14 Things Small Business Owners Need to Know
By Rieva Lesonsky
1—Social Responsibility Pays Off
Consumers and employees alike are increasingly looking to buy from and work for companies that are socially responsible. In fact, according to the infographic below from SCORE, embracing Corporate Social Responsibility (CSR) is a smart way for small businesses to stand out, increase sales, attract workers and make an impact.
2—Buzz is Not Enough
Being buzzed about doesn’t necessarily mean you’re successful. These days, it’s so much what consumers are saying, but what they’re searching that really counts. Regular contributor Matt Zajechowski of Digital Third Coast sends along the infographic below from Slant Marketing, which shows what brands consumers are actually searching for.
AppDirect surveyed SMB IT decision makers to find out what business owners are looking for when it comes to the cloud—and how providers and resellers can make the process easier. According to the survey, “technology has become a lifeline for SMBs, often giving them a competitive edge and allowing them to respond to rapidly changing markets.”
This report focuses on the way U.S. small businesses use cloud services. AppDirect says cloud-based business applications put enterprise-grade solutions into the hands of millions of small business.
Among the key findings:
- SMBs use an average of 6.48 cloud services
- 61% of SMBs want to use more cloud services, but
- 73% are overwhelmed by their choices, and need help buying
- 85% want to talk to a real person who can answer their questions about which cloud services are best for their businesses
- 84% of SMBs want a greater variety of cloud services to choose from
- 69% want apps that are specific to their industries
- 39% are worried about keeping their data safe in the cloud
4—The Digital Divide
Deloitte Digital and MIT Sloan Management Review recently released their annual Digital Business Study looking at the differences between businesses successfully navigating digital change and those that are struggling with it.
The global survey asked: “What sets digitally maturing companies apart from early stage companies?” The answers:
- A growing digital maturity gap: Nearly 85% of business executives and employees believe it’s important for their organizations to become digital businesses. Yet, only 25% of respondents say their organizations are digitally mature.
- Companies that don’t act run the risk of losing talent. 34% of respondents from early stage companies say their companies spend more time talking about digital business than acting on it.
- Implementation isn’t the main problem—strategy is. Only 13% of respondents say improving technology development and deployment at their companies is a source of concern. Meanwhile, nearly 40% say improving digital strategy and innovation is what their organization needs to do differently in order to progress toward digital maturity.
- Overcoming aversion to risk is the most important characteristic of digitally native companies. 71% of digitally maturing organizations have conquered this cultural barrier by encouraging their organizations to experiment, and accept the risk of failure, versus some 29% of early stage companies.
5—Are Workers Afraid of Automation?
6—Are You Investor Ready?
Getting investor ready is one of the most important junctures that an entrepreneur might face. To prepare for this key milestone, many early-stage startups have a mountain to cross before they’re even in the same room as an investor. While it’s admittedly challenging, it doesn’t have to be a completely uphill battle.
Here’s how startups can get investor ready.
Endurance. It’s important to set out on the funding journey with the right mindset. We recently had the opportunity to sit down with Mike Suprovici, who knows this challenge all too well. He’s the Entrepreneur-in-Residence at The Founder Institute, an idea-stage startup accelerator and launch program. Suprovici provides guidance to fresh entrepreneurs, helping prevent them from making the fundraising mistakes that can turn out to be deadly or expensive.
Suprovici says, often, founders aren’t psychologically prepared. It’s a long and arduous process that is mentally and physically taxing. Be ready to dedicate the time necessary to raise a round, as Suprovici says, on average, fundraising can be a full-time job for up to six months.
“Often, founders go into fundraising not realizing how difficult it is and the amount of work that is required,” Suprovici shares. “Founders think when they’re reading news about funding rounds that it’s a quick process, but it’s not. Fundraising is a very difficult thing and entrepreneurs need to be able to handle that.”
Entrepreneurs should prepare for the likely reality that, out of every 100 investors they speak to, 95 will say no. Looking back on graduates from The Founder Institute who have raised successfully in the past year or so, Suprovici says some spoke to up to 150 potential investors before they got a ‘yes’.
If entrepreneurs are doing things right, they will get a yes eventually. Perseverance is key.
The Right Growth and Business Model. Benchmarks for raising capital have gone up over time as the cost of product development has decreased. Unfortunately, it’s not enough to just be someone with an idea. Investors need to see a realistic business model.
They also want to see how well the business has been thought out, an acute understanding of the business’ unit economics and the lifetime value and cost of customer acquisition. Questions like these need to be answered very succinctly. Otherwise, it can very quickly make the entrepreneur seem as if they don’t know what they’re talking about, and therefore lose their credibility.
When fundraising, the business owner needs to show they’ve been able to recruit a team, inspire the team to develop a solid product, that there’s a small subset of people who like using the product, and that the product has grown closer towards product-market fit.
Investors like to fund growth, rather than product development. Being able to show an investor month-over-month growth over a certain period is a strong way to do so. Suprovici says fundraising is essentially about de-risking the business from the investor’s perspective. He adds, “The more the business is de-risked, the more attractive it is to employees, partners and investors.”
Getting the Financials in Order. For a startup, one of the most important parts of being investor ready is having its finances in order. To do this, establishing a relationship with a banker and an accountant is critical. Working collaboratively with these trusted advisors, and leveraging an automated and reliable platform, the entrepreneur can make sure their books are up-to-date and clean.
When the entrepreneur leverages a platform that has deep integrations with their bank, the business owner can simply and quickly compile high-integrity financial data, give investors a clear, up-to-date view on how the startup is tracking, and what the company’s true financial position is.
Having all this data available at the click of a button is imperative when fundraising, says Suprovici. He recommends Xero, a cloud accounting platform, for this important point in the fundraising process. With a few clicks investors can be granted limited access to the platform and get every report they need.
“An investor might email you at 11 pm to find out information about your company and you want to reply as fast as you can so you can close the deal as quickly as possible,” Suprovici says. When it comes to the due diligence stage, speed and accuracy is everything.
With the right mindset, business model and the ability to provide this and other financial information to investors quickly and in an intelligent way, the startup funding journey can be made that little bit easier for entrepreneurs.
7—Does the Weather Impact Sales?
If you live in New York City, you know the answer to that question is yes, since the minute raindrops start to fall, scores of street vendors are suddenly selling umbrellas. But what about for the rest of us?
Four data scientists—Chenxi Li, Xueming Luo, Cheng Zhang, and Xiaoyi Wang—noticed the weather was a “huge focal point for many mobile marketing campaigns.” But, they wondered, what specific weather conditions drove sales. Their research, appearing in INFORMS’ Marketing Science, shows many large marketers, such as Burberry, Ace Hardware, and Taco Bell (among others), unleashed weather-based mobile marketing messages, promoting specific products.
Some of their findings:
- Consumer responded more quickly to these types of promotions in sunny weather.
- Responses were “lower and slower” when it rained.
- “Better than yesterday” weather increased sales.
- If the forecast was for bad weather, but it was nice instead, that too boosted purchases.
But it’s not all black and white. When it was raining, mobile marketing pitches that “incorporated a sense of urgency and scarcity” were effective. General pitches thrived in the sunshine.
We are apparently weather-obsessed. About 150 million people use weather apps on their smartphones—and there are approximately 2 billion (yes BILLION) checks of the weather every day.
Why not try testing some weather-related mobile marketing messages for your business?
8—Mobile Shopping Behaviors
Getting ready for the holiday shopping season? According to a new report from Liftoff, a leader in mobile app marketing and retargeting, September is the best month to acquire users—ahead of the holiday shopping frenzy. The bad news is, “the findings suggest that rapidly dropping mobile user acquisition costs may be the direct result of brick-and-mortar’s demise.”
Some other insights:
September is still the new Black (Friday). It’s getting less expensive to acquire new mobile shoppers, year-over-year, suggesting as users grow more comfortable with their phones, it’s less expensive for marketers to acquire mobile users. This contributes to the growth of mobile commerce, which encourages mobile users to make more purchases on their phones and ultimately contributes to the continuing downfall of the already-shaky brick-and-mortar climate.
As users get more and more comfortable on their mobile devices, it’s likely that the cost to acquire users who go on to make a purchase will only continue to decrease.
Liftoff says if mobile retailers want to get ahead of Black Friday and critical shopping holidays, boosting user acquisition efforts in September then focusing on re-engagement in November and December is still the most cost-effective approach.
North America is the place to find engaged buyers. According to the report the North American market is mature, but the install-to-registration rate for apps is only 4%. But, while North Americans are the “least likely to register,” they are more than twice as likely to actually make a purchase. Once they commit, North American users convert to an in-app purchase at a rate of 17.7%.
So, while it may be challenging to convince North American consumers to create an account in a shopping app, the effort is well worth it.
9—401(k) Plans Help Small Businesses Attract and Retain Talent
Increasingly small businesses are looking to 401(k) plans to attract and retain talent, says the Spark 401k Small Business Retirement Planning Index.
According to the survey, 94% of small business owners (SBOs) who offer a 401(k) say it drives employee recruitment and retention, and 86% of SBOs with a plan are confident they are saving enough for retirement.
The Index also shows 59% of owners who don’t offer 401(k) plans believe their businesses are too small to have one, 22% say they can’t afford matching contributions, and 16% believe plan costs are too high. Worse, 47% of all SBOs are saving less than 10% of their income for retirement, with 25% saving nothing at all.
Other insights include:
- In addition to driving recruitment and retention, 52% of SBOs say offering 401(k) benefits helps them attract better quality employees, and 47% say it increases employee engagement.
- 27% of SBOs who offer a 401(k) say employee demand played a role in establishing a plan
- 48% of SBOs with 2-50 employees say departing employees report a lack of retirement benefits influenced their decision to leave
- 39% of SBOs plan to fund their retirement by selling their businesses
10—Small Business Transactions Hits Record Levels
BizBuySell.com, the internet’s largest business-for-sale marketplace, reports there were a record number of businesses changing hands in the second quarter of 2017. The full results, included in BizBuySell’s Q2 2017 Insight Report, shows a total of 2,534 closed transactions, a 31% from Q2 2016. This brings the year-to-date total to 4,902 closed transactions.
The report also indicates small business sellers are benefiting from today’s market, “which shows increasing sale prices and faster deals.”
Sellers are asking—and getting more for their businesses. The median sale price in the 2nd d quarter increased from $199,000 in Q2 2016 to $229,000.
The restaurant sector experienced major growth in the Q2—the number of closed restaurant transactions increased 34% year-over-year, and the median sale price jumped from $165,000 to $195,000.
11—Track Your Pets
In its annual Summer Pick Awards, Keypoint Intelligence—Buyers Lab recognized four Xerox printer and multifunction printer (MFP) lines—including three from the newly launched ConnectKey® portfolio—based on their productivity-boosting capabilities.
The award-winning printers and MFPs were:
- TheXerox VersaLink® B400 series was awarded “Outstanding Multifunction Printer for Mid-Size Workgroups” because of its support for mobile printing, ConnectKey apps and impressive feature set, including flexible media handling.
- TheXerox VersaLink C400 series was named “Outstanding Color Printer for Mid-Size Workgroups” due to its access to ConnectKey apps that streamline workflows and add functionality.
- TheXerox VersaLink C405 series received “Outstanding Color Multifunction Printer for Mid-Size Workgroups” based on its highly intuitive touchscreen panel that simplifies walk-up activity and access to time- and money-saving ConnectKey apps.
- TheXerox WorkCentre® 6515 series won “Outstanding Color Multifunction Printer for Small Workgroups” for its easy-to-use touchscreen panel and high-quality, professional-looking output.
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14—Stop “Buddy Clocking”
Nucleus Research reports 19% of employees admit to “buddy clocking”—where employees clock in for each other. This practice accounts for over 2% of gross payroll losses—and often leads to mistrust and management challenges for the company.
To help combat the problem, Nimble Software Systems just launched the Ximble Time Clock App for tablet devices. Integrated with the wider Ximble.com platform, the Ximble Time Clock App “leverages the ease of tablet technology” with the convenience and accuracy of a photoClock feature to verify employee identity when they check in.
Access to The Ximble Time Clock App is free for Ximble subscribers, with subscriptions starting at only $2/user/month. You can try it for free.