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Posts Tagged ‘small business success’


Are You a Micromanager?

June 21st, 2011 ::

By Karen Axelton

Is micromanagement hurting your business? If you or another supervisor at your company is a micromanager, it could be causing more problems than you know. In a recent survey by FINS, 68 percent of employees said they’d turn down a dream job if their boss would second-guess everything they did.

Micromanagement affects the majority of the workplace. According to another survey cited by FINS, nearly 80 percent of people have been micromanaged at some point in their careers. Of those, 85 percent said micromanagement damaged their morale, nearly three-fourths said it hurt job performance and more than one-third had changed jobs to escape it.

Small business owners frequently micromanage because they feel that the business is their “baby” and no one can do things as well as they can. This attitude keeps your employees from developing their skills—which ultimately hurts your business. If employees feel you don’t trust them, they’ll become resentful and stop trying. Then, you’ll have even more burden on you, and your business won’t grow.

What can you do to nip micromanagement in the bud—whether it’s coming from you or another manager at your company? The first step is recognizing that a problem exists. That’s fairly easy if the problem is coming from someone else—but if you’re the micromanager, you may not realize it.

One way to learn how you’re really doing is to encourage an honest relationship with employees. You can institute 360 degree performance reviews, in which you get reviewed by everyone who reports to you. Or maybe you can ask a partner or key employee in the business you trust to give you some honest feedback. (Personally, one of the best things anyone ever did for me was the time one of my direct reports confessed my micromanaging was driving her crazy.)

Once you’ve identified the problem, the next step is determining how to handle it. Micromanagement often stems from a desire for information, says one expert cited by FINS. To help eliminate micromanagement, sit down with your employees to discuss what kind of information you need from them. Figure out a system in which they can provide you with the information so you don’t need to bug them about it.

Gaining information can be something as simple as holding weekly status meetings or having employees check items off a chart when a task is completed. A complex business with multiple deadlines may want to implement project management software such as Basecamp or Zoho. Using these tools, employees can update project status as they complete tasks. The micromanager can log in and get all the information he or she needs, without being a pest.

Of course, sometimes you have to recognize that you’re simply asking for too much information. This is where you and your team need to have an honest discussion. What aspects can you leave out of the equation? Find a middle ground that won’t drive your team crazy, but will still leave you feeling confident that nothing is falling through the cracks.

The more you let go and trust your team, the more they will grow and the faster your business will grow.

Image by Flickr user Okko Pyykko (Creative Commons)

Employee Health and Wellness Become a Bigger Priority for Companies

May 30th, 2011 ::

By Rieva Lesonsky

Does your small business have a strategy for promoting employee wellness? Whether it’s offering health insurance, promoting health and wellness through your policies, or offering financial assistance to employees for things like health club memberships, a strategy to encourage a healthy workforce is an idea that more companies are embracing.

In a recent study by Towers Watson reported in CFO Zone, three out of four global companies said workforce health will be a higher priority this year and next, and 87 percent said it will be a higher priority in the next two to four years. While currently 32 percent of survey respondents had a global workforce health strategy, 47 percent plan to implement one in the next two years.

As “global” might imply, these are huge multinational corporations we’re talking about—making it easier for them to promote health care and wellness than it typically is for small business. But it’s no less important for you—especially if you’re competing for employees with bigger firms that will offer these benefits.

Companies had a range of reasons for implementing these new programs, which interestingly enough, varied by region. The majority of companies based in Europe, the Middle East and Africa (EMEA) cited employee well-being and stress management as key motivators. The majority of those based in Asia cited “providing competitive rewards” as their reason. And the majority of North American companies wanted to implement the policies to control costs.

Controlling costs may not be as noble a rationale as the other two, but it’s an unavoidable factor. Not only can healthy employees cut health insurance and health care costs, but a healthy workforce also suffers less absenteeism and injury and is more productive.

All of these are good reasons to encourage employee health and wellness, whatever means you choose to do so.

Image by Flickr user Rance Costa (Creative Commons)

Do You Know the Six C’s of Credit?

May 26th, 2011 ::

By Maria Valdez Haubrich

Are you trying to get a loan or line of credit for your small business? Then you need to know what bankers are thinking when they consider your application. One key to success in obtaining the financing you need is to understand the “six C’s of credit.” Here’s a closer look:

1. Character: Bankers will consider your personal character, which includes both your personal and business credit history. Character depends a great deal on other people’s impressions of you, including your trustworthiness and integrity. The banker will consider your references (are they, themselves, of good character?) as well as your experience in the business and/or industry. Last, but not least, what kind of impression do you make on the banker?

2. Capacity: Does your business have the ability to repay the money you are borrowing? Bankers don’t want to lend you money if it won’t have a positive result on your company; nor do they want to throw good money after bad with a loan that will just maintain the status quo. They want to see growth as a result of their investment so that they can get their loan back with interest. How soon will your business show a profit as a result of the changes you plan to make with the loan proceeds? Will the profit be sustainable and how big will it be? These are among the biggest questions bankers want answered.

3. Capital: How much capital do you and your business already have? The saying “it takes money to make money” applies here. Bankers will want to see that you have personally invested in your business and are willing to invest more. If you aren’t willing to put money into the business, why should they be? They also want to see that your equity in the business is growing.

 

4. Collateral: Collateral is extremely important in getting a small business loan. The bank will want to see that, in case the profits you project from the business don’t pan out, you have a “backup plan” for how they will get repaid. This can include a secondary source of repayment; a guarantee from a third party; or assets owned by you or your business. Intangible assets like goodwill or expertise don’t count; banks want to see tangible assets such as equipment, property, inventory or accounts receivable that could be sold to pay off the loan if necessary.

5. Conditions: This refers to the loan terms, including how much you are requesting, the length of the loan and the purpose you intend to use the money for. Conditions also encompass the current economic state of your industry and your region. For instance, if you own a restaurant and the restaurant industry as a whole is struggling, you will have to work extra hard to show why your particular restaurant won’t be affected by the conditions that are affecting other eateries.

6. Cash Flow: Last, but not least, bankers will want to know how the loan or line of credit will affect your business’s cash flow. How will you use the money from the loan? Have a detailed plan for what you will do and how it will help your business grow. The point is, bankers want to see that you have adequate cash flow to repay your loan.

Getting bank financing is still not easy in today’s economy—but if you have the six C’s of credit under control, you’ll greatly improve your chances of success.

Image by Flickr user Beast of Traal (Creative Commons)

Do Your Employees Need a Dose of Criticism?

May 25th, 2011 ::

By Rieva Lesonsky

Employee feedback is a hot buzzword these days—a plethora of studies show that workers, especially younger ones, crave constant input from the boss about how they’re doing. But are you providing the right kind of feedback? Recent academic research reported in Strategy+Business offers some thought-provoking insights into what really works to motivate employees—and what doesn’t.

Researchers sought to measure the effects of three kinds of feedback: Positive feedback, indirect negative feedback (i.e., comments that were vague and unclear as to what and how employees needed to improve) and direct negative feedback (comments that clearly explained the problem with employees’ performance).

The researchers tested all types of feedback on employees who performed rote data entry tasks. Employees were not told their exact rankings or that of their co-workers, but were told how they rated in relation to either the “bottom 10” or “top 10” in terms of productivity.

While overall, the study found that all types of feedback tend to result in improved performance when delivered on a regular basis, in the short term, different kinds of feedback got different—and surprising—results. Positive reviews didn’t have much effect on productivity. And vague negative reviews actually hurt performance, causing productivity to drop an average of 17 percent the next day.

But direct negative reviews made productivity surge. When workers first received direct negative feedback, their performance improved an average of 13.6 percent the next day. But when employees first received an indirect negative review, they faltered, dropping an in productivity the following day. The researchers concluded the people who were informed they were in the bottom 10 were motivated to improve by shame.

If you’re looking for quick results when giving an employee feedback, this study suggests it may be better to be brutally honest about poor performance—something that can be tough for many of us entrepreneurs to do.

However, in the long run, the researchers found that all forms of feedback helped boost performance. Compared with a control group that got no feedback, the positive group’s productivity rose approximately 20 percent and the negative group’s productivity rose by approximately 30 percent.

The bottom line, according to the researchers: “Managers should consistently tell their employees where they stand: Whether presented in positive or negative terms, feedback tends to improve performance over time.”

You can read the full study here.

Image by Flickr user Zaldylmg (Creative Commons)

Small Biz Resource Tip: Survey Analytics

May 23rd, 2011 ::

Survey Analytics

A proper marketing plan should always include polling current and potential customers on what they’d like to see from your business. Whether it’s customer service improvements, new products or even better hours of operation, you need to hear it from the people that matter—the ones who spend the money. Survey Analytics allows you to survey unlimited resources and receive unlimited amounts of responses. The Web-based tool also analyzes findings and when you’re ready to take your surveys to the next level, it has a complete set of advanced tools for online research such as piping, extraction, sorting and randomization.

Is a Shared Workspace Right for Your Business?

May 23rd, 2011 ::

By Karen Axelton

Do you run a small business from home, but sometimes crave getting out of the house and still getting your work done? Maybe you’re ready to move out of the house, but not quite ready to spring for a full-on office. If either of these situations sounds familiar, it might be time to take a look at the concept of shared office space.

USA Today recently wrote about the growing trend, in which small business owners, freelancers or independent contractors rent space in communal settings. In most cases, these spaces have business necessities like Internet connections, copiers and conference rooms.

Shared office space concept has been around for awhile. Companies like Regus have long offered business suites that typically include reception, shared office equipment, office or workspace and meeting rooms. But the new breed of shared office space differs in being less formal than the traditional “executive suite” concept.

Being elbow-to-elbow with other people is often part of the appeal in today’s shared office spaces, which focus as much on sharing ideas and energy as physical desks. For this reason, many of today’s shared office space solutions focus on a particular industry. Some are high-tech; others might focus on creative pursuits like freelance writing or editing. USA Today reports high-tech spaces are taking off in cities including San Francisco Austin, Boston, Chicago and New York.

Shared spaces appeal to small business owners and independents who might otherwise lug their laptops to Starbucks, but have grown tired of the din of espresso makers and the challenge of finding an empty chair or outlet at often-crowded cafes that offer free Wi-Fi.

If you’re considering signing on for a shared space, here are some factors to consider:

  • Amenities. What is included at the space? Some may provide some type of reception as well as coffee and lounge areas.
  • Price. Many shared spaces operate on a membership basis where different monthly fees give you certain levels of access.
  • Availability. Will the amenities you need (say, a conference room for an important meeting) be open when you need them? How far ahead must you sign up?
  • Vibe. Spaces generally provide quiet space for individual work as well as social areas. Still, it’s crucial to visit in person and get a feel for the arrangement. A shared workspace that’s always a hive of activity may not work for someone who needs thinking space.
  • People. Are the other members a fit for you? A serious small business owner might not be happy in a shared space full of bohemian scriptwriters. Part of what you’re paying for is collaboration and connections, so look for kindred spirits who can inspire you and help your business grow.

Will shared workspaces continue to grow? Experts USA Today spoke to have various opinions, but with an increasingly mobile workforce, it seems safe to say this concept isn’t going anywhere.

Image by Flickr user Ollie Crafoord (Creative Commons)

Consumers Will Spend More for Good Customer Service—But Is Your Small Business Delivering?

May 20th, 2011 ::

By Rieva Lesonsky

There’s good and bad news for small businesses in the most recent American Express Global Customer Service Monitor survey. First, the good news: 70 percent of Americans say they would to spend more money–an average of 13 percent more–with companies that provide excellent customer service. That’s a big increase from last year, when 58 percent said they would spend an average of 9 percent more with companies that provide outstanding service.

Now, the bad news: Americans want better service, but they don’t think they’re getting it. Sixty percent say businesses haven’t improved their customer service, up from 55 percent last year. Of that 60 percent, 26 percent think companies are paying less attention to service, not more. Overall, 22 percent of Americans say companies take them for granted. And 78 percent say they have canceled a transaction or given up on a purchase because of receiving bad service.

For small businesses, though, there’s even more positive news in the survey: 81 percent of respondents say small businesses put more emphasis on good service than larger ones do. And 59 percent say they are willing to try a new brand or company if it means better customer service.

That means there’s opportunity for your business to fill the customer service gap. So just what do Americans consider to be good service? Well, it’s not automated voice response systems. Just 20 percent of respondents prefer that method of interacting with a business. Sixty-seven percent are fine with going through a company website. But if a problem arises, 90 percent say they want to deal with a live person on the phone. And 75 percent prefer dealing with live people on the phone even if there’s not a problem.

Customers don’t keep quiet about the service they experience from your business, either. Respondents said they tell an average of nine people about good customer service experiences, and an average of 16 people about each bad experience. With numbers like that, your customer service affects far more than just the individual customer—it can have wide-ranging effects on your business’s reputation.

How does your business measure up? Take time to think about how your customer service can improve—and then take steps to improve it. Your business’s continued success depends on it.

Image by Flickr user comedy_nose (Creative Commons)

Most Small Businesses Use Savings, Not Financing, to Grow

May 19th, 2011 ::

By Maria Valdez Haubrich

Many small business experts urge startup firm founders to use their personal savings to finance business startup, rather than trying to get financing from outside sources. This was good advice even before the Great Recession hit, and following this advice has become even smarter since then.

Most startup entrepreneurs are heeding that advice, a new study shows. Preliminary data from the 2010 Survey of Consumer Finances, a report by the Federal Reserve that’s scheduled to be released in full in 2012, show that more than 70 percent of U.S. small businesses use personal savings or assets as a main source of business funding, The Wall Street Journal reports.

But this doesn’t apply only to startups. As the businesses grow and become more established, one-third of their owners say they still use their personal savings to run, grow and expand the business. In comparison, a mere 5 percent said they use credit cards or business loans.

Perhaps it shouldn’t be surprising that small business owners are using their own money to run and grow companies, instead of trying to get loans or outside investment. During the depths of the recession, many entrepreneurs had their loans called in by banks—in some cases, even if they’d never missed a payment. And still others were turned down for expansion loans despite having orders in hand and proof of demand for their products or services.

Such behavior by banks seems to have convinced many small business owners they’re better off relying on no one but themselves financially. In fact, out of all the small businesses surveyed (for survey purposes, defined as companies with fewer than 500 employees), a whopping 80 percent say they have not even applied for a business loan in the last five years.

Surprisingly, however, the survey also shows that small business owners’ fears of being turned down by banks may be unfounded. Of those small businesses that applied for loans, only about 12 percent were denied. And almost every small business owner whose loan was approved got the full amount of financing he or she was seeking.

If you’ve let “fear of failure” hold you back from seeking a bank loan, maybe now is the time to make your move.

Image by Flickr user Jamie Welsh (Creative Commons)

Does Workplace Nagging Pay Off? This Study Says Yes

May 12th, 2011 ::

By Maria Valdez Haubrich

Are you one of those bosses who tells an employee to do something, then sends them an email reminder and follows up with a phone call a few days later? You may think you’re being a nag or wasting your time. But according to new research by Harvard Business School’s Tsedal B. Neeley and Northwestern University’s Paul M. Leonardi and Elizabeth M. Gerber, you’re actually being an effective manager.

BNET reports that the authors of How Managers Use Multiple Media: Discrepant Events, Power, and Timing in Redundant Communication found that “redundant communication” (that is, saying the same thing over and over in different ways) was highly effective in getting tasks completed smoothly and on time.

Interestingly, the researchers found the people most likely to use redundant communication were those who didn’t really have any authority over the people they were directing. For example, employees who are working in teams and put in charge of a short-term project, but have no hiring or firing authority over their fellow team members, were more likely to use redundant communication, especially in time-pressured situations.

People who did have real authority (such as, say, a business owner) were less likely to follow up (or nag). Instead, they just assumed projects would be done on time—then spent more time doing “damage control” when things didn’t turn out that way.

In the study, 21 percent of project managers with no direct power over their coworkers used redundant communication. Just 12 percent of managers with direct authority did so. The managers who used redundant communication got the projects moving faster and more smoothly.

Not only do successful managers send the same messages over and over, they use different media—that is, text message, IMs, face-to-face, email, etc.

These days, using multiple media makes a lot of sense. We’ve all experienced working with that person who “never checks voicemail” or doesn’t respond to email, but instantly replies to texts. And with so many of us overloaded with communications, it’s smart to hedge your bets by communicating as many ways as you can.

Read an abstract of the research paper here.

Image by Flickr user alanwordguy (Creative Commons)

How Are Small and Midsized Businesses Managing IT?

May 6th, 2011 ::

By Rieva Lesonsky

How does the way your small business handles its IT needs compare to what others are doing? A new study by Zoomerang Online Surveys and Polls, Cloud Computing and the Role of IT Professionals in Small- to Mid-Sized Businesses, sheds some light on the subject.

Of the businesses requiring IT support, 22 percent outsource their IT needs to vendors. Asked why they outsource IT functions, those respondents that do so cited cost-effectiveness (52 percent) and access to better resources (26 percent) as the top reasons for outsourcing.

As you might expect from small businesses trying to do more with less, IT workers within most companies in the survey also play other roles. Sixty-seven percent are involved in daily operations; 6 percent in sales and business development; and 6 percent are involved in customer support roles.  Just 21 percent focus solely on IT.

“More often than not, the IT role within a small or midsized business may be fulfilled by the most technology savvy employee, requiring them to juggle multiple responsibilities on top of keeping the company’s technology up and running,” said Alex Terry, General Manager of Zoomerang. “With limited resources, businesses are looking to every employee to contribute and as a result, the IT role is gradually shifting from one of support to one of support and revenue generation.”

Thirty percent of SMBs indicated that the role of their in-house IT staff has evolved in the past year to include day-to-day functions; 15 percent said in-house IT staff has become more involved in business development; and 11 percent said the in-house IT staff has become more involved in customer support.

Whether they use in-house IT expertise or outsource this function, the survey found good news about how small and midsized companies view their technology overall. The majority (58 percent) describe their technology systems as “good” (“not the latest, but everything runs smoothly and with minimal maintenance”). Thirty-two percent describe their technology as “intermediate” (“it has its good and bad moments”). Just 7 percent said their technology is “advanced” or ahead of the curve. And only 4 percent said it is “poor” enough so as to hinder operations.

Technology plays a more crucial role in business success than ever before. This survey shows that small businesses, by and large, are keeping pace with technology developments and using technology to run better businesses. Where does your business fit in?

Image Courtesy: Karen Axelton