Selecting Additional Revenue Streams

July 4, 2022

Generating revenue is essential for your business. 

Revenue streams are varied, and choosing the best one(s) is critical to your business’s success. 

Having multiple revenue streams gives you the ability that if one source is suffering, others are stronger, and you will not run short of cash.

Let’s explore the different revenue streams and consider which ones you should select to diversify your revenue sources.

Product Sales – Customers buy your offering outright and own it. Some examples are a carton of milk, a toothbrush, and a folding mattress. Brick-and-mortar retail companies and/or e-commerce companies use this revenue stream.

Plusses include: lower ticket items are easier to sell; higher ticket items provide excellent revenue all at once.

Minuses include: every product demands that it be produced, stored, and shipped; products often have lower profit margins; and there are limits on how inexpensively you can produce it, even with higher volumes.

Services and Consulting – Talent and expertise are saleable. Examples range from computer geeks that help you with your technology needs to hair salons that improve their customers’ appearance. 

Businesses can provide various services, each providing revenue to the company. Services are a great way to add revenues without creating new assets, but as the billable hours mount, you need to add people. Survey your customers on their needs and wants to identify what services to add, then use your existing in-house expertise to deliver the service(s).

Benefits: you can charge more as the services are personalized, and you need fewer customers to reach your revenue goals.

Drawbacks: services are not easily scalable, and you may pay for talent not being used as services are based on billable hours; customer service has a more significant role; and finally, you are more responsible for the outcomes your customers get.

Subscriptions – Customers pay a recurring fee regularly (monthly, quarterly, yearly) to access a product or service. Some examples of subscriptions are Amazon Prime and gym membership, enabling customers to have access as long as they pay their subscription fee.

Pros include: if you can accurately estimate your customer churn rate, new customers, and monthly recurring revenue, you can calculate how much revenue your business will generate next month; if your marketing and sales efforts slow or stop, you can still generate revenue from existing subscribers; and it is often easier to close subscription sales as customers perceive the upfront cost and risk is low.

Cons include: if your customer acquisition cost payback period is more extended than you retain your customer, you will lose money; you may need to invest resources in customer service and other areas to avoid high cancellation rates, and revenue can be uncertain during the start-up phase.

Advertising – You can sell advertising space via your customer channels, especially if you have a large and loyal customer base or audience. For example, you can generate advertising revenue if you have a podcast or Twitter handle that millions of people regularly follow and engage with you, especially if they retweet.

If you have a sizable email list, you can partner and charge other brands seeking your target audience to advertise. It does not have to be online; high-traffic areas like buildings and event venues charge for advertising to be placed for people passing by or in attendance to see.

In your favor: ads can be highly lucrative if you have a large customer base or following, and this revenue stream is easy and inexpensive to start and maintain.

Potential disfavor: if your audience is small, the revenue will be small; ads can distract from your offerings, and you will be associated with the brands you advertise, so choose carefully.

Usage fees (based on consumption) – How much a company charges for using its service. The customer pays you based on the amount they use the service. Some examples: a phone company charges customers for a certain number of minutes and per month of data; a car rental company charges the customer based on miles traveled; and a postal carrier charges you to deliver a parcel from one location to another.

Essentially, with usage fees, the more customers use a service, the more they pay. 

+ +: pay for what you use appeals to many customers; a low barrier to entry; provides the agility and flexibility to respond to changing business and customer needs quickly; enables businesses to grow faster with price points that are attractive to a more extensive customer base; eliminates or shortens purchasing cycles; higher net dollar retention that a more traditional subscription-based model.

– -: sticker shock can cause customer dissatisfaction or churn; low switching costs; creates revenue (and cash flow) insecurity; and the metric used for scaling is not always well understood by customers. 

Licensing – Income generated through customers’ approved usage of your company’s products, services, or intellectual property. An example is software licensing, such as for Microsoft Word. You can also grant a customer to use your company’s copyrighted material (such as images, characters, songs) or trademark.

Some advantages: licenses run for the longer term, so there is less churn, and your business gets more money upfront from purchases of its license(s) products.

Some disadvantages: customers usually buy once unless you create or improve the product, such as movie characters or software releases; and if you do not make sales, your revenue will be nothing.

Renting and Leasing – When you rent or lease assets as a revenue stream, you give exclusive usage rights to the buyer for a specific length. Some examples of rental companies are designer clothing company Rent the Runway, moving truck company U-Haul, and vacation rental company Vrbo, as well as real estate leasing companies. You could rent it out to freelancers and/or other businesses if you have unused office space. Renting and leasing businesses often have other revenue streams such as subscription fees and product sales.  

On the positive side, you can generate significant revenue from a single in-demand asset over time, and customers do not need to justify long-term purchases, so making sales easier.

On the flip side: it can take a while to make back your money after investing in your asset, especially if it is not in demand (think rental cars during the early days of COVID); you will need to account for the depreciation of your asset, and over time wear and tear will happen, so maintenance is essential.

Brokerage Fees – Involves a business that connects buyers with sellers and collects a commission on the resultant transaction. Advances in eCommerce allow this brokerage business model to thrive since virtually any product or service can now be ordered online, and Amazon brings buyers and sellers together and collects a fee from sellers. Companies like Fiverr and Upwork make money (a percentage of the fee) from matching freelancers with clients who need their help; in this case, as the matchmaker, it collects a fee from the buyer who gains access to a multitude of qualified professionals and the freelancers matched with clients.

Upsides include: once you can match parties together, it becomes a relatively low-effort revenue stream since you do not have to deliver products or services, and there can be less friction for sales as customers do not have to pay upfront, you take a cut from their transactions.

Downsides are: setting up matching can be expensive and time-consuming, you have to be willing to put forth the resources to make it work and then get buyers and sellers to use the matching service, and brokerage fees are currently only used in a few industries.

When selecting revenue streams for your business, a few factors to consider: your revenue stream should connect with your value proposition, and the value that your product or service delivers should align with your revenue streams; and analyze how your competition generates revenue, study their strategies, mistakes, and wins to help you determine your revenue streams. 

Further, you want to consider who your customers are, what your assets are, and how you can and want to make money.  

Think about your customer and market fit; consider how you interact with them and their preferences. Is another revenue stream additive to what you are already providing? Survey your existing assets and judge the most effective way to add income; the best revenue streams add the least complexity to your current business structure.  

Also, consider if you want to expand your assets to bring in revenue; but make sure it will provide what your customers want/need. 

Finally, think about whether the revenue stream is something you can and want to provide. Ensure the revenue stream(s) are in sync with your business purpose.

Consider new revenue streams for your business today to add income and make your business more resilient to tough economic times.

P.S. Sponsorship: If you are a non-profit, sponsorships can benefit organizations of all types and sizes. Advantages include: additional revenue in the form of contributions; in-kind donations of items and/or services; partnership with a company whose brand and values align with your organization’s; both parties get exposed to each other’s audiences; and partnering with a well-known company can add credibility to your organization. When identifying and securing potential sponsors, do the following:

  • Look for companies who serve a similar demographic as your organization.
  • Identify who has sponsored similar organizations or events in the past. 
  • Ask your staff, volunteers, members, donors, and board members if they can think of any potential sponsors. 
  • Examine your significant donors – do any of them own a business or work for a company that would be a good match. 

Before approaching a company about a potential partnership, think about what you can offer them in return, such as increased awareness and exposure to members of your community or public recognition as a socially responsible, purpose-driven company that supports a worthy cause.

Return to Work Hurdles

June 1, 2022

Identifying the reasons workers do not want to come back to the workplace is challenging.

Often the reasons your employees and staff tell you are not the underlying cause(s) for their reluctance.  As owner, manager, and/or leader it is your responsibility to identify and address the hurdles your workers have.

We have identified some reasons for their resistance, but there may be others.

From around the nation, employers reported on some of their workers’ responses to directives bringing them back to the workplace, they include the following.

In big cities, long commutes have surfaced as a major impediment to giving up working from home.  As a most given reason, it was followed by added food costs for lunches and snacks plus finally, unsureness of office wear mores.

An added factor is many workers have changed body shape due to the long idleness. Ironically, many workers have actually trimmed weight and find office wear too big rather than too small.

The emotional cost of renewing relationships on a personal basis after months of zoom-like meetings is sometimes a hindrance to workplace returns.

The savings in child-care costs along with the time to bond with children have led many parents to question the sacrifices they are making in leaving their offspring with others.  Many parents report renewed closeness they are reluctant to loosen.  Plus, some had other caregiver responsibilities.

Better work-life balance was also reported by many employees.  Workers spend more time with family but also believe they provide improved performance to their company by concentrating on the job needs rather than workplace distraction.

Being away from the workplace enabled them to better sort out their goals within the company.  They also indicate their life goals have changed, making them less desirous of career advancement over personal achievements.

Other employees say they have better communications with senior management through direct contact required by dispersed workers.  They report improved understanding of company goals with improved communications with senior leaders.

Perhaps you can add to this list.  The important task is to listen to what workers reply when asked to return to the workplace.  Then ask follow-up questions to understand each individual’s hurdles for returning and think about how you can help them soar over them.

The Power of Words

May 1, 2022

Words matter.  Your customers also think words matter.

So be cognizant of how your staff speaks internally as well as externally, the words and pictures on your website, the phases found in your promotional material, and even what’s printed on product wrappings.

Since words color all our perceptions, it is important to listen and hear closely what words are used when anything referring to your company is brought up.  Your current and future success depend on the repetition of favorable words and the silencing or careful handling of negative phrases.

You as a business owner and/or leader set the tone.  Consider how you refer to your business.  Is it positioned as a place you would want to be and/or do business with?  Are you clear and positive about your priorities?

Next, listen and look at how your employees refer to your business.  What words are used in their conversations and posted online in reference to your business?  Often their actions back up their words; do you have tenure employees or a revolving door?

Then consider partners, stakeholders and investors, you want to hear positive words from all; preferably similar words to how you refer to your business.  If significantly different words are used, find out why.  Then take steps to address where you are and where you want your business to be.

Finally, consider your customers, present and former.  What do they say about your business?  Customer opinions are significant, and you want favorable thoughts and endorsements both word-of-mouth and online.

What words or phrases should you consider using to have a favorable for your business?  An accurate description of your business is most important.  You might strive to be described as:

     Having quality offerings (product and/or services)

     Providing superior customer service

     Nurturing happy, long-time employees

     Achieving business longevity

     Fostering a good customer experience throughout their journey

     Fun, conservative, irreverent, ethical, etc.

Now is the time to think about words used to describe your business.  Are they favorable?  What can you do to make a positive impression that results in the best word selection when referring to your business?

If negative words are used, find out why.  Respond as favorably as possible, perhaps with planned corrective action.

Words matter.  Start listening, looking, and acting today.start now sign

Customer Experience

April 3, 2022

Customer experience can make or break your business. 

How customers feel about your company is not only a personal experience but one often shared on social and digital media.

Whether superior or hellacious, these more extreme customer experiences are often shared, repeated, and form the basis of your business’ overall reputation.

Therefore, it is essential for your business to ensure your customers get the best experience possible.  And, when they don’t get the best experience that you handle the shortfall(s) quickly and effectively.

Let’s look at what makes a favorable customer experience today.

  • Easy interface online and in-person – the information flow with the customer should be seamless and low effort.
  • Personalization – basic personal information from your customer’s name to past preferences has become table stakes; with advanced technology and multiple visits, the bar has risen to include style and tone of communication, suggestions, and anticipation of needs or wants.
  • Genuine interest – most customers want you to engage with them and show a genuine interest.
  • Knowledgeable resource – you must be the expert in what you do and the product/service you provide your customers.
  • Privacy – personal data, and preferences, will be protected and not shared without permission.
  • Receiving value – customer always want to feel they have gotten a good deal, or what they paid more for was well worth it.

To deliver good customer service, your business needs to build a culture of customer service and the capabilities to make it happen.  The customer experience should be considered in every decision your business makes.

The business owner and/or manager must support the objective of delivering best-in-class customer experiences.  All employees should be trained and compensated on delivering superior customer service.  

Even if an employee does not directly touch a customer, their work ultimately effects the customer’s experience; therefore you need to make sure the employee understands his/her role in making the customer experience optimal.

Understand your customer and what is important.  Your employees should be able to articulate and deliver a positive customer experience to your customers.  Also, your approach must be agile to change with customer needs and wants.

As you set-up or change work processes consider your customers’ expectations across areas such as getting help or service; remember, customers like to maintain control and want personalization.

To be successful:

  • Link your customer experience with strategic priorities, such as growing revenue and/or market share through increased customer attraction, engagement, loyalty, and referral.
  • Consider the whole customer experience or journey the customer takes with your business; changes and/or problems in one area can and do effect other areas.  Find and fill those gaps and problem areas to ensure the entire customer experience is consistently superior.
  • Be innovative, creative in coming up with improvements to your customers’ experiences.  Generate bold ideas, use a customer-centric mindset, and then assess the feasibility of them.
  • Prioritize what customer experience practices will make the biggest difference.
  • Feedback from your customers is critical.  You think and hope you are delivering a solid customer experience; but are you?  Ask your customers.

In summary, for your business to thrive you must focus on and deliver superior customer service.  Doing so begins with you, the business owner and/or manager.  Start making it a cultural and business imperative today.

Value Creation

March 2, 2022

Value creation happens when a business uses its work and resources to create something of value that is sold to a customer base.  In turn, the business earns a profit for what it has created and the customers have a want or need fulfilled. 

Every day value is being built (or destroyed) throughout your business; so let’s look at how to create value.

Value is created through the organization’s purpose, strategy and business model taking into account all resources, capital, and relationships in an integrated way.

A good place to start is clarifying the purpose (or aim) of your company; purpose is not what you do, but why you do it.  The clearer the purpose of your company, the easier it will be to communicate it, get stakeholders on board to fulfill it, and decision-making becomes simple as the measure is whether it supports your purpose or not.  Purpose adds direction as business stakeholders make the little decisions moment-by-moment.  Those little decisions and actions over time have a tremendous impact.

A winning value creation strategy is essential to define where and how a company can excel in systemic change, sustaining the core, creating the new, and delivering it fast.

Next, think of your business and its business model as a complex system of value creation techniques.  Look at each element separately and as part of the whole business and see where enhancements can be made to add value.

  • Production or Service Delivery – compare your cost of a process or product to industry averages. Greater efficiency creates greater profits.  Profits come from the creation of value in production or service delivery.
  • Sales and Marketing Process – when your customer first learns the value you can provide to them; profits come from the communication of value through your sales process.  Here are ways to determine whether you’re creating value through your sales and marketing process:  focus on higher profits; identify the salespeople or marketing channels that lead to repeat sales, who create loyal customers; and use A/B testing on your sales and marketing strategies to learn what works best.
  • Technology Advantage – use technological approaches to manage customer experience, relationships and support.   Integrate software and technical applications to track and maintain customer accounts and information.  Automating various processes to help streamline customer service can also help you create value in your business.
  • Right Tools and Resources Utilization – collaborate with team members to determine which resources and tools can boost overall customer value.  Tools like surveys and market analysis can help your business increase the value it offers to customers and create a lasting business that leads to growth and success.
  • Product Development Improvement – enhance the product development processes of your company.  Use data from market analysis and evaluating customer demographics to support designing and planning new products that meet demands.  Also, address customer concerns and input to find methods of development that produce high-quality offerings that customers are willing to purchase.  By improving the product development cycle, you can create offerings that give more value to customers.
  • Investments – learn where to invest company funds to support growth and add value to the business.  Investing in marketing, sales, and customer service training for your teams can also add higher value to your organization.

Also, think how stakeholders (owners, customers, employees, and suppliers) are relevant to the purpose and techniques of your company.  Then find a way to fulfill what their expectations are from you.  By doing this, you will have viable partner commitments that permits versatility and value creation in our business.

Meaningful engagement with key stakeholders enhances understanding of the positive and negative impacts of doing business, and informs a continuous assessment of material issues informing strategy and its implementation through the activities in the business.

Business success comes from value creation for owners, customers, employees, and suppliers. Let’s look at each critical stakeholder group.

OWNERS

Business owners need to play an increasingly active and critical role in strategic guidance, oversight and effective decision-making in order to create value. 

Further, owners need to develop skills that contribute to the creation of a high-performing board culture.  Hone the ability to challenge other directors, investors, executives and experts through positive exchanges focused on the key issues that underpin value creation.

Creating value for owners (shareholders) translates into increase in stock price (if you are publicly traded), and future likelihood of investment capital.

CUSTOMERS

Value creation is not a matter of selling or convincing your customer to buy something.  Rather, how your customers perceive value is based on their perception of your product or service; make your offering something they want or need to buy.  In turn, this makes marketing and selling to customers easier. 

Identify what points of value your potential customers seek.  Here are some tips to improve value creation.

  • Understand customer needs – perform market analysis and learn about what your organization’s customers look for when making purchases.  Find ways to meet unique customer needs or wants, create lasting value with your business’s offerings, and build customer relationships.  Also, businesses that strive to fulfill customer needs/wants are better able to build trust and rapport within the market, leading to repeat business and increased revenue growth.
  • Improve customer support – customers value businesses and organizations that focus on providing exceptional service and support.  Evaluate your organization’s current customer support processes and collaborate with teams on ways to improve these aspects of customer experience.  Make it easy for customers to ask questions about products, troubleshoot issue, and connect with businesses through automated and professional support services.
  • Increase convenience features – create more convenient methods for customers to engage with your business, make purchases and use your organization’s products more easily.  Streamlining checkout methods within an online shopping platform or create bundled offerings for related products are two ways that can make the customer experience more convenient.
  • Promote value propositions – the value proposition represents the value customers find in a product or service minus the costs of purchasing the offering.  For example, the value of an offering may be higher for customers if they know they can rely on the offering over the long-term, resulting in a willingness to pay a higher cost for the longevity/quality they receive.  Creating and promoting the value propositions that are inherent to your company’s products can help engage customers and inspire them to make purchases.
  • Outdo competing offerings and prices – revaluate competing businesses to determine what methods and products provide the most value to your existing and targeted customer markets.  Then, find ways to create similar offerings that are unique to your business.  Creating alternatives to competitors can encourage new customers to purchase from your business; it will boost your business’s value and give value to customers as well.

Creating customer value is essential for growth and increasing revenue.  Customer value helps businesses maintain lasting relationships with customers.  Also, business that successfully increase customer value can often expand into more markets, develop innovative offerings, and build competitive advantages in their industries.

Value creation for customers helps sell products and services, creating value for employees results in higher efficiency.

EMPLOYEES

You don’t achieve your goals alone; you need the support of your employees to succeed.

Value creation involves creating value for your team, which translates to the increase in employee retention rate.  [See February 2022 blog for ideas to increase employee retention]

If your employees are happy, their productivity will increase, and that’s exactly what you need to help your business grow.

To receive that support, you must provide value to your employees; it goes beyond a job and a paycheck, which is enough to get them to show up for work.  You also need to appeal to their hearts and minds.

Effective employees want purpose.  Both Boomers and Gen Y found motivators like “a great team” and “the ability to give back to society through work” to be more important than money.

Help teams develop effectively; ensure teams have the necessary skills to boost value and reach customers.  With experienced and skilled teams, companies are better able to meet customer needs and provide offerings that create lasting customer value.

Value for employees includes being treated respectfully and being involved in decision-making.  Employees also value meaningful work; excellent compensation opportunities; and continued training and development.

When people feel valued, they’re more likely to go above and beyond for the organization.  They’re quicker to hold themselves accountable for their part of a project. Most importantly, they’re happier in their roles, which means they’re less likely to leave.

When leaders disregard opportunities to connect with their team and show employees their appreciation, they lose a secret weapon in building a dedicated, long-term team.

Make employee appreciation a daily habit.  Here are some ways to show your employees some appreciation:

  • Make small gestures – such as a note of appreciation, an email of acknowledgement, or call of encouragement can make a positive impression.
  • Create new opportunities – this is a way to win employees hearts and minds; let your employees take on a leadership role, a challenge of a big visible project, or invest in their learning at a workshop or conference.
  • Be specific and personalize – with your expressions of appreciation and recognition.
  • Show your employees trust – one way is by not looking over their shoulder, that their work is good enough for them to move forward on their own.
  • Make business upgrades – in facilities, technology, etc. to help make your employees more comfortable and efficient.
  • Take time to connect with your employees – find out how they are doing in their lives both in- and outside of work.
  • Establish mentorships – pair new employees with longer-term ones; both will benefit.
  • Give ownership to employees – this is a great way to motivate, especially when an initiative is of interest and leverages their expertise.  This will empower them to succeed, plus will inspire others by seeing them do well.
  • Be transparent and honest in conversations – especially when giving feedback and delivering hard truths.

Professionals in marketing, sales, customer service and other areas can work together to implement approaches to creating high value for customer that build customer engagement and achieve more sales.

SUPPLIERS

The potential of a supplier’s value creation derives from multiple dimensions including cost of offering, capacity to provide it, as well as commitment to deliver consistently.  Additional supplier value can be derived from:

  • Innovation – they are experts in their field, who has potential to easily offer you a solution to your development product or strategy. 
  • Advice – offered on what you need, not what you want to hear.
  • Their own growth and improvement of offering – their success will help ensure you obtaining ongoing value.
  • Integrity – having similar values makes doing business easier.

The best suppliers will regularly give you new ideas and suggestions to improve your business.  There is much to be gained by having a stable/long term supply base as long as they assist you to grow by improving aspects of your business.  The stability and support of your suppliers is essential when you are growing and/or your business is seeing changes in its market.

When both sides, business and supplier, benefit from the total value created by the relationship, but the degree of value capture varies.  The value perceived by the supplier is greater than that perceived by the buyer, which consequently encourages the former to boost its efforts even further to ensure that the relationship continues.

In summary, value creation is an essential base to support a profitable and lasting business.  You can create value in your business through involving other: your shareholders, customers, suppliers and employees, plus by putting your resources to best use.  Remember that value creation does not happen in a day, it takes time, so start working on it now.

P.S. Sustaining value is achieved by retaining and protecting value internally in the organization and distributing value externally to shareholders and stakeholders.  Ideally, there needs to be a balanced approach between the retention of value derived by the organization and the distribution of value to its stakeholders aligned to purpose and value objectives.

Employee Retention

February 3, 2022

There is an enduring truth: it is people — especially employees — who innovate and are always there, which moves your business forward.  The Covid era has revealed (or reinforced) this adage.

With one resignation wave behind us and another due soon, now is a perfect time to look at employee retention and what you can do about it. Remember, losing just one key employee can negatively impact your business.

The cost of resignations is high, so let’s look at some of the reasons they happen. 

A few statistics:

  • The average employee exit costs 15-250% of their annual salary depending on their pay.
  • Employee burnout (caused by many factors) is responsible for 50% of turnover.
  • 80% of employees would seek a new job after just one bad day.
  • 70% would leave a company for better development and learning.

Reasons employees leave their jobs include:

  • Inadequate salary and benefits
  • Not happy at work
  • Feeling overworked and/or unsupported
  • Limited career advancement
  • A need for better work-life balance
  • Lack of recognition
  • Boredom
  • Unhappiness with management
  • Concerns about the company’s direction or financial health
  • Dissatisfaction with the company culture
  • More desirable opportunities at other companies

Okay, in addition to employee dissatisfaction, better alternatives, a negative experience, some employee attrition happens due to a planned change such as relocating, managing a family-related matter, retiring, pursuing a desired change in career/industry, returning to full time education, etc.  Plus, there may be a few employees better off working elsewhere.

What you do not want to happen is to lose many or most of your employees, especially an employee or few who is/are key to your business success.

Now let’s explore what you can do to retain your employees.

First, your support as owner and/or senior leader is essential.  It sends a message to managers and supervisors emphasizing that employees are critical to the business’ short- and long-term success.

Encourage open communication – Foster an environment in which employees are free to express their ideas, questions and concerns at any time.  Having an “open-door policy” is one of the most effective communication strategies to establish a culture of transparency and trust.  It shows that you’re always available to listen to their views.  And as a leader, you need to make sure you’re doing your part to help promote timely, constructive and positive communication across the entire team, including on-site and remote employees.

Practice a feedback culture – regular feedback (on the work, individual’s performance, and how they are doing in their career) and suggestions can help you stay connected with your employees.  Checking-in with them helps you to get the pulse of your workforce; learn the work challenges they are facing.  Help them visualize their future with the company.  While you should never make promises you cannot keep, talk through potential career advancement scenarios together and lay out a realistic plan for reaching those goals.

This will increase their loyalty and trust in your leadership style and the company.  If your business receives negative feedback, it is important to take swift action to implement changes to make the employees feel they are heard. 

Bond with employees – A good manager works continuously to nurture their relationship with the team members; bonding with employees can be both inside and outside of the office.  Shared experiences such as team lunches, group treks, excursions are some methods to celebrate employees.  To deepen individual bonds, you might consider celebrating even their personal achievements, such as a new house, marriage, birth of a child, etc.

Focus on retaining all your employees.  Pay extra attention to your most valuable employees, those who handle special functions and/or are your top-performers.

Train and develop – Make it a priority to invest in your workers’ professional development through training and support.  Helping employees achieve their short- and long-term goals is one of the most crucial employee retention strategies; it shows that you are invested in their future just as they are.

As part of providing continuous feedback on performance, you can help employees identify areas for professional growth, provide training to learn new skills plus support upskilling to gain new abilities and competencies as business requirements continue to evolve.

Invest in your workers’ professional development.  Give them time to attend virtual conferences, provide tuition reimbursement or pay for continuing education.  Further, succession planning can be a highly effective method for advancing professional development and building leadership skills. 

Offer mentorship programs – All employees, new and your existing staff, can greatly benefit from mentor-mentee relationships as they learn from each other and form bonds.

Emphasize teamwork You should encourage all your employees, not just top-performers and/or critical players, to contribute ideas and solutions.  Promote teamwork by creating opportunities for collaboration, accommodating individuals’ work styles and giving everyone the latitude to make decisions and course-corrections, if needed.

Compensate your employees fairly It is essential for companies to pay their employees competitive compensation.  As mentioned above, one of the major reasons that make employees quit is the lack of compensation.  A salary hike is a way to retain top performers.  Further, your workforce would be demotivated if they do not receive the proper benefits.  You should build a competitive benefit package. 

Salaries – Employers need to evaluate and adjust salaries regularly.  For merit, cost of living (especially with inflation), etc. consider giving a raise; 35% of workers will quit if they don’t receive one.  Even if your business can’t increase pay right now, consider whether you could provide other forms of compensation, such as bonuses.

Bonuses – For meeting goals; paying out more frequently and/or at key times during the year (just before summer vacations or year-end holidays) will mean more to your employees.

 Health benefits – As the cost of healthcare outpaces wages and inflation, providing or supplementing health coverage is appealing to employees.  A low cost alternative is a high-deductible health insurance plan coupled with a health savings account, which is owned and controlled by the employee plus has triple tax advantages.

Perhaps offer a profit-sharing plan – This is a plan used by employers to distribute a portion of a business’s profits to employees.  It can help retain valuable talent, giving people an incentive to work harder and better over the long-term.

Also, consider an employee stock ownership plan – An ESOP is an excellent way to compensate your employees as a bonus or incentive.  Making employees stakeholders of your company helps them stay invested in its performance.

Beyond compensation, you might consider the following for your employees.

Add perks Nice-to-have additions to an employee’s salary and benefits package can make your workplace stand out to potential new hires and re-engage current staff, all while boosting employee morale.  Flexible schedules and remote work options (separate from pandemic-related stay-at-home orders) are the perks many professionals value most.  Also, paid parental leave can be a big plus for some.  Some companies use food and beverages to bring their employees to together. 

Set-up recognition and rewards systems Every person wants to feel appreciated for the work they do.  Acknowledge your employees for good work; doing so can reduce turnover up to 30%.  In today’s “anywhere workforce,” an employer’s gratitude can make an especially big impact in making employees feel valued.  When employees feel a sense of belonging, they tend to be more loyal.  So be sure to thank your direct reports who go the extra mile and explain how their hard work helps the organization.  You can institute compelling recognition programs, even if you have a limited budget.  While it can be an award or corporate gift, consider giving virtual rewards to your employees, such as online gift cards, Spotify or Netflix subscriptions, and more.  Also, a day off is always welcome. 

Further, recognize and reward your long-term employees for their years of service.  Employees feel valued and appreciated for recognizing the time and hard work that they have put into your organization.

Engender peer-to-peer recognition – Employees who trust and believe in each other value one another, they will help each other and work as a team.  This will lessen internal conflicts, and create a culture of peer-to-peer recognition.  Further, think about rewarding efforts, not just results.  Consider recognizing with the hard work put forth to get something done.  Also, consider rewarding employees who have helped their coworkers.

What makes people happy at work varies. Social elements for many are more important than compensation.  The social factors that matter most to employees include being energized by their work, feeling like they belong, and having a sense of purpose.  Here are a few things you can do.

Establish flexible work arrangements – If possible, allow employees a partial remote work option; this will lower your turnover by 25%.  One in three professionals working from home would look for a new job if they were required to return to the office full time.  Flexible working arrangements have become one of the top things that people look for in a new job.  The option to work remotely can be a win-win situation for both employees and employers.  Employees save time and money to commute, have less stress, improve their work-life balance, have fewer distractions, and it is safer to work from home.  Employers save on infrastructure costs and overhead costs, avoid office politics, reduce absenteeism, plus there is no geographical constraint in hiring people so the company gets access to a bigger pool of talent.

Provide work-life balance – A healthy work-life balance is essential to job satisfaction.  10% of workers have refused a new job due to a lack of good work-life balance opportunities.  People need to know their managers understand they have lives outside of work; and recognize that maintaining balance can be even more challenging when working from home.  Encourage employees to set boundaries and take their vacation time. And if extended hours are necessary to complete a project, consider giving them extra time off to compensate.  To help meet your employee’s personal needs you might consider varied schedules and/or staggering shifts.

Reduce workdays – Think about focusing on the work accomplished, not the amount of time it takes to complete it.  Often workers fulfill their daily obligations in different time frames, especially if have another commitment.  Consider allowing employees who finish their tasks ahead of schedule to leave for the day.

Allow workcation – A combination of work and vacation; it is taking a trip while continuing to work online.  A unique working environment can be a unique differentiator when looking to improve your staff retention strategy.

Wellness offerings – It is good business to keep employees fit: physically, mentally, and financially.  The pandemic caused employers to expand and improve their wellness offerings to help employees feel supported and prioritize their well-being.  Offer programs that interest employees and foster their engagement.  Here are some programs to consider.

Physical – Beyond health insurance, sick leaves, and free health checkups, the physical programs you can offer range from hygienic workplaces to fitness activity.

Especially with the Covid pandemic, you need to make your workspace clean and comfortable if you want your employees to stay healthy and be productive.

Provide location, stipend and/or time for fitness activity; it may be partial compensation of a gym membership or reimbursement for fitness classes, an in-house workout room, or even maps of fitness trails and free activities in the areas.  Some managers go on talking walks with employees; they discuss business while strolling, accomplishing two things at once.  Also, health insurance coverage (discussed above).

Mental – Beyond providing counseling (stress management, grief, etc.) as needed, consider offering sabbatical & refresh programs.  Employees can benefit a lot from time away from the business; they come back much motivated and refreshed after a good long break.  During a sabbatical leave, 6+ weeks, your employee gets a chance to spend time with love ones, work on a passion project, and/or develop a new skill.  Also, you can offer a refresh week-off for your remote employees.  These programs are a great way to prevent burnout and retain top talent; it shows that you appreciate the hard work and service of your long-term employees.

Financial – 80% of employers believe that financial wellness programs deliver more loyal and satisfied employees, and as a result improves employee retention.  Some employee financial wellness benefits include: student loan repayments, flexible paydays, personalized financial advice programs, and retirement plans and planning services.

Other programs build employee engagement and commitment include the following.

Engage in corporate social responsibility (CSR) programs – Look at your company’s commitment to manage the social, environmental and economic effects of its operations responsibly and in-line with public expectations.  By contributing to society and helping those in need are some feel-good factors for your employees, they can inspire their loyalty and engagement plus team bonding.  Further a CSR initiative where the workers can contribute their participation fosters employee retention.

Change-up work responsibilities – Doing the same work becomes boring and tedious.  Allow employees to become involved in different tasks and work with other departments.  This will help generate better ideas and improve coworker relationships.  It will also improve their skills and advance in their professional development. 

Use Virtual Team-building Activities – These activities are carried out by managers to enhance group processes and interactions, increase employee engagement and morale.  It also develops better working relationships between employees.

Provide Diversity and Inclusion – A workplace which identifies and respects people from all backgrounds and sexual orientation will definitely retain and attract more talents.  Small changes like removing gender coded signs, having lactation and multi-faith prayer rooms, and other changes can be introduced to make all your employees feel included.  Plus it is another way to improve your employee retention policy.

Effective change management – During times of disruption and change, employees look to managers for insight and reassurance.  If your business is going through a big shift, keep your team as informed as possible; it will help ease anxieties and manage the rumor mill.  Also, when you make big announcements, either individually or in a group call or meeting, always allow time for questions.

The employee retention strategies outlined above are just some ways to help increase your team members’ job satisfaction.  Be sure to re-evaluate your efforts regularly.  That includes staying current on market standards for salary and benefits, and best practices for developing an attractive workplace culture and strong manager-employee relations.

It’s inevitable that some team members will leave your organization sooner than you’d like.  But you can at least make their decision a little tougher.  And if those employees leave your firm knowing they were valued and supported, they’ll likely say good things about your business and, perhaps, even come back to work for you one day.

When it doesn’t work out – Conduct an exit interview just before an employee is about to leave.  Ask your departing employee about his experience at the company.  This process can help throw light into things like poor management practices, conflicts among personnel, etc.; it will help determine whether your employee retention strategies need improvement.

Being strategic about employee retention can make or break a small business.  Setting up the current employees for success and making them feel valued should always be your business’ first priority.  Small business owners face many hurdles right now, but with a strong team, anything is possible.

Technologies For Growth

January 5, 2022

All businesses rely on technology in some way, but the vast majority are not taking full advantage of all the ways being more tech savvy can improve their businesses.

Almost everyone agrees technology increases how small businesses interface with employees, new and existing customers, vendors, partners, etc. 

But our most recent small business research at 3 Oxbridges shows:

  • 83% of small businesses are not taking full advantage of available technology;
  • 68% of employees say automation helps them be more productive, and they feel less stressed at work; and
  • 90% of small businesses reported technology helps them compete with larger businesses. 

In brief, adapting technology and systems can make a positive difference in your small business’ success.

Here at 3 Oxbridges we have put together some of the technologies your small business should consider leveraging in 2022.

Hybrid Workforce Technology – Seek purpose-built technology solutions that bring equity, parity, presence and inclusion to hybrid work.  Use work tools that allow employees to work when and where they want; seek vendors with end-to-end capabilities to securely deploy to remote users, offer hardware and software managed services and provide end-user tech support. 

Enhance Digital Security – Digital threats are a growing reality.  Whether it is private customer data, proprietary company information or financial accounts, security must remain a priority in 2022.  Security with seamless authentication driven by artificial intelligence and biometric technology (such as fingerprint scans) is key for small businesses.  Also, use intelligent security technology and training to mitigate insider breaches.

Monitors – The desktop monitors your employees use can transform their work experience for increased comfort and capabilities. New monitors offer larger screen real estate and single cable management for easy connections; they also feature higher resolution, new aspect ratios such as ultra-wide and low blue light tech to reduce eye strain. Further, new monitors will extend functionality for employees as they can provide a docking hub for connection of other devices such as smartphones, speakers, headphones and tablets.

Remote Teamwork Tech Tools – Consider acquiring IT solutions such as firewall management to protect your company’s network from cybersecurity issues. A reliable and trustworthy IT company will ensure that your firewall is always updated with the manufacturer’s latest firmware and security updates, keeping your business secure.

Accessories – Create up-to-date, efficient workspaces with accessories; it is important for productivity but also for personal well-being.  Provide employees with complementary tools that bridge the gap between home and office will elevate the experience and empower hybrid working trends.  Consider providing power banks, noise-canceling headphones certified for unified communications platforms, plus ergonomic mice and keyboards.

Cloud and Digital Printing – Facilitate the printing needs of your in-person, remote and hybrid workforces. Cloud print management services routes printing jobs from any web-connected device to an internet-connected printer, eliminating the need for printer drivers. Digital printing is valuable because of its fast turnaround times, use of variable data, new inkjet printing processes (matte, silk, glossy finishes), and environmental friendliness with only the exact amounts of ink and toner are used, and no harmful chemicals are needed for clean-up.

Mobile 5G – The new global wireless standard has lightning-fast data transfer speeds, positive user experience, and network reliability. 5G can help small business by allowing: increased website and app speed; instant video, audio, and image streaming; customer connections in real-time; use of AR, VR, and 3D; collection of hyper-local, detailed data and analytics; and personalized customer experiences.

Chatbots – Utilize chatbot technology to chat with existing and prospective customers and answer their questions immediately will take their loyalty and your conversions and sales to incredible heights.  Nearly two-thirds (64%) of 3 Oxbridge survey respondents say that they prefer messaging with a chatbot to making an effort to communicate with a business through phone or email.  Additionally, our survey found that customer benefits from chatbots included 24-hour service, plus getting an instant response to inquiries/simple questions. 

Voice Search and Virtual Assistant – Voice command technology actively leads to profits for businesses that utilize technology that makes it easy to show the exact information or product that a person has utilized a voice search to find.  Consider how you can tailor your digital strategy to better meet voice search requests

E-Signatures – Electronic signatures are an affordable way to safely and securely handle critical business documents such as sales contracts and personnel offer letters.  Legally binding with bank-level encryption, eSignatures on small business agreement workflows are signed about 80% faster than paper contracts, according to a recent 3 Oxbridges survey.  Identify the software that fits best with your small business needs, and integrates easily with other cloud computing technologies (HubSpot, Google Suite, Slack, and Dropbox).

Apps – Use fewer apps to run your businesses.  This does not mean a drop in the use of digital tools, it means better-integrated products and services.  For example, use a CRM as centralized systems for customer interaction, sales, service, and marketing; this can be found all within the same app.

Video Software – Many suppliers, internal team members, and customers see video conferencing as an essential way to maintain quality relationships.  Find a simple, consolidated, unified video conferencing solution (with a centrally managed user interface) that: makes screen sharing easy; allows for real-time instant messaging and live chat; empowers people to be engaged; provides event live streaming; and has reliable meeting recording available.

Virtual Events – A virtual event can be a webinar, Livestream, or can be as complex as a conference.  Businesses can launch new products or services as they are largely accessible and inclusive to customers and prospects regardless of their ability or location.  It is also a good way to engage with your customers to teach them something about your business or any other valuable subject.  You can also get feedback on your products or services so you can improve them.

Omni-channel Marketing – Foster the seamless connection of all marketing channels available to your customers so they can experience consistent communication across every platform; invest only in technology platforms that give your brand the power of omni-channel marketing.  3 Oxbridges’ research shows that companies actively using omni-channel marketing consistently retain 89% of their customer base compared to a 33% retention rate for businesses without omni-channel engagement.

Video Marketing – Video is the medium of choice for businesses that want to distribute content that will have a high level of engagement and will get seen from start to finish.  Optimized videos are also now shown directly in relevant searches, with Google now offering video snippet previews in its video carousel. Consider using technology that offers 360-degree video.

Accelerated Mobile Pages – Search engines drive a lot of free traffic to your website, with up to 60% of it being generated from mobile devices.  The faster your page loads, the lower the bounce rate, leading to improved rankings. With accelerated mobile page technology, pages load very fast (under 0.5 seconds), making it ideal for small businesses to leverage mobile traffic.

Personalization – Marketing automation technology is the key to keeping your customer engaged and/or continuing to make purchases; it allows your business to email customers different emails that will appeal to them based on past email opens, purchases, or click-throughs.  Almost half of customers spend more when their email experience with a brand is personalized.

Messaging through Apps – An ideal option for marketing your products and services where prospective customers are.  Social apps allow you to personalize the messages you send to your customers, allowing them to have direct and natural contact with you in a platform they are comfortable with.  When considering different social media platforms, consider the demographic of the audience you are trying to reach.

Sale on Social Networks – E-commerce is being integrated into social media platforms making it possible to purchase from the publishers through tags so transactions can happen on the apps, making them a good place to find leads and convert them.

AI and Big Data – CRM tools keep investing in AI and big data to enable customers to become more intelligent and efficient.  Small businesses gain the capability to understand their business performance and how their customers could benefit from additional services.  AI and big data offer the power of customer segmentation, click tracking, retargeting, customized push notifications, and so much more; it can help your business deliver real-time, personalized ads and messaging across different social platforms.

Also, augmented and virtual reality create custom workplaces for employees, immersive training, efficient data analysis and enhanced productivity.

Business technology allows small businesses to work more efficiently and be more competitive.  

  • It promotes remote working; employees and business owners can work from anywhere, enhancing work-life balance. 
  • It enables you to track sales and assets, market effectively, improve productivity, and provide better products and services.  
  • It enhances team collaboration to organize your projects, assign tasks, monitor projects effectively, and maintain schedules.
  • Plus, helps you to effectively target audience segments while meeting customer needs; and allows your business to open up new markets online to reach wider audiences, even those outside your geographical area.

Consider leveraging one, many or all the above technologies in 2022 to enhance your interfaces, streamline operations, and boost your small business growth.

Year-end Preparations

December 1, 2021

Year-end is a busy time both professionally and personally.  As a small business owner or manager, you have an even longer list of things to think about.  But devoting attention to your business not only helps you end 2021 in the best way possible, it also sets you up for success in 2022.


Here are some activities you should consider focusing on.

Accounting/Finances

  • Run standard financial reports, such as an income statement, balance sheet and a cash flow statement.  Doing so gives you an opportunity to look at the big picture and a guide to your company’s financial position and health. 
  • Compare the amount earned in a period of time (4th quarter 2021 or all of 2021) versus the amount spent through your income statement; it is also called a profit and loss statement.
  • Look at your balance sheet to determine if you are profitable; it does this by comparing everything the business owns(physical inventory, property or equipment, trademarks, and invoices the business needs to collect)against everything the business owes (pension plan obligations or invoices needing payment).
  • Analyze cash flow statement to identify where cash was spent, trends for operating (revenues and expenses), investments (assets purchased and sold), and financial decisions (loans and repayments) activities throughout the year to see if you generated or lost money.
  • Calculate a few metrics to get a better handle on your business: current ratio (current assets divided by current liabilities) ideally should be between 1.5 and 2; debt ratio (total debt divided by your total assets) anything below .3 is considered fair; and gross profit margin (divide profit by total revenue) shows what percentage of your income is actually profit.

If you do need some adjustment (such as more sales and/or fewer expenses), financial documents show you where adjustments are needed and tell you how much you need to adjust.

Also, if you’re in the market for funding, expansion, or mentorship, financial documents are often required to let interested parties see the financial records of your business. 

You might also want to also speak with your accountant or CPA about any questions you might have.

  • Get your tax documents together.  You may need to fill out tax forms, which may include Form 1099-NEC and Form 1096, W-2 Forms and W-3 Forms, State and federal payroll returns (Form 940) or quarterly (Form 941). 

Plus you should compile your income, both business and personal, if relevant.  Gather all your deductions.

  • Verify vendor or supplier information for contact information (contact name, email, telephone number, mailing address); make sure to include any new relationships started during the year.  If time permits, evaluate your vendor relationships and look for opportunities to negotiate better terms for 2022.
  • Reconcile accounts receivable, the invoices remaining unpaid and past due by customers for work completed and/or goods purchased.  Collecting accounts receivables will give boost your cash flow and start 2022 in a better position.
  • Check on payroll and benefits.  Handle any issues or corrections that need to be made before year-end.  Ensure taxable fringe benefits (such as company car, third-party sick pay) and other benefits (such as health and life insurance, transportation subsidies, educational reimbursement) are accounted for.

Human Resources

  • Do an audit of the information you have on all your employees. Make sure you have the correct phone numbers, addresses, and payroll information for each one. 
  • Update the status of new hires or former employees, including access, if any, to computer systems or financial information.
  • Use year-end incentives to reward individuals and your team(s).  Yes, money is always welcome, but also consider paid time off, flexible schedules, perhaps a gift or a party as a way to say thank you as well increase employee satisfaction and morale as you close out the year and head into 2022.
  • Consider conducting a drive for charity for a give-back to your community and as a possible business benefit.
  • Consider whether you need to hire worker or there are areas where you can cut back on your team?  To better suit your business needs, think about adjusting hours, rearranging schedules, and whether some employees can work remotely.  Instead of a new employee, consider a part-time person, seasonal worker, gig worker, or a college intern.
  • Celebrate your business successes.  Document and share the accomplishments and wins achieved during the year by individuals, teams and the business as a whole.  These activities are a great way to build camaraderie, increase morale, and end the year on a high note.

Information Technology

  • Backup your computer, plus ensure all data is stored as securely as possible.  Important files such as accounting documents, point-of-sale systems, customer information, valuable emails, creative and proprietary briefs, employee records, and other critical business information should be put on external hard drives or in cloud-based storage systems.
  • Download your important files and reports, even if you have them on a cloud-based system like Box or Dropbox.  Create two separate digital copies and store them in separate locations, plus have one offline/hard/printed copy that is store in another location.
  • Evaluate your filing naming conventions.  Consider implementing a company-wide file-naming system, such as Name-Date-Invoice#, if you don’t already have one; it will keep your file organized and make finding documents easier for everyone.
  • Backup your contacts and/or cell phone to the cloud or a hard drive, especially if you don’t have a cloud service that regularly conducts a backup.  Make sure you have current information for your most important business contacts.

Other Year-end Activities

  • Take an inventory count. Conduct a count of physical products and material as close to December 31st as possible.  Investigate any significant discrepancies between actual and recorded inventory.  An annual physical inventory is not only important for tax purposes, but is a great way for you to evaluate what products sell well and identify which ones don’t do as well.
  • Contact suppliers about slow-moving inventory; unless it is obsolete, perhaps they will be willing to exchange it for something you can turn over more quickly.
  • Conduct a physical asset count.  Check for all assets on your books.
  • Check business licenses and permits, they may need to be renewed.  Some are subject to sales taxes; others are subject to testing, inspections, and/or certifications.
  • Ensure intellectual properties that need to be protected from potential theft by competitors through registration and then being in commerce “consistently and in a high-quality manner.”  Ownership then must be renewed every ten years.
  • Know and follow-through on your business’ annual compliance requirements, which vary by state and by business structure.
  • Audit your website.  Check to make sure all your website links are functional, that your contact information is up-to-date and works.  Update images or headline to keep your site looking up to date.
  • Update your business goals.  With input from your team(s), customers, partners and financial statements, assess your 2021 goals and determine whether you fulfilled them or where you fell short; perhaps you need a last minute push if your goals are within sight. 

Or,

  • If, unfortunately, you are closing your business be aware of and follow the dissolution process defined by your business’ structure.

In all the hustle and bustle of doing business through the end of the year, don’t forget to take some time to do some year-end preparations; it will be time well spent and get your business in good shape for the new year.

Now if you are super ambitious, why not get a start on 2022?

Plan 2022 Goals – with your 2021 learnings, set your goals for 2022 and write them down.

Develop Action Plans – create an action plan to help you achieve each goal.  The best goals are specific, measureable, attainable and time-based.

Plan Time to Keep Financial and Tax Records Up-to-Date – set aside time to update both on a quarterly basis as well as to meet with accountants and/or financial advisors.

Create Your Marketing Plans – think about what areas of marketing you want to focus on.

Assess Employee Engagement – review your compensation and benefits to ensure they remain competitive.  Develop possible promotional paths going forward to foster loyalty and keep your best performers.  Plan company get-togethers (barbeques, hikes, etc.) that are advantageous to everyone.

May 2022 be your best year yet.

Communication Challenges with Remote Workers

November 7, 2021

Business communications have become almost too challenging in this new pandemic environment.

In the hybrid world, business owners and leaders worry that organizational cohesion is being lost.

Remote works offer communication challenges including:

  • Use of jargon or over-complicated, unfamiliar or technical terms
  • Emotional and taboos; physical barriers to non-verbal communication
  • Expectations and prejudices; cultural differences
  • Information overload; lack of attention, interest, distractions, or irrelevance to the receiver
  • Differences in perception and viewpoint
  • Physical disabilities such as hearing problems or speech difficulties
  • Use of technologies
  • Organizational development
  • Work-Life balance

The effects of these communication problems on remote employees include:

  • Miscommunication
  • Lack of connection
  • Lack of collaboration
  • Lack of trust
  • Feelings of alienation
  • Over-communication
  • Personal aversion to interaction

To ease these challenges, here are some best communication practices for owners and leaders to deliver news, updates, and remediation:

  • Be an active listener
  • Ask effective questions
  • Understand and know your audience
  • Listen to nonverbal communication
  • Over-communicate effectively
  • Begin and end powerfully
  • Timing is everything
  • Get comfortable being uncomfortable
  • Have fun!

If you want to learn more about communication challenges and solutions with a remote work force as well as suggestions for what you can implement right now to enhance communications with remote workers, listen to a panel of experts discussing this on Biz-Bytes at https://youtu.be/AH61k8lac9g

Being a business leader requires constant adjustment to changing challenges.  With remote workers becoming more common, you need to operate effectively in this new world.  Most of you will.

Logistic Bottlenecks Can Kill Your Business

October 1, 2021

How small businesses must adapt to the changing logistics world

Logistical considerations have always played a strategic role in business, today more than ever.  Logistics can spell the difference between success and failure in business. 

In recent years, changes in the business environment have forced small businesses (and larger companies, too) to pay particularly close attention to how this function relates to others.

Here are a few tips on logistics optimization for small businesses; how you can minimize bottlenecks.

Understand the objective

The principal purpose of logistics is to get merchandise from one location to another.  First from the vendor to you.  Second from you to your customers.  You want to do so in the most expedient, cost effective manner possible with transparency of doing so along the way.  Not having your offerings can mean missed revenue.  But, having too much is costly.

Strategies

Many companies manage logistics by developing competitive strategies considering postponement and speculation, standardization, consolidation, and differentiation. They may conduct formal or informal logistics audits, redesigned systems to provide more effective support, and take steps to ensure continued appraisal of opportunities over the long run.

Government regulation, the health of the nation’s transportation system, energy restrictions, custom and trade restrictions, and technological developments all represent important considerations in the formulation of a logistics business strategy.

Strong customer focus

Logistics is not only about delivery. It is also about investing in your customers from your business beginning to its end. Customers are essential to the logistics flow. They expect assurance and constant updates about the product. If there is any change in shipment date, delivery issues, then let the customer know about it instantly.

Once an order is placed, make sure the customer can track everything online. Invest in an excellent online shipment tracker to allow your customer to be updated about the website or app, and they need not call customer care every time.

Offer your customers options

Flexibility is required, customers expect retailer to offer many options that can fit their needs and lifestyle. Therefore, it is relevant in order and logistics fulfilment.  A lot of customers abandon their cart while choosing the requisite delivery option; often it is because they did not find the right delivery approach they were looking for. Many want door-to-door shipping options relevant, while others look pick-up as another variable option for them. With many delivery methods, you negate the risk of losing them at the last step.


Spend on visibility and collaboration

Regardless of your strategy, you can’t run an effective supply chain without visibility and the ability to communicate to customers and suppliers quickly.  Collaboration will help you keep inventory low while keeping lead times at a minimum.  Your supply chain is core to running your business.   

Track Costs

Break down your logistics process and have a clear view of what each element costs you.  You can’t control costs if you don’t know where you’re spending.

Also, with this knowledge, you can directly or indirectly transfer the cost to the customer.  You must know how much it costs to move the item from point A to B if you are going to make the right pricing decisions.

Get competitive quotes

Comparing different providers is basic business procedure, but it’s amazing how many SMBs go with the first logistics company that comes to mind.  Use the internet to search for the ideal service provider.  Obtain quotes from multiple carriers and check if the prices are negotiable; make sure you are comparing like for like.  Always get at least two or three quotes for any sizable expenditure.

Planning is the key

Prepare your inventory and choose reliable suppliers as the first step in your logistics chain. Whether you are managing your in-house logistics teams or outsourcing it, you need to have complete control.  Ensure that you review the commitment and forecasts regularly for calculating the safety stock as well as contingency plans in place just in case there are delays or diversions.  That doesn’t mean stockpile inventory, but you should have plans that include alternative sources and the ability to shift goods from one location to another.

Improve sales and operations

Effective sales and operations (S&OP) planning can help you understand when you might need new equipment or overtime.  Accurate forecasts help you plan inventory, so you have enough of the right products in place to meet demand.  The S&OP process can provide insight into upcoming promotions, new product introductions or other demand changes.  With this information, you can ensure you have enough (but not too much) inventory on hand.

Outsourcing

Outsourcing, more or less, the entirety of your logistical needs can free up your time and allow you to focus more on innovating and growing your business.  This may not be the most cost-effective option, but it could be the simplest and most convenient.

Consider teaming up with a partner

Most logistics companies set their prices based on volume, and teaming up with a partner could provide a more cost-effective way to meet your needs.  Take into account not only the specific details of the logistics company, but also the specific needs of your partner. 

Try a small business logistics service from a major provider

If the size and budget of your business cannot warrant investing money in a specialized logistics provider, perhaps it could be beneficial to explore what some of the major shipping and transportation providers offer. UPS, FedEx, and DSL all offer services that cater to small businesses.  Given their reputation for reliability, this could easily be a viable option for your business.

Consider an industry-specific provider

An industry-specific provider would know the specifics on how to handle and care for the product being delivered, especially if it is fragile, perishable or high-value.  You may spend more money on an industry-specific provider, but consider the risk of hiring a provider that does not specialize in your particular market.  If a product is mishandled or damaged, that’s money down the drain.

Work with a third-party logistics company

Many small and mid-sized businesses believe that working with a third-party logistics company (or 3PL) is too expensive for them, but that may not be the case.  A good 3PL can help ensure that you get reasonable rates, fast delivery, and the most productive warehouse and storage teams.  It will have many of the necessary visibility and collaboration tools available to help you; further they can help you with packaging, warehousing, handling, tracking, paperwork, labeling, and even business partnerships.

Leverage Technology

Today it is possible for you to keep tabs on a wide range of events affecting your product’s transportation.  Both you and your customers should be able to tell where the item is at any given point in time.  By giving customers direct access to tracking information, you rid yourself of the burden of having to keep them updated.

Supply chain and logistics are vital for the success of any business.  Without a well-thought-out logistics management plan, you’ll place your entire business strategy at risk of failure. 

Every business must learn to master logistics, all parts work together, to make it more organized, cost-effective, and efficient for both you and your customers, stand out from the competition, and boost customer satisfaction.