Business Posts

Year-end Review: Your Business Barometer

We all know that a barometer is an instrument used to measure atmospheric pressure. Another definition of a barometer is something that reflects changes in circumstances and opinions. A good business barometer could be an annual review of that business to determine current trends and can also be used to forecast the future, and thus, to revise a strategic business plan.

An annual check-up is as good an idea for a business as it is for a human being. Most successful businesses spend time frequently and regularly evaluating progress toward strategic goals. Sometimes, even those strategic goals need an update.

Owners of established businesses may want to use the annual review as a sort of barometer to identify how to make the most of the market position already attained and decide where to take the business next.

Reviewing progress will be particularly important when an owner feels uncertain about the future and which direction to take. An annual review can refocus and give new direction as a new year of operations begins.

When setting a new direction, questions to be addressed might include these:

  1. Where should the business be in 3-5 years?
  2. Are there new markets to pursue?
  3. How can the business perform better than the competition?
  4. What skills, assets, relationships, technical competence will be needed?
  5. Are there new or different key measures of performance that should be adopted?

When assessing the core activities of the business, these questions may be helpful:

  1. Are any products or services not performing well? Should or could they be discontinued?
  2. What are factors making some products more successful?
  3. In both cases, how can products be improved or are there complimentary products or services that should be offered?
  4. Do products and services still solve customer problems and meet their needs?
  5. Are there any rising costs that have made certain products or services unprofitable?

When assessing the efficiencies of the business, consider these questions:

  1. Does it still make sense to own or lease physical space? Is the current space still meeting the needs of the business?
  2. Is it time to consider a new location for the sake of convenience to the trade area, for better support of updated technology, capacity issues, potential cost savings, etc.?

When assessing human resources, consider these questions:

  1. Is there significant turnover? What is causing it?
  2. Is current staff adequately trained to do the required job, or is additional training necessary? Are additional skills needed?
  3. Is the leadership team effective?

When reviewing your finances, ask these questions:

  1. Is gross margin going up or going down? What are the causes of that movement and does the trend present an advantage or are adjustments needed?
  2. Have working capital needs changed?
  3. Are there cash flow challenges?
  4. Is financing debt becoming too costly?

Conduct a fresh competitor analysis by taking these actions:

  1. Determine if there are any new competitors and identify what they offer.
  2. What do they say about themselves?
  3. What do customers say about them?
  4. Conduct a revised SWOT analysis

A fresh market analysis might be in order. Consider these factors:

  1. Changes in your market or trade area
  2. Changes in customer needs
  3. New technological developments
  4. Customer feedback on your products or services
  5. Other analysis tools such as Porter’s Five Forces or STEEPLE analysis, in addition to the SWOT analysis already mentioned.

Reviewing these seven areas of a business each year will go a long way in uncovering potential problems as well as opportunities for improvements. By examining these areas in depth, the business owner will regain certainty and will become focused on key activities that will assure a higher probability of success.

NaperLaunch will be hosting a SCORE Fox Valley workshop on December 5, at 8:00 a.m. in the Nichols Library Community Room. Join us for more guidance on year-end analysis.

Posted: 
Monday, November 4, 2019 - 15:45

Employee Retirement Plans Aren't Just for Big Business

Many experts recommend saving 10% to 15% of pretax income annually for retirement. But while Americans accumulate the majority of their retirement funds through employer-sponsored defined-contribution plans, according to a report from the Pew Charitable Trusts, many small business owners and their employees are not afforded this option.

A 2017 survey of small business owners found that 34% of small business owners do not have a retirement savings plan for themselves. In addition, in 2015, the Social Security Administration reported that small businesses are the least likely to provide their employees with retirement options; while 87% of businesses with more than 100 employees offer retirement plans, just 28% of businesses with fewer than 10 employees did so.

The most common reasons for not offering a retirement plan cited by small business owners in the Pew report were the expense of starting a plan, the lack of resources for administering a plan, and a perceived lack of interest from employees.

However, starting a retirement savings plan for your small business can be easier than you might think. Tax credits and incentives are available and can offset the costs of starting a retirement plan. Once the plan is established, employer contributions also are tax deductible.

In addition, a retirement plan is also one of the most desirable employee benefits, so offering one may help you attract and retain qualified employees, reducing turnover.

Small business owners who are interested in establishing a retirement plan have a number of options, including IRA-based plans, defined contribution plans, and defined benefit plans. The IRS and SCORE offer many helpful resources describing and comparing the various retirement plan options.

For more information about retirement plan benefits and options for your small business, join us on Tuesday, Oct. 1 for Choosing a Retirement Solution for Your Small Business, presented by Scott Miller of the U.S. Department of Labor’s Employee Benefits Security Administration. 

This session is part of NaperLaunch’s 6th annual Entrepreneurs Week, a series of workshops focused on educating and guiding startup and experienced entrepreneurs. For more information, visit www.naperlaunch.org/entrepreneurs-week.

 

Sources:

Choosing a Retirement Plan for Your Small Business. SCORE.org. 15 May 2019.

Dushi, Irena, Howard M. Iams, and Jules Lichtenstein. Retirement Plan Coverage by Firm Size: An Update. Social Security Bulletin 75(2): 2015.

One-Third of Small Business Owners Don’t Have Retirement Savings Plan. Manta 11 Jul. 2017.

O’Shea, Arielle. How Much Should You Save for Retirement? NerdWallet. 8 Aug. 2017.

Small Business Views on Retirement Savings Plans. Pew Charitable Trusts. Jan. 2017.

U.S. Department of Labor Employee Benefits Security Administration and Internal Revenue Service. Choosing a Retirement Solution for Your Small Business. IRS.gov. Oct. 2017.

Posted: 
Tuesday, October 1, 2019 - 10:30

Want to Improve Your Communication? Listen Up.

Communication is a two-way street. But most of what’s written about effective business communication focuses on just one side: speaking. The other side—listening—is often overlooked but at least as important.

Writing for Entrepreneur.com, Anna Johansson describes several ways that active listening is important for helping a small business survive and thrive. For example, listening to your employees can clue you in to small problems before they become big issues. What’s more, the team members who alert you to potential problems may also have useful suggestions to help solve them, as well as new ideas that can lead to improvements or growth. An added bonus is that taking the time to listen to your employees also builds trust and loyalty to your company. The same goes for clients and partners: actively listening rather than coming in with a preplanned sales pitch makes them feel valued and understood.

Derek Miller, a recent contributor to the SCORE blog, cautions that effective listening is not easy, especially in situations where there is a power imbalance, such as a superior and a subordinate. Therefore, it’s especially important for entrepreneurs and small business owners to cultivate these skills.

In a 2016 article in the Harvard Business Review, leadership development experts Jack Zenger and Joseph Folkman describe how data from more than 3,000 participants in a program to develop managers’ coaching skills revealed four main characteristics of good listening:

  • Good listeners ask questions that promote dialogue and insight.
  • Good listening includes interactions that builds the other person’s self-esteem.
  • Good listening is a cooperative conversation with feedback flowing in both directions.
  • Good listeners make suggestions and provide feedback in a way that others will accept and consider.

So how do you improve your listening skills and become a more effective active listener? Inc.com contributor Matthew Jones, a licensed therapist and coach, suggests some things to pay attention to:

  • Content: Focus on the specific words and phrases the speaker uses.
  • Context: What overarching circumstances and unique personal situations influence what’s being said?
  • Tone: What feelings are implied by the speaker’s tone of voice?
  • Emotion: What emotions are being conveyed by the speaker, and how can you amplify them in order to make him/her feel understood?
  • Body language: Be aware of nonverbal as well as verbal communication.

In addition, active listeners do the following:

  • Ask questions: Open-ended questions encourage elaboration, while closed-ended questions slow down the pace of the conversation and allow the listener to clarify important details.
  • Offer affirmation: Validate the speaker’s choices as important and valuable.

To learn more about effective listening and why it’s so important to the success of a business owner, join us on Monday, Sept. 30 for Building Relationships through Effective Listening. John Panarese of SCORE Fox Valley will address key skills in relationship building, including why people don’t listen, how to break the bad habits of responding before the other person has stopped speaking, and how we always learn more from listening than speaking.

This session is part of NaperLaunch’s 6th annual Entrepreneurs Week, a series of workshops focused on educating and guiding startup and experienced entrepreneurs. For more information, visit www.naperlaunch.org/entrepreneurs-week.


Sources:

Johansson, Anna. “5 Ways Listening Grows Your Business.” Entrepreneur.com. 28 Oct. 2015.

Jones, Matthew. “10 Ways to Immediately Improve Your Listening (and Networking) Skills.” Inc.com. 10 Jan. 2018.

Miller, Derek. “5 Ways to Improve Communication Within Your Small Business.” SCORE.org. 16 May 2019.

Zenger, Jack, and Joseph Folkman. “What Great Listeners Actually Do.” Harvard Business Review. 14 July 2016.

Posted: 
Tuesday, September 24, 2019 - 16:45