Handshake in front of crane

To Rent, To Lease or To Buy:  Obtaining Expensive Equipment for Your Business

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Any small business owner stuck between buying or renting essential equipment knows that the query is not a simple binary. Making a choice you are firmly satisfied with requires both a full understanding of your current financial standings as well as a clear picture of where you anticipate your business to stand in the future. And making the wrong decision can have lasting consequences of their own.  Let’s discuss practical use cases to determine where buying, renting, or leasing may be right for your business.

When to Buy…

Potential Benefits to Buying Equipment

Buying property or equipment – whether through cash on-hand or equipment financing – has the obvious incentive of true ownership. Having absolute ownership over your property or expensive equipment has the chance to be a cost-saver in the case of equipment you use frequently or in property that appreciates in value. Consider this example: a farmer with 75 acres of tillable land outright purchases a combine harvester. Since the combine harvester is necessary to reap crops annually, the purchase may very well be a financial gain after several years. Consider as well the IRS Section 179 allowance; businesses were allowed to deduct up to $1,080,000 as a first year write off in equivalence to equipment or software purchased during that tax year in 2022.

Potential Detriments When Buying Equipment

This example, however, plays equally well into the downsides of purchasing: combine harvesters are exceedingly expensive outright (like many industry-specific machines) and can be equally expensive to repair if you don’t already employ sufficient technicians. Imagine, as well, the potential that a certain crop doesn’t properly germinate or labor shortages lead your team to miss proper times for reaping; in the case of leasing or renting, the tangible financial hit of that reduced harvest would likely not be as dire.

Buying is a Bet for the Best

Buying expensive equipment outright requires sage-like industry knowledge as well as an exit strategy in order to be fully insulated, or as much so as is possible. Business owners on their first venture or entering a new industry may find that buying equipment more than double-digit percentages of their total capital is markedly unwise. Small businesses have the most to gain from owning their equipment… but only if that equipment meaningfully returns on its investment. Purchased equipment that fails to see regular use or drastically impacts your capital or overhead has the risk of becoming a monument to rash decisions rather than a useful business tool.

When to Rent…

Potential Benefits to Renting Equipment

Not every industry allows for easy renting of equipment. Renting generally is most beneficial to industries that are wholly seasonal or have tracked busy seasons. If you run a year-round business with consistent revenue, customers, and products, it is unlikely the monthly price and lack of ownership could in any way benefit your business.

Since renting requires the least capital upfront, it is often the most attractive option for freshly minted businesses that are still finding their stride. A worst-case scenario for a small business is preemptively paying for assets that don’t turn around to help your business. Let us consider the example of a farmer and a combine harvester again: in 2022, new or even lightly used combine harvesters can cost stupefying amounts of money upfront, often close to $750,000. In our example of a 75-acre farm, that cost is likely too much capital for a farm of this size which is not the subsidiary of a larger corporate structure. Renting a combine may simply be the only way for smaller farms (or small seasonal businesses) to turn a profit annually. The hope for farms and small businesses with similar structures, of course, is to save enough capital or meaningfully study trends enough to which purchasing expensive equipment amounts to a no-brainer good decision.

Potential Detriments When Renting Equipment

Rented equipment isn’t yours. Flatly, this almost explains any major downside that comes with renting. In the case of damage to any machinery you rent, there is a very good chance you will also have to pay for repairs on top of your existing rate for the rental. And let’s go back to our farmer one more time: Our farmer simply does not have the capital to outright buy a combine harvester (as is the case for many harvest-based farmers) and annually rents a combine from a regional host. Here’s the trouble: seasonal harvests happen all at once for farmers in the same region. This means that every farmer in that region that doesn’t own their own combine is going to rush to rent. In that rush, there is a more than possible chance that certain farmers may not secure a combine and then suffer the loss of an entire harvest. Leaving essential equipment in the hands of a third party introduces unpredictable variables for business owners. And for small business owners with smaller safety nets, suddenly being left without a suitable rental can spell disaster.

Rent From Trusted Sources and Only When You Have To

Unpredictability can quickly shutter seasonal businesses for good; of course, seasonal businesses are also those who are most likely to rent expensive machinery. Renting isn’t bad by nature; many industries like construction and, of course, agriculture wholly depend on rentals in order to remain profitable. This simply means that every choice to rent or buy ought to be informed by genuine industry trend data. Whether this means understanding the potential loss from not renting a certain piece of equipment or funding a safety net in the event of a missed rental or other unexpected hits.

Third Choice… Leasing

For those industries where rentals are rare or simply implausible, leasing can likely be a worthy third choice to consider when dealing with any major, expensive machinery. Leasing is a great option for businesses that use equipment that is constantly changing. With a lease, you’re only committed to equipment for the length of the lease, so you’re not stuck with equipment that can quickly become obsolete. While vehicles, specifically, are most peoples’ first thought for lease potential (our farmer and combine are back!), it’s worth knowing that several major industries lease a wide variety of machines. Offices can lease expensive copy machines, charter schools can lease student laptops, and several more practical examples are out there and likely relevant to just about every industry. 

Leave No Stone Unturned and No Path Untested

No small business owner can be fully certain that buying, renting, or leasing expensive equipment is the right choice. What small business owners can do, however, is consider, as we have here, the potential benefits and detriments to each choice parallel to their own business. Those businesses who make informed decisions with safety nets and back up plans have the least to lose when making a major financial decision.

What Type of Financing is Best for Your Small Business?

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Small businesses, slammed by inflation, supply chain disruptions and staffing shortages,  are expected to rely on debt financing heavily this year, as pandemic relief programs such as the SBA’s Economic Injury Disaster Loan and the Paycheck Protection programs have long since dried up. If you believe your small business needs to take on debt to survive this rough patch, however, you also need to evaluate which of the many financing tools available are right for you.

The good news is that there are several types of loans to fit your specific needs – whether you’re seeking money to keep your operations afloat; purchase vital equipment; keep your business running during off-season months; you’re seeking to expand, or you need cash for an emergency – there is an option for you.  Some loans carry more requirements and may be more expensive than others, so it’s crucial that you learn which is the most practical and cost-effective for your business.

Here are some of the most common types of small business financing to choose from, depending on your business’ specific needs:

SBA Loan

SBA Small Business Administration lending Kapitus

While pandemic-related assistance has dried up, the US Small Business Administration still offers plenty of financing options for small businesses.

An SBA loan is backed by US Small Business Administration and is sold through registered agents, be it a traditional bank or an alternative lender. One of the most sought-after loans by small businesses is the SBA 7(a) loan, as it often offers a comparatively low interest rate and terms of between 10 to 25 years and has a maximum borrowing limit of $5 million. This money can be used to grow your business, purchase new equipment or simply as operating cash.

However, just because you want a 7(a) loan, doesn’t mean you’re going to get one. The borrowing requirements are typically more stringent than what a bank or alternative lender would require for a term loan. These include a FICO score near 700, a required number of years in business and a strong, consistent history of cash flow. Other drawbacks of a SBA 7(a) loan include the fact that the turnaround time for the loan can be weeks, and collateral is often required for loans exceeding $350,000. In addition, SBA loans have a unique requirement which indicates that you must use “alternative financial resources, including personal assets, before seeking financial assistance.” 

If you believe your business qualifies for such a loan and you can wait several weeks to get approved and get the money, you should speak to a lending professional regarding what terms you can get.

Term Loans

Term loans, or business loans, are offered by both banks and alternative lenders and are viable financing options if you’ve been turned down for a 7(a) loan or if you need money quickly. The requirements of a term loan usually aren’t as strict as that of a 7(a) loan – for example, your FICO score probably doesn’t need to be as high as it would for a 7(a) loan.

The terms of the loan, such as interest rate and maturity date, are negotiated between the borrower and lender, and in some cases, especially with alternative lenders, you may get approval and funding within 24 hours. Similar to the 7(a) loan, you can use the proceeds for virtually anything related to your small business.

The cons of a term loan are that they are going to carry a higher interest rate than a 7(a) loan – depending on how much risk you represent to the lender – and typically offers terms of five- to 10 years, though they can be much shorter than this depending on the lender. While the requirements of a term loan may be less stringent than a 7(a) loan, you’re still going to need a strong FICO score, at least two years in businesses and a strong cash flow. Traditional lenders may also require you to put up collateral. 

SBA Microloan Program

The SBA also guarantees microloans – small loans of up to $50,000 – through intermediary lenders. These lenders often operate in underserved communities and work with minority- and women-owned businesses, and their purpose is to provide financial help to new businesses. According to the SBA, the average microloan is $13,000. These loans have a maximum term of six years, and interest rates are going to be significantly higher than a term or 7(a) loan, and often require the borrower to put up personal assets as collateral. 

Invoice Factoring

Invoice factoring is typically offered by alternative lenders and can help you with your cash flow if your customers are slow to pay. In this type of financing, a lender will provide you with cash for your outstanding invoices in exchange for a percentage of the money that is owed to you. You can choose which invoices to factor, and this type of financing won’t add debt to your balance sheet since the money that you’re “borrowing” is backed by money that is already owed to you. 

Invoice factoring is best if you need money quickly to keep your operations going while you’re waiting for your customers to pay, and if you don’t mind not getting all the money that is owed to you by customers. The turnaround time for this type of financing is usually very fast, sometimes happening in 5- to 10 business days.

Equipment Financing 

Equipment financing is a great tool to make sure you have the best, most modern machinery to keep your business running.

Whether you’re a small agricultural company that relies on row crop tractors; a contractor that needs bulldozers or backhoes for construction projects, or a doctor or dentist who needs the latest X-ray machine to treat patients, having high-quality, modern equipment is the lifeblood of your business. Machines, however, can cost a fortune, and your small business may not have the cash to pay for that machinery upfront. This is where equipment financing can serve you best.

Your FICO score generally must be in the high 600s and in most cases, you have to have been in business for at least a year. The advantage of equipment financing is that the equipment itself often serves as the collateral – not your personal assets. Ideally, the revenue that your company generates from the equipment you’ve purchased should more than cover the interest and principal payments you’re going to have to make. 

Purchase Order Financing

Obviously, your business needs inventory to sell in order to make money. However, you may not have the cash up front to pay for the inventory you need to meet a customer’s order. This is where purchase order financing comes in. PO financing pays your vendors upfront so you can keep your customers happy, grow your business and maintain your cash flow. 

In some cases, the lender may even take on the responsibility of payment collections from your customers’ orders, freeing you to run your business smoothly. To qualify, you generally should be a profitable business, and it’s your suppliers and customers – not you – that must have good credit. This type of financing typically requires a low factor rate as the cost of capital.

Business Line of Credit

A business line of credit, similar to a personal or business credit card, is typically an unsecured line of credit extended to you by a lender for an annual percentage fee. The limit on the business line of credit is negotiated beforehand and typically, the line of credit must be paid off at various, pre-agreed upon intervals. The benefits of this type of financing are tremendous. 

The APR is typically significantly lower than a business credit card (although you won’t get any rewards points that you might get with a credit card), and the credit can be used for just about any type of business need, such as keeping your business operating during non-seasonal times of the year or through a recession, cash emergencies and the need for sudden, unexpected purchases. 

The caveat is that a business line of credit may not be as convenient as a business credit card for smaller needs, such as a business meal or the purchase of a small piece of office equipment, so carefully consider which one is best for you. 

Revenue-Based Financing

Revenue-based financing is an expensive financing tool in which you essentially borrow against your future sales. If your company is about to launch a new product that you believe will be highly profitable and you need cash to support the initial promotion of it, or if the roof of your office collapses and you need emergency cash to get it fixed to continue your operations, for example, then RBF may be a useful financing tool. 

Before you consider this type of financing, however, consider that the cost of capital is higher than most forms of financing, as your company will be required to make pre-agreed upon payments equal to the percentage of your overall future sales plus a multiple of the borrowed amount. This type of financing requires your business to have a strong sales history, so it should only be considered for specific, short-term cash needs. 

Consider Your Options Carefully

If you decide that your business needs financing, carefully consider which type of product you choose, your needs and what you are willing to pay in terms of cost of capital. Seek counsel from your accountant or financial advisor. Keep in mind that lenders want to do business with you and don’t wish to have you use a financing product that you may not be able to afford, so they will be willing to work with and advise you as well. 

Hand reaches for file

Essential File Management Tips and Trends

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As the tides come in on another annual tax filing deadline, there is perhaps no better time for small business owners to reevaluate their current tax record management structure. An outsider may not realize how much work goes into managing and maintaining tax records for a small business but those in the know are all too aware how quickly paper files can turn into a Himalaya-sized hassle. The advent of digital tax filing tools has doubled as a great means to store those same records but there are more than a few reasons why digital records can become a chore in themselves.

An essential element of modern financial literacy (especially for small business owners) is maintaining a trusted system for storing and tracking your own tax records. A good system is also easily accessible whenever reason requires. Consider, then, this collection of methods and tips before next quarter is already at a head.

Going Paperless

You’ve certainly heard it before and will hear it again before long: it’s time to go paperless. Going paperless is more than a clutter-reducer; by having less papers spread among less places, there is an equally lesser chance that documents disappear by incorrect filing or plain old human error. While initially overwhelming for most small businesses, crossing the peak into fully paperless document management makes life easier for your business if you file digitally or even with a CPA; it is entirely likely that the CPAs you may consult come tax time already have their own paperless system in place. By carrying your relevant documents on a flash drive instead of a shoebox and a few filing tins, you may just be doing your CPA a favor. Going paperless for your essential documents is a full enough topic on its own that it deserves some sub sections:

Document Management System: Running a secure document management system is a nonnegotiable must when switching to fully paperless records. Here is the flipside all paperless considerers should, well, consider: Your document management system is the digital safe that protects your every essential document; don’t go for cost-savings and don’t cut corners: if this system fails or unexpectedly suffers a breach, I don’t have to explain what bad things can happen next. Evaluate your current tech loadout. If you are running a local server that is fully offline and, thus, more secure, this is a more than sufficient directory to store scanned and wholly digital files until they need to be retrieved.

If servers are too costly for your business, look into cloud-based accounting software. The most well-known example of such software is QuickBooks by Intuit, also the operators behind TurboTax. These systems store and organize files in a near-identical means to local storage but can also be retrieved when you’re away from your master file. Plus, if your business is small enough or manages few enough files to confidently file fully digitally, QuickBooks is fully integrated with TurboTax allowing a one-stop document management and tax filing system. For reasons we will explain later, however, there are more than a few reasons that even if you are confident in your ability to self-file, working with a CPA can still be beneficial.

Cataloging Old Documents: Depending on how long you’ve been in business, the process of digitizing and cataloging your old documents can range from no-trouble to a lengthy ordeal. If your printer has a scanner function, you’re already equipped to do most of the work from your office. Luckily, there are several apps and programs that can use your smartphone camera to do the same work as a scanner. Since such apps will be scanning your essential documents, it pays to triple-check the legitimacy and security of the service you plan to use. Digitizing old records is also a thoughtful alternative to discarding records that have passed the retention mandate; records that are over seven years only are a good place to start digitally downsizing.

Co-Management with Your CPA

There are several industries, however, where going fully paperless either makes work more difficult or costly. This simply means that the documents, receipts, expense reports, etc. for your business must be stored by a method convenient for you. If you work quarterly with the same trusted CPA, it is likely reasonable to split your files (or maintain copies of) relevant files between your two offices. Your CPA can also advise you on the essential record retention mandates relevant to your specific field and filing status. Being that essential financial documents for your small business may include personally identifying information about you and your employees, be certain that any files you leave on record with your CPA are equally (if not more) protected and secure compared to your own record security system.

Stepping Up Security Online and In-Person

The financial documents you maintain for your business are considered essential for a reason; if those documents were stolen or compromised, it may not be just your business at risk. Your employees, as well as any contractors that were directly paid by your business are likely personally identified in your essential documents and identity thieves are aware of this. And as you’re likely aware, identity thieves aren’t safecrackers and cat burglars; they are the digital prowlers, constantly vigilant of unprotected infrastructures with easily accessible SSNs to flip for cash. It is then paramount that every “what if” of your security structure is hammered out.

In-Person Security: The rules for in-person security of your documents luckily haven’t changed much in the past 50 years. The most meaningful way to increase security for your physical documents is to keep them somewhere locked (preferably a safe, not a flimsy locked filing cabinet drawer). Second, know with unimpeachable certainty who has access to those secure documents; reduce the number of people who interact with those documents as much as possible. Only relevant, trusted employees should have access to your essential documents. A modern security element to consider is motion detection modules on the hinge edge of your safe or document holding area. Modern modules can even connect to an app on your phone and inform you directly if some amount of motion is detected. Essentially, treat documents bearing SSNs or other personal information with the same gravity as cash itself; thieves want it just as bad.

Digital Security: If you are on the road to paperless documentation, it’s worth knowing that those digital files are just as attractive as the physical ones. Plus, there are infinitely more methods of egress for cybercriminals to test. If your files are stored on a computer with Internet access be certain that you have an external (cloud-based or local) back-up of those files. In the event of a ransomware attack, those files could be irreparably encrypted. The best way to securely store digital files is on a wholly offline local system with semi-regular back-ups. Since nearly all small businesses file taxes quarterly, it’s sensible to pair back-ups on that same schedule. Hard drives and even modern solid-state drives all fail eventually; so, like paper records, it pays to have extras and back-up copies.

Every Management System Has Room for Improvement

The most effective file management systems are in a state of constant improvement. Whether your records are paperless, paper-ful, or somewhere in between, it pays to regularly shake up your management system both to keep intimately familiar with the where and how of your most essential records as well as to take advantage of cutting-edge trends. Especially for small businesses who don’t have the luxury of in-house accounting and legal departments, being the master of your finances and the keeper of an organized collection of records is the cornerstone of financial literacy.

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Should You Take Out a Business Loan? Consider this Checklist

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If your small business is ready to obtain financing, that means you should be in a great position – your sales are flowing, your earnings are consistent, and you’re ready to expand your business’ footprint. Before you do take out a loan, however, it’s crucial that you decide first whether taking on debt is truly advantageous to your business, and which lending product is best to meet your goals.

Should You Take Out a Loan?

One of the most pressing questions you need to answer before taking on any new financing is: how well-equipped is your business to take on new debt? To answer this question, you should complete a comprehensive checklist regarding your business:

#1 Do I Even Qualify for a Loan?

Different types of loans require different qualifications, but you should first make sure that your business meets certain requirements from lenders. Your minimum FICO score should probably be in the 680 to 700 range for certain financing products such as a term loan, although alternative lenders such as Kapitus may require slightly lower scores, depending on which financing vehicle you are applying for. 

Lenders will also want to see how strong your company’s business plan is; how long you’ve been in business; what your plans for growth are, and the consistency of your cash flow in order to gauge whether you have the ability to pay back the loan. 

If you’re not sure whether you qualify, you should speak to a lending officer at the institution you are seeking to borrow from, who can walk you through the steps in which your business needs to take in order to qualify for a loan.

#2 Why Do You Need a Loan?

Ideally, you are seeking to borrow money to expand your business and increase revenue, and hopefully, that increased revenue will offset the cost of capital for your loan as well as enable you to make monthly loan payments. 

As we all know, however, we’re currently not living in an ideal economic environment, as small businesses are still struggling to make ends meet in a turbulent economy. Fortunately, there are a variety of financing products to choose from that can provide much-needed cash for all sorts of reasons. Some of these are:

  • The development of a new product or service which you foresee increasing sales.
  • Opening a new office or facility.
  • An emergency such as a collapsed roof or crucial machinery breaking down in which you need emergency cash to keep your business in operation. 
  • Getting immediate cash for invoices.
  • Increasing your inventory to meet high demand.
  • Meeting off-season expenses.
  • Purchasing new equipment. 

Once you’ve decided the reason you need financing, you can examine several distinctly different financing products that can meet your needs.

#3 How Strong is Your Cash Flow?

After credit score and business longevity, lenders will want to see your business’ cash flow – the net balance of cash that’s moving in and out of your business on a regular basis. If you’re borrowing to finance the development of a new product, for example, and sales of that product don’t end up being as strong as you thought they would be, a lender will want to know if you’ll still be able to make monthly installment payments on the loan you took out. This is what a strong cash flow will indicate to them.

There are several ways to improve your cash flow if necessary – you may want to examine ways to cut unnecessary spending, optimize inventory management, hound customers to pay their invoices and improve your cash flow forecasting. Your loan approval could very well depend upon the strength of your cash flow. 

#4 Is the Price Right?

Courtesy: CBS Television. No, you don’t have to be a contestant on The Price is Right, but you do shop around for the best prices in terms of cost of capital.

Anytime you borrow money, be it through a business credit card, a mortgage or a term loan, you are going to have to pay a cost of capital. This can be the interest rate associated with a term loan, the APR on a business credit card or line of credit, or the costs associated with invoice factoring or revenue-based financing. Whatever financing instrument you choose, it’s crucial that you ask the lender the total amount you will be paying back over time. 

It’s also just as crucial to shop around for lenders and consider which ones may be offering the best terms, and which ones can offer you a quick turnaround. 

Traditional banks often have more stringent borrowing requirements, while alternative lenders often are  more expensive but will typically offer a quicker turnaround time on your loan with fewer requirements. 

Something else you should consider – the Fed has just hiked the overnight rate by a half percentage point – that’s after a quarter-point hike last month – so some loans are going to be even more expensive than they were at the beginning of the year. 

#5 Are you Willing to put up Collateral?

Depending on your credit score and other factors, some lenders may require you to put up collateral or even a personal guarantee. Collateral would include the liquid assets of your business such as your equipment, business savings and/or investments and future invoices. 

Some may even want you to give a personal guarantee that you’ll pay back the loan by putting up some of your own assets as collateral, such as your house or your personal investments, in case you default on the loan.

Putting up collateral may increase your risk in taking out a loan, but keep in mind that lenders really aren’t interested in seizing your assets – they would much rather see your business succeed and for you to pay back the loan in a financially healthy manner. Therefore, when you’re taking a loan, it’s imperative that you sit down with your lender and carefully go over the terms of collateral and the exact steps that will be taken should you default. 

Carefully Weigh Your Options

Before you take out a business loan, it’s always a good idea to consider other ways to raise money besides going into debt. Crowdfunding, asking for outside investments, borrowing money from family are other options. If you do decide to take out a loan, carefully consider the above questions and decide which loan will help your business the most and which would be most cost-efficient.

Company Culture Small Business Kapitus Hiring

How to Strengthen Your Small Business’ Company Culture

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Is your company a place where people actually want to work? That question has obviously become front and center since “The Great Resignation” began wreaking havoc on the US workforce in 2021. 

Indeed, gone are the days of whip-cracking bosses, inflexible hours, subsistence-level wages and workers’ fear of getting fired – they’ve shown that they’d rather quit at the mere threat of being terminated, as the Dept. of Labor’s most recent Quit Rates have shown. In fact, workers have shown that they’re less tolerant than ever before of toxic workplaces.

A recent Pew Research Center study revealed “Feeling Disrespected at Work” as one of the major reasons workers are quitting in droves. As a small business owner, you probably can’t afford to compete with your larger competitors when it comes to salary, so you’re going to have to compensate by offering a strong company culture, among other things. 

What is Company Culture?

Offering a strong company culture is crucial in today’s challenging hiring climate, but it’s an opaque term and involves a lot of different elements. Defining your company’s workplace culture starts with a simple question: “If I were an employee of this company, would I be happy working here?” 

When answering this question, consider several key factors:

  • Do workers feel comfortable offering suggestions to upper management? 
  • Do workers feel like they are being listened to?
  • Is there room for advancement and innovation?
  • Do the company’s workers share similar values and behaviors?
  • Does upper management show empathy for employees’ needs?
  • Does the workplace offer an amiable and respectful environment, starting with the boss?
  • Do your employees feel appreciated? Are they rewarded for going ‘above and beyond’?

Those are just a handful of questions that need to be answered if you are going to ensure that your small business offers a culture that will attract workers, even if you can’t afford to match the salaries being offered by your larger competitors. While the task may seem daunting at first, here are a few steps you can take to make your business’ culture standout:

#1 Diversity, Equity and Inclusion (DEI)

Diversity Equity Inclusion hiring Small Business Kapitus

Having a strong DEI policy in place can go a long way in attracting workers.

This sounds like a complicated term, but it really isn’t. A DEI policy means that your workforce represents different races and ethnicities, genders, sexual orientation, religions, ages, experience and abilities. You may think this doesn’t apply to small businesses, but you’d be wrong. Job searchers are increasingly demanding that prospective employers have a DEI policy in place. 

Having a DEI policy can benefit you in many ways – it allows you to hire younger, less experienced employees to train and start at a lower base salary than normal. It also gives opportunities to people of color that may not have seen them previously, and allows work for people who may have disabilities but are able to work in a high functioning manner. These people, thankful for the opportunities you are giving them, are often eager to work hard and get ahead. Plus, you’re letting the world know that your company believes in a diverse workforce. 

#2 Listen to Learn, Learn to Listen

One of the advantages that you have over your large competitors is that big companies often tend to treat

A willingness to listen to your employees and making them feel like their voices are being heard goes a long way in creating strong company culture.

workers like numbers, leaving employees feeling as if that their voices go unheard by the company’s senior managers. After all, do you really believe that Amazon’s CEO, Andy Jassy, knows the names of any of the employees in the company’s warehouses, or that Elon Musk knows the names of anyone who works on the factory floors of Tesla? That’s one of your biggest advantages as a small business owner: employees have access to you – the boss – which enables them to be heard. Listen intently to your employees’ needs. 

Whether your employee has a suggestion to improve your business or has a pressing family issue and needs to readjust their hours as a result, the fact that you’re there for them and are willing to listen and consider what they have to say will go a long way in keeping your employees loyal to your business, as it will make them feel that they are truly contributing.

#3 Birds of a Feather…

Your company culture can be boosted by the mere fact that your employees get along with one another. A single worker who is difficult to deal with can easily cause a hostile work environment, especially in a small business with 20 or fewer employees. Employees that become “work friends” will lead to more productivity and greater cooperation among your staff, so it’s important to make sure they have personalities that will encourage that. You don’t want someone who’s naturally an introvert having to deal with co-workers who are extroverts, for example.

Therefore, when you’re interviewing job candidates, it’s important to try to assess their personalities. Try asking questions such as “Describe a stressful work situation and how you handled it,” or “What hobbies or sports are you involved in outside of work?” Also, in as much as you can, try to discourage talk of politics in the office, as that can often be divisive. 

#4 Be Human

Nobody wants to work for a boss who is inflexible, short-tempered and cold. While you don’t have to be best friends with your employees, it is important to take some interest in how they are personally doing and showing empathy when they have a personal matter they must deal with. Be flexible with scheduling when an employee needs to take a day off for a personal matter. 

Ask questions such as “how was your weekend?” on Monday mornings. Also, if an employee makes a mistake, it’s important not to scream at them (no one likes being yelled at), rather, simply correct them and offer solutions on how to avoid the mistake in the future. Being personable and friendly will go a long way in making your office more pleasant and attracting workers.

#5 Show Some Appreciation

Employees will be more productive when they know they will be rewarded for their efforts and/or they know they will be able to reach professional goals. You don’t have to establish performance-based incentives, if an employee goes above and beyond to make a sale or exceeds a production quota, for example, it’s important to recognize those efforts with a small check, free dinner, gift certificate, etc.

Remember, it’s not so much what you give them, it’s the fact that they know they are being appreciated. Giving your employees cash bonuses if your business has an especially strong quarter or year will also go a long way in getting people to want to work for your company.

#6 Have Some Fun

If your employees are working especially hard, it’s okay to treat them to a fun activity. This could mean having a contest to see who has the best vacation photos, or a company-wide scavenger hunt. Perhaps you take half-a-day on Fridays for cocktail hour, take them to see a movie or another fun event. It doesn’t have to be done on a weekly basis, but it does further show them that you appreciate their efforts. Make sure to post your activities on social media to show prospective employees that your company is a good place to work.

#7 Your Company is NOT Family

While the age-old practice of calling your workforce “family” may be well-intentioned, it’s actually insulting to workers, especially in the midst of “The Great Resignation.” Employees have collectively stated over the past year that they want more pay and better work environments, and they know that they are usually “at-will” employees, meaning that they can be terminated at any time for any reason – that isn’t what a typical family does.

As such, employees feel insulted when you refer to workers as family, because you’re implying that their company should be just as important to them as their families. The thing is, your family isn’t going to lay you off when business is slow, and your company isn’t going to love and support you unconditionally when times are tough. Employees know this. It will serve you far better to call your company a “good” or “pleasant” place to work. Advertise your strengths as an employer instead of claiming that your company is family. 

You Have the Advantage

If you feel discouraged about competing with larger companies for workers, just remember that, as a small business, you have the advantage since you have fewer employees – the CEO of a large company won’t get to know many of the workers, but you can. You have the ability to be more flexible and personable with your employees by creating a great company culture, therefore giving you a distinct advantage over your larger counterparts.

Tips to Prevent a Toxic Work Environment

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What Is a “Toxic Work Environment”?

“Toxic Work Environment” is a phrase that evolved into a buzzword notably fast; while the business world at large is quick to use this phrase as a catchall for any kind of “bad” workplace, toxic work environments have very specific warning signs that, if understood by managers, owners, and supervisors, can then be more mindfully weeded out. Toxic working environments are, in essence, a workplace marred by significant and distracting interpersonal conflicts between employees which eventually can affect employees’ wellbeing and mental health.

What is especially troublesome about toxic work environments is that they frequently appear normal from the outside, and often are normal for some other employees. Silent frustrations brew in the staff members who feel as though they aren’t considered, and managers likely don’t know that certain staff feel that way since the cycle is inward. It is exceptionally difficult to diagnose a toxic workplace because even if asked directly, staff who are suffering toxic thinking likely wouldn’t admit it. It is, then, a worthy exercise for small business owners to assume and predict the ways their workplace may be considered toxic to root out toxicity that may already be in your workplace, silently building employee distrust and eventual resignation.

Tips to Prevent

Keep Inter-Staff Communication Frequent

Toxicity grows slowly over long periods of time. As employees feel their input isn’t heard or their opinions don’t matter, they’ll slowly become sardonic. To help alleviate the feeling that employees work in their own bubbles, and that their work isn’t important, schedule regular meetings that allow staff to communicate more freely. Put managers in a room with their staff. Put supervisors in the same rooms as managers. Do everything you can to burst bubbles and break barriers; toxic work environments thrive as well because the humanity of the coworker or manager they view as “toxic” is devalued; those “toxic” employees become caricatures of their reality in the gossips and snide remarks that fly behind their backs. Even if you don’t know who is viewed as “toxic” among your staff, take it upon yourself to give space for everyone to speak to, and even more importantly get to know the people they work with.

Recognition and Accountability

Work environments become toxic when employees feel their actions go unnoticed. This, however, goes in both directions. If an employee is excelling but feels ignored, they will often store those feelings inside and turn them around, becoming cynical of the business itself. Just as well, if certain staff are underperforming or acting out of order and seeing no meaningful repercussions, this can be a morale hit of the century for all of your staff. If you are avoiding confrontation or withholding praise for your employees, let me tell you: they know.

The most meaningful way to address both extremes of positive recognition and reasonable accountability is the same response: speak to your staff. Go out of your way to recognize excelling staff and do not be afraid to hold staff (or, and most especially, yourself) accountable when things go wrong.

Ask Managers and Supervisors to Regularly Review Performance of their Direct Staff

One of the most common dynamics of toxicity brews between managers and their direct staff. As a business owner, it’s your responsibility to direct managers. While you can’t be everywhere at once, a great first step to alleviate potential toxicity between staff and their managers is to require those managers to regularly evaluate the performance of their direct staff. As to whether they should report the performance directly to you or simply share it with the staff member in a one-on-one discussion, that will likely depend on your current structure. Find a system that doesn’t impede your managers’ time or become a chore (or dread) for your staff.

Mindful Scheduling

Employees in an environment they already view as toxic are unlikely to speak out. Little innocuous choices like scheduling for shifts has the potential to only add to the stress and discomfort of your staff. When making schedules for your managers and staff, step into their minds for a moment and trace any frustration that may come from the schedule you are drafting. A classic scheduling choice that can build employee frustration is “clopening” shifts where employees work a third shift immediately followed by a first. Especially if this lands on a Sunday night and Monday morning, this is an easy headache to avoid for your staff.

The basis of mindful scheduling, however, is to more fully understand your employees and managers’ needs when making their hours. For that to happen, employees and managers need to be confident enough to even speak to you about these matters in the first place. Either through your new, regular meetings with staff or new dedicated times/avenues, invest thought and effort into giving your staff the space to build schedules that reduce toxicity and stress.

Avoid Nepotism and Hiring Friends at All Costs

This is another seemingly obvious tip, but one that bears infinite repeating. Sniffs and hints of nepotism will have blowbacks no matter what industry or business size. This is both dangerous for the reputation of yourself, the business owner, and the friend or family member who you bring on board. Friends or family hired even through entirely legitimate procedures will near-always be seen as having received special treatment; the trick is, just about no employee or manager would feel comfortable saying this outright. This means that the gossip culture that breeds toxicity will only be exacerbated as a result of hiring a family member or friend.

Be an Example for Your Staff

It is well documented that change comes best from the top down in companies. If you want your staff to act and feel happy at work, you ought to do the same. Sit down and genuinely consider how you, the business owner, act in your workplace. Another business trope easy to fall into is the ghostly owner: owners who don’t spend very much time with their staff (even for legitimate reasons) risk becoming the catchall of things gone wrong in a toxic work environment. For the same reason that regular meetings are important, it is essential that owners are regularly present and available for staff and managers. Owners aren’t kings and ought not rule their businesses like one. Defeat the image of hierarchy by being open and transparent with your staff. Be present during the workday; simple tricks like knowing the names and hobbies of your staff are more than enough to help you lead by example.

Don’t Get Tied Up Trying to Change Yourself

Just as well as it is important to lead by example, don’t lead by fake example. Your employees and managers are smart enough to know when you aren’t being genuinely yourself. If you truly want to weed out a toxic work environment, your heart must be in it as well as your mind.

Don’t put on a fake version of yourself to please staff; they’ll know. Don’t put on appearances that you care about your staff without backing it up; they’ll know. Worse than a ghostly owner is a fake owner. Don’t put on a new face before you walk into your workplace, put on your best face. Your staff won’t take well to the feeling they are being patronized or treated like variables. Curing a toxic work environment comes not to those who see the productivity advantages of alleviating one but rather to those who understand the importance of the mental health and happiness of their staff.

Know the Signs and Run Your Business

Not every business is toxic, and not every business is healthy. Being that toxic thoughts are rooted deep in the subconscious of your staff, it’s not as simple as reading a label to see if your business is “toxic or “nontoxic.” You must then operate on the mindset that your business can always be run better. And that, perhaps, you can run your business better. You can always be more mindful of your staffs’ needs. The businesses least likely to become toxic, however, are those who know the signs and meaningfully implement countermeasures. If the entire concept of toxicity were a spell with a magic word to underdo the curse, that word would be “communication.” At the root of every one of these tips is the guiding light that you must speak candidly and regularly with your staff. As departments become more distant and staff begin to spread into cliques, it is up to owners and managers to break the trend and reintroduce open, healthy communication.

Hands shake

Where and How to Find Employees Who Value More than Pay

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One of the more frustrating rituals small business owners know all too well is putting out a job listing and finding no suitable candidates. Worse is finding a perfect candidate but not aligning on payment. Hiring has become a frustration, especially for small businesses who may not be able to compete dollar-for-dollar with corporate neighbors or other local competition. Instead of conceding to unrealistic rates for your business, consider that there are more than a few methods and strategies to pulling in competent and enthusiastic candidates. An essential element to “hiring around pay rates” is indeed, finding people to hire, so consider this collection of tips and inspirations to galvanize your hiring game and bring in staff who see your business as more than a paycheck.

Would You Work Here?

Before even considering how to attract enthusiastic candidates, you must ask if your business – in its current state – is worth getting excited about. No, this doesn’t mean you have to run a party rental company full of bouncy castles and clown makeup to have an exciting business. Instead, put yourself in the shoes of the candidate and determine if your business in its current state exudes an energy of Valuable Experience, Genuine Interest, or any tangible value add for the employee’s personal growth.

Employees who value more than pay value themselves, so while you may not be able to pay them competitively, there must be something else there. Or more specifically, candidates and employees must feel that something else is there. Industrious younger candidates are generally interested in jobs that continue their education in a certain field or could lead to more specialized work in the future; think hard about how your business can represent a prideful step on a young person’s employment journey.

Career Fairs

Speaking of young people, one of the most meaningful avenues to meeting young candidates are career fairs and employment fairs at educational institutions. Most career fairs allow you to spend longer amounts of time getting to know your potential candidates; this window of time is more so for you to sell the merits of your company to them rather than the other way around. Schools and college campuses are perhaps one of the greatest places to find enthusiastic, young candidates; and by having a physical presence as well as physical staff at the event, you can make an immediate and more positive impression than if those same people had simply seen your business on an Internet job listing. As the name says, a career fair is just that; a place for hopefuls to connect with a career. Be certain that your messaging and materials sufficiently reflect that candidates who choose to work for your business will find everything that comes with a fulfilling career and more.

Another unorthodox location to seek out candidates are rehabilitation centers and reentering the workforce centers. Both regularly offer job training programs for those within the centers. Reentering the work world with a criminal record or simply on the wrong foot due to past addiction and rehab is exceedingly difficult. By giving these unlucky people another chance, you are more than likely to find several people enthusiastic to work at your business.

City Hall & Community Boards

Many cities and townships would be enthusiastic to mention your business in community messaging if you approach them. Consider making a meeting with your local community board to see, first, how your business can get involved in the local community, and second, how they can help connect with other service-minded and industrious candidates. Make your business’s name known at charity events or local clean-ups. Making your name known, however, does not mean cutting a check and putting up a sign. If you are looking to convince people that working for your company will benefit the common good, you’ll need boots on the ground and ammunition to back those claims. By spending time at community service events, you’ll meet people who are personally driven and interested in communal good; these are the exact same people who will likely work at a business for its merits rather than its paychecks.

Assert Your Humanitarian Interests

As an extension of the previous point, meaningfully intertwine your business with one or several charitable organizations. Here’s an essential caveat, however: attach yourself to the charities you are already enthusiastic about. Don’t Google “charities to convince people my company is worth working for” because true humanitarians– as well the people who are likely to seek out a job on merit – can smell inauthenticity like sulfur. If people think you are using charities to pull in new enthusiastic staff, you’re sunk. This section, instead, is a reminder to remain authentic to yourself when making changes for recruitment. Wear your own interests on your sleeve and be your authentic self, good candidates will likely see this as a plus in itself.

They’re Out There, But Not for Long

Ponce de Leon would have done well if there was an article out there called “How to Find the Fountain of Youth,” and that can sometimes feel frightfully similar to “Where to Find Employees Who Value More than Pay.” Like good old Ponce, though, both answers are within you, the business owner. Employees value themselves and their happiness. In short, if your business can contribute to their satisfaction or overall happiness, you are more than likely to make a meaningful connection. So while the number of candidates seeking more than cash may seem slim, the reality is that those candidates are, instead, wildly driven and don’t stay unemployed for long. By making your business known and making connections with the right crowds, it is more than likely that your small business will be recognized for its merits over its ability to cut big checks.

Looking glass seeks the perfect candidate

Dos and Don’ts of Online Job Listings for Small Business Owners

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You’re likely familiar with the structure of modern job boards. Indeed, LinkedIn, and the several other major players in connecting employers with candidates have streamlined and centralized the hiring process but, in its wake, has created an incredibly competitive space… for employers. Prospective employees may scroll through thousands of job listings and only glance at yours for a few seconds before moving on. And beyond that, attracting the right talent is another battle all on its own. Job listings can be driven by more than just dollar signs; consider the following collection of “Dos and Don’ts” when putting together your future job listings to see if there is more you can do to pull in talent driven by a will to sow rather than reap.

Dos

Create a Specific, Tangible Job Title

This may sound obvious, but more times than not, listings titled “Part-Time Help” or other nonspecific labels find their way onto job boards because of the nature of smaller businesses. While the justification for a more handyman-ish title may make sense to a business owner, consider the people scrolling through job listings. It is much more difficult to picture yourself as “Part-Time Help” or “Front of House Worker” compared to “Cashier,” or “Houseman.” Consider, as well, that there is a fair amount of anxiety that comes with working an unspecified job; a job with a vague title has vague responsibilities.

If you genuinely need a “Jack of all Trades” type for your business, there are more than a few means to make that selling point. Phrases like “wearing many hats” are so corny that your prospective employees will certainly read that as “overworked and underpaid.” Consider instead asking for a “Front of House specialist” or  specifically explain what experience would best help that candidate if they were to get the job.

Keep your Descriptions Brief, but Detailed Where it Counts

There is a fair amount of research that says there is something of a sweet spot for job listing word count. This ranges between 300 and 800 words; listings should only ever reach that high point for technical or highly specialized positions. As to what those words should say, that’s a whole different question. Here is a good rule of thumb: get as specific as possible when describing job responsibilities and be as concise (but complete) as possible when describing other aspects like performance expectations. When building your listing, ask yourself “what exactly do you want potential employees to know about the job and about your business?”

Be Upfront About Pay

There is intense debate about whether online job listings should show compensation outright (and in some states, it has been made a requirement to show compensation in a listing). While listing pay may draw candidates away from the opportunities at hand in a listing, this guide is about attracting the right candidates for your business. Trust your candidates to know how much money they require to live their lives; if you interview a candidate and find a perfect match only for them to turn you down for the pay, you’ve both wasted time.

Focus on Skill Requirements Over Education Where Possible

Once again, this article is about finding the best candidates for your business. If you want to find an employee who can confidently do the work you need done, find someone who has done it before. If you need someone with electrical engineering experience, ask for it. Request portfolios for creative roles and experience-based references from fields that justify it.

If you find a candidate that checks all the boxes except the one for a college degree or even a high school equivalent, ask yourself how genuinely important that box is in the first place. Plus, you’re even less likely to reach that stage if you turn perfectly acceptable candidates away before they have the chance to impress you simply because they haven’t gone to college.

Don’ts

Don’t Let Your Writing Get Away from You

Ask trusted employees and managers to proofread and edit your listing for language. Especially for smaller businesses who don’t have on-call writing teams, getting a second opinion is the basis to making a compelling job listing. Just as well, creating listings in the first place ought to be a collaborative process between you, the business owner, as well as staff who may have insight into the prospective listing’s requirements. And who better to write up the language of your company and its culture than the employees and managers who embody that culture.

Don’t Bury the Lead for Job Responsibilities

Being that whomever you will eventually hire isn’t even being interviewed yet, it is more than possible that that eventual employee’s responsibilities are only about 90% clear. That’s fine but be certain that the language you use to describe responsibilities in your listing doesn’t alienate prospective employees. Here’s an example of a weak responsibility description: “Will oversee multiple departments during special projects.” While that may be true, this means nothing to a prospective employee. In that case, it is far less important to focus on the departments at hand and more important to explain “special projects,” as language like this doesn’t explain what that employee will be doing day-to-day, nor whether they have the experience to tackle that responsibility. This example would read better as: “Manage inter-department brand awareness initiative.”. The point of your listing isn’t to trick your prospective employees. If you want them to know how to use Microsoft Excel, say it outright; the same can be said for any given skill.

Don’t Overlook the Importance of Company Culture

If you truly want to attract candidates who see your business as more than a dollar sign, prove to them that it is through detailed and poignant descriptions of your company culture. This, as well, is likely an exercise in brand and marketplace awareness. Defining a company culture doesn’t happen by decree, but rather through paying attention. Before you can concisely explain your company culture, you have to know what it is.

If you don’t feel capable of defining your company culture, this is a great example of where consultants can help quite a bit. Being that consultants work from outside your company structure, their unbiased view of your company from inside and out is more likely to reflect the view of job candidates. Consider working with a marketing or brand specialist to better understand and investigate what makes your company yours. Better yet, make the self-discovery a group experience for your existing team. Perhaps ask your current staff to define your company culture in their own words, even anonymously if that makes employees more comfortable.

Don’t Leave Candidates in the Dark About Application Process Timelines

Candidates expect to have multiple interviews, but the difficult part of a job listing is explaining to candidates how long it will take from the first interview to a potential offer. This number of days isn’t likely to be a certainty, as business owners have no means to know how many qualified candidates will apply for each position, but giving a general timetable for a best-case scenario can be extremely helpful in expediting the process for both business owners and candidates. Imagine this: you find a candidate that matches your needs seemingly well and impresses you on the first interview. Interviewing the remaining candidates and conferring with relevant staff takes perhaps 30 days to pick that first candidate but, in that time, they have already picked a new job, as they fully intended to find work before 30 days. Generously calculate how long it will take for you to potentially evaluate all potential candidates and advertise this number prominently on your job listing, it may save you from having to pick a second-best down the line.

Convincing the Perfect Candidate

Connecting your business with the right staff is increasingly difficult in the digital world. While, of course, it is easier than ever to show your listing to hundreds if not thousands of candidates through major job boards, this also means that you, the business owner, will have to sift through an ungodly mound of irrelevant applications. There are, however, still genuine, quality employees searching for work online; it’s up to you and your business to prove that you can offer what they need to not only pay the bills, but be a source of their pride as well.

Over 200 Small Businesses Told Us How They’re Attracting Workers, and Gave Some Surprising Answers

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How can small businesses compete for talent with large corporations that can afford to pay workers higher wages? The question has been plaguing SMB owners ever since Texas A&M business school professor Anthony Klotz coined the term “The Great Resignation” last year. 

Since then, the quit rate measured by the Bureau of Labor Statistics showed that nearly 4.4 million workers quit their jobs last month and attracting new workers is still a major concern. Additionally, US small businesses – especially those with 19 or fewer employees – saw a total decrease of 96,000 employees between January 2022 and February 2022, according to a report from payroll services provider ADP.

In an informal poll, Kapitus asked 213 small businesses across the US that very question, and the most popular response, unsurprisingly, was that they are offering workers more flexibility in when and where they work. The second most popular method of attracting workers was the somewhat opaque answer of offering a strong company culture. 

The third most popular answer may come as a bit of a surprise: many small business owners – especially in the eCommerce space – said that improving the way they interview job candidates has had a high degree of success (10 out of 11 responding eCommerce companies emphasized this), although many of them took different approaches in doing this. 

Overall Responses

Kapitus collected responses from 213 small business owners in various industries after asking the open-ended question of “How are you hiring workers when you can’t afford to pay those workers more than larger companies can?” The question was posed on Cision’s Help a Reporter Out (HARO) platform, and responses were collected between March 23 through March 25. 

Of course, a pool of 213 responses is not large enough to quantify as an official survey. Rather, this article is meant to provide a casual, overall snapshot of how small businesses are dealing with the challenge of hiring workers when they don’t have the resources to offer substantially higher pay to workers than larger companies.

 

Great Resignation Small Businesses

The responses given were broken down into eight different categories, each defined by what small businesses are doing to attract workers:

Small Business Owners say…

While some responses require little explanation, others are vague. Small business owners that responded to our query defined areas such as “Improved company culture” and “Greater candidate evaluation” in detail, while with some of the obvious categories such as “Flexible Schedules/Remote Work” are being practiced in different ways by different small businesses. 

Here are explanations from actual small business owners on what these categories mean. 

#1 Offer Flexible Scheduling – Four-Day Work Week? 

Many small businesses emphasized that allowing workers to set their own schedules or work from home is the number one key to attracting employees, especially if you can’t afford to match what larger competitors may be offering them. Some small businesses, such as Electrician Mentor, have even begun offering four-day work weeks to entice applicants.

“You can go to this company and make a six-figure salary or come to us and have a four-day work week, unlimited vacations, and the freedom to work on the projects you desire the most,” said David Welter, Electrician Mentor’s owner. “You can go somewhere with a great 401(k) program, but we’ll pay for your career advancement training. So far, this strategy has served us well because now, we’re staffed with a happy and loyal workforce.” 

Dan Skaggs, CEO of One Thing Marketing, said that allowing employees to work from home has improved his hiring process.

Dan Skaggs, CEO of One Thing Marketing, said that allowing his employees to work from home saved his company on rent, and he was therefore able to provide them with a comprehensive health insurance plan, which further attracted workers.

“Our employees preferred to work from home because they could save money on commuting and food at the workplace. This helped me cut back on the costs of renting the building and utilities,” said Skaggs. “This gave me the perfect opportunity to introduce a comprehensive health insurance plan for the existing and new employees. Due to the upgrade, a lot of applicants agreed to work for me.” 

#2 Offer an Inclusive, Friendly Culture

Although the “Offering a Strong Company Culture” is a bit vague, many respondents who gave this answer generally defined this category as making the workplace more pleasant for workers through various means. 

One such business owner who believes in offering a great workplace culture is Daniel Rubenstein, founder of healthcare company Reset IV. 

“People are recognizing that life is too short, and they don’t want to spend it in some boring office,” said Rubenstein. “Make your office culture-friendly, inclusive, and fun. Do employee features on social media, offer awesome employee perks, and show job candidates that people enjoy working at your company.”

Mark McShane, owner of Skills Training Group, emphasized inclusion, empathy for employees and a supportive environment in his company’s culture. He also emphasized that it’s important to advertise that on social media, where most potential applicants now are hunting for jobs. 

“Building a social media presence that amplifies your team culture will pay dividends in the long run,” he said. “You need to lead with transparency and show people what it’s like to work in your office.”

Company culture is key ot hiring and retaining employees, said Kathryn McDonald, CEO of Editor’s Pick.

Kathryn McDonald, CEO of beauty and fashion eCommerce company Editor’s Pick, defined a positive company culture as one that promotes an entrepreneurial environment.

“It essentially entails creating a climate that encourages people to experiment, create and take measured risks,” she said. “It provides employees with freedom, flexibility, and reduces the necessity for work/life balance discussions” because employees will be enjoying their work.

#3 Improve Your Hiring Process

Improving your business’ hiring process by carefully vetting candidates and not putting them through long, labor-intense interview processes should give your small business a hiring advantage over your larger counterparts, said many respondents. 

“Today, people are trying to find their next job whether to start, as a stepping stone or to pivot,” said Erik Wright, owner of New Horizon Home Buyers. “It takes almost three months, sometimes longer from applying to hiring. That can weigh heavily on people and even discourage them from looking further. Having a quick turnaround could turn a talented and seemingly out-of-reach individual into a skilled employee.”

Rohit Bimbra, founder of Home Healthcare Shoppe, emphasized that SMB owners should probe candidates during the interview process to determine whether they share similar values and beliefs as the company, and then describe to them all of the aspects of your business that may appeal to them. 

“During the interview, inquire about their objectives,” said Bimbra. “What do they hope to get from this job? Hire people who can work toward their own goals while helping you reach yours. Then assist them in becoming successful.”

#4 Emphasize Career Growth Opportunities

Obviously, few employees want to work a “dead-end” job that has little prospect for advancement, and therefore, it’s crucial that you let candidates know that there is room for growth in the position you are offering. 

“Explain to employees and candidates the plan for their career development and advancement in your company and establish a system of regular feedback, on a weekly or monthly basis, ” said Mike Sheety, owner of That Shirt, adding that growth opportunities also encourage employee referrals. “In practice, we have been convinced several times that hiring through referrals is a very good idea.”

#5 Perks Work

If you can’t match the salaries being offered by your larger competition, you may find success in attracting talent by offering company perks such as sign-on bonuses, social activities and workplace wellness programs as a way of saying thank you to your employees, said several respondents. 

“Some great perks would be allowing your workers to work flexible hours, surprise company trips, mental health days, and a free lunch buffet every month,” said Marty Spango, owner of Bia Coffee. 

Offering desirable benefits packages goes a long way in attracting good employees, said Maria Flores, COO of Media Peanut.

Maria Flores, COO of marketing firm Media Peanut, said it’s important to work with your business’ HR department (if you have one) to lure talent by providing greater benefits. 

“We offer care packages, allowances, and additional health benefits, as we value the physical and mental health of our employees,” she said. “We also offer free education or skills development training, and allow them to take additional skills training classes whenever possible. 

#6 A Piece of Ownership Goes a Long Way

Some small businesses suggested offering employees equity in the company can go a long way, and if it’s not possible to offer equity, then offer performance-based bonuses to attract and retain talent. 

“When it comes to hiring and maintaining key team members, sharing ownership or company stock can help,” said David Reid, sales director at VEM Tooling. “Senior team members and recruits may be encouraged to stay and see their shares grow. Generally, flexible schedules, bonuses, extra vacation time and pieces of equity can help us attract talent for hard-to-fill roles.”

Performance-based bonuses also go a long way in retaining and motivating current and prospective employees. 

“When small businesses can provide performance bonuses, flexible work schedules and complimentary lunches, they stand out,” said David Wurst, owner of cybersecurity firm WebCitz. “An ambitious individual looking for autonomy, flexibility and advancement will definitely value your offer.”

#7 Show Some Respect

One of the major keys to recruiting is treating your employees with respect, said some of the respondents. This means showing empathy, genuinely caring about their well-being and recognizing their accomplishments. 

“Treating current employees with respect enhances referrals to top talent when an opportunity arises,” said Leslie Radka, founder of Great People Search. “Training, advice and experience enhance the attraction of potential employees.”

Brad Hall, founder of Sonu Sleep, added, “Paychecks come and go, but things like respect and recognition are harder to come by when it comes to the corporate world. Be competitive in not just your salary offer, but your treatment towards your employees.”

#8 Outsource; Hire Them Young

A somewhat surprising response category was small businesses resorting to hiring recent college graduates or employees with little experience as a relatively affordable and effective way to woo job candidates – if you are willing to invest in and train them.

“The pandemic brought many negatives with it, one of them being the lack of employment opportunities for college grads,” said Lauren Proctor, marketing director at BenchmadeModern. “The fact that I started hiring this young, raw talent was a win-win for both parties. After all, these young individuals had a job, and I had an efficient team of employees. The best part was that these young people were full of energy and determination to perform well.”

Outsourcing work to outside contractors has also helped alleviate the hiring dilemma, according to Aaron Traub, owner of HVAC Marketing Engine. “We have been utilizing Upwork frequently lately,” he said. “We’ve been able to hire quality freelancers affordably for content strategy, data entry, content production and more.”

Responses by Industry

Kapitus broke down small respondents into 16 general industry types, with retail (non eCommerce) being the most popular with 39. Some of the categories, such as construction, are self-explanatory, while some need to be defined. A basic definition of some of the categories is as follows:

  • Retail companies (18.3%) are businesses that primarily sell products from a physical location but can still have an eCommerce presence as well.
  • Online services (17.4%) companies are web-based companies that provide tangible services – but not physical products – to customers.  
  • Business Services (14.6%) are companies that provide services to large companies, although we separated out branding/marketing and law firms from this group to offer a more exact analysis.
  • eCommerce businesses (6.1%) are companies that only sell their products through eCommerce platforms.
  • Food Services (6.1%companies comprise restaurant owners and companies that sell food-related products and services, such as one of the respondents, Kitchen Community.
  • Technology companies (2.4%) are companies that produce technology not related to the Internet.
  • Educational support providers (1.9%) are companies that provide learning services to both students and adults such as becomeanything.com.

Conclusion

While this is not an official survey, the small business owners who responded have made it clear that the way companies searched for talent before the Great Resignation have been quickly outdated, much in part due to the COVID-19 pandemic where many workers got a taste of working from home. It’s clear from the results that attracting workers is more than just offering a fat paycheck. Offering flexible hours and remote working situations have become critical in attracting workers. 

SMB owners can’t treat their employees like numbers and must concentrate more on providing a robust and empathetic workplace that offers a plethora of perks if they are to survive the continuing worker shortage.

Should you hire a lead gen firm

Should You Hire a Lead Generation Firm?

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Generating sales leads is probably the most important ongoing task to ensure the survival of your business, but doing so on your own can cost you time, and deplete your personal bandwidth. If this is the case, you may want to consider handing over that task to an outside firm that specializes in generating sales leads for businesses such as yours. 

Of course, hiring an outside firm will cost you, but it can also grant you peace-of-mind that specialists are handling the most crucial aspect of your business. Before you hire one, however, you need to evaluate your business to determine if this is an appropriate move for your current business situation. .

Dollars and Sense

The biggest question to ask yourself when deciding whether to hire an outside lead gen firm is: will it be cost-effective? Lead generation services – especially B2B – often charge you per lead or can cost you thousands of dollars per month. As a result, your customer acquisition costs (CAC) will be driven up. The hope, however, is that the cost of hiring a lead generation firm will be offset by increased sales resulting from the extra sales prospects that the firm is bringing to you. 

Due to the cost, however, lead gen firms are probably most useful to high-margin small businesses that sell big-ticket items or services: medical offices; accounting and law firms; car dealerships, real estate companies, etc. If the increased CAC is so dramatic that it forces you to raise the price of your products, then hiring a lead generation service is probably not your best bet. You’d be far better off putting in the time and effort to generate sales leads on your own.

While you may have the budget to hire a led gen firm, it doesn’t mean that your budget is infinite. Some firms will charge you per month, while others may charge you per lead. It’s important that you determine which pricing plan would make the most sense for you.  

If you’ve done the math and concluded that hiring a lead generation firm will benefit you, it’s crucial that you do your research and find out as much about them as possible beforehand to determine if they are the right fit for your business. 

#1 Do Your Due Diligence!

Like you would with any other outside vendor, you need to research any lead generation firm you might be considering. First, find out if they’re ranked by any credible business source. For example, Fit Small Business, an online resource for small businesses, offers reviews and rankings of the most popular lead generation firms. 

Also, go to each candidate’s website and look for customer reviews and find out if they have experience in generating leads in your particular industry or geographic location. Try to get an idea of their pricing and how they get their leads. These are the firms that have experience in knowing where to look for sales leads and how best to glean information from them such as income range and interests.

#2 Do They Produce Quality Leads?

Poor quality sales leads won’t do anything for your conversion rate and worse yet, land your emails or phone calls on spam lists. What you want, besides contact information, are prospective customers who can afford – and are generally interested in – your products or services. In other words, you want leads that will produce the highest possible conversion rate. Will the lead generation firm produce a list of prospective customers that have previously purchased products or services in your industry? Will the lead generation firm build a list from scratch, or simply give you a ready-made list? If they are offering you a ready-made list, that’s probably not a good option – it may contain outdated information, and the firm probably hasn’t weeded out all of the sales prospects who said no. 

#3 Make Sure They are Compliant

There are laws in place in the US, such as the CAN-SPAM Act of 2003, that regulate solicitation emails, and you need to make sure your lead gen firm is in compliance with them. The act requires marketing emails to be sent from a legitimate email address, and the subject line must pertain to the body of the email, among other things. If you are trying to sell to customers overseas, especially in Europe, your led gen firm needs to be compliant with the European Union’s GDPR law that regulates marketing and solicitation emails.

Not complying with these laws can lead to stiff fines and other penalties against your business, so it’s crucial that you inquire about this.  

#4 Set Specific Expectations

Transparency is key, so you need to be as clear as possible about the volume of leads and what types of leads you expect from them. Ask them what their definition of a quality lead is and how much they charge for that, as the definition of a lead may differ from firm to firm. Some firms consider a lead to be anyone who makes contact with them about your business, while others consider a lead to be someone who is willing to set up a meeting with you. 

You need to also find out what emailing platform and email address the firm is reaching out to prospects with. Make sure the messages that prospective clients are responding with show up in your mailbox – not theirs. This way, you don’t risk missing out on legitimate leads because the firm forgot to forward them to you. Make this crystal clear with the lead gen firm before you sign a contract. 

Make Sure it Makes Sense for You

Lead gen firms can be very useful in increasing your sales and client base, but keep in mind they are not for every business. You need to conduct a careful analysis of your business to determine whether hiring such a firm will be cost-effective and make sense for what your business is trying to accomplish.

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