ZapposThere is perhaps no brand that embodies the importance of culture and employee investment than the shoe company Zappos. Former CEO Tony Hsieh advocated for a culture of happiness and emphasized the importance of team-building. For example, the company expects each manager to spend 10% to 20% of their time on team-building activities. Cultural fit is so important to Zappos that it offers new employees $1,000 to quit, to ensure each employee really wants to be there and doesn't feel trapped in the job by the need for cash. Because of this obsession with cultural fit, Zappos weathered the 2000 dot-com bubble, as employees took measures such as living in dorm-like conditions and taking collective pay cuts to keep the company afloat during the tough times. They felt valued by the company, leading to Zappos' success and culminating in its $850 million acquisition by Amazon. You don't need to be a Zappos to double down on your employees. You don't even need the fancy perks. Just treating them with dignity and respect is a good start. If you're there for them when they need you, they'll be there for you when you need them. 4. Be open to pivoting your business model.Past success does not guarantee success in the future, and this is especially relevant in business. Many industries have been disrupted by innovative solutions that forced slow-to-adapt brands out of business. The recent Airbnb IPO is an outstanding example of an industry disrupter, as consumers are seeking alternatives to traditional lodging models. With technology evolving at such a rapid rate, you need to keep your mind open to pivoting your business. What this means in practice is keeping up with the trends in your industry. Stay abreast of cutting-edge innovations by researching widely, and consider how your business could incorporate them. If there is an opportunity, hire the right people to execute on it. In this day and age, you can't be too attached to your ideas, as our next case study demonstrates. Case study: Blockbuster vs. NetflixPre-2000, Blockbuster was a leader in the video rental market, with a peak valuation of $8.4 billion. It never fully recovered from the 2000 dot-com bubble, though, and filed for bankruptcy in 2010. Netflix began its journey in 1997, weathered (you could even say thrived through) three different recessions, and is now valued at $203 billion. It consistently out-pivoted Blockbuster by noticing the trends in their infancy and capitalizing on them. In 2005, streaming was novel, and Netflix was an early adopter of the technology. In 2020, streaming is a commodity, and Netflix is distinguishing itself by being a content creator. The company always seems to think one step ahead. Pivoting your business may seem daunting, but it can reap big rewards when done right. The change could be as small as delivering your service digitally. 5. Create a unique marketing angle.No matter how stellar your product or service is, it can't go anywhere without proper marketing. To be more effective, skip the showcase of your product's bells and whistles, and instead go straight into your story. Storytelling is one of the best ways to develop an emotional connection with your customers. For example, if your industry is highly technical, your unique twist might be telling your story through pictures rather than words. If this is the case, think about leveraging platforms such as Instagram and Pinterest to find your audience. The most successful marketing angles often come from a strong alignment with topical themes of the current times as we will see in our next case study. Case study: Warby ParkerWhen Warby Parker started in 2010, it told a story that lay the foundation for the business: Once upon a time, a young man left his glasses on an airplane. He tried to buy new glasses, but they were so expensive. "Why is it so hard to buy stylish glasses without spending a fortune on them?" he wondered. He returned to school and told his friends. "We should start a company to sell amazing glasses for non-insane prices," said one. "We should make shopping for glasses fun," said another. "We should distribute a pair of glasses to someone in need for every pair sold," said a third. "Eureka!" Warby Parker was born. Warby Parker's unique marketing angle is in its Buy a Pair, Give a Pair program: For every purchase, it donates a pair of glasses to someone in need. This has separated the company from others like it, allowing to thrive even during the pandemic. You could try imitating this approach. For example, perhaps donate a small percentage of each sale to a charity, school or scholarship fund. 6. Collaborate with other players.Teaming up with other companies is one of the best ways to bolster a weakness in your business without paying for it upfront. Even though we are less likely to collaborate during a recession, it is more important than ever. If you are a real estate maintenance company, for example, you could collaborate with a developer to offer reduced service fees for its customers in return for guaranteed business. You could also look at adjacent markets – for example, as a plumber, you could collaborate with a roofer and share leads directly with each other (without cannibalizing each other's business). This can be a foundation for a referral program, help you grow your network, and improve your word-of-mouth marketing initiatives. Instead of thinking of business as a zero-sum game, approach it with an abundance mindset and see every potential interaction as a win-win. The best businesses often see collaboration angles where others cannot. Case study: Xbox and NetflixXbox and Netflix are one example of this. We've talked about Netflix already, but I wanted to highlight a specific action the company took during the 2008 financial crisis that showcases its creativity. As Netflix was still a growing platform in 2008, it partnered with Xbox to give gamers access to 10,000 Netflix titles. This allowed Netflix to expand its market quickly and gain new users without marketing to them directly. It also partnered with Roku and LG Electronics to bring streamed content from its web-based catalog to the television. It's often easier to survive recessions by being open-minded and finding unique ways to collaborate rather than closing yourself off. 7. Be conservative with your cash.The most important piece of advice in this article is to be prudent and conservative with your cash at all times. This means keeping enough cash in the bank account to pay off any short-term debts if you suddenly lose revenue from a recession. You may not be growing as much since you cannot use this extra cash, but it's a good buffer to keep your business afloat when the rubber meets the road. This extra cash could also be very useful if you want to gain assets or buy out competitors at a discount when the recession hits. It also assures your employees that their jobs will not be at risk. Case study: Wells FargoWells Fargo is an American bank that posted positive net-income returns throughout the 1987 Latin America debt crisis, the 1991 commercial real estate downturn, the 2000 dot-com bubble and the 2008 financial crisis. What's its secret? Wells Fargo was aggressive with its loan loss provisions and allocated a sum of money each year to cover the expected defaults due to a poor credit market. This was $589 million in 1987, but it increased to $1 billion in 1991 and $16 billion in 2008. By preparing yourself for the worst-case scenario and saving money for a rainy day, you ensure that your business can survive and even thrive through a recession. Recessions are an inevitable feature of today's global economy, but these time-tested principles should arm you with the knowledge to survive downturns and even capitalize on them. You will still have to do your homework on how to apply these principles, but they should provide you with a good starting point. |
| How AI Will Transform the Retail Customer Experience Posted: 19 Jan 2021 01:00 PM PST  If you've tried to crack a Rubik's Cube, you know how tricky it can be. In the past, it was a challenge only humans could learn to solve. No longer. A computer at the University of California, Irvine, figured out all the right moves in just over a second. The machine wasn't specifically programmed to decipher the cube. Instead, it taught itself to do so, using an artificial neural net to reason about the challenge and make its own decisions. For retailers, intelligent machines solve a different kind of puzzleRetailers, like virtually everyone else, are trying to understand what such advances in artificial intelligence (AI) mean for the future. Machine learning (ML) and other applications of AI have already begun to change how major retail companies understand and interact with their customers. And these efforts are picking up steam as high-tech competitors such as Amazon force more and more retail firms to rethink the customer experience. With further developments in AI, retailers will gain the ability to provide more effortless, more satisfying outcomes at every phase in a customer's journey, from product discovery to customer service. Advanced ML and data analytics will be essential to powering such experiences at scale. Here's a look at how the future is taking shape and what is likely to happen next. AI will take personalization to the next level.Thanks to Spotify and Netflix, customers have come to expect digital experiences tailored to their individual tastes, wants and needs. With AI, retailers dealing in physical products also have a growing ability to deliver such one-to-one personalization at scale. The hyper-personalized future of retail is already emerging, especially in sectors such as fashion and cosmetics. Stitch Fix, for instance, employs ML algorithms and data analytics to learn shoppers' tastes in clothing through personal style profiles they fill out online. Stitch Fix's system then provides recommendations to help human stylists make personalized choices for customers while using feedback from the stylists to improve its own suggestions over time. Similarly, Shiseido used ML and Treasure Data to model preferences and personalize its loyalty program – for example, by recommending different beauty products to customers as they move through different stages of their lives. Future AI will only become more adept at discerning patterns in unstructured data such as images and video, unearthing individual preferences and making real-time decisions based on these calculations. And it will need less and less human assistance to do so. Today, automated product recommendations often feel predictable, but tomorrow's AI, using techniques such as deep learning, could supply that missing note of serendipity. In-store shopping, meanwhile, will catch up to online commerce when it comes to providing personalized customer journeys. Eventually, an AI system may recognize a preferred customer as soon as he or she walks through the door. The system could then send an alert to an in-store human representative, along with the customer's up-to-date individual profile. Such a profile could include style preferences and customized recommendations, drawn from real-time data on everything from past shopping behavior to the weather outside. Predictive retail will give customers what they want, as soon as they want it – or sooner.Predictive analytics powered by ML is already enabling many companies to foresee customers' actions and make proactive decisions. A customer data platform (CDP), for example, uses predictive AI built on Apache Hivemall to score customers by criteria such as churn affinity or upsell potential. Marketers can then use these scores to target customers with specialized campaigns. Here, retailers can take inspiration from what companies are doing in industries beyond their own. A leading game maker, for instance, recently used ML, predictive analytics and data unification with Treasure Data's CDP to predict which types of in-game rewards were most likely to keep users playing. Imagine a store chain trying to prevent its most valuable customers from leaving. AI-based predictive scoring could identify and flag the customers most liable to stop buying. Predictive AI could also determine exactly which offers or interactions were most likely to pull at-risk customers back from the brink and learn how to predict such outcomes more effectively over time. Alternatively, AI-based analytics might be able to predict which traits and sequences of behaviors suggest a customer is almost ready to buy. When the system identified a customer with the right profile, it could then take the action most likely to lead to a sale – for example, sending out a personalized invitation for an in-store demo. Meanwhile, the spread of predictive AI into back-office operations will impact the customer experience. For example, inventory management systems will grow in their ability to seek out predictive patterns and decide when and where to ship items – as Amazon is already seeking to do with AI-based techniques such as anticipatory shipping. For customers, this trend will mean better in-store selection and less time waiting for items. For brick-and-mortar retailers, it could provide better tools to counter online competitors by making services such as in-store pickup faster, easier, and more satisfying. Along the way, we may see the democratization of predictive AI, as new automated ML tools put such capabilities within the reach of small and mid-sized businesses as well as the retail giants. One example is Northstar, an interactive prediction tool developed by researchers at MIT and Brown University. With Northstar's drag-and-drop graphic interface, a user can import datasets and generate predictive ML models on any touchscreen device, using a drag-and-drop graphic interface. Such tools could allow companies of any size to benefit from predictive AI without extensive in-house expertise in data science. For example, a small business owner could use Northstar to predict sales from historical data and decide which products to stock, with only limited manual input. The in-store experience will become intelligent.Brick-and-mortar retailers have a pressing need to create in-store customer journeys that can rival online shopping in speed, convenience and personalization. Forrester's 2018 white paper, "The State of the Digital Store", summed up the situation: "In the age of the customer, the retail store must now deliver a relevant and differentiated customer experience or face obsolescence." A new generation of software systems, enabled by the internet of things, is emerging to help retailers close the gap by creating digitally enhanced stores that provide personalized experiences to shoppers. The combination of powerful data solutions, from both online and offline sources, with more and more intelligent systems, will help retail stores emulate the seamless, effortless journeys that customers expect online. What's more, next-generation AI will help brick-and-mortar retailers build on the unique advantages of in-person shopping. AI systems can improve at learning shoppers' individual preferences, providing suggestions and guiding them to faster, more satisfying choices. And AI-powered conversational interfaces may make such interactions feel more effortless and natural over time. To optimize future in-store experiences, brick-and-mortar retailers will need detailed, real-time data collection and analytics similar to what we see in e-commerce. This goal will come within reach as AI-driven systems hone their ability to interpret data from cameras and audio sensors, observe human behavior, and capture insights from the physical environment. For example, an intelligent system combining ML and advanced video analytics may be able to find and interpret otherwise elusive patterns in how customers are picking up and abandoning different items, just as e-commerce systems currently track and analyze online cart abandonment. Such applications of AI could enable retailers to fine-tune the paths customers take through their physical locations. Likewise, AI could use direct observations from video and audio to provide new insights into how a store's human staff interacts with customers. This could lead to better decisions about employee development and training, and enhance the human touch that makes for a special trip to the store. Customers will learn to love talking with robots.Current chatbots and voice assistants have only a limited ability to converse with retail customers and respond to their wants or needs. Companies in industries from auto rental to satellite TV are already using AI-powered chatbots to handle customer service questions, but such systems struggle to handle the more complex interactions involved in other stages of the customer journey, such as sales. This may change in the not-too-distant future. More advanced conversational AI could affect every phase of the retail customer experience. Such systems would interact with customers in more humanlike ways and resolve an ever-growing range of questions or requests in real time. Customers will likely interact with conversational systems at many touchpoints, from smart speakers, apps and call centers to in-store interfaces. Over time, retail customers will become accustomed to machines that ease the burden of communication and can meet an ever-growing range of requests. They will grow used to accessing help on demand, 24/7. And activities such as searching for products, shopping in stores or calling for support could all become more effortless and enjoyable. Will human workers disappear from the picture? Probably not. Instead, you can expect to see heightened collaboration between people and machines, as humans are freed up to focus on tasks that call for nuanced empathy and judgment. For example, an automated customer service agent might be able to judge emotional states from a speaker's language and tone of voice. When it detects anger or impatience, it could route the customer and relevant information to a human representative, who may turn to another conversational system to help find a solution. Is the retail singularity at hand?Some futurists invoke the idea of the AI singularity: a revolutionary moment at which computers will transcend human intelligence. AI still appears to be far from that point, and so is the retail industry. Nevertheless, the retail customer experience is likely to evolve at an accelerating pace in the years ahead. To compete in this new era, retailers will have to master two essential resources: data and people. An AI-powered customer experience requires high-quality data to produce customer-focused insights and decisions. Among other things, retailers will have to meld an ever-growing variety of data and data sources into a single comprehensive, accurate real-time view of every customer. At the same time, retail companies face the choice of building their own AI solutions or working with outside partners or vendors to acquire tools with AI under the hood. An enterprise customer data platform can help firms meet such challenges. The human element is just as crucial. New customer experiences will require technical teams skilled in deploying AI systems. They will also require customer-facing personnel with updated skills for roles transformed by automation. In addition, retailers will benefit from building organizational structures and cultures that welcome AI-driven innovation. Above all, the most successful retailers will stay focused on understanding what experiences their human customers want and delivering the goods. That's something even the most intelligent machines will (probably) never change. |
| How to Build Business Momentum With Limited Resources Posted: 19 Jan 2021 11:04 AM PST  Business momentum is the impetus that drives a company's growth. The Wharton School of the University of Pennsylvania equates this to businesses seeing everything they do succeed effortlessly. Momentum can make a business push itself to new heights and build on its successes. However, developing momentum usually has a price tag. Most businesses that leverage momentum do so by laying the foundation with a well-crafted marketing plan highlighting their strengths. That doesn't mean that companies without a considerable bankroll can't develop their own momentum, though. Here, we look at how a business can establish a decent momentum with only a handful of resources. 1. Find the essence of what you do best.Most businesses see growth as reaching out and expanding the options they offer to consumers. While this does give the company access to a larger market, it comes with a potentially crippling problem. According to BehavioralEconomics.com, choice overload (also known as overchoice) results when the consumer has too many options. In many cases, this overload of choices leads to customer unhappiness. In this case, offering the buyer too much leads to them stalling on actually buying anything. Eventually, it drives new buyers away from the business. As an alternative, you could look at what your business does well already. Distilling your core product down to its essence can also help you by keeping your business's production, marketing and management costs down. The more focused your company is, the more likely it is to become a name that people trust. 2. Listen to the majority.Listening to your audience's feedback is the preferable way to adapt your business to the consumer's wants and needs. However, when your audience starts growing, you'll likely have many conflicting opinions to consider. Some businesses prefer to focus on the buyers that have been with the brand for a longer time. The downside of this choice is that it alienates newer customers. While they are essential to a business's growth, the early adopters shouldn't dictate the business's evolution. Entrepreneurs should look at the holistic picture instead of focusing on a small demographic of users. A new business should look at its customer base and see what most of its consumers say. Adapting to your audience means learning from the majority. A business isn't a democracy. While loyalty is appreciated, depending on it to shape your company's destiny can end in disaster. For your business to generate momentum, you need to look at what most of your buyers want from the product. That focus will propel your business by attracting more like-minded buyers. 3. Build momentum on a single axis.It can be tempting to try to build momentum dynamically. The metric you choose to measure your company's acceleration will define its growth and what it becomes known for. One of the best ways to determine that is to see what your business is already doing well. Metrics such as consumer satisfaction and profitability are reasonable measures of success. Using the one that your company already excels at gives your business a leg up on its momentum goals. Don't spread out the business's momentum goals across multiple metrics. Focusing on one metric has the upside of requiring fewer resources to drive the business forward. The other metrics will eventually follow suit, but the core axis that your company is pushing needs all your resources. Spreading those resources too thin will lead to the business failing to generate any significant forward motion on your chosen axes. 4. Plan for the long term.Momentum doesn't happen overnight. It requires a plan to execute correctly because of all the moving parts involved in the process. Thus, what your business does today, you can come back to build on at a later date, driving the business forward. With each plan, your company puts more force behind its growth and generates more momentum. This constant push toward the goal eventually pays off, allowing the business to leverage its previous movement to fuel its future development. As many businesspeople will note, plans are sometimes buried under real-world drama. Strategic plans are developed and then fall by the wayside as departments evolve and change. Eventually, your business may start looking at moves to preempt or deal with crises instead of following the long-term plan. When a company starts doing this, it loses sight of its goals, and it cannot generate enough momentum to push forward. Businesses that get to this point stagnate. Therefore, it's essential for a new business to always keep sight of its long-term strategic plan and build on its previous growth. 5. Remember the importance of transaction efficiency.Momentum requires a business to perform a larger volume of transactions. Unfortunately, most small businesses encounter a bottleneck when it comes to transaction processing. When these companies formed, many didn't expect their momentum to lead to such massive growth, so their transaction processor expected far less traffic from them. This limitation means that, after a certain point, transactions fail, leaving disgruntled customers in their wake. Transaction efficiency is an integral part of generating momentum because it's essential to its sales and profit. Without a reliable credit card or payment processor, your business could lose the benefit of all the momentum you've generated so far. Efficient transactions lead to satisfied customers and more sales. 6. Keep an eye on the competition.You're not building your business in a vacuum. While you're busy setting up momentum, your competitors are taking note. Whatever you can do, your competitors can easily copy and tweak to fit their own style. You may be pioneering the idea of how you use momentum to grow your business, but you aren't the only entrepreneur who wants to build their business along these lines. Keeping an eye on your competition gives you a heads-up when others start adopting your momentum-generating tactics. Negative momentum can also alert you to other businesses building on your successes, of course, but by the time you realize what's going on, it may be too late. Remain aware of your competitors and their movements in the industry. Keeping your customers satisfied while staying ahead of the competition is far more effective than recovering customers you lost to the competition. 7. Remember that momentum can shift in an instant.Using momentum to push your business growth can have massive and explosive benefits for a company. However, momentum is fickle. In the space of a month, it could shift against you if you don't keep your finger on the pulse of your industry. Momentum loss doesn't only come from making the wrong steps; you might just think that you're so far ahead of the competition that you can ease your foot off the gas a little. Many entrepreneurs set a soft threshold for where they consider their business a success, but this risks losing that momentum. Resting on your successes offers your competition a chance to overtake you. Your company's growth is tied to how well you can maintain its growth momentum. |
| Small Business Optimism Sinks as COVID-19 Rages, New President Takes Office Posted: 19 Jan 2021 09:00 AM PST  Small business confidence is sinking as the COVID-19 pandemic continues to rage and the Biden administration gears up to take office. With the country in turmoil and vaccinations rolling out slowly, small business owners are concerned about the next few months and the impact it will have on their enterprises. That's despite the expectation that business will improve once vaccinations are widely available and some sense of normalcy resumes. In December, sentiment among small business owners polled by the National Federation of Independent Businesses fell 5.5 points to 95.9. This marks the first time since 1973 that the NFIB Small Business Optimism Index has fallen below 98 in December. Business owners who expect better business conditions over the next six months fell 24 points in the December NFIB survey, to a net-negative 16%. Calling the drop "historically very large," NFIB Chief Economist Bill Dunkelberg blamed the loss of confidence among small business owners on the spread of COVID-19 and the potential for new economic policies under a Biden White House. The pandemic has winners and losersThroughout the pandemic, small businesses have been split between those that are surviving and thriving and those that are barely staying alive. Business-to-business enterprises are faring much better than consumer-facing ones, particularly in entertainment and hospitality. It's the latter group that is growing more pessimistic as the potential for more COVID-19 deaths and shutdowns weighs on their minds. It doesn't help that it took Congress months to approve the most recent stimulus package. It's not clear if more will be necessary and if small businesses will get it. "Our data shows 50% of small businesses are ranging from doing OK to pretty well, and 50% of small businesses aren't doing well at all," said Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce. "We're talking about 50% of America's small businesses that are hurting." The recent MetLife & U.S. Chamber of Commerce Small Business Index found that the majority of small businesses expect more pain to come. They believe it will take six months to a year for the small business environment to return to normal. "To see 62% of folks who have gone through one of the worst nine months say it will get worse is really scary," Sullivan said. COVID-19 and new president drive pessimismThere's no question that the COVID-19 pandemic is driving much of the decline in small business confidence. As the number of people who are sick and dying spirals out of control, it's not clear if business owners will face more shutdowns and restrictions. It's hard for businesses to plan for the future when the present is so uncertain. But on top of the pandemic, small business owners are worried about what a Biden presidency will bring. It marks the first time in years that the Democrats control the presidency, House and Senate. A recent CNBC and SurveyMonkey poll of small business owners found that 53% expect the Biden administration's tax policy to have a negative impact on their business in the next 12 months, while 49% pointed to government regulation as the likely problem. The results were split by party, with Republicans overwhelmingly in the negative camp and Democrats more optimistic about a Biden presidency. Beyond the potential for new rules and regulations and changes to tax policies, politics aren't playing a big role in the sentiment among small business owners, despite a polarized country. "The election of the president isn't high on the sleepless-night scale for small businesses," Sullivan said. "There is an enormous desire for them to put partnership aside and just help." The previous MetLife and Chamber of Commerce survey of small business owners highlights that point, with an overwhelming majority (82%) saying gridlock due to partisan politics is a serious problem and 68% saying they'd prefer political leaders to compromise to get things done. Future still looks brightWhile small business owners' confidence is down in the early days of 2021, a new presidency does bring hope and reasons for optimism. For starters, there's the likelihood of more stimulus money. President-elect Joe Biden called the latest stimulus a down payment, and with the House and Senate stacked in the Democrats' favor, expectations are high that more aid is coming. That should increase optimism on the part of small business owners. "If there is additional stimulus and something gets done fairly quickly, that's going to turn sentiment," said Philip Noftsinger, vice president of finance and corporate controller at CBIZ. Stimulus money alone isn't enough to improve sentiment, however. As the NFIB's Dunkelberg noted, it's a "foot race between using up financial resources and getting the virus under control so the economy can open up and Main Street can get back to work." The COVID-19 virus must be contained for businesses to reopen safely and for the economy to begin growing again. That's where the vaccine comes in, and it's a big reason why many small business owners feel optimistic about 2021 once we get beyond the winter months. A recent Vistage survey of 1,500 CEOs of small and midsize businesses showed that 64% are planning to increase headcount in the year ahead, another 40% are getting ready to increase their fixed investments, and 67% anticipate sales and revenue will increase this year. CEOs expect business to resume growth once the majority of the population is vaccinated. "The economy wasn't broken; it was shut down," said Joe Galvin, Vistage's chief research officer. "Once we get past the health crisis, we will see an economic surge." |
| How to Manage an Employee Leave of Absence Posted: 19 Jan 2021 06:00 AM PST  There are times when personal issues require employees to temporarily step away from their job. It's important that employers make accommodations when employees need to take a leave of absence. An increasing number of states and municipalities have laws protecting employees in taking a leave of absence, and, in some cases, require that they be paid. When creating a leave of absence policy, you should work with a lawyer so you abide by all of the legal requirements in your area. What qualifies for a leave of absence?A leave of absence is an extended period, usually more than a month, when an employee is away from work. Unlike vacation time or personal days, most leaves of absence are related to health and well-being. The most common reasons for a leave absence are:
A fair, consistently implemented leave of absence policy is a way to keep good employees. Not only does it show you care about them and their well-being, but it allows employees to hold on to their group health insurance coverage. Why you should work with legal counsel when creating a leave of absence policyYou should create and implement your leave of absence policy only in consultation with legal counsel. There are many risks by not doing so, including:
Missteps might violate federal, state or local laws, which could mean fines. And disputes over a leave of absence often end up in court, with plaintiffs sometimes awarded damages for back pay, future pay, attorneys' fees and liquidated damages. In a recent Massachusetts decision, the state's highest court upheld a $1.3 million award to an employee who took a vacation to Mexico while on a medical leave of absence. The case "emphasizes the risk to employers of taking employment actions based on outrage rather than reason, particularly when it comes to decisions about leave of absence," attorney J. Lane Crowder wrote for the Society of Human Resource Management. Do you pay employees who take a leave of absence?In the United States, a leave of absence is traditionally unpaid. Nonetheless, if you have the resources, you might consider offering employees full or partial pay during a leave of absence. This kind of benefit builds employee loyalty. In some situations, state or local laws may require you to contribute to an employee's pay while they are on leave. Related to leave of absence is sick time. The United States and South Korea are the only two countries in the Organization for Economic Cooperation and Development that do not guarantee paid sick leave, according to UCLA's World Policy Analysis Center. However, the Family Medical Leave Act does entitle eligible employees of covered employers up to 12 weeks of unpaid leave for specified family and medical reasons, with continuation of group health insurance coverage. The FMLA generally applies to employers of 50 or more employees. Despite not being required to do so, most employers offer paid sick leave. Data from the Pew Research Center shows that as of 2019, 76% of U.S. civilian workers receive paid sick leave. That number is up from 67% in 2010. As the COVID-19 pandemic rages on, political leaders and health experts are telling people to stay home if they don't feel well. Employees are more likely to follow this advice if they're getting paid for sick time. This is why now may be a good time for you to ensure sick pay for both salaried and hourly employees. Depending on where your business is located and the size of your company, you may be legally required to do so. Arizona, California, Connecticut, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, Rhode Island, Vermont and Washington all have some form of paid sick leave requirements. Response to COVID-19The pandemic has made government and business more conscious of leave of absence policies. On the federal level, the Families First Coronavirus Response Act, which was signed into law in March of 2020, provides up to two weeks of emergency paid sick leave and up to 10 weeks of paid emergency family and medical leave for certain COVID-19-related reasons. It applies to public sector employees and private employees at companies with fewer than 500 employees. State leave lawsOver the past several years, more than 30 states have enacted laws relating to leave of absence, according to the National Council of State Legislatures. They typically mandate benefits and protections more expansive than federal statutes. Washington's law, for instance, covers all employers. Connecticut's, though it applies only to employers with 75 or more employees, mandates 16 weeks of family medical leave, four more than the federal FMLA requirements. States with relatively strong leave of absence laws include:
What qualifies for a paid versus unpaid leave of absence?Whether a leave of absence is paid or unpaid is determined by legal requirements and your company's internal policies. For instance, the California Paid Family Leave insurance program provides up to six weeks of paid leave, in some circumstances. The benefit amount is approximately 55% of an employee's weekly wage, from a minimum of $50 to a maximum of $1,067. The leave is funded through employee-paid payroll taxes and is administered through the state's disability program. Other states with provisions for paid leave of absence are New Jersey and Rhode Island. Like California, these states use an insurance fund to pay employees while they are on a leave of absence. How to manage an employee leave of absenceRegardless of where you do business, employment experts agree that a leave of absence policy is necessary for a business of practically any size. Here are steps to follow when creating and administering a leave of absence policy:
Can employees work a different job while on a leave of absence?The FMLA does not specifically prohibit an employee from working another job while on leave from your company. However, you can establish your own policy and limit the circumstances in which an employee can work another job. Conflict of interest is a reason for such a policy; after all, what if the employee on leave goes to work for one of your competitors? Courts have tended to side with employees in cases involving outside employment during a leave of absence. Sometimes, the leave falls under the protections of the Americans with Disabilities Act. Or it may fall under state or municipal regulations. It may be sensible to think of employees on a leave of absence as people who, for the time being, don't work for you. What they do on their leave is their business. Except in the case of a clear conflict of interest, trying to enforce a no outside job policy might not be worth the effort. Is workers' compensation considered a leave of absence?Employees who are receiving workers' compensation are taking a form of leave of absence. Workers' compensation is a type of insurance that provides pay and medical benefits to employees who temporarily can't work due to being injured on the job. In most states, employers can fire employees who are workers' compensation, as long as the discharge isn't related to the injury. In addition, sometimes an injury creates a permanent condition that might make the employee eligible for protections afforded by the Americans with Disabilities Act. Passed in 1990, the ADA prohibits employment-related disability discrimination. If your business has 15 or more employees, you must provide reasonable accommodations to employees with disabilities. One possible accommodation is a leave of absence. Such a leave might be in addition to an FMLA leave, for instance. If employees exceed the limits of their leave of absence, it's sometimes prudent to accommodate them. They might have the right to return to work, when they're ready, under the protections of the ADA. By terminating them, or not rehiring them, you risk being sued. Other types of leave of absenceIn addition to leaves of absence for medical reasons, there are the following other situations. You should have specific human resources policies covering all three:
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| How to Pitch Your Business to Venture Capitalists Posted: 19 Jan 2021 05:00 AM PST  When you're looking for funding to start a business, one outlet you might consider is venture capital. Those who have a unique, excellent idea will have tremendous success getting venture capitalists on board. However, to do so, you've got to have a great pitch. Here are some tips to help you pitch to venture capitalists. Before we dive into the tips, let's talk about what it's like to pitch to Warren Buffett. When he picks stocks, he looks for companies he would like to own outright. We can look to Buffett's deal to buy the Nebraska Furniture Mart for the basis of developing a great pitch. Interestingly, he didn't even do due diligence on the store. He simply went to the owner, Mrs. B., and offered her $55 million. The company's books weren't audited, and Buffett did not require one. However, he had been watching the Nebraska Furniture Mart for years and trusted the integrity of the owner. Mrs. B.'s motto was "sell cheap and tell the truth," and anyone who is pitching to a venture capitalist should always tell the truth. Buffett trusted Mrs. B. to tell the truth always, so he knew he could buy her store based on her word. She was pitching her business to Buffett for years without even knowing it. When you're pitching to a venture capitalist, you should always tell the truth, even if it seems like it puts you at a disadvantage in the bargaining process. A study written up in the Harvard Business Review backs this up. The study found that angel investors' interest in a startup was driven more by perceptions of trustworthiness than judgments of competency. The research suggested that business owners who demonstrated that they were trustworthy boosted their odds of getting funded by 10%. Know the person you're pitching toBefore you start working on your pitch, you should research the venture capitalist you will be pitching to. You're wasting your time and theirs if you pitch to someone who has no interest in the industry your business is in. On the other hand, if they already have expertise in the industry your business is in, you don't need to share as many details about how the industry works. Instead, you can focus on how your business works and fits in the industry. You should also find out how large the venture capital fund is because that will impact how much money they might give you. It's also a good idea to find out about the fund's success stories and then position your startup as similar to them if possible. Elements of a successful pitchThe more you know about the person you're pitching to, the better you will be able to tailor your pitch to them. There are some metrics and details every pitch should contain, but you'll know to spend more time on those that are most important to the person you're pitching to if you know about them. Here are the elements every pitch should contain:
Work on your openingNow that you understand the essential elements of a pitch, you should work on the details. The best place to start is with your opening, which should be casual and set the pitch up more like a conversation than just a one-way demonstration. Some experts suggest starting your pitch off by asking what information they want to know the most about. Asking that question will enable you to focus more energy and attention on that area of the pitch so that you can answer all their questions fully. Your pitch should also start with a tagline that says all the most important information about your business in just a few words. Every venture capitalist has sat through their share of pitches in which they didn't know or understand the business that was being promoted. You don't want that fate for your company. Your opening should also enable your listeners to get a feel for what you're like and whether they would like to work with you. While passion is important, the Harvard Business Review talks about a study involving records of one-minute pitches during an MIT Entrepreneurship Competition. The judges in the competition consistently preferred level-headed entrepreneurs over those who oozed passion from every pore. Create your pitch deckAfter you've figured out what you're going to say, it's time to put together slides that reinforce your presentation. Review your pitch and figure out which points are the most important and which would make the most sense to include on a slide. Slides should have no more than four bullet points on them. If each one is chock-full of information, you risk overload, both for yourself and the venture capitalist who's listening. In the same vein, you shouldn't have more than 15 slides in your deck because no venture capitalist will review more than that. The key is to give them enough information to cause them to want to know more. You want to be invited back for another meeting, and you won't be if you weigh them down with details they don't really care about. Be prepared to answer questions Every venture capitalist is going to have questions about your presentation, so don't take offense. It doesn't mean you didn't do an excellent job with the pitch. Questions can be a good thing if you have included everything you needed to include in the presentation. The key is not to get defensive when they ask you hard questions. You should also demonstrate an openness to being coached, especially if meeting with angel investors. Most of them spend time in the trenches with the entrepreneurs whose businesses they fund. After all, the benefits of getting funded by venture capitalists extend beyond a sizable check. You also get access to their resources, contacts and knowledge. Being coachable shows that you're willing to learn from those who have been where you are now and move beyond it to success. Pitching to a venture capitalist or angel investor requires a lot of time and effort, but you can create a solid presentation that will capture attention with a little preparation. Not everyone you speak with will give you a check, but don't get discouraged. If you've done your homework on the funds you want to pitch to, you should be able to identify at least one that will respond favorably to your presentation.
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| How to Lower Your Credit Card Processing Fees Posted: 19 Jan 2021 05:00 AM PST  Credit card processing fees are unavoidable for merchants who want to accept credit and debit card payments, but that doesn't mean you should overpay. Not all the fees are set in stone and some can be negotiated. Whether you're shopping for a new credit card processor or just want lower rates from the one you're already working with, here's how to get lower fees on transactions. Editor's note: Looking for the right credit card processor for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs. 4 ways to lower your credit card processing feesGetting the best rate for in-person and online card payments is particularly important during the COVID-19 pandemic. E-commerce has taken center stage and those transactions typically cost more than in-person processing fees. "When it comes to in-person payments, merchants learned to negotiate for better rates because it's such a big part of their business," Nicolas Beique, CEO of Helcim told business.com. "E-commerce was always a side thing for a lot of merchants until this year." When it comes to credit card processing fees, there are some that are negotiable and others that aren't. The interchange and card-brand fees charged by the card issuer and card network are non-negotiable – but there's wiggle room for the processor to lower its markup. That's where you should focus your efforts. To get the best rate, follow these four strategies. 1. Do your homework before you call your credit card processor.Negotiating your credit card processing fees isn't easy. With so many moving parts it can be difficult to ascertain what the fees are for, let alone if they are negotiable. But if you don't understand them, you may not get the lowest cost possible. Go over your statement to find fees that can be reduced before engaging with your processor. Knowledge is power when negotiating. "There are so many different fees that processors can charge. It's difficult to call them and say you want lower fees if you don't know what they are," said Matthew Rej, a partner at Merchant Cost Consulting. "You really need to understand your statement to grasp how to reduce your fees." 2. Get a better pricing model.If you are on a bundled (or tiered) pricing model it's hard to get an idea of what fees you are paying and how it stacks up compared to competitors. Transparency is key to getting a lower price, which is why you should ask your processor to move you to an interchange-plus or flat-rate model. In both instances, you'll know how much you are paying for every type of transaction. 3. Negotiate away the premium for e-commerce payments.Card-not-present transactions are riskier and thus, more expensive to process. Nevertheless, this type of processing was often an after-thought to merchants who did most of their business in person. That's changed with the pandemic, but the rates merchants pay for card-not-present sales haven't decreased. "The line between in-person and online sales are starting to blur. You want a processor that doesn't charge a premium just because you are accepting payments online," said Beique. 4. Avoid the PCI fee.To ensure merchants handle their customers' credit card information properly, they are required to follow standards known as the Payment Card Industry Data Security Standard or PCI DSS. The idea is to lower the risk of the credit card information falling into the hands of hackers and thieves. To ensure PCI compliance, some credit card processors charge a PCI fee and in exchange, provide services to make sure you are meeting the standards. In other instances, credit card processors charge no fee but don't offer any services. There are also some questionable credit card processors that charge the fee but provide nothing in the way of service. Those are the ones you want to avoid. If this is how your existing processor operates, you may want to try to get it waived or reconsider your relationship. "PCI fees are notorious in the industry," said Beique. "Merchants in the e-commerce space see PCI non-compliance fees and jump through hoops to avoid them. E-commerce is complicated and processors take advantage of that." Beique said PCI fees can vary widely, but it's best to find a processor that doesn't charge it. "You want to find a vendor that makes you secure without a fee. The PCI fee is just a cash grab," he said. What are reasonable credit card processing fees?The amount you pay to process credit and debit card payments varies, based on the type of card, how the payment is accepted, the dollar amount of the sale, and the credit card processor you work with. American Express, Mastercard, and Visa all charge their own rates to accept their cards which are laid out below.
The credit card processing companies then add a markup to these rates. They have different pricing structures that can affect how much you pay. Here are the three most common:
[In the market for a new credit card processor or thinking about making a switch? Check out our guide and reviews.] What are credit card processing fees?Credit card processing fees are the fees merchants pay every time a customer completes a transaction with a debit or credit card. Credit card processing fees, sometimes called the discount rate, are comprised of three parts: interchange fees, assessment fees, and the payment processor's markup. These fees are expressed as a percentage of the sale and a flat fee.
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| Text Message Laws Every Business Needs to Follow Posted: 19 Jan 2021 04:30 AM PST  Text message marketing, also known as SMS marketing, is becoming a poular marketing channel. This rapid rise has many businesses scrambling to incorporate text message marketing into their marketing strategies. Before you get started, however, it is critical to understand the laws surrounding this marketing method. Even though you may not intend to break the law, some aspects of compliance may be easy to miss, and even a tiny oversight could cost your business millions of dollars and damage consumers' trust in your company. What are the text message marketing laws?Several governing bodies have created regulations regarding telemarketing communications. These laws are updated continually to reflect technological advancements and evolving business practices. Here are some of the laws you should be aware of: Telephone Consumer Protection ActThe Telephone Consumer Protection Act (TCPA) is the primary telemarketing law in the United States. Passed by Congress in 1991 and governed by the Federal Communications Commission (FCC), the TCPA has been amended numerous times to target unsolicited text messages and phone calls. It emphasizes rights of privacy through the following measures:
CAN-SPAM ActThe Federal Trade Commission (FTC) published the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM Act) to combat unsolicited email messages containing explicit or offensive content. It supplements the TCPA by extending the laws governing autodialers to all commercial entities. Informational messages that do not promote new business, such as those regarding the status of an already completed purchase, are a permissible exception; they can be sent to customers without express written consent. The CAN-SPAM Act was created in 2003, before the widespread adoption of text messaging, so it does not fully govern SMS communication. The FTC is permitted to write new text message marketing regulations within these guidelines, but the FCC remains the chief arbiter of SMS communication laws, through the TCPA. Cellular Telecommunications Industry Association guidelinesThe Cellular Telecommunications Industry Association (CTIA) is a national trade group that represents the wireless communications industry. The CTIA is not a governing body, but it can discontinue and block the texting services of businesses that refuse to comply with its guidelines. The CTIA provides a Messaging Principles and Best Practices document to define and elaborate on many of the provisions set forth in the TCPA and CAN-SPAM Act. The document outlines exactly what a business must do to secure a legally binding offer of express written consent from consumers. Express written consentExpress written consent, as required by the TCPA and defined by the CTIA, validates the contract between a business and its customers to communicate through text messaging. The offer for customer consent to telemarketing must meet, in a single written form, these five criteria:
Brian Wilson, chief revenue officer of SlickText, said obtaining full express written consent is critical. "The most common mistake we see is not receiving prior consent," Wilson told business.com. "If there's one central rule around compliance with federal regulations, it's to receive consent from the individuals you are going to be messaging." International lawsInternational consumer privacy laws govern all communication conducted within their territories, regardless of a business's primary headquarters location. The strictest of these laws is the European Union's General Data Protection Regulation (GDPR). In addition to requiring express consent, the GDPR mandates any business that wishes to store European customer data to meet six additional data privacy requirements. Complying with these extensive regulations demands significant financial and legal investments. Canada has its own set of laws – Canada's Anti-Spam Legislation (CASL) – but differences between CASL and the TCPA mostly pertain to email. If your SMS campaigns meet the express written consent criteria as defined by the TCPA and the CTIA, they will likely be permissible under CASL guidelines. If you are unsure whether your campaigns meet U.S. or international criteria, seek legal counsel. What are the penalties and fines for not adhering to the laws?Even just one mistake with text messaging compliance can result in hefty fines, and a full understanding of prior express written consent does not shield businesses from all errors. Garrett Olexa, practicing attorney at Jennings, Strouss & Salmon PLC, warns of several other mistakes businesses often make. One common misstep, he said, is "mistakenly assuming that just hiring a third party to send out the texts shields their business from liability." Even when using a separate texting service, businesses remain responsible for the content of their messages. Each violation levies a $500 fine, per occurrence. In other words, this is the penalty for each individual message in breach of TCPA compliance, not the fine for the entire campaign. Therefore, an SMS campaign that illegally messaged 1,000 contacts would result in penalties of at least $500,000. The fines for any violations deemed intentional are then tripled to $1,500 each. In that same campaign to 1,000 contacts, the total penalty, if deemed premeditated, would be $1.5 million – and that assumes only one message was sent to each contact. These damages are not capped, and businesses are held responsible for every violation. As subscriber lists grow, so do the potential damages, often outpacing insurance coverage. Olexa warned companies against "assuming their business liability insurance coverage will apply to any statutory violation, which is often not the case." How to avoid violating text message marketing lawsThe potential for fines and regulations might discourage some businesses from using SMS marketing, but mass texting is too effective to ignore. Here are several ways to fulfill TCPA requirements while successfully marketing your business: Include all of the information necessary for express written consent.Use the express written consent guidelines above to ensure that your first message to a new subscriber includes all of the necessary information. It should contain the following information:
It sounds more obtrusive than it is. Here's a simple template to get you started: "Hi [Name], thanks for signing up for the [Company] Summer Sale! We'll send you personalized deals every week. Up to 4 msg's/month. Msg & data rates may apply. Reply HELP to review terms, STOP to cancel." Use keyword short codes.A keyword short code is a word or phrase that customers can text to a specified number to sign up for your text messages. Businesses can provide that keyword to the customer within a CTIA-compliant disclaimer that includes all components of express written consent. When a customer responds with the keyword, they have provided consent. These messages can be displayed through signs on-site or through email and text. A physical sign might list the URL customers can use to access the terms and conditions. Consider a double opt-in.A double opt-in is the safest way for a business to ensure the legality of their text messages. After a subscriber has provided their phone number, send a message asking them to confirm their subscription by replying "Yes" or "No." The double opt-in erases any doubt that a keyword message or email subscription did not acquire the consumer's express written consent. "Any time companies have a certain age level or verification they want to do with an individual … they may want to use a double opt-in to understand how old the person is before we agree to include them in our text marketing list," Wilson said. Maintain your commitments.Text message campaigns offer the highest open rates of all marketing channels. This can tempt a business to inundate their subscribers with SMS notifications, but contacting customers too frequently can put you at risk of violations and damage your brand image. SMS laws ensure a business commits to its promised texting schedule. By adhering to these laws, your text messaging will remain an infrequent surprise, and customers will be less likely to grow annoyed and perceive these messages as spam. Provide an incentive to sign up.Offer value for customers who sign up for your text messages. For example, subscribers could receive discounts, limited-time offers or additional features to your core services, such as delivery tracking or real-time alerts. Consider how your favorite brands could convince you to provide your phone number, and then see how your business might use a similar approach. |
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