Why Are All of My Employees Leaving?

Do you know what work your employees really enjoy doing? Most business owners and managers have no idea, according to a recent Harvard Business Review article authored by three Facebook executives and a university professor. “It spills out in exit interviews — a standard practice in every HR department to find out why talented people are leaving and what would have convinced them to stick around,” the article says.

A smarter approach is to figure out why people leave before they actually do. A recent study from the ADP Research Institute found that 5% of all workers leave their job every month, and most employee turnover is voluntary.

“Unemployment is at a 17-year low, and job switching is at a record high,” says co-head of the ADP Research Institute Ahu Yildirmaz. “It has always been important for employers to minimize turnover, but it is more critical now than ever before given the current state of labor market.”

40 Reasons for Leaving

The ADP study determined 40 factors that contribute to voluntary turnover. Those factors can be categorized as: “Pay, promotion, overtime/premium time, commute, experience-and-tenure, and other job characteristics.”

The specific influence each of these categories has on causing employees to leave varies by industry. Pay and promotion are the main drivers of voluntary turnover. Commute time, the study found, is a more important factor than experience and tenure.

Understanding why employees leave can help a company in a couple of ways. First, this can guide you in hiring. If you know that a long commute is a significant factor in why a certain class of employees tends to quit, you might re-consider whether to hire someone who will spend an hour on the freeway each day getting to work.

These insights can also help you determine which of your workers are likely to leave.  They can also help to uncover workplace issues you need to address. Perhaps you can offer remote work or a flexible schedule to that worker with the long commute. If good workers are going elsewhere because of benefits, you may need to reconsider your benefits package.

Conduct Stay Interviews

What’s the best way for a company to figure out what is causing its turnover issues? You no doubt have done interviews when you were deciding to hire someone.  And, many of you might have conducted “exit interviews” after someone leaves.

Susan Heathfield, a people management expert for TheBalance, suggests you also conduct “stay interviews” to determine the reasons that employees remain at your company. “Then, pay attention to and enhance the factors they identify that keep them coming back every day,” she suggests.

If you pay close attention to the reason employees leave, there’s a good chance your turnover will decline. And the workers who stick around will be more productive.


How to Hire the Right Candidate

Sizing Up a Prospective Employee

When Chase Hillenmeyer takes a job applicant to lunch, something usually goes wrong — on purpose. For instance, Hillenmeyer, who runs a landscaping business in Lexington, Kentucky, will quietly go up to the server and ask that the applicant be brought a salad instead of the cheeseburger he ordered.

Hillenmeyer isn’t playing games; he’s determining how the potential hire deals with adversity. If the applicant treats the server with respect, and handles the mistake well, Hillenmeyer knows he’ll fit with the culture of his fifth-generation business.

Sizing up potential employees is one of the hardest and most difficult tasks for a business owner. A good hire can take the company to the next level, but a bad one is costly. “For a small company, a five-figure investment in the wrong person is a threat to the business,” writes entrepreneur Falon Fatemi in Forbes.

Ask Behavioral Questions

Knowing the importance of hiring well, some companies are shifting to “behavioral interviewing”.  This approach bypasses vague questions, like “What are your strengths?” that often lead to canned answers lacking any real substance or insight. Instead, applicants are quizzed on how they handled actual situations.

For example,Inc. Magazine suggests saying: “Describe a time when you recognized that you were unable to meet multiple deadlines. What did you do about it?” If you want to check an applicant’s communication skills, pin them down by saying: “Give an example of a time when you persuaded a boss, customer, or peer to your point of view, even when that individual may not have agreed with you.”

While this is a better approach than standard interview questions, you should still keep any eye out for any potential pitfalls or problems. Ron Friedman, a social psychologist and author of the Best Place to Work, found that 81% of applicants lie in interviews because they give the answer they think is expected. “In many cases, job interviews are entirely disconnected from the reality of people’s day to day job,” he says.

Run a Job Audition

Instead of interviews, some entrepreneurs favor “job auditions” where an applicant handles the actual tasks of the position. For example, a sales rep position will come in and sell to the company’s team. Or a web designer may be asked to create a landing page.

Friedman’s research shows these tryouts are a better indicator of success than job interviews. This is because they show how a person actually does the job rather than simply what’s on their resume.

Observe All Actions

Candidates are typically on their best behavior when being interviewed.  This makes it difficult to get a true feel for their personality, attitude and demeanor. Since one very important aspect of the interview process is determining whether a candidate will be a positive addition to your team, it’s important to figure out if the person is an “unsavory character” prior to bringing them on.

To help get a better idea of whether a candidates “in interview” personality is fake or authentic, observe how they are interacting with individuals outside of the actual interview – those who aren’t involved with the interview process. Were they pleasant and friendly with the receptionist? Were they cordial to other employees they passed along the way to and from the interview room. Closely watching their interactions with others, when the candidate doesn’t feel as if they are being closely watched.  Doing so can give you an idea of their true colors.

Hold a Brainstorm Session

Similar to a job audition, conducting a brainstorm session during an interview can indicate how a person can actually do the job. In addition, it can showcase how well you and the individual can effectively work together to complete projects and solve problems.

Before the Interview

The above tactics are great options once you get someone in FOR an interview.  But how do you go about narrowing down the candidate pool to determine who you should bring in to interview? With job postings sometimes receiving hundreds of applications, culling through resumes and cover letters can become extremely time consuming. Here are two ways to save time in assessing top candidates to interview.

Request a Video Introduction

Consider requesting a video introduction as part of the application/resume submission process – especially if presentation is a key part of the role. Video introductions can allow you to quickly gauge a candidates personality, skill set and enthusiasm for the role prior to bringing them it. Remember to note in your job description and directions for submission that the video does not have to be great quality and remember be sure to set a time limit on the video.

Nix the Cover Letters

Instead of requesting cover letters that are often templated, consider requesting candidates to “describe in 100 words”. You can ask them to describe why they’d be a good fit for the role. Or you can ask why this opportunity excites them. Or you can have them describe how they’d tackle a specific aspect or responsibility of the role. Descriptions of this nature require candidates to showcase their ability to think creatively (you can’t template unique thoughts!).   It can also show you bits of their personality and how they communicate. And, it’s a lot less time consuming and can be a lot more entertaining for you.


What Small Business Should Know About 2019 Payroll Changes

As an owner, it can be hard to keep track of everything at the start of the new year, including changes and additions to employment laws. In 2019, there are plenty of important human resource and payroll changes to consider.  These changes are especially important to small business owners. Here are few:

Retirement Savings Contributions

While SEP contribution levels stayed the same, contribution levels for 401(k)s, SIMPLE IRAs and Roth IRAs increased for 2019.

401(k) contributions for employees increased to $19,000, along with 403(b) and most 457 plans. SIMPLE retirement accounts increased to $13,000.

For Roth IRAs, income phase-out range increased. Married couples filing jointly will see the amount increased from $189,000 to $199,000. For singles and heads of household, the income phase-out range bumped up with a range of $122,000 to $137,000. This is an increase from the previous range of $120,000 to $135,000.

Both traditional and ROTH IRAs contribution limits rose by $500 to $6,000 (over the $5,500 limit in 2018).  However, catch-up contributions if you’re 50 or older remain at $1,000.

Medical and Healthcare

  • FSAs If you offer a flexible savings account for medical expenses, the amount employees can contribute increased from $2,650 to $2,700. There is one caveat: the amount for dependent care is fixed at $5,000.
  • Healthcare Savings Accounts: Employees with individual coverage can contribute $3,500 (up from $3,450 in 2018), and $7,000 for a family plan (up from $6,900 in 2018).
  • Adoption benefits: If you’re looking to adopt, the annual Adoption Assistance Limit increased to $14,080 (up from $13,810 in 2018).
  • QSEHRA: If you’re offering a Qualified Small Employer Health Reimbursement Arrangement, also called QSEHRA or a small business HRA, self-only coverage increased to $5,150 (up from $5,050) and $10,450 (up from $10,250).

New thresholds for the Small Business Health Care Tax Credit

If you enrolled in a Small Business Health Options Program (SHOP) or are considering doing it, you can then apply for the small business health care tax credit.

To do so you must have, according to HealthCare.gov:

  • Fewer than 25 full-time equivalent (FTE) employees
  • Pay at least 50 percent of your full-time employees’ premium costs
  • The maximum average employee salary must be $54,200 or lower (up from $53,200 in 2018)

It’s also important to note, for eligible small employers the average annual wage level at which the tax credit begins to phase out is $27,100 (up from $26,600).

Unemployment Details

Taxes for unemployment vary on a state-by-state level. The rate usually depends on the size of your company and how long you’ve been in business, as well as other factors like the number of former employees who have applied for unemployment benefits, your company’s historical turnover rates, and your industry .

Each state has a program to fund its unemployment pool via the State Unemployment Tax Act, better known as SUTA. Employers must pay this on behalf of their employees. American Payroll Association has a free chart of State Unemployment Insurance Taxable Wage Bases.

States seeing a wage base increase include: Alaska, Colorado, Hawaii, Idaho, Iowa, Kentucky, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, Utah, Washington and Wyoming.

Missouri and Vermont will see decreases.

The Federal Unemployment Tax Act — also called FUTA — tax rate in 2019 is 6 percent.  This applies to the first $7,000 you paid to each employee as wages during the year. According to IRS.gov, you can usually take a credit against this tax if you’ve paid state unemployment taxes. If you’re entitled to the maximum 5.4 percent credit, then the FUTA tax rate, after the credit, is reduced to 0.6 percent.

Minimum Wage

Nineteen states increased their minimum wage at the start of 2019.  Another two states—Washington and Oregon—will see increases in July.

Social Security Taxes and FICA

Payroll taxes can be complicated. An employee’s paycheck typically includes taxes for federal income, Social Security, Medicare and in many locations, state income tax.

The Social Security tax rate of 12.4 percent is split between employer and employee who each pay 6.2 percent of the gross pay — while the tax rate remains the same for 2019, the tax cap increased to $132,900 in annual earnings for 2019 — up from $128,700 in 2018. This means the maximum amount of Social Security tax employers and employees will each pay in 2019 is $8,239.80. This is a $279 increase from the $7,960.80 amount in 2018.

The one exception, if you’re self-employed, then you pay the full 12.4 percent.

Social Security are then combined with Medicare taxes for FICA (Federal Insurance Contributions Act) taxes. (Federal law also requires employers to withhold an additional 0.9 percent for anyone who earns more than $200,000.) The Medicare tax rate remained the same at 1.45 percent which is applied to all earned wages since there aren’t threshold limits for Medicare taxes.

According to the IRS, for wages that don’t exceed $132,900, the combined social security tax rate and Medicare tax rate is 7.65 percent each for the employee and employer for wages paid in 2019.

For those who are self-employed, FICA tax rate is 15.3 percent — which combines the Social Security tax rate of 12.4 percent and Medicare tax rate of 2.9 percent.

Transportation Benefits

Extra perks, like qualified transportation fringe benefits help many employers who are working with millennials. If you offer these benefits which include vanpooling or transit passes, the tax-free amount increased to $265 a month, up from $260 a month in 2018.

If you need more insights, review the IRS’ Employer’s Tax Guide to Fringe Benefits.


Improve Your Bottom Line by Compensating Younger Employees Creatively

For business owners, it can be hard to attract and retain younger employees — especially when they are expecting and asking for more.

Google searches for the term “employee experience” have increased 130 percent over the past five years, according to a 2018 report published by IBM and Globoforce. The same study found organizations that scored in the top 25 percent on employee experience netted nearly three times the return on assets when compared to organizations in the bottom quartile.

Positive buy-in from employees means potentially more productivity and more revenue for the business; however, keeping employees happy can be difficult.

Many companies have gravitated towards a Silicon Valley, “work hard/play hard” mindset.  In these environments employee perks help with retention.  Many employees, however, want forward-thinking rewards from a company. These often include an environment that embraces gender equity and the ability to work on a flexible schedule.

Here are some things to consider to improve your bottom line this year by compensating your younger employees more creatively.

Offer a flexible schedule or telecommuting options.

Many employees don’t want a 9-to-5 workday. Allowing employees flexible schedules or telecommuting options may be seen as a good benefit to younger employees. Consider this if you have employees who are parents that are juggling daycare constraints.  Or if your company is in a high-traffic city where commuting on off-peak times or telecommuting might be a benefit.

Even though 40 percent more U.S. employers offer flexible workplace options than they did five years ago, according to Global Workplace Analytics, only 7 percent make it available to the majority of their employees.

Upwork, headquartered in Mountain View, California, has “Work Online Wednesdays”.  This perk allows their employees to work from anywhere as long as they are online. Blinds.com, a 150-person operation in Houston, allows call center employees to telecommute, as well as other staff members. Before employees began working remotely, Blinds.com set up training sessions to help employees learn how to maximize their home office productivity.

Have gender equity.

According to the “Winning the Fight for Female Talent” report by PwC, 50 percent of women say there’s a pay gap between equally qualified male and female counterparts.

Creating gender equity may help attract and retain key female talent. The report found three traits which make a potential employer more attractive to female employees: Being given fair and equitable compensation to their male employees, having opportunities for career progression, and an atmosphere of flexibility and work-life balance.

Many companies are following this trend. Social enterprise firm Equileap pulled publicly available data from 3,000 companies around the globe across a variety of sectors with a market capitalization above $2 billion. General Motors was identified as one of only two global businesses with pay equality across the entire spectrum of business with no overall pay gaps in the company. It also has an equal number of men and women on its board of directors.

Consider on-site and off-site offerings.

On-site childcare, gyms, nap rooms, yoga and massage sessions are some of the additional perks companies are offering to attract and retain talent. Twitter offers acupuncture and improv classes to its employees. Blinds.com brought therapy dogs into their office to help employees during a stressful month.

If you don’t have options on-site, consider a stipend to help reduce the cost for your employees.

For example, Eventbrite offers its employees $60 wellness stipends that can be used for a variety of healthy options from juice cleanses to gym dues. Microsoft’s StayFit program reimburses employees $800 annually ($66.66 a month) for gym memberships and fitness programs.

Evaluate parental leave.

American millennials are taking a lead from their European counterparts, according to Forbes, and want paid maternity and paternity leave — the longer the better.

Birthing mothers typically receive an additional 6-to-8 weeks under salary continuation for medical leave. Breastfeeding moms also get access to a 24-hour lactation consultant. They can also ship their breast milk home for free if they are traveling.

Netflix takes a European-approach with one year of paternity or maternity leave for parents.  They couple this leave with the ability for its workers to return to work on a full or part-time basis.

Give stash instead of cash.

Unscratched lottery tickets and gift cards are ways to reward positive employee behaviors without handing out dollar bills for a job well-done.

Sure Amazon and Starbucks gift cards are good standbys. But you should also consider other options – maybe a gift card for a car wash or a manicure. Experts suggest you ask your employees what they would value the most to to determine the best fit. Don’t assume you know.

Training and teaching.

SMBs don’t always have time to train their staff adequately, and employee development may be a key factor in retention. Consider offering to send an employee to a national conference or paying for Lynda.com training.

Offer to bring in guest speakers that employees would like to hear and then sponsor a lunch. Make this a reward to whoever does something above and beyond.  Make it even better by allowing them  to earn the right to choose the next speaker.

Bring your … to work day.

In the past many parents would bring their kids to work once a year. Now the “kids” want to bring their aging parents to work to show them what they do. They also want to bring their pets, kids, or significant others.

Cement-making Ozinga Bros in Mokena, Ill. and Cornerstone OnDemand, a cloud software company in Santa Monica, Calif. both allow employees to bring parents to work. The 22-person PR firm, EvolveMKD in New York skews towards Generation Z and Millennials and morphed its parents night into a family night.

Give the gift of time.

Personalized perks can make a big difference. Consider gamifying the options so once a week or once a month an employee earns a unique reward.  Rewards could be anything from getting a longer lunch break or the ability to leave work early on a Friday. Or maybe it’s offering an hour or two of flex-time or the ability to work from home once a week.

The software company Salesforces gives employees seven paid days off per year to volunteer on the project of their choice. REI employees get two paid “YAY Days” a year to go outside and do something fun.

Regardless of what creative perks you offer, pick benefits that align with your company values and will make your employees feel appreciated which will help them to work harder and grow your business.


Six Business Financial Housekeeping Tasks to Get Done Before Year End

There may be several weeks left in the year before you officially close the books and shift your focus to next year, but getting a head start on your financial housekeeping tasks can ensure you end this year on solid financial footing — and start the next one with a plan to succeed. Here are six business tasks to complete before you ring in 2019.

Check your retirement plans

If you don’t have a self-employed retirement plan, there’s still time to establish one, and make contributions to it. In turn, you may also find opportunities to reduce your tax burden. As Forbes explains, a sole proprietor who has a solo 401(k) in the 2018 tax year may be eligible to contribute up to $60,000 to it (based on net business income, and the business owner’s age).

If you prefer a retirement account with little costs and administrative burden, consider establishing a self-employed IRA (SEP IRA). Many providers allow you to complete account set up, funding and management entirely online.  And, you may be eligible to contribute (the lesser of) 25% of your business income, or $55,000, in 2018.

Meet with your accountant (or find one)

If you don’t have consistent contact with your accountant, set aside time to discuss your business’s current financial reality.  You should also discuss  your business goals, future plans and anticipated challenges for the remainder of this year, and next. If possible, schedule the meeting to take place at least two months before year-end.  Doing this will give you enough time to act on any recommendations for optimizing your finances before this year ends.

When you meet, let your accountant know of any additional financial moves you are considering that could have tax ramifications.  Things that could fall into this category include buying or selling new equipment or assets. Beyond the numbers on your financial statements, ask your accountant for any recommendations to improve or optimize your business finances, based on the current and future plans you’ve shared.

Confirm your estimated payments are accurate.

If your business is a sole proprietorship, partnership or S corporation, the Internal Revenue Service says you may be required to make estimated tax payments if you expect to owe $1,000 or more when you file your annual tax return. Corporations have to make estimated tax payments if they expect to owe $500 or more when filing their tax return. (Depending on your business, you may also be responsible for payroll, sales, and excise taxes).

If you picked up new clients or sales were stronger than expected, you may owe more tax than originally estimated. Ideally, your quarterly estimated tax payments are made in equal increments.  But the IRS does put the onus on taxpayers to estimate income as accurately as possible to avoid penalties.  They also expect you to ensure it remains correct based on business or tax law changes that may impact it.

Confirm tax paperwork for independent contractors you’ve hired.

If you’ve hired independent contractors over the course of the year, the IRS requires that you have their completed Form W9 (and that you keep it on file for at least four years). Sites that make it easy to hire virtual help also make it simple to hire contract help.  However, they can also make it difficult to keep in touch with contractors who are several states (or countries) away.

Regardless, the IRS also states that employers who pay an independent contractor $600 or more over the course of one year “may have to file Form 1099-MISC, Miscellaneous Income, to report payments for services performed for your trade or business.” Allow yourself the time to collect the paperwork you need from contractors so you’re prepared to issue the Form 1099-MISC tax forms. Note that you may be required to send them for payments by late January 2019.

Conduct an employee satisfaction survey.

Employee engagement may not seem financial in nature — until you consider the impact that disengaged employees have on business productivity, customer experience, and culture. Experts at Villanova University’s School of Business report that increasing your investment in employee engagement efforts by just 10% can yield $2,400 in profit (either directly or indirectly) from each employee, each year. Engaged employees are also 87% less likely to leave their jobs.  And, having engaged employees may reduce costs associated with employee turnover, hiring and training.

Take a pulse on employee engagement in your company with a basic online survey tool and questions that address what consultancy firm Deloitte says are the five pillars of employee engagement: Whether employees feel their job provides opportunities to do meaningful work, involves hands-on management with positive coaching, guidance and support, a positive work environment and culture, and trust in leadership.

If you find that you have engagement issues, your survey can provide the insights you need to address issues.  Once you know where problems may lie, you can work to improve employee productivity, engagement and satisfaction next year.

Organize your receipts and financial statements.

You have several months until tax season officially arrives.  But, the earlier you compile the receipts, mileage logs and cancelled checks you’ll need to support business-related tax deductions and credits, the less you’ll have to scramble as tax season approaches. If you rely on a bookkeeper or accountant to prepare your business tax return, ask his preference for how you should organize and transfer tax-related documents, to streamline the process (and better manage the billable hours you’re charged for their tax preparation services).


4 Must Have Features for Easier Payroll Processing

Managing payroll can be tedious and time-consuming, but it’s a necessary task if you have employees. Finding ways to streamline the process can make it a less onerous chore, and rethinking your current payroll software provider may be the answer.

If you’re looking for ways to make payroll a less stressful part of your business operations, here are four features to look for.

1. Employee self-service

If you ask your employees whether they’d like to take a DIY approach to managing payroll, the answer might be a resounding yes. According to a Paychex survey, 73 percent of workers would prefer to use self-service tools for things like downloading or viewing payroll information and checking their hours, versus contacting human resources.

Adding a self-service component to your payroll system can also make it easier for employees to handle more mundane tasks, such as changing their address, notifying your business of a life status change (like a marriage or birth of a child), submitting time off requests for holidays or sick leave and filing expense reports – taking those administrative burdens off your shoulders.

2. Mobile functionality

There’s an app for just about everything these days, including payroll processing. Payroll mobile apps are designed to coordinate with your payroll software so you can review hours and approve payroll payments from anywhere, at any time with just a few taps on your phone or tablet.

Some apps do even more than that. You may have the added benefit of being able to set up direct deposit for your employees and/or calculate and schedule your payroll tax payments from your mobile device for even more convenient payroll management.

3. Notifications and alerts

You may already use notifications and alerts to manage your business banking activities and they can be equally helpful for managing payroll. If you struggle to keep up with payroll or tax filing deadlines, for example, you can simply set up an alert to notify you when those due dates are approaching.

Alerts can also be helpful in detecting payroll errors. Your payroll software may automatically send out a notification when the information on an employee’s record doesn’t match up with what’s listed on their pay stub. That can help ensure that employees aren’t being over or underpaid.

4. Diverse payment options

Printing paper checks may not be cost-efficient if you’re shelling out big bucks on ink and paper. Writing out checks by hand can be a huge drain on your time. Adding electronic payment options — such as direct deposit or pay cards — into the mix makes paying employees less of a hassle. Using direct deposit or pay cards can reduce the potential for payroll reporting errors and your employees may appreciate being able to access their money faster.

Switching up your payroll software may require an initial investment but think about the potential return. Upgrading your payroll system could save you time and money, both of which are invaluable for growing your business over the long term.


How to Handle Orders without the Danger of Too Much Inventory

You need inventory to fill orders, so having plenty of everything on hand might seem smart. There would never be a stockout and closing sales would be as easy as sending someone to the warehouse. But maintaining too much inventory may undermine your business.

Holding considerable inventory can force you to hold more product than is necessary. What you might consider, instead, is only stocking the amount of merchandise you need, and the inventory turns ratio (ITR) can help you find the inventory levels for your business.

Availability is good, but has a cost

High availability means buying, carrying, and storing a lot of product. Inventory costs money, so you end up using capital that could otherwise help grow and sustain the company. Too much money in inventory can also affect your need to finance and how much you might need.

And there are other problems: Inventory ages, not only on the books, but on the shelves. You may have products fall out of support, become discontinued, get damaged, or otherwise lose value. Then there’s the cost of storage space and increased headcount to manage the additional product.

This all adds up to money your business will have to spend on maintaining a constantly full inventory level.

Increasing inventory turns

Instead of more inventory, consider replenishing stock more frequently. So long as there are enough products on the shelf to satisfy orders that will come in until the next delivery, you can keep customers happy and reduce costs.

This is why you need to look at the ITR. ITR shows how frequently you replace stock over a given period – such as each month, each quarter or each year.

Calculate inventory turns by dividing the cost of goods for the sales you make in a period by the value of your average inventory over the same period.

The idea is to push inventory turns as high as you can to make better use of that inventory.

Setting the right turns level

Finding the right ITR can be a challenge. If you drive turns too high, you may miss filling orders in a timely basis because you don’t have the products you need. Too low, and it means cash is locked up.

Balance inventory turns with sales, vendor stock availability, supplier reliability, and minimum order sizes. Sales fluctuations like seasonality or outsized importance of certain products can also make it tougher to monitor and control ITR. Arrival of new stock in a timely manner becomes more critical.

There is no magic way to know what ITR will be right for your company, but understanding how ITRs work may help you test stock levels and optimize for your operations.


7 Mistakes New Small Businesses Make

A great idea is only one part of what makes a business successful.

From not researching your market to not vetting or training your employees, there are plenty of pitfalls small business owners can make that could be easily avoided with a little knowledge and preparation.

Here are seven common missteps to avoid in your small business.

1. Not performing market research.

Making sure customers want your product or service enough to pay for it is an important piece of initial market research. So is having what you’re selling priced at a profitable point, and one that doesn’t price you out of the market.

The Small Business Administration (SBA) says low sales is one of the top reasons a small business closes. That’s why they recommend conducting market research before starting a small business by looking at the following factors:

  • Demand: Is there a desire for your product or service?
  • Market size: How many people would be interested in your offering?
  • Economic indicators: What is the income range and employment rate?
  • Location: Where do your customers live, and where can your business reach?
  • Market saturation: How many similar options are already available to consumers?
  • Pricing: What do potential customers pay for these alternatives?

It is also important, once your business has been established, to continually look into each of these areas to ensure that your product and services portfolio continues to be relevant and profitable.

2. Not preparing for a cash flow crunch.

Many small businesses face cash flow problems at some point in their early stages. In fact, WePay reported in May 2017 that 41 percent of businesses had experienced cash flow issues in the past year and 16 percent had experienced payment fraud.

Projecting when a cash flow disruption might happen and making sure you have access to funds, or enough in reserve, can be difficult. That’s why the nonprofit SCORE has a variety of free financial templates for small businesses, including a cash flow budget worksheet.

3. Not securing financing before you need it.

Even if you start with personal funds and cash from friends and family, sooner or later you probably will need additional funds.

While 57 percent of new businesses used personal savings, according to the SBA, 73 percent of small firms used outside financing. The key to securing financing is planning ahead.

There are a variety of options including:

  • business lines of credit
  • short-term loans
  • medium-term loans
  • short-term line of credit
  • medium-term lines of credit
  • SBA loans
  • equipment financing
  • merchant cash advance
  • invoice financing
  • crowdfunding
  • personal credit cards

4. Not having a website.

It seems almost unthinkable, but according to a Clutch business research survey, 29 percent of all small businesses in the U.S. still don’t have websites. And in the Midwest, 42 percent of small businesses still don’t have websites.

Websites like Squarespace.com and Wix.com make it easy to create your own business site without having to know coding.

5. Not hiring the right team for your culture.

Hiring employees with the right skillsets is important, but so is finding employees who fit with your company’s culture. Look for their passion for the industry, not just their interest in the position. Ask open-ended questions to get a sense of how they think, versus how they respond, especially if your company rewards creativity and problem-solving skills.

Some companies will have perspective employees do a “test run” before an official hire is made to help the job candidate and company decide if the fit is right. For example, why not try 30-days of contract work with a potential new employee before making them full time? Just be sure to check your local employment laws beforehand.

6. Not understanding your creditworthiness as a business.

Unlike your personal credit score which tends to be based on the same financial information across providers, there isn’t one single business credit score methodology that covers everything for lenders.

For example, Dun and Bradstreet rates businesses via a viability rating, a supplier evaluation risk rating, a delinquency predictor score, a financial stress score, a D&B rating and its most well-known Paydex score.

The Paydex score looks at your payment history for the past two years and rates your company. Scores range from 1 to 100 based on your promptness to pay bills.

A score of 80 to 100 is good. The reason, if you score an 80 it means you promptly paid your bills on time. Anything higher means you pay your bills before the payment was due. And, a score lower than 80 indicates a late payment.

Business credit scores help pinpoint your company’s creditworthiness by looking at how much credit your business has used, type of customers, and if you pay your bills on time.

There are plenty of other factors and systems including Equifax Small Business, which doesn’t give a single score, Experian’s Intelliscore Plus and FICO Small Business Scoring Service.

The better your scores, the better the lending rates and your borrowing power may be. Concerned about your company’s credit score? Here are some ways to start improving your business credit score.

7. Not learning the basics of accounting.

Most entrepreneurs don’t start a company because they love accounting. But without some basic skills, it can be hard to keep track of what is going on financially. Even if you offload everything to a bookkeeper, you still need to understand how to read financial statements, and understand what income statements and balance sheets are saying.

Thanks to mobile technology, business owners now have a variety of accounting apps designed for businesses that provide easy ways to understand your business’s finances and to keep on top of accounting.


What to Consider When Choosing a Payroll Partner for Your Small Business

Payroll — and everything that goes with it — can be confusing and stressful, even to seasoned entrepreneurs. Chances are, when you dreamed of launching your business, payroll and human resource management weren’t part of the picture you imagined.

While some entrepreneurs love dealing with logistics, paying employees incorrectly can invite costly mistakes; the IRS can penalize business owners with up to five years in prison for failure to comply with quarterly payroll tax contributions and other federal payroll laws – just to cite two examples. Those are pretty high stakes!

Choosing a payroll partner may simplify the process and decrease your potential of being non-compliant with local, state, and federal tax laws — especially if you have employees in multiple states. Below are questions and considerations for choosing the right payroll partner for your business.

Is my company large enough to need a payroll partner?

When my business partner and I launched our marketing company, we only had one employee. She and I took distributions from the LLC, so we thought we could get by without a payroll partner. That was a BIG mistake, because although we thought we had familiarized ourselves with all the laws, we missed an important requirement about quarterly reporting.

That mistake cost us over $1,000 in fines, plus hours and hours of stress and paperwork. Additionally, it drew our attention away from managing other areas of our business. Ultimately, we were doing a C- job on payroll instead of finding an A+ partner to help us and spending our time doing A+ jobs on things like marketing and biz dev instead. Our HR and our core functions were suffering because of this choice. Double-whammy!

If you’ve got at least one employee, you may benefit from a basic payroll partner. That’s because payroll encompasses a LOT more than just making sure employees get checks every two weeks.

A payroll partner is responsible for:

  • Issuing employee checks.
  • Withholding employee and employer taxes.
  • Withholding non-tax contributions like retirement, medical benefits, and garnishments.
  • Filing quarterly tax reports.
  • Issuing 1099s and W2s.

Who should influence my partner search?

After my business partner and I got hit with the fines for our tax mistake, we knew we needed professional help. The most important component to finding a payroll partner can be having a great accountant or CFO.

Now, we have an outsourced accountant who is a critical member of our team. He helps with every financial decision – from payroll to retirement to benefits. The few hundred dollars a month we pay for his services saves us thousands of dollars a month in headaches … and, more importantly, frees up time for the business functions no one except us can do as owners.

If you’re just starting out looking for a payroll partner, chances are an outsourced accountant can be a good fit for your business, rather than a full-time, dedicated HR employee or a founder who wears an accounting hat part-time. The reason it’s important to include an accountant or other advisor in your search for a payroll partner is because they will be able to help you assess how much service you actually need in a partner.

What should I look for in a payroll partner?

Every small business is different, so the complexities associated with the financial management of each varies greatly.

At the core, a payroll provider should make your work-life easier, not harder. It should offer convenience, transparency, and easy to access support. If you’re choosing a partner based primarily on cost, make sure you have a complete understanding of any “extra” fees that you might incur for things like direct deposit or onboarding new employees. Be sure that the partner integrates with the rest of your business software.

The first payroll partner my business used was Intuit. We were already using Quickbooks to track our accounts receivable, so Intuit seemed like a good choice for payroll. It was affordable, easy enough to navigate, and integrated well with the rest of our business; however, we quickly realized we needed help with more than just payroll.

Is payroll really all I need?

While some small businesses may just need a payroll provider, we needed a lot more. We found that, in order to attract the best employees, we were going to need to offer things like competitive retirement benefits and healthcare plans. Then we found that hiring employees meant more rules and regulations around workers’ compensation, liability insurance, unemployment insurance, and lots of other things we hadn’t initially considered.

We decided a Professional Employer Organization (PEO) was the right fit for our business. A PEO is an organization that offers an entire suite of benefits and services to small- and medium-sized businesses, including payroll, health insurance, retirement plans, workers’ comp, risk and liability management, and other HR functions. We chose TriNet as our partner, but there are many PEOs, including Just WorksADP Total Source, and Oasis Outsourcing. For us, a PEO was an attractive solution over the alternative of cobbling together services from various providers and hoping the technology with each would integrate together into a single solution.

If you’re a growing business, or if you have complexities like offices in multiple states or partners who want to put aside money for retirement, a PEO might be a good choice for your business. The monthly costs can be higher than a payroll-only solution, but significantly lower than an in-house HR expert.

So, what’s the right choice for me?

Like choosing a business structure or a new employee, your decision shouldn’t be rushed into. The time spent getting it right the first time is a fraction of the time it will cost if you make the wrong decision and have to start over. If you have an accountant or similar partner, talk to him or her about the right choice for your business. If you don’t have an accountant, consider that as your first step before moving forward, because he or she can be a critical component to a successful, growing company.


Best Human Resource Apps for Small Businesses

What are the best human resource apps for small businesses?

Though human resource departments in big, multinational companies look a lot different than they do in a small business setting, both deal with similar issues on all levels of business.

And both could use some help from technology.

To help streamline processes and make your business a better place for you and your employees, here are 12 must-have human resource apps and how they can help your business.

For easier on-boarding.

With new hires, there’s always paperwork. But with WorkBright, you can cut out all the paper documents. The process is remarkably simple. New employees receive an email and a link that opens all on-boarding documents for them to read through and sign. This saves a lot of time on the first day.

Payroll made easy.

You don’t need to outsource your payroll to a third party. With Gusto, you get an easy-to-use interface that allows you to simplify payroll onboarding and also automates the process by calculating taxes, benefits and submitting payroll filings.

Schedule easier.

Coming up with a schedule can feel like an elaborate math problem. With Deputy, juggling who works where and when just got a lot easier. With spreadsheets, time clocks and a mobile-first approach, it also allows you to send out schedules to employees and to payroll with just one click.

Know your employees.

Whether in the hiring stage or 10 years into their career, it’s important to have a way to measure how your employees are performing. PeopleFluent is an app that helps you track an employee’s development at your company. Career development, pay management and applicant tracking – all at your fingertips.

A healthy workplace is a happy workplace.

The app Nudjed is designed to make workplace wellness programs more effective. Employees create profiles, input information and through deep analytics, receive personalized health advice. It also allows you to track the progress of everyone in the program.

Manage with ease.

For projects small and large, every HR manager can benefit from DropTask, a visual project management app that clearly defines workflows and responsibilities while eliminating juggling and guessing.

For your to-do list.

Stop relying on all those scraps of paper! With features like due dates, reminders and the ability to assign tasks to others, Wunderlist will help you prioritize and follow through.

Because we can all be forgetful.

With payroll and insurance portals, benefits pages and any number of other secure sites they need access to, HR managers have a lot of passwords to remember. LastPass basically takes care of this by storing all your passwords in one place.

Keep track of those expenses.

Make receipts stapled to expense reports a thing of the past. Expensify is an Intuit app that makes it easy for employees to submit claims and for you to track spending and budget more effectively.

Learn from your employees.

Many small businesses conduct surveys every quarter to get a sense of morale and where the company is at. Peakon is an app that prompts employees with questions and gives HR managers real-time analytics based on the feedback. The genius in the app is its design, which helps get a 90 percent response rate.

The HR behemoth.

Namely is one of the most widely used, and most exhaustive, pieces of software available for a company’s HR needs. Its centralized platform can be easily customized and allows you to do everything from track time off and automate workflow to store documents and more. Oh, and you can do this all from their app as well.

All-in-one for the small players.

If Namely is widely used across the spectrum of businesses, Zenefits is the all-in-one choice for small-business owners. Its dashboard allows you to access and manage benefits, time tracking, payroll, compliance and more. The easy pricing system lets you select the features you want.

There are dozens of other options out there, but if you only looked at this list, you would surely find a few that could transform how you do HR.


5 Examples of Great Company Culture

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How can you improve company culture?

Small business owners tend to think a lot about their company culture. In fact, they probably think about it a lot more than presidents or owners of larger companies.

There are several reasons for this. On a personal level, small business owners tend to be more involved with the day-to-day happenings of their company. They have their boots on the ground and directly interact with employees. That is, the culture of the company directly affects them.

On a more practical level, it’s in their interest to cultivate a culture that inspires and supports employees. They may not be able to compete with larger corporations when it comes to pay or benefits, but they can create a culture that attracts top talent and keeps them around.

From an employee perspective, 53 percent of employees say that a greater work-life balance and personal well-being is “very important,” according to a Gallup poll. According to another survey, 80 percent of millennials report that a highly flexible workplace has a very/fairly positive impact on their work-life balance.

For employers, a strong culture means a more engaged workforce. With only 16 percent of employees reporting that they felt “connected or engaged,” it’s in the best interest for a company to strive to create a culture that engages their workers.

This is especially true for businesses with a small number of workers.

How you set out to define and shape your workplace depends on the needs of your employees and your business goals. Companies that foster positive workplace environments have one thing in common: They all do it differently!

That being said, it does help to learn from those who have mastered this particular art. In these examples, it’s likely that you will find an idea or two that could have an impact on your culture and improve your overall business.

1. The icon of workplace culture: Google

We admit that it’s something of a cliché to cite Google as an example of a great place to work. Perks like table tennis, beanbags, nap rooms, multiple cafeterias serving up free gourmet food and yoga classes are legendary. You might have some beanbags in the office, but as a small business owner, how can you possibly compete?

While you might not be able to provide the same material comforts and goodies, you can take a cue from Google’s workplace spirit: Expect the most from your employees, but at the same time, trust them. Offering them perks and time to relax will make work seem less like work. At the same time, employees should know what’s expected of them. This combination helps bridge the gap between work and life, creating a more engaged workforce and greater employee loyalty.

2. Creating connections at Zappos

Not too many companies have such a fun culture that they offer to bring in groups to tour their offices. Zappos does. But it’s not just ball pits and quirky art that make for a great company culture. Tony Hsieh, the CEO of Zappos, doesn’t have an office that takes up an entire floor or is behind a wall of security. He sits in the call center, right alongside those listening to customer complaints and trying to figure out how an order got messed up. In fact, every new hire is required to work in the call center for four weeks. The hotshot with a freshly minted Harvard MBA interacts with a high school dropout. This effectively breaks down the hierarchy, allowing them to build honest relationships and keep lines of communication open.

3. Flattening hierarchy at Evernote

Through its Officer Training program, employees at Evernote sign up to learn how everyone else does their job. Part of this training involves attending two additional meetings each week, in a department they don’t work in. Those in Officer Training absorb the information, ask questions and become more involved in the company’s overall operations.

4. A wild experiment at Treehouse

The world of tech startups is a notoriously fast-paced, stressful environment where burnout is high and competition stiff. As CEO of Treehouse, an educational site where people can learn to code from any number of courses, Ryan Carson had firsthand experience of this crushing culture. So he tried something that many people would call foolish: He implemented a four-day work week. The idea is simple: More time doesn’t mean more productivity. Employees who are not squeezed are more likely to have those epiphanies that can bring the project, or the company, to the next level.

5. Putting employees first at Publix

When you think about working at a grocery store, the words “loyalty” and “ownership” don’t exactly come to mind. But the Florida-based supermarket chain Publix has created a culture that revolves around employees. Full-time and part-time employees are given stock options that increase the longer they are employed. Their Publix career site is full of resources to help employees grow in their career. A huge inspiration for this is the fact that President and CEO Todd Jones began his Publix journey as a part-time bagger. The result? Among full-time employees, Publix has a less than 5 percent voluntary turnover rate and is the largest employee-owned company in the world.

A great company culture doesn’t just happen. It can take some time, but with a dedicated vision and leadership, you can build a culture that makes employees feel valued, and excited to come to work and further your company’s mission.[/vc_column_text][/vc_column][/vc_row]


Employee Engagement Strategies for Your Small Business

Employee engagement is more important to your business then you may realize. A recent Virgin Pulse State of the Industry Survey has found that 88% of businesses planned to improve employee engagement throughout 2017. Why is that? Because not only is employee engagement an important area of focus for the overall happiness of your employees, but improved employee engagement can also vastly improve retention and increase the productivity of your workforce.

Businesses that remain highly engaged with their staff have seen a 41% reduction in absenteeism and a 17% increase in productivity, according to a State of the American Workplace Report.

Richard Branson, Founder and Chairman of Virgin Atlantic said it best, “Train people well enough so they can leave, treat them well enough so they don’t want to.”

Have you begun tapping into the potential that employee engagement has for your business? If not, it’s time to get started! Here are a few ideas that are easy to implement.

Encourage personal projects

Giving your employees the freedom to connect and bounce ideas off of each other can help in gaining new perspectives. This can be something you put in place for just 30 minutes or even an hour. Even that short amount of time could have a profoundly positive effect on projects and initiatives. It will also build upon your employees’ creativity. Supporting the flow of ideas and the projects of your employees will not only show that you care and improve morale; but it will also help your business’s bottom line.

Support charity & volunteer work

Help to give your employees a day or two out of the month to volunteer for a cause they support. Or the entire company could choose one cause to support. Either way, this will help in keeping employees engaged and build camaraderie, thereby improving corporate culture and your reputation as an employer. Volunteer Match can help you get started.  This site matches individuals and businesses with non-profits that need volunteers.

Supply the right resources

Make sure that you are equipping your employees with the tools and systems they need to not just do their jobs, but to make it as easy as possible for them to complete their tasks. Having the right tools will help the members of your team to invest their energy into doing the best work they can. What is the best way to get started? All you need to do is ask your employees what they may need to get the job done! But, make sure that you have the basics covered before you move on to other, more abstract, ideas.

Go beyond the employee survey

The best way to know how to improve the work place environment is to get feedback directly from your employees. A simple way to collect this feedback is through mobile employee engagement surveys.  These tools can make recording feedback much easier for both you and the employee. They also create a more interactive experience by allowing you to attach media elements such as photos, videos and surveys. Check out this list of apps that can help you to drive employee engagement.

Now what are you waiting for? See if you can implement at least one of these strategies.  The results will not disappoint you!

Want to take your employee engagement a step further? Check out 5 Perks and Benefits Today’s Employees Really Want.”


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