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This Halloween, Slay Your Biggest Fears as a Small Business Owner

October 31, 2022/in Featured Stories, Operations/by Vince Calio

Children may be afraid of ghosts and goblins during the Halloween season, but for small business owners, things that go bump in the night are nothing compared to their real-world fears. If you’re a small business owner, you’re likely more afraid of an auditor from the IRS knocking on your door than you are of Michael Myers or Jason coming at you with a knife.

In the spirit of Halloween, here are some of the biggest fears that small business owners face, as well as tips to overcome them.

#1 – Fear of Catastrophe

The fear of catastrophe monster can be slain with some planning and insurance.

The COVID-19 pandemic proved disastrous for small businesses, as it forced more than 300,000 small businesses to close their doors permanently. Many small business owners that survived had to take out PPP loans and other government assistance to survive, and many are facing challenges with having to pay back rent the last two years are suffering from anxiety.

Now, with inflation and interest rates out of control and the labor shortage persisting, small business owners are waiting in fear for the next catastrophe – be it a full-blown economic recession, a fire, a natural disaster or some other event that can drive them out of business.

Slaying the Monster – It’s important to remember that the pandemic was a historic once-in-a-century event, and while hurricane Ian did devastate parts of Central Florida, natural disasters don’t occur very often. Just in case disaster does hit, however, you want to be prepared. Some steps you can take now are:

Take out small business hazard insurance. It may be an added monthly expense for your business, but it could prove to be worth it when the next crisis hits.

Check out SBA Disaster Mitigation Assistance. This SBA program allows businesses within declared disaster zones to apply for additional funds specifically for improving their businesses to better protect against future disasters.
Take out a business line of credit (BLOC). BLOCs are offered to qualified borrowers from both traditional banks and alternative lenders, and can provide you with emergency cash to help you quickly recover when disaster hits.

Protect your business records. You should always have a backup of your most important business records. You can do this by storing important information on a separate hard drive or through cloud computing.

#2 Rapid Growth

Having more customers or receiving too many demands simultaneously from clients than you can

handle is another monster that may be hiding under the beds of small business owners. While some may say that this is a good problem to have, this fear can threaten your business if you aren’t in a position to quickly obtain additional inventory or are understaffed.

Slaying the Monster –If your business is growing at a rapid pace, the first thing you should do is take pride in knowing that you’re doing something right. After you give yourself that little pat on the back, your first priority should be customer service. Be ready to explain politely to them that they need to have patience because you are experiencing overwhelming demand but assure them that their needs will be taken care of.

You should also have a plan to add more hourly or full-time staff if you find yourself overwhelmed with customer demands, or consider hiring a virtual assistant. If you need more inventory fast but don’t have the cash upfront to pay for it, you may want to consider purchase order financing to help you.

#3 Employees Quitting

The fear of all your employees quitting can be very spooky, so make sure you’re treating your workers well!

Small businesses in nearly every industry are feeling the brunt of the labor shortage, as workers are increasingly demanding higher salaries and better working conditions. The prospect of your best employee – or all of your employees – suddenly quitting at roughly the same time is scarier than the thought of Freddy Kreuger visiting you in your dreams, especially if you employ hourly workers that don’t get benefits.

Slaying the Monster – Every business, no matter how small, must deal with employee turnover. The scenario you want to avoid, however, is having all of your employees quitting in a short period of time. You want to create a system that doesn’t overly rely on a single employee, no matter how good that employee is. You also want to make sure that you create a company culture that your workers feel comfortable and safe in. You should also look to offer small perks, such as quarterly bonuses or limited essential coverage plans that your workers will appreciate.

#4 Getting Audited

There are few boogeymen that are scarier to small business owners than an IRS auditor – which could

mean that you inadvertently misreported finances and that you suddenly owe a fortune in back taxes.

Slaying the Monster – As a small business owner, you shouldn’t be too worried about getting audited if you’ve kept your books in order throughout the year. Only 1.5% of small businesses in the country get audited on a yearly basis, but to prevent yourself from being among them:

Make sure you keep track of your business finances. It’s especially important to carefully separate them from your personal expenses.
Carefully document your business expenses throughout each quarter. Sometimes the line between a business and personal expense can be blurry, so make sure when you document a business expense you have a good reason why it should be a business expense.
Consult with an accountant on how much in taxes you should pay each quarter. You’re probably better off being conservative when reporting your business expenses and getting a refund at the end of the year.
Stay up to date on new tax laws. The see-saw battle between Republicans and Democrats over who controls Congress and the executive branch has never been more volatile. Expect the tax code to change every time the balance of power shifts to make sure you’re not missing out on new tax deductions.

#5 Continued Inflation

While inflation has slowed a bit in the past two quarters, it is still growing at a rapid pace thanks to continued supply chain disruptions, rising gas prices and higher wages for workers across the board. Indeed, the inflation monster has forced small business owners to raise their prices and fear losing customers as a result.

Slaying the Monster – The prospect of having to raise the prices of your products and services is always scary for small business owners, but here’s the good news: inflation is showing signs of slowing, and while consumers resent having to pay more for goods and services, they’re still spending, according to a recent JPMorgan study. Also, if you raise your prices carefully, you can actually beat out your larger competition, since they’re also raising their prices.

#6 Failure

This fear is probably the most prevalent among new business owners. Having to close your business due

to lack of sales does count as a tangible definition of failure, but there are other definitions of the word that haunt small business owners, making this fear much more opaque. Those fears can include the fear of not providing enough income for your family, losing control of your business, or losing confidence in your ability to run your business. An overwhelming fear of failure can take its toll on your mental health, as any unexpected problem can cause you to go into full-blown panic mode.

Slaying the Monster – Fear of failure is normal among small business owners, but having that fear to an unhealthy degree is not good. One of the most important things to remember when it comes to the fear of failure is that, more than anything, it’s psychological. Sometimes overcoming this fear is as simple as developing a positive mindset. Here are some steps you can take:

Set daily goals. If you feel overwhelmed in the number of tasks you need to complete, try breaking down those tasks on a daily basis. Be realistic in what you can get done every day, and feel good about accomplishing those tasks afterward – they can serve as reminders that you’re succeeding.
Adopt a philosophy of learning. Failure, in many cases, isn’t a dirty word. Some may argue that there are no such things as failures – just lessons. If you experience a setback, solve it, learn from it and move on with no regrets.
Prepare for obstacles. As a small business owner, you will face obstacles, both big and small, every day – there may be a delay in the delivery of important inventory; your credit card processing machine may break down, or an employee might unexpectedly not show up. It’s important to prepare for these obstacles by having a backup plan.
Find relaxation time. Constant stress can lead to serious mental health problems over time. Try to carve out time every day to take care of yourself. This can be in the form of meditation, exercise and spending quality time with your family.

#7 Slowing Sales

The prospect of slowing sales can be terrifying, but don’t worry, there are ways to prepare for that.

Every small business owner fears a sudden slowdown in sales, especially now that we’re living in uncertain economic times. This fear is often exacerbated by the holiday period – a time when many small businesses rely on seasonal sales to survive.

Slaying the Monster – Overcoming this fear comes down to your marketing strategy. Are you offering the proper discounts during the holiday season? Are you implementing a strategy to retain existing customers and gain new ones? Are you offering something different and better than your competitors? Focusing on marketing throughout the year should help you overcome this fear.

Happy Halloween!

This Halloween, don’t allow your fears to stand in the way of running your business successfully. If you find yourself overwhelmed by fear, it’s important to face those fears head-on by making good decisions and celebrating victories and milestones in your business.

Labor shortage, small business lending, economy

Which Industries Are Getting Hit Hardest By The Labor Shortage in 2022

October 26, 2022/in Featured Stories, Operations/by Vince Calio

The labor shortage remains stubbornly high for businesses across several different industries despite the high number of job openings, even as many predict that the current recession will eventually level the playing field between employers and workers. Small business owners continue to feel the brunt of the shortage, as many of them can’t compete for workers in the labor force with larger competitors when it comes to salaries.

So which industries are getting hit the hardest in terms of unfilled job openings and worker shortages? Based on information gathered from the Bureau of Labor Statistics, the worker shortage continues to affect companies with both hourly and full-time workers for different reasons. Here are some of the most impacted industries.

Accommodation and Food Services

Restaurants had a quit rate of 7.6% in September 2022 – the highest of any industry measured by the BLS – with 193,000 job openings compared to 139,000 new hires, leaving 60,000 job openings. These include table servers, cooks, bartenders, and other staff. The National Restaurant Association (NRA) predicts the shortage will continue for the rest of this year and into 2023.

Restaurants laid off thousands of workers during the COVID-19 pandemic, and those workers have been slow to return. The reasons include low wages – the federal minimum wage for tipped workers is still $2.13 per hour (the NRA, ironically, has lobbied Congress every year for a decade against raising that wage). Restaurant jobs also often require long hours, low pay, and no benefits. According to a study by Blackbox Intelligence and Snagajob, 15% of restaurant workers left the industry during the pandemic to move into different industries that offer higher wages and benefits, such as education, warehouse jobs, and starting their own businesses.

Retail Trade

Retail workers had a quit rate of 4.9% in August 2022, with job openings outpacing new hires by more than 25,000. This follows the laying off of over 2 million retail trade workers due to store closings at the height of the COVID-19 pandemic. Amazon predicted in a recent report that it could run out of warehouse workers by 2024. Many retail workers laid off during the pandemic decided to switch careers or retire.

Despite the median salary of retail workers increasing to $18.50 per hour in August 2022 (from $14 per hour before the pandemic), a study by Cogsy showed three main reasons retail stores are having a hard time finding workers:

Low compensation. The retail industry has never been a high-paying field, and most jobs don’t provide benefits.
Customer-facing retail workers are usually the first people to be laid off during an economic downturn – that job instability was magnified by the pandemic, and
Difficult working conditions. This has been a problem facing retail workers for decades, especially since the “just in time” inventory technique (companies being lean on inventory based on seasonal expectations) was invented to cut costs at large retailers. This inventory technique generally made it possible for retailers to cut the hours of retail workers and put them on often unpredictable, makeshift schedules.

Transportation

The transportation industry, including truck drivers and rail workers, saw a 4.6% quit rate in August

A nationwide shortage of truck drivers has contributed to supply chain disruptions and inflation.

2022, as the US faces a shortage of about 2.6 million truck drivers overall, despite a general increase in pay. This shortage not only affects the roughly 3.1 million transportation and warehouse small businesses in the US, but it also is one of the root causes of the recent global supply chain disruptions.

Like with many industries, the worker shortage in transportation existed before 2020 but was compounded by the global pandemic. According to business consulting firm MossAdams, the primary causes of the shortage isn’t salary, it’s due to the fact that the job requires long hours away from family, the fear of contracting COVID-19 and the fact that the transportation workforce is aging, and few millennials and GexXers are willing to replace them.

Healthcare

Industries that require skilled workers are also facing a massive labor shortage, and salary may not be the overriding reason. In August 2022 there were 1.7 million job openings in this industry, particularly for nurses, while only 717,000 were hired. According to the American Medical Association, the country will also face a shortage of some 38,000 to 124,000 primary care doctors over the next 12 years, even though salaries in these professions are typically higher than the national median household income.

According to the AMA, many medical school graduates are becoming discouraged by the fact that independent primary care doctors’ offices are being quickly swallowed up by large health care providers. That, combined with doctor burnout from the pandemic; rising medical school debt; increased medical malpractice insurance premiums, and the red tape that independent doctors often face when it comes to sharing electronic health records, many hopeful doctors have been discouraged from entering into the industry.

One-Third of Nurses Plan to Leave

A study by Fierce Healthcare showed that one-third of nurses across the country plan to leave their job over the next year, exacerbating a problem that the healthcare industry has been suffering from since before the pandemic – a national nurse shortage. Last year, BLS data showed that the country is going to need an additional 275,000 by 2030. Despite a median national income of over $82,000 per year for registered nurses in the US, many are quitting due to burnout, according to the study.

Most healthcare facilities were already suffering from a high patient-to-nurse ratio, and COVID-19 greatly expanded that number. The study also found that 65% of nurses endure constant beratement, and in some cases, physical assault, from patients. Most don’t feel appreciated by the doctors they are assisting. This is compounded by a current shortage of nursing schools and faculty in the US.

Construction

The quit rate among construction workers was 4.7% in August 2022, and in the same month, the industry was short by over 33,000 jobs. Cornerstone, one of the leading publications for the construction industry, expects that the current overall shortage of 430,000 construction workers in the US will expand over the next two years, as new construction projects will increase with the passage of the Infrastructure Investment and Jobs Act in 2021.

Several factors are contributing to the shortage, according to a study by Cornerstone:

First, many construction workers were forced out of their jobs during the pandemic and decided to retire. In total, 40% of the construction workforce is expected to retire over the next decade.
Second, there aren’t enough carpentry trade schools in the US to meet the increased demand for skilled construction workers – contractors, designers and workers with the knowledge to build specialized construction projects.
Third, many contractors in the US have yet to embrace digital technologies to make projects more efficient, on time and on budget, thus slowing down the number of projects that they are qualified to complete.

To compound that, wages are still relatively low for construction workers – the median annual salary for a construction worker was only $39,190 as of September 2022. The pandemic made working conditions hazardous.

How Can Companies Combat Labor Shortages Going Into 2023?

Unfortunately, for small business owners struggling to find workers, there are no easy answers. The labor shortage is persisting, and it appears that it isn’t just a passing fad – it can only be solved by making permanent changes. Study after study has shown that employees in some industries are demanding better pay and benefits, while in other industries, workers are demanding a better work-life balance and better working conditions. The best solution to this problem is to examine the workplace you are providing for employees and look for ways to improve it.

Kapitus, small business lending, economy

SMB Owners are More Pessimistic Than Ever, Despite Some Positive Signs

July 26, 2022/in Featured Stories, Operations/by Vince Calio

Despite some relatively good news about the economy over the past month, most (51%) small business owners that comprise the membership of the National Federation of Independent Business(NFIB) believe they will see worsening economic conditions over the next six months – the highest percentage the NFIB has ever seen in its 48-year-old Small Business Optimism survey.

The Inflation Scare

Inflation was the top concern for small business owners last month. The survey found that the net percentage of small business owners that had to raise prices in June increased by four percentage points to a net 72% (seasonally adjusted) – again, the highest in the history of the survey.

The worry over inflation, however, comes amid both good and bad news about rising prices. The bad news is that the Consumer Price Index for All Urban Consumers (CPI-U), the index that most financial institutions look at as a measure of inflation, skyrocketed to 9.1% in June – more than a full percentage point above May and the highest since 1981 – with rising gas and housing prices and insurance rates all leading the way.

The good news is that the core Personal Consumption Expenditures (PCE) Index – the index that measures the prices of consumer goods excluding fuel and food – only rose 4.7% from May to June, which was lower than what most economists predicted. The Federal Reserve Bank uses the PCE index as its main measure of inflation. This suggests that the rise in the costs of consumer products lag somewhat behind the rise in costs of essential items such as gas and food. The bottom line is that the two may not be having as big of a correlation as many believe.

Hiring (or Lack Thereof)

A large percentage of small business owners surveyed by the NFIB (47%) said that they have job openings that they can’t fill, mostly in the transportation, manufacturing and construction industries. That number, however, is down from 51% in May and reflects a national trend that the hiring climate may be slowly improving.

According to the US Dept. of Labor’s most recent Job Openings and Labor Turnover Summary (JOLTS), the ratio of job openings to available workers fell by 0.3% to 7% in April from March, while job openings fell by 455,000 in April from March. While these are only slight decreases, it marks the first time that ratio has fallen in nearly a year.

The JOLTS report does not say whether job openings fell because a recession is approaching and, as a result, there are fewer jobs, or whether it was due to increased hiring. The national unemployment rate, however, fell to 3.6% from 3.8% from March to April, however, indicating that the decrease may be due to increased hiring.

Supply Chain Blues

The NFIB survey also showed that 40% of small business owners cited supply chain disruptions as a major problem, a number largely unchanged over the past three months. Global pressure on supply chains has certainly been very real since the end of 2021 as the world slowly crawls out of the COVID-19 pandemic, and many economists are predicting that those problems will persist well into 2023.

Inflation Supply Chain Kapitus Small Business Lending

Yardeni Research found that delivery times – one of the main measures of supply chain efficiency – have been improving.

Some research is suggesting, however, that national supply chain problems in major economic hubs have been slowly easing this year. Economist Ed Yardeni of Yardeni Research studied delivery times – one of the main measurements of supply chain efficiency – in five major Federal Reserve Bank regions – New York Metro, Philadelphia, Kansas City, Richmond and Dallas – and found that those delivery times have been improving.

Yardeni found that delivery times in all but one of those regions – Dallas – have improved since April.

“June’s surveys of five of the 12 district Federal Reserve Banks strongly suggest that supply-chain disruptions have eased significantly in recent months,“ Yardeni wrote on his LinkedIn page. He noted that supplier delivery times often closely correlate to inflation rates.

“The question is whether the drops in regional indexes tracking unfilled orders and delivery times during the first half of this year reflect more ample supplies or diminishing demand,” he wrote.

Be Vigilant

If the NFIB Small Business Optimism Index reveals anything, it’s that small business owners are facing some unprecedented challenges and may have to adjust their prices and offerings as a result. While that is certainly the case in many instances, there are also some silver linings in the challenges small business owners are facing that indicate that economic conditions may be slowly improving.

With many economists predicting a recession later this year and into 2023, however, it could be the case that the economy gets worse before it gets better in the immediate future. Small business owners would be well-advised to slowly raise prices and compensation levels for their employees to meet some of these challenges, as well as prepare for an oncoming recession by trying to cut operating costs where they can and arrange for additional financing if needed.

Enhance Your Success by Offering Subscription Box Services

June 7, 2022/in Featured Stories, Operations/by Vince Calio

There’s no doubt that these are trying times for US-based small businesses, as rising inflation and employee shortages, among other factors, are clouding their future cash flows – especially in the retail and eCommerce spaces. One of the sure ways to pad your future cash flow, increase customer loyalty and increase your database of repeat and lifetime customers is to offer subscription box services.

Although people often think of video streaming services or publications when they hear the word ‘subscription,’ this service has become popular among retailers selling physical products. In short, more retailers are offering groups of products to customers who agree to pre-pay for and receive on a weekly or monthly basis for a predetermined time frame.

According to tech consulting firm NCR, subscription services among eCommerce and retailers rose 23% during the COVID-19 pandemic, and have increased 17% on a year-over-year basis for the last five years.

In fact, the pre-pandemic years saw the rise of the most popular retail subscriptions services such as Birchbox (beauty supplies), Blue Apron (homemade meal kits) and Dollar Shave Club (men’s shaving products).

Should You Offer a Subscription Service?

Whether you should offer subscription services depends on the products you sell, as they aren’t for every small business. For example, such a service probably wouldn’t be a good fit for construction companies and business services firms such as accounting and law firms. If you sell physical products, however, a subscription service can bolster your bottom line and ensure future sales, and the best part – if you set it up correctly, you don’t need to be a major retailer to offer such a service.

No matter what physical products you sell, subscription services have skyrocketed during the pandemic. Consumers have shown that they enjoy receiving a surprise box of products tailor-made that fit their personal or professional lifestyles on a weekly or monthly basis for an automatically recurring fee, especially now as more consumers are working from home.

Get Inspired

If you’re unsure whether the products you offer would work in a subscription plan, you should first determine who your target customers are and what niche you are seeking to fill. The first thing you should do is check out other successful, small- to medium-sized businesses that have made it work for inspiration. Examine how companies such as The Honest Co. (environmentally safe baby products) and KiwiCo (homemade science projects for kids) have successfully built their businesses around subscription services.

Granted, those are now large companies. If you believe your business is too small to offer this service, you’d be wrong – consider the success of these small business subscription services created at the height of the pandemic that are still going strong today:

Business Book Monthly. Business Book Monthly is a small business that has built a successful model by getting customers to subscribe to a service in which they receive a new business advice book as well as an assortment of office products every month.
GlobeIn. GlobeIn sends exclusive artisan products for the home or office monthly and offers a
GLobeIn is a great example of a small business finding success in the subscription box industry.
three- or six-month or annual subscription with prices ranging from $35 to $40 per month. Notice how its site features positive business reviews and colorful graphics highlighting its various products.
CrateJoy. CrateJoy offers several unique subscription boxes containing products such as flower arrangements, monthly earrings and food and snacks. Its most popular subscription is its Fair Trade Fridays boxes, which contain artisan trinkets from various independent artists.
Sitti. Sitti partners with women-owned businesses and sends monthly boxes containing nine ethnically diverse artisan products.
Each Peach Market. Each Peach Market sends boxes of gourmet cheeses with recipes, handmade chocolates and wines on a quarterly basis for a few hundred dollars per year.

Where do you Begin?

If you have products that you know your customers will love to receive at various intervals, it’s time to set up a service – but, where do you begin? Once you’ve figured out your niche and determined who your target customers are, here are some steps you can take to launch your subscription box enterprise:

#1 Create a Prototype Box

The first question to ask yourself is: what do my customers want? Whether you sell gourmet snacks, clothing or beauty and fashion products, put a list of products together that your target audience would want. Advertise that product on social media, on your website or in your physical store to see customer reactions to it.

It may take a few tries, but once you’ve come up with the perfect box, you must be creative in how you’re going to update and personalize those boxes at the intervals you want – be it weekly, monthly or quarterly. This sounds like a chore, but it’s something you can have fun with as a business owner.

If you sell gourmet snacks, for example, you may want your boxes to contain food items that correspond to the different holidays during the year. If you’re a home goods store, you may want to sell boxes that contain small items for gardening in the spring.

#2 Price it Accordingly

Obviously, your ultimate goal as a small business owner is to be profitable, but you don’t want to charge so much that it will drive away customers. Like with any product, you need to take into account the cost of the materials, marketing costs, transaction fees and packaging and shipping costs when pricing your boxes.

With inflation currently skyrocketing, you should also consider that consumers are seeking bargains now more than ever before, so a key component of your success will be to market your subscription boxes in a way that lets customers know that they will be saving money by pre-purchasing your subscription boxes than if they simply purchased the products separately.

#3 Personalize Your Boxes

One of the allures of a subscription box is that the subscriber sees it as a present to him or herself every month. Every customer has their own tastes, so it’s important to give them choices as to the style of boxes that they want based on their age, gender, income level, etc..

For example, subscription box company BespokePost, which sells retail items from clothing to hardware tools, takes into account each customer’s age, color preference, grooming habits and size before personalizing boxes for them, ensuring that they deliver boxes that individual consumers will enjoy. Personalizing your boxes will bring you greater customer loyalty and ensure future subscriptions.

#4 Figure out Inventory and Shipping

Everyone knows the economic challenges businesses are facing right now, especially small businesses. For this reason, small businesses need to figure out the best way to keep inventory flowing and shipping costs down. The rules of inventory management have changed for small businesses over the past year as supply chain disruptions continue.

eCommerce and physical retail stores seeking to offer subscription boxes should set up a system in which inventory can be pre-ordered. Your list of suppliers should be diversified, and it may be best to partner with other small businesses to offer unique products and to make sure you have products in stock for your customers.

As far as shipping goes, examine the best and most cost-effective shipping fulfillment companies for your subscription service, especially if you’re engaging in direct-to-consumer shipping practices. There are also a variety of ways you can reduce shipping costs so that you don’t have to pass those costs along to your customers.

Enhance Your Business

In all, subscription boxes are a great way to ensure future sales, increase cash flow and customer loyalty. The past three years has witnessed skyrocketing growth in the popularity of subscription box services from retailers, as customers like to feel special with personalized boxes and want to feel like they’re getting a bargain. If a subscription box service is right for your business, don’t find yourself left in the dust in this growing trend.