11 Things Entrepreneurs Need to Know
By Rieva Lesonsky
Happy Holidays everyone—we’ll be back January 9th.
1—Crazy Travel Expenses
Certify surveyed hundreds of business travelers to find the craziest business travel expenses of 2016. Someone expensed a llama!
2—Credit, Capital & Cash Flow
We all know that some of the biggest challenges small businesses face is controlling cash flow and costs. Research also shows they have a harder time getting bank loans than larger businesses, though small, local banks are more likely than large banks to approve loans for small businesses. SCORE, the nation’s largest network of volunteer, expert business mentors, has gathered stats highlighting the financial difficulties and opportunities American small businesses face today. Check out the infographic below.
3—Is Your Workplace Too Noisy?
In this age of open offices and co-working spaces, noise and distractions are a bigger challenge than ever to collaboration and productivity.
An Oxford Economics survey of 1,200 global employees and executives (underwritten by Plantronics) found that employees ranked the ability to focus on work without interruptions as their top priority—more important than perks like free food or onsite day care. Almost two-thirds of executives believe their employees can deal with distractions at work—however, less than half of employees agree.
The infographic below has more details.
4—Making Expert Benefits Decisions, Even When You Aren’t a Benefits Expert
Guest post by Brian Michaud, Senior Vice President, ADP TotalSource®
As the war for talent rages on, it’s getting tougher and more expensive to attract high-quality job candidates. In fact, the average cost to hire a new employee—including expenses for interviews, travel, testing, training and orientation—is $4,129, according to the Society for Human Resource Management (SHRM®).
Many small businesses can’t afford that. So, as small businesses look for ways to set themselves apart and appeal to the most sought-after prospects, offering a robust benefits package is emerging as a differentiator. A competitive benefits package could be the valued asset that tips the scales for a desired candidate.
But as today’s benefit landscape becomes more and more varied, employers may be overwhelmed by the task of assembling an enticing plan. Ironically, employees aren’t the only ones who can be unnerved by sifting through options every enrollment period.
Business owners have to balance overall cost with providing an array of plan options that meet the needs of a diverse workforce. And it can be very expensive for small and midsize businesses to offer competitive packages. As a matter of fact, SHRM’s most recent Health Care Benchmarking Report notes that the average cost per covered employee has increased by nearly $500 in just one year.
Choosing the right plan can be the difference between attracting appropriate, skilled talent and losing qualified candidates to the competition. Why so challenging? Most business owners are not benefits experts.
Most business owners began their entrepreneurial journey by pursuing a passion. Imagining themselves as benefits administrators may not have been part of the vision. So, here are four ways small business owners can help ensure that they make more informed decisions:
Look to your peers. Benchmark how your current plan compares to plans that others in your industry and geography have been selecting. This practice will help inform your decisions with relevant trend information.
Compare plans side-by-side. Closely review plan options and contribution amounts to see how current plans compare to other possible offerings. This comparison should also determine whether your planned employer contribution meets affordability requirements set by the Affordable Care Act.
Find a trusted benefits adviser. As a small business owner, it’s difficult to prioritize your business goals while also managing your company’s HR needs. Hold strategic, annual one-on-one conversations with an HR professional to keep your plans current and competitive. Walk through the selection process and make benefit selections based on relevant data coupled with knowledge of the goals and objectives of your business.
Consider offering “softer” benefits. In addition to offering more “traditional” health coverage and retirement plans, many employers are providing more diverse options. In some industries, wellness benefits are becoming the new gold standard. For instance, a recent HealthMineSM survey showed that 75 percent of consumers want employers to offer incentives on health and wellness. Other “soft” benefits include subsidized gym memberships, activity tracker competitions, flexible work arrangements and professional development, to name a few. Consider how these benefits could make your offerings stand out to prospective employees, as well as possibly increase employee engagement and retention.
Small business owners already manage a wide range of responsibilities. There’s no need for them to be benefits experts, as well. By considering these tips, you can help your business remain enticing and competitive to job candidates while you keep your passion alive.
5—Small Business Optimism Soars
According to the latest Wells Fargo/Gallup Small Business Index conducted last month, small business owners are the most optimistic they’ve been since January 2008. The quarterly small business survey shows a major driver for the optimism is how business owners are feeling about 2017—45% expect the operating environment for their businesses will be better next year. The increase in small business optimism was largely driven by business owners’ expectations that their finances will improve in 2017.
Key drivers of this quarter’s Index score included:
Revenue: 58% expect their revenues to increase in the next 12 months, up from 48% in July.
Stronger cash flow: 70% believe their cash flow will be somewhat or very good in the next 12 months, up from 65%.
Capital spending: 35% plan to increase their capital spending, up from 25% in July.
Hiring: 36% expect the number of jobs at their companies to increase a little or a lot over the next 12 months, up from 21% in July. This is the highest reading in the 13-year history of the survey.
Small business owners and credit: Almost 44% of the small business owners surveyed think credit will be easier to get in the next 12 months, up from 37%. This is the highest reading on this measure since January 2008 when 48% though credit would be easier to obtain. And 14% plan to apply for new credit products for their businesses.
Small business challenges: The business owners say their biggest challenges are: attracting customers and finding new business (11%), government regulations (11%), hiring and retaining quality staff (10%), the economy (8%) and healthcare costs (8%).
6—Small Business Concerns
The small business owners surveyed in the latest Capital One Spark Business Barometer are also feeling optimistic (the Capital One Small Business Confidence Score is higher in Q4 2016, than it was in the first half of the year), but many are worried about weaker sales this holiday season.
- Only 23% expect an increase in holiday sales, down from 29% a year ago.
- However, 31% of larger businesses, those with more than $1M in annual revenues, believe holiday sales will increase, compared to 20% of smaller businesses.
- 49% of businesses with over $1M in annual revenue reported better financial positions compared to last year versus only 30% of business owners with less than $1M in annual revenue.
- 59% of larger businesses reported “excellent” or “good” business conditions in their areas, compared to 48% of smaller businesses.
That said, however, overall they are feeling positive.
- 49% report “good” or “excellent” business conditions in their areas heading into 2017, an increase of eight points compared to the first half of 2016.
- 38% say sales have increased over the last six months.
- Female business owners are more encouraged by local conditions than their male counterparts, with 55% saying business conditions are “excellent / good,” compared to 46% of men.
- 12% of SBOs believe their financial position will be “much better” in the next six months, up three points from earlier this year.
Top Concerns in 2017: The top three concerns of small business owners in the coming year include taxes (47%), managing cash flow (31%) and keeping up with technology (25%). 72% of men estimate they will be impacted by these issues in 2017, compared with 67% of females.
Businesses are hesitant to grow
- Only 23% of SBOs plan to hire new employees in the next six months.
- Less businesses are hiring contractors, 41% plan to hire a contractor, compared to 51% in Q4 2015).
- Industries with the highest growth expectations in 2017 include construction (45%), transportation (30%), and finance (29%).
- Women business owners are more likely to add to the workforce in the next 12 months, with 26% planning to add to their workforce (versus 21% of men).
7—Connected Small Businesses
Salesforce just released its 2016 Connected Small Business Report, which attempts to better understand the role technology plays in small businesses and how they sell, service and market to their customers.
Today’s small business owners have limited time and resources, wearing many hats, from founder, to sales lead, to head of IT. Because of this, they often get stuck in day-to-day activities and fail to look at how to strategically apply technology to address tomorrow’s opportunities—whether it is their customers migrating to mobile devices or the emergence of big data as a potential asset for their businesses. As a result, many small businesses end up with multiple, one-off technology solutions that don’t communicate with one another or grow and scale with them.
Key Report Findings
Most small business owners are responsible for their companies’ technology buying decisions—and they are price sensitive.
- 83% of small businesses do not have an IT staff.
- 73% of SBOs are responsible for purchasing technology for their businesses.
- The most important factors in purchasing technology: price (74%), convenience (43%) and compatibility with their current infrastructure (37%).
- Technology accounts for 15% of SBO’s annual budgets on average, mostly going toward hardware (46%) and financial software (33%), such as accounting packages.
Most small business owners still rely on outdated tools and processes when it comes to connecting with their customers.
- To track customer information, SBOs primarily use email (44%) and spreadsheets (41%)—and the numbers are similar for managing sales opportunities.
- For customer service, 51% of SBOs make direct phone calls to customers, followed by direct emails (47%) and social media (32%).
- 21% of SBOs don’t use any technology to sell to their customers. [That’s shocking!]
Newer technologies, such as business process automation, analytics and artificial intelligence (AI), are still nascent at small businesses.
- 49% of SBOs take advantage of business process automation—primarily automated billing and finance (69%).
- Only 21% use business analytics or business intelligence software to measure their businesses.
- Despite the hype around AI, 61% of SBOs say their businesses are not ready, citing it as too complex for what they need.
While the economy is a concern, small business owners would still be likely to start a business in today’s climate.
- Not having enough time in the day (35%) and the impact of the economy (34%) are among the top business-related issues small business owners face.
- However, 58% of SBOs say they would still likely start a business today and 75% believe their city is a good place to start a business.
8—Celebrating Small Business
Sage launched its first ever digital Christmas advertising campaign, showing how hard small businesses are working over the holiday season. The ad will run from December 7th to January 7th on social channels including YouTube, Twitter and Facebook (using the hashtag #ThereForUs). At the same time Sage is launching a contest that will reward businesses that have made a big impact on their community.
The contest asks the public to nominate a small business of their choice that will win £5,000/$5,000 from Sage.
You can view the ad and vote for outstanding businesses in your community here.
9—Meet the Winners
OnDeck® and Shark Tank’s Barbara Corcoran announced the three winners of the 2016 OnDeck Seal of Approval Contest—B’more Organic®, Beau & Belle Littles™ and Hardball Cider®— during a nationally televised broadcast of the Rachael Ray Show. Chosen from over 1,000 submissions, each of the winning small businesses will receive a $10,000 cash prize from OnDeck and a one-on-one coaching session with Corcoran designed to propel their businesses to the next level.
Take a closer look at the winners of the 2016 OnDeck Seal of Approval Contest:
B’more Organic, an organic smoothie company founded by Jennifer and Andrew Buerger, promotes healthy living with a socially conscious mission. Dedicated to local, family-owned sustainable farming, B’more Organic smoothies use skyr, an Icelandic yogurt packed with protein. One percent of their sales benefit Jodi’s Climb for Hope, a non-profit dedicated to funding the development of a new viable treatment for breast cancer. The company’s biggest challenge is educating consumers about the brand while competing in the increasingly popular health food space.
Beau & Belle Littles, maker of reusable swim diapers, started out as a few well-designed and adorable swim alternatives for Rachelle and Paul Baron’s water-loving six-month-old, Beau. It quickly developed into a top-selling Amazon product—the Nageuret Swim Diaper—which grossed $250,000 in the first year. The eco-friendly diaper manufacturer donates 5% of its profits to Compassion International to help bring children and their parents out of poverty worldwide.
Hardball Cider, driven by founder Geoffrey Dean’s passion for baseball and real hard cider, began three years ago in Pennsylvania. Its three varieties of cider can now be found in the area’s local restaurants and, appropriately, in many of Pennsylvania’s major and minor league baseball stadiums.
A full summary of the contest winners and their video submissions can be found here.
10—A Jacket for Your Legs?
Every so often we’ll feature a crowdfunded project in Things Entrepreneurs Need to Know. Launched on Kickstarter VEAR created a durable pair of rain pants, with top-to-bottom zippers on both sides, that allow the pants to be zipped like a jacket. The company calls the pants The Legs Jacket. The pants are windproof, waterproof, breathable and lightweight.
The product is aimed at commuters who live in rainy/snowy areas and make it easier to cycle and walk to work. The design allows users to get from the road to their offices in seconds, because you can get the pants on and off without the removing your shoes.
VEAR Legs Jackets got fully funded in 27 hours.
Legs Jacket pants are also great for golfing, mountain biking, hiking, motorcycling or pretty much any rainy outdoors activity and are made with “special reflective features that remain black and discreet during the day, but provide 360° visibility at night.”
The creators of VEAR live, work and commute in Denmark, a country that’s famous for its eco-friendly biking culture, and infamous for its rainy climate.
Sustainability is important to the folks at VEAR. The company urges customers to return the pants to them when they don’t need them anymore so VEAR can properly recycle or refurbish them, in exchange for a discount on a future purchase.
12—EMV-Compliant Card Readers.
Control, a leading payment analytics and alerts platform for Software as a Service (SaaS), subscription and eCommerce businesses, partnered with Stripe, Miura Systems, and payworks, recently launched the first EMV-compliant app for Stripe. Stripe merchants can now take in-person payments using a Miura Systems card reader in tandem with Control¹s mobile app, which delivers key payment metrics on both iOS and Android devices. The card reader is both NFC enabled and EMV compliant, meaning that merchants will be able to accept secure mobile payments from customers using either contactless payment methods or chip-enabled cards.
11—Transforming Customer Communications
As the mobile platform shift accelerates beyond smartphones to homes, cars and VR, businesses must remove customer data silos and combine insights across channels—or else risk losing to the competition. To help marketers more easily reach customers with personalized messaging at every step of the customer journey, Urban Airship recently unveiled next-generation platform services—Open Channels and Open Profiles—to deliver individualized messaging to any platform, device or marketing channel and use real-time customer data from any system.
With Urban Airship’s Open Channels, businesses no longer need to integrate their software with numerous messaging channels or build orchestration logic from scratch in order to reach customers with rich notification-style messaging on any channel—from chat messaging services and email, to intelligent personal assistants and in-car information systems.
Urban Airship’s Open Profiles extends the company’s open mobile data strategy and further breaks down customer data silos, by collecting and processing real-time customer behavior, events and attributes from any system or channel. This data enriches user profiles for real-time automation and messaging orchestration, and is also available in Urban Airship Insight to analyze customer patterns across multi-device, multi-touchpoint journeys, or for real-time streaming through Urban Airship Connect to populate data warehouses and trigger user-level actions in other systems.