Posts Tagged ‘technology’

The New Tax Bill Is Positive For SMBs

February 6, 2018

Experts are still dissecting the most extensive rewrite to the U.S. tax code in 30 years.

What is becoming clear is that on the whole small businesses will net a great many benefits from these new legal provisions.

Every small business should consult their accounting professional for individual guidance. However, there are five major issues that SMBs must stay on top of under the tax landscape.

  1. Choose your company structure carefully.

This concern is based on whether there is a need to retain working capital and the distribution needs of the owners.  Along with these concerns is how the company will look to a potential buyer.

  1. Smaller firms have different considerations than larger firms.

Smaller firms will benefit from passing cash through to owners while larger firms will see ways of shielding income and bringing back overseas monies.  In this case size matters so check with a tax professional.

  1. Tax savings are an opportunity to grow your business.

As the bill intended, there are good reasons for SMBs to invest in growth.  So even the smallest firms should broaden plans to include longer time horizons.

  1. Take advantage of estate tax exemptions.

For estate planning purposes the exemptions have doubled but have a sunset of 2026.  In this case, are you betting you will die before the exemptions expire?

  1. Beware of unintended consequences of the legislation.

Congress limited interest expense to 30% of adjusted income, a difficult barrier for companies in hyper-expansion mode.  Perhaps as a swipe to new age or millennium companies, it also reduced to 50% the deduction for providing food to employees.  It phases out entirely in 2025.

Surveys have shown the changes are popular with SMBs.  In fact, the latest public soundings show Americans in general warming up to the new tax bill.

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Small Business Hiring in Today’s Changing World

June 11, 2017

The latest employment data once again demonstrates small businesses hiring is greater than that of large corporations.

At the same time, surveys of small business leaders indicate they expect to hire more and more workers as the year progresses.

While good news, it also highlights a growing problem for smaller firms: finding qualified employees.

As the nation’s unemployment rate ticks under 5% the number of unfilled jobs is increasing.

This is occurring despite the nation having an estimated 94 million people who have dropped out of the job seeking sector who are just now starting to return to the labor force.

Many of these individuals had skills and experience in older, less technical functions or in declining industries.

Concurrently, the rise of cloud-based services eliminates the need for many in-house functions such as accounting, payroll, invoicing, and social media.  This outsourcing means remaining employees must be more and more specialized.

With specialized talents needed and despite this apparent large pool of candidates, many small businesses still say they can’t find individuals capable of doing many tasks important to their company.

Experts say there are several reasons for this but the major factor is many individuals are unprepared for today’s marketplace.

One reason is many corporations no longer provide training programs for young talent.  According to some experts, the evolution of technology is replacing repetitive entry level positions such as data entry, order taking, and distribution assembly with robotic tools or artificial intelligence.

Even in-person sales training programs have been curtailed replaced with auto-generated phone call marketing and customer service programs with scripted messages.

This was particularly true during the past eight years, leaving a void in the 28-35 year old age group of talent capable of first- and second- level management roles.

But that explanation is too simple.  For many small businesses, identifying good candidates requires time and the use of a wide number of possible sources.  Many job boards such as indeed, simplyhired, ziprecruiter among others have sprung up offering a multitude of possible sources.  Often, they generate hundreds of candidates which must be sorted and evaluated, including background checks on all hires to ensure you are getting what you expect.

And herein lies the opportunity for small business leaders.

Finding the best “fit” for a potential employee can mean extra dividends for the employer.  But this requires some flexibility on the part of the employer.

For instance, the employer should look for the passions of possible employees rather than just their experience or education.

Many moms returning to the workforce are equipped with the experience of multi-tasking which can be valuable in a smaller organization.  Veterans are another pool of candidates to consider; their disciplined training makes them reliable.

Asking to test a future employee with a paid project is another way of learning if he or she could become a valuable employee.  This approach is gaining acceptance with so many people opting for a “gig” type of working arrangement, where they prefer moving from project to project rather than full time employment.  A paid project can be an effective tool to finding the right person and filling your business need.

The world is changing enabling small businesses to expand their sales territory to the world.  So too, they should expand their employment horizon.  The results may be a positive surprise.

Customer Service And Technology

January 3, 2016

Technology is rapidly changing our world but individual customer service is not keeping up.
While many companies offer products and services through apps and downloads, there are still many functions and applications still needing hands-on help.
Take for instance buying a new mobile device. On average, consumers spend five hours talking about or researching a new mobile device, according to industry pundits.
When they do decide to buy, consumers wait an average of 27 minutes for a sales person and another 38 minutes to actually make the purchase. Add an expected 89 minutes to upgrade and make the new mobile device fully functional.
Technology is being held back by insufficient customer service.
We’re told by knowledgeable people that upgrading to the newest version of Microsoft results in one of two new users seeking outside help.
While Apple, Microsoft, Samsung are among the leaders in making technological transitions as seamless as possible, there is still a lot of handholding going on as we transfer many applications to our mobile devices.
Technology is also transforming the way we ring up drugs, groceries, cab rides, transit tickets and a host of other applications.
But with these changes is a vast training requirement, which is requiring tens of billions of dollar.
For small- and medium-size businesses (SMBs), the road to technological change means in many cases they are hanging back until larger entities have expended the dollars to train customers.
Take for instance the new credit and debit card acceptance protocols. Where before banks accepted the losses from fraud, starting just recently merchants not equipped with the new smart terminals were paying for fraud loses. The threat of the costs associated with these losses forced many card receivers to ease restrictions for a year.
Some card issuers did not ease the costs to SMBs and these entities are suffering losses.
Here is a clear instance where technology is ahead of customer service managers’ ability to train staff.
Ironically, younger customer service employees despite their familiarity with tech tools are showing the same lack of flexibility as their older predecessors in servicing customers.
For those companies relying on network downloads the story is much the same. A recent survey by Information Strategies, Inc. (ISI) determined that after price customer service and live tech support were key factors determining sales success.
For SMBs and others, the watchword should be technological advancement with a strong dose of customer service.

For Many Small Businesses Heralded Recession End Has Come Too Late

August 11, 2013

In Hollywood films depicting a group fighting off overwhelming enemies, as the rescuers are just coming to their relief, some of the embattled characters die.
In real life today, that scenario seems to be working in the small business sector.
The U.S. economic growth outlook has been upgraded to decent from lousy—which is likely good enough for the Federal Reserve to pull back on its stimulus later this year.
On the positive side, fears of another downturn are minimal. Economists in the latest Wall Street Journal economic forecasting survey put less than a 15% chance on another recession hitting in the next 12 months.
But at the same time, they put only a 13% chance that growth in gross domestic product this year will be stronger than the long-run average of 3.5%.
With the recession seemingly receding and an uncertain economic picture may be emerging, many small businesses are dying.
In effect, as the good times look as if they are appearing, many smaller firms are disappearing.
A combination of factors is at work in the real world.
First and foremost is many small businesses have simply run out of resources. During the recent recession, many small enterprises first cut all the fat from their operations. Then they began trimming the bone or heart of their operations. With funding very tight or almost non-existent, to stay alive, many small business leaders used up their credit, business and personal, keeping their entities afloat.
The second reason is not so obvious. Many companies became obsolete or redundant during the past five years. Technology has changed the marketplace and so have consumer and client needs morphed. The ability to change with the times was not there as many enterprises short of cash or other resources were prevented from investing in new alternative scenarios.
Some experts also see another trend. With the massive downsizing of large corporations during the recession period, there are many more competitors particularly in the consulting and technology fields.
Technology, particularly cloud applications, has also played a role by enabling many new companies to start up with little investment in equipment, physical plant or employees while having access to the newest management, marketing, and financial tools. Existing companies with their investment in older technologies and reduced resources are being put at a disadvantage.
One small example: dry cleaning stores are springing up at an increasing rate because they can be started with little capital. All that is needed is a store front, an electronic control system, and access to a central garment processing plant.
The recession made many prime storefronts available with landlords eager to make deals.
New point-of-sales offerings manage the entire process from initial drop-off to final pick-up.
With the recession pinching disposable income along with style changes, central dry cleaning processing plants saw a significant decline in their sales. They cut prices to these drop-off establishments, thus making them potentially profitable.
Many of these new stores do not invest in dry cleaning plants because of the heavy environmental regulations but rather act as drop-off and pick-up stations.
In contrast, older dry cleaners, with costly in-store plants, higher staffing costs, have tighter margins. Many have not survived the past five years.
Another factor is the changing demographic of the workforce. During the last five years, many older workers, even those who cannot afford to retire left the workforce. With them went a vast amount of knowledge and loyalty. Smaller companies tend to keep employees longer, particularly those with institutional knowledge. As they left, they were replaced with younger workers with different expectations, many of which could not be met by smaller businesses straining to stay alive.
One final factor is the continued growth in regulatory requirements and higher taxes faced by many small companies.
Just this week the IRS sent out the first of what is expected to be an avalanche of letters to small companies. These were enterprises whose reported income from credit card sales are not matched by some percentage of reported cash payments.
The IRS thinks small businesses are hiding cash payments. These companies have 30 days to explain in writing why their cash payments are not in line with IRS expectations.
In addition to this and other federal actions, state and local authorities strapped for cash themselves, imposed new and higher levies on companies who for one reason or another could not move. These jurisdictions know they have a captive population and they have been very creative in identifying new tax or operating levies to impose.
While many states say they want to encourage small businesses, few honor this notion in the breach.
At the same time, some states go out of their way to make it easier to start a new business. It is no accident that many new enterprises are started in lower tax states such as Utah, Nevada and New Mexico.
Unfortunately, many businesses can’t for one reason or another relocate and when something such as a local ordinance requiring a higher minimum wage is enacted, they must either swallow the increased costs or close.
Older small businesses are usually stuck in their current location. For new enterprises, the world is now at their fingertips by way their computer.
Other than retail establishments, the Internet has made it possible to locate a business anyplace. One notable statistic: the average market footprint for smaller companies has grown from 50 to 70 miles in the past five years and is expected to widen even further in the future.
But there is another factor at work. People’s taste change and society today graves change at a far greater rate than in other times.
“New,” “different” are key words to many audiences, particularly younger consumers.
One example is the restaurant industry where the failure rate is now closer to 50% within 18 months according to a recent survey,
Here too, the public’s acceptance and even embracing of food trucks over traditional lunchrooms is driving down the latter’s profits.
Again taxes and regulatory trends work against older establishments.
Food trucks have fewer regulatory and tax burdens while greater emphasis and taxes are being focused on storefront establishments by local authorities.
Most experts think the economy is improving.
For more and more small businesses it has come too late.

Technology Is Leveling The Playing Field For Small Businesses

April 30, 2013

Technology is making the process of starting and growing a small business easier and less costly.
From cloud-based operations dashboards through personnel recruiting, management offerings and beyond to marketing applications, there are powerful tools now available to enable even the tiniest enterprise to compete on the web and on the ground.
Much of these changes have been spurred by smart cloud-based solutions that have best-in-class SaaS applications and business process-as-a-service (BPaaS) capabilities.
When utilized, they help you accelerate innovation and focus on business goals rather than IT deployment.
Clearly, cloud-based offerings can and have done much to help small businesses better manage their operations, cash flow, marketing efforts, and recruitment.
What many experts have failed to note is the trend to evolving pricing models and easy adaptability that mirrors existing ways of doing business.
Four years ago, in my book, The Janus Principle, Focusing Your Company on Selling to Small Business, I pointed out that conserving cash was a principle factor in smaller enterprises’ buying decision.
At that time, most technology applications required upfront implementation charges and hefty monthly subscription charges.
That happened because many tool providers did not recognize that conserving cash is a key factor in keeping a small business profitable. It is equally or more important when new enterprises are launched.
During this period, a change in the pricing algorithm appeared.
Today, many of these offerings have a pricing model which requires little of no upfront costs and subscriptions under $10 per month.
Clearly, application providers have learned to adapt the costs of these tools to the needs and buying preferences of their target market.
A deep review of recent new offerings clearly indicates prices have been driven down by competition, innovative technologists and the economic downturn.
Part of this change is the migration to the clouds and acceptance by tool providers of the concept that the subscription model works best in the small business space.
Providers no longer seek to recoup their development expenses within the first year(s) but rather look for long-term relationships with a steady cash flow.
Another factor is the flexibility of the cloud which has enabled tool providers to develop applications that are easily adapted by smaller enterprises.
Equally as important, many of these applications better mimic the existing operational practices of small businesses.
Providers are recognizing that downsizing a big corporation application is not the best answer.
Small businesses do things differently.
Newer offerings are closer in functionality to how small businesses operate; they deliver enterprise-grade security, availability and elasticity while limiting the need for a small business client to change their current practices.
An added bonus, these tools allow managers to focus on running the business, not IT deployment; they free limited IT resources to focus on supporting operations rather than developing, installing and maintaining applications as enterprises grow.
By becoming the application provider and maintainer for a number of small businesses, providers are able to continuously adapt their products to the ever changing environment.
In this win-win scenario, everyone benefits.
Evolving technology is leveling the playing field and benefiting small businesses.
Let’s hope it continues.