Category: Operations

A New Year can bring new opportunities as well as new trends. As a small business owner, making the most of the small business trends in 2020 can help you to avoid potential pitfalls. From technology to customer demands, the marketplace is changing and it’s important to change with it.

Here are seven 2020 small business trends to prepare for to have your best year yet.

1. Increased Personalization

We all want to feel valued. And for your customers, that means personalized service. In fact, 80 percent of consumers are more likely to make a purchase when personalization is part of a service.

Technology can help you personalize customer experience on your website. More e-commerce sites tailor web-page displays to match a customer’s browsing or purchasing history. For example, when you visit Amazon you’ll find the home page populated with products similar to those you’ve purchased or viewed. Businesses that personalize messaging to customers can see a 16 percent increase in outcomes.

In addition to using personalizing tools for your web presence, you can personalize your customers’ experiences by implementing loyalty programs that reward them for their purchases. Make sure to train your employees to use the information they collect to enhance interactions. You can also personalize your email campaigns by using the subscriber’s name to send special gifts or discounts on their birthday or anniversary.

2. Customer Reviews

Social media allows customers to voice their opinion. As a result, customer reviews are becoming more important to other shoppers. In addition to product features, consumers want to know about other shoppers’ experiences. Offering a way for customers to leave feedback is increasingly important. Ninety percent of consumers read reviews before visiting a business. And 92 percent of people may not complete their purchase if there aren’t any reviews available.

The great news is: Adding reviews to your website is often as easy as selecting the option with your website provider. You should also encourage reviews by creating Yelp and Google business accounts. Regularly ask customers to leave a review. And if you do get a negative or even neutral review, respond professionally and try to remedy the situation. A study by Harvard Business Review found that when small businesses respond to reviews–both good and bad–their ratings increased.

3. Voice Searches

Whether it’s through a smart phone or smart speaker, smart assistants like Alexa and Siri are becoming increasingly popular. They’re changing how consumers search for products. Gartner predicts that almost a third of web browsing will be voice activated by 2020.

To show up in searches, small business owners must reconsider the phrases and product descriptions they use on websites. Instead of focusing on keyword optimization, you’ll now have to consider voice optimization. This is because your customers won’t search in keywords, they’ll use complete sentences.

When creating product descriptions and tags, imagine the questions a customer would ask to find you. Unlike text searches that are often short and sweet, voice queries are longer and action oriented. For example, a customer may enter keywords into a computer such as “Tailor in New York.” But, they may ask a voice assistant, “Where can I get pants hemmed in New York?” Make sure to optimize your keywords to reflect how people talk.

4. Social Media Stories

Stories—short temporary video content—were first introduced by Snapchat. However, now you can find them on Facebook and Instagram, too. It’s a new way for businesses to connect with customers in a casual–but authentic–way. If you haven’t gotten on this trend now, make plans to try it in 2020. Social media stories are growing 15 times faster than the news feed.

Live streaming is another way to connect with customers in real time. The key is to get creative and get the attention of the social media users, especially as more businesses start using them. Because they’re nimble, small businesses have an advantage.

5. Demand for Sustainability

More people are concerned with reducing their ecological footprint. They’re demanding that the companies they patronize help them in their efforts. More companies are looking for ways to reduce waste, choose sustainable materials and limit energy consumption.

Going green must be done with authenticity. A recent study found that consumers are paying attention to how companies position themselves. They’re looking for transparency. If a customer feels their values align with your brand’s, they’re more apt to engage with the company. But if the values don’t align, 42 percent will walk away. 21 percent won’t give the company a second chance.

If sustainability is one of your underlying missions, share it with customers. Also, educate your staff so they can answer questions about your standards in their communication with customers.

6. Flexible Work Arrangements

In addition to customer experience small business trends in 2020, employees are asking for flexible work arrangements. More than half of employees want more control over their personal and professional lives. If you and your business can afford to have your team work remotely, consider offering more opportunities. Technology helps employees check in via project management and instant messaging platforms–video conferencing, too.

Gig work is also growing, with 36 percent of workers in the United States going freelance, according to Gallup. It offers workers ultimate flexibility. Also, it gives small businesses a way to reduce their talent budget. Consider using gig workers for your small business with seasonal opportunities or occasional jobs.

7. Focus on Purpose

Finally, while a paycheck is important, employees also want to find meaning. This comes from understanding how their job makes a difference in the lives of customers as well as the world. Employees can also find meaning when they are able to volunteer on company time as part of a team.

By creating an engaging, educational and exciting company culture, you’ll positively impact the success of your small business. Employees who find meaning at work express higher levels of job satisfaction. This is linked to greater productivity and higher retention rates.

Looking Ahead to Small Business Trends in 2020

The marketplace is always changing. The New Year is the perfect time for small businesses to pause and take steps to take to improve their companies. By understanding potential and current trends, you can make the best decisions moving ahead. If you can make the most of upcoming opportunities, you can set yourself up for success in the coming years.

When it comes to business expansion, business owners face a daunting challenge. Is now the right time to expand your enterprise? If not now, when? What type of expansion makes the most sense–new customer acquisition, upgrading or launching a new product line or opening a second retail location? The choices may feel overwhelming at first. But it doesn’t have to be – if you watch for signs that expansion really is the wisest move in the months ahead.

As Forbes notes, while “no single factor can dictate success or failure in business expansion,” intuition plays a key role, “knowing precisely which signs to focus on and follow in planning your business’s growth.” Here are widely acknowledged key factors that indicate successful business expansion could be on the horizon.

High demand

An increased demand for your products or services indicates the need for a new growth strategy. (Of course, by “need,” we mean an ongoing demand from customers, not a one-time or seasonal spike in sales.) A new, more effective marketing strategy could generate such demand. As is often the case, an increased cadre of repeat customers know what you have and want more of it.

Favorable trends

It’s not enough to focus only on what’s happening within your own organization. Successful business owners closely monitor industry-related forecasts and trends in order to gauge potential challenges and opportunities that might lie ahead. In fact, the more often you engage in this market analysis, the more knowledgeable you become at detecting small or significant shifts within the industry that can favorably impact your business.

Keep an eye on the big picture. Watch for signs of slowdown in the national economy or, conversely, indicators that consumption might soon be on the rise. Armed with this information, you can embark on a growth plan based on a solid foundation.

Healthy cash flow

As every business owner knows, cash flow is the lifeblood of any enterprise. While entrepreneurs may struggle at first to master this key element, businesses that enjoy success in the marketplace often find themselves with sufficient funds to explore new avenues of growth.

So while “cash can be consumed by any number of incremental expenses,” notes Inc., when you’re “confident that you can cover additional outlays and can weather any number of storms … then your prospects for growth look awfully good.”

Strong workforce

Business owners continuously grapple with the challenge of recruiting and retaining quality talent. But if you’re fortunate enough to have a strong workforce in place, the moment could be right for expansion.

Take time to identify your current top performers. Look for ways to encourage their development. Maybe add training and development sessions. Through more access to technology and other resources, your employees will become more effective in their jobs.

Clearly communicate your company’s mission and objectives. This way, each of your skilled employees will understand where they fit in the bigger picture.

Hungry for a Challenge

When you first start out, every aspect of the business represents a challenge. The owner of a successful business might feel like they need a new challenge. What was once exciting has become a daily grind. If you “are actually bored, your business has probably reached a plateau and it is time for you to grow it,” says the UPS Store.

As noted, successful business expansion relies upon a number of factors. But if your business is presently doing well–and all indications show that consumer demand will remain consistently high–don’t put off making plans for growth. No business can afford to “run in place.” Opportunities for expansion don’t come along every day, so it’s critical to recognize positive signs and take action as soon as possible. A bright future lies ahead!

As an independent practitioner, you focus on providing high quality healthcare to your patients. But, you’re also a business owner with a wide range of expenses. All business owners want to reduce costs, but as a medical professional you want to be sure that your service doesn’t suffer in the process. The average medical practice has overhead between 60% and 70% of its revenue. This includes everything from staff salary and benefits to medical supplies, insurance premiums, rent, technology and more. To decrease medical practice overhead, focus on items that won’t negatively impact your patient or employee experience. Here are seven areas to consider when you want to decrease medical practice overhead.

1. Insurance

One of your largest annual expenditures is likely your malpractice insurance. Depending on your practice type and state, premiums start at about $4,000 a year and can go up to the tens of thousands. The typical practitioner pays about $10,000. To avoid overpaying, make a habit of reviewing your policy and getting new quotes each year. Make sure you’re also taking advantage of available discounts. You may qualify for a lower rate by being a member of an association or for taking a course on reducing your malpractice risk that some insurers offer.

2. Office Lease

Another way to cut costs is to review your office lease and compare it to available properties. If you’re not using your entire space, consider a smaller space or subleasing an office to another provider. Or, use the information you’ve gathered on market rates to negotiate with your landlord. While moving your practice could be inconvenient, it might save you money in the long run.

3. Supplies

Take inventory of your supplies on a regular basis as to not order too much. If you have a contract with a supply vendor, review the terms and renegotiate where possible. And, check prices with competitors with a quick internet search. You may be able to save money by ordering supplies in bulk. If this is the case, make sure you’re only doing this for the things you use most frequently. Also, take advantage of sales. Contact your rep to ask about deals they’re offering this month. Check if you can combine vendors and qualify for a volume discount. You may be surprised at the number of overlapping products your vendors offer, allowing you to streamline your ordering and decrease medical practice overhead.

4. Outside Services

Review the outside services you use each year, like your patient linens supplier or document shredding. You may find providers that are less expensive or that offer multiple services so you can combine and save. Or you may be able to team up with other healthcare providers in your building and request a discount if you agree to use the same service on the same delivery schedule.

5. Paper Usage

Find ways to cut back on your paper usage. In place of paper, a growing online program is HIPAA-compliant digital tools. For example, you could send new patients links to forms that they can download and fill out at home before coming to your office. You can also look into services that allow your patients to complete and securely submit forms online. An added benefit of using online forms is that it speeds up your check-in process. This can improve patient waiting times.

6. Billing

Sending paper bills can be costly. You run the risk that patient payments are delinquent or overlooked and must go into collections. Instead, start asking all patients to keep a credit or debit card on file. This step eliminates the patients’ need to mail in payment and helps you keep costs down by reducing your own billing charges. If a patient doesn’t want to provide a card, require prepayment.

7. Utilities

Finally, watch your utility bills and take steps to reduce them. For example, you can turn off all devices at the end of the day. Take it a step further by unplugging electronics or using power strips that can be turned off at the end of the day. Computers, scanners, copiers, medical devices and other electronic equipment use electricity even when they’re sitting idle or turned off. Also consider the kind of equipment you’re using. Switching from desktop to laptop computers can save 80-90% in electric usage. Whether you lease or purchase equipment, be sure to choose ENERGY STAR devices that automatically power down when inactive. This can help you save as much as 50% on your energy bill.

The Bottom Line

Reducing your costs can free up money to use in other ways. You can possibly provide your staff with higher salaries or more benefits, or invest in new equipment to expand the services you offer. Be sure to share your goals and ideas to decrease medical practice overhead with your staff. Your team probably knows what can be eliminated. Asking for employee input gives your staff ownership over the outcome and increases the chance of implementing these suggestions. And remember, minimizing costs requires everyone’s cooperation.

A key factor in the success of your business is how effectively you negotiate a commercial lease. This impacts your cash outlays over several years, your operational efficiency and, depending upon your type of enterprise, your revenue as well. Thererfore, it’s essential to take a comprehensive and methodical approach before signing a lease agreement.

Here’s how the way you negotiate a commercial lease impacts you in those three areas:

• Cash outlays: It’s not just the rent payment itself. It’s also the financial obligations you might also incur through the lease agreement, depending upon the lease type.
• Operational efficiency: If you quickly outgrow the space you rent and can’t do anything about it, your operations can become bogged down due to overcrowding, or the inability to add more staff or equipment to meet the increased demand for your products or services.
• Revenue: You might depend upon the convenience or visibility of your location to keep customers and draw in new ones. So, remember the old adage about the three most important criteria in real estate—location, location, location.

With those considerations and your business plan for the next few years, you can determine how much you can actually afford. Without some kind of multi-year rent budget in mind, you can’t make many other decisions. You don’t want to waste your time looking at places you can’t afford. And, you certainly don’t want to settle for barely adequate space without realizing you can afford more.

Assess Your Needs

Before you enter lease negotiations, make sure you take into account all the important considerations about the physical space itself. The hardest part involves making predictions. Consider, for example, local growth patterns in the community and any known big development projects (including infrastructure) in the works. Is the property you’re considering likely to be a more or less desirable location a few years from now?

Also, think about the tax and regulatory environment. Can you anticipate any changes that might make that jurisdiction become a more costly place to do business?

Once the location you like cleared that initial test, it’s time to focus on lease terms. Before you obtain a filled-in lease, it could be beneficial to ask the landlord for a blank one. That makes it easier to focus on all the variables and fine print you might overlook while going over the numbers.

What’s Covered in the Lease

Property-related costs addressed in the contract are the most basic thing to understand about a lease. For example, with a “triple net lease” – in addition to paying for the space itself – you’re responsible for the utilities, real estate taxes, insurance, routine upkeep and simple repairs. You’re on your own for everything except for major structural repairs (i.e. a collapsed roof).

With a “double net lease”, you pay for all of those items except maintenance and repairs. With a “single net lease”, you pay only for utilities and property tax. You might also find another kind of lease with a different cost-allocation formula.

None of these lease types is necessarily good or bad. When you negotiate a commercial lease, the more cost elements covered in the contract, the more exposed you are to cost increases – whether it’s in taxes, insurance or utilities. You can try to reduce that risk by negotiating limits on how much of a cost increase you’ll be obligated to absorb over the lease term. The more risk you take with these, the better the deal you’ll need to negotiate on the base rent.

Equally, or perhaps more importantly, is the length of the lease. How long are you willing to commit to staying at that location? Even if your lease allows you to sublet the property to someone else, you’re still on the hook for the rent. You’d assume the risk that whoever you sublet to will default.

Long Lease or Short?

Landlords generally prefer longer leases. It allows them to lock in a constant income for more time without trying to find a new tenant. Contrarily, the landlord might be willing to give you a better deal on the initial base rent. But, they might insist on having you responsible for the items you get in a triple net lease.

Still, what you want in regards to the length of the lease depends on the commercial real estate market environment. In a hot market, a landlord could push for a shorter term to raise the rent substantially.

Ten Lease Negotiation Tips

Here are ten more items to keep in mind when it’s time to negotiate a commercial lease:

Useable space

The number relates to space you can actually use when rent is by a per-square-foot basis. Things like elevator shafts, emergency stairwells and structural columns take up useable space. Measure the useable space and compare it to the number advertised. Minor discrepancies might be acceptable, but not big ones.

Sublease clauses

Insist upon finding another tenant to replace you to finish out the lease term if you need to move early.

Termination penalties

Perhaps you’ll want to break the lease without finding a tenant to complete the lease term. Try to keep the penalty reasonable.

Protection from competitors

If the landlord owns additional space nearby, include a provision that prevents the landlord from renting such space to a direct competitor.

Co-tenancy clause

This is the opposite of protection from competitors. If you chose to lease space adjacent to a “big box” store or a similar “anchor” tenant and you expect to draw foot traffic to your location, and that tenant leaves, you could suffer greatly. A co-tenancy clause allows you to break your lease in such a scenario.

Reasonable “cure” period

A “cure” period is the amount of time you’re given to catch up on rent if you’re behind – before incurring massive penalties or losing the lease entirely.

Certificate of occupancy

When space is used for something other than that for which the original building permit was issued, the landlord needs to obtain this document from local government. If you can’t move in until that document is obtained, protect yourself from paying rent during the time the landlord is waiting to get that certificate.

“Fixturization” period

Try to avoid paying rent during the time it takes you to modify the property so that it meets the needs of your business.

Utility costs

In the likely event that you pay the electricity, water, waste disposal and other utility bills, find out what you’re getting into. Ask to see a year’s worth of those bills from the prior tenant.

Parking rights

Does the landlord own or have access to a parking lot? If so, make sure you have enough spaces for employees and customers.

Finally, there are factors that can’t be pinpointed when you negotiate a commercial lease – whether it’s the responsiveness of the landlord when problems arise or possible issues involving neighboring tenants and their customers. For insights on those, you’ll need to do some research by talking to other tenants and spending time in the area observing its goings on.

When it comes to haggling over specific lease terms, you can get ahead by engaging a real estate attorney familiar with not only lease contract provisions, but local market conditions as well. That way, you reduce your chances of paying more than you have to. But as in any negotiation, expect to make some compromises to ensure not only that you end with an agreement, but set the tone for a positive long-term relationship with the landlord.