Posts Tagged ‘small businesses’

Small Businesses With Low-Wage Immigrant Workers Need To Change

February 20, 2017

Ironically, the recent attempted nationwide boycott of restaurants and other businesses by lower-wage workers to demonstrate their importance to the economy actually highlighted vulnerability of many smaller businesses.

As one expert recently told an audience of small business leaders: “If your business can’t survive without low paying immigrant labor, your business model is wrong.”

His challenge came as the nascent stirrings of a fundamental change in American business practices starts to gain steam.

For the first time, business leaders are facing the possibility that cheap labor provided by illegal immigrants may be eroding.

Two factors are lending themselves to this trend: President Donald Trump’s attacks on illegal immigration and labor unions’ efforts to codify into law the $15-an-hour minimum wage.

To be sure, many business leaders say they can’t survive as profitable entities without being subsidized by immigrants, who are in most cases are paid less than American counterparts.

Perhaps this new trend is a good thing for America.

Technology has radically changed the face of America’s economy.  From a nation of manufacturing it has become one of service.  At the same time, the nation’s education system has not provided the tools for young people to compete in many new science and tech areas.

The socialization of America’s young people for the past 50 years has also not educated them to the tenets of hard work, sacrifice, and attention to detail ingrained into immigrants.  For a variety of reasons, taking menial jobs to begin a career is no longer acceptable in today’s world. Horatio Alger is a long forgotten hero to Americans. Yet in the 19th and early 20th centuries his stories were a must read and inspiration to generations of youths.

With the dearth of applicants for entry level or menial positions, employers have turned to immigrants who entered America in unprecedented numbers during past decades.

Immigrants often take the lowest paying, menial jobs such as bus boys, cleaners, janitors, retail clerks, and construction. They are also exploited with lower pay, withheld wages, brutal working conditions, and no benefits.

Economists tell us for the past 50 years these immigrant workers, particularly from Central America and the Caribbean islands, often undocumented and illegal, have fostered a separate economic sector which enabled many companies to enjoy profits.

As illegal workers, they do not pay taxes, contribute to healthcare programs, their employers do not pay wage-based taxes, and much of the monies earned is sent out of the country.

While many of these immigrants have been productive, useful, and welcomed citizens, others have remained outside the regulatory net.  As the need, use, and availability of illegal workers grew, they became a national issue that is now dividing the country.

Given the hue and cry their numbers have elicited, changes in the free flow of immigrants are imminent.  Foreign-born labor as an economic crutch for many enterprises may not survive the Trump administration.  Already, border crossings from Mexico of illegal immigrants are down.  Farmers in western states report shortages of workers to pick crops.  The Immigration Department’s efforts to deport illegal immigrants are expected to increase under President Trump.

It is said, immigrants from impoverished nations are often the most talented and ambitious citizens.  To take up roots and move requires great effort, emotional investment, and courage. Therefore, the host nation often benefits from immigration.  Clearly over the centuries, America has been blessed with its immigrants.

While it is also well-documented these immigrant workers take low paying jobs that many Americans will not fill, they manage to save.  The saved earnings from these positions are often used as resources to ownership of other businesses.

In some cases, American businesses have found themselves facing competition from other enterprises owned by immigrants who worked for them short years ago.  While the number of small businesses founded by immigrants have not been fully counted, some initial surveys by Information Strategies, Inc. put the number at 10% for the period 2010-2015.

Starting with the ordering counters at fast food restaurants to cleaning services to car washing units, many entry or menial jobs are being replaced by robots or other automated systems.

According to Ed Hess and Katherine Ludwig in their new book, Humility Is the New Smart, citing Oxford University research, 47 percent of all jobs in the United States have a high probability of being taken over by technology in the next five to fifteen years.

The workers displaced by these technological changes could well threaten American democratic institutions.

It is time small business owners who depend on low-wage immigrant workers in order to make a profit began to think of alternative business models.

Small- and Medium-Business Employee Healthcare Insurance: Yes Or No

September 11, 2015

Shock waves are hitting a majority of smaller businesses receiving notices about the premiums due for employee healthcare insurance policies in 2016.
The new rates exceed 20% for many enterprises based on surveys done by Information Strategies, Inc. and other organizations.
An average 23% increases were reported in ISI’s survey of 233 randomly selected businesses under 50 employees. Other soundings surfaced similar increases ranging from 19% to 24%. One respondent reported a 49% increase.
Many companies are pondering alternatives such as providing stipends in lieu of benefits, increasing deductibles, reducing coverage to the minimums required by the Accountable Care Act (ACA), or doing away with any coverage.
For companies with under 50 employees, this last alternative does not involve government sanctions.
Organizations with 100 or more employees have weighty penalties for abandoning employee healthcare insurance.
Perhaps hardest hit are enterprises with 51-99 employees who are seeing massive increases in healthcare insurance premiums.
During the past two years, companies have held down premium costs by shifting the burden to employees either through higher deductibles, increasing the percentage paid by employees, or trimming benefits.
Most of these savings have been wrung out and there are few other alternatives.
While last year, only 6% of respondents said they were considering eliminating healthcare insurance benefits (believed important for employee recruiting and retention), in 2015 the number more than doubled to 13% in ISI’s survey and two other surveys reviewed.
Here are two ways small businesses can attack the cost hurdle.
The first involves a government program offering subsidies to smaller enterprises. This program is complicated and less than 100,000 companies have attempted to use it. The program is called the Small Business Healthcare Options.
The second involves setting up a private exchange enabling employees to purchase individual policies and obtain government subsidies under the ACA.
It has been reported that such programs can save companies significant dollars while providing individually tailored healthcare insurance. To learn more about this approach small business leaders can go to HealthMarkets.com.
If you know of other alternatives, please share them.
No matter what course of action is taken for 2016, small- and medium-businesses can expect 2017 premium rates will be higher.

Small Businesses Need To Utilize Their Best Advantage, Personal Relationships

March 29, 2015

Most small businesses grow through their personal relationships.

Despite being closer to their customers/clients small businesses often fail to use this advantage effectively.

At the same time and unhappily, more and more in the Internet age they are sacrificing their ability to apply the personal touch.

Everyone agrees it is critical to be on the web, have social media contact, market effectively online, and devote resources to all things electronic.

However, it is equally as important to maintain an individual relationship with current and potential customers/clients.

A small business can easily identify if it is truly touching its audience by asking three simple questions.

  1. When was the last time a staff member orally spoke with a current/potential purchaser?
  2. When was the last time a current/potential customer was asked his or her needs?
  3. When was a problem brought to the company’s attention and resolved personally?

Let’s discuss each of these questions individually.

People still like to talk to someone: Much of today’s businesses (B2B, consumer) is transacted on the Internet.  But the Internet is really a barrier to true communication because it prevents direct interaction and those interactions skew negative without tone and body language. A sales pitch can be made over the Internet but if the customer says “no” the only recourse is another online exchange.

There is a sales adage: “The sale begins when the customer says no.” Personal interaction elicits the reasons for declining and allows these objections to be overcome. An existing customer has already proven his or her interest in the company’s offering. Talking with them can lead to additional sale, maintaining the relationship, or a word of mouth endorsement.

People always have needs but are seldom asked what they are: A call asking them simple questions such as: How do you like our product or service? What does it not provide for you? What other needs are not being fulfilled? All can reinforce the relationship and provide valuable feedback. The key reason for doing this exercise is reinforce the personal side of doing business. Smaller companies can implement this process better than larger counterparts given their finite customer list and ability to deploy staff members who have already dealt with customers, in many cases.  Regardless of your business size, test with a few familiar customers first and then work your way from your largest to smallest customers.

Small businesses have more flexibility in solving problems: People hate hearing their problems need to be resolved by higher authorities. Often small businesses solve problems on the spot because of shorter management levels: Making the customer happier by quickly addressing issues whether it is in their favor or not usually means they remain loyal. Problems should be looked on as opportunities to interact with a disgruntled purchaser. Verbal communications often surfaces other issues and sometimes gems of knowledge.

The Internet is an important media but so is oral communication. Don’t lose touch with the customer. They are the lifeblood of the company.  Get in touch with your current customers today.

Small Businesses Hit With $3 Billion Tab As Microsoft Ends XP Support

February 13, 2014

Many small businesses will be part of a $3 billion dollar decision.
That’s the estimated costs associated with the coming abandonment of support for XP software by Microsoft.
The technical giant is phasing out its support for the system used by an estimated 3.3 million small businesses on March 31, 2014.
Most of those companies using XP have less than 50 employees.
Enterprises currently using XP have two choices:
• Beef up security on current systems, or
• Purchase new equipment and/or software.
Either choice requires a cash outlay.
As our colleague, Dr. Kenneth E. Lehrer estimates, the total costs will run into the billions, not counting the expenditures in manpower and operational disruptions.
The Houston, TX economist based his analysis on the estimated 4.3 million small businesses currently running XP as their primary system. Assuming an average outlay of $600 for software and/or new equipment, this generated an estimated $3 billion in additional costs.
Likewise, for the Exchange 2003 the average cost is expected to be above $1000 per installation.
A recent survey of 1034 small businesses under 50 employees by my company, Information Strategies, indicated 78% ran their operations on XP platforms.
Of those queried, only 57% were highly aware of the impending loss of support from Microsoft.
As of mid-January, only 41% had plans or already implemented solutions. The majority 55% of those who already acted migrated to cloud-based solutions. 26% migrated to Windows 7 or 8. Interestingly, 11% moved to Apple products, primarily tablets.
With Microsoft not providing any more software updates to the Windows XP operating system, to cover all bases, smaller businesses should seek out a computer service company to have on call in case disaster strikes. If the computer does go belly up they’ll be forced to move onto the latest Windows operating system on a new computer.
At that point, it makes sense to move ahead to using the new operating system. If there are any costly legacy programs used from Windows XP, then a virtual software may be set up on the new computer to access such old software. That way, the best of both worlds are attained, a new operating system along with not paying again for expensive Windows XP software.
What will more likely happen is companies will accelerate their movement to the cloud for their operating support.
For a flat monthly fee, they will have all the technical support they need and not worry about such a problem in the future.
This also goes for those companies currently operating Exchange 2003 servers.
This adds to their angst at during a period of economic uncertainty.
With Microsoft lagging in the cloud sector, they are handing competitors a significant marketing advantage.
In the meantime, small businesses will suffer.