Paid Time Off for Workers
Can Pay Off for Employers
Under pressure to balance work, family, and other
personal commitments, paid time off is among the benefits employees
value most. Given the choice between an extra week of vacation
time and an additional week's pay, more than half of American
workers would opt for more time away from their jobs, according
to a recent survey by CNNMoney.com.
Employers in the United States are generally under
no legal obligation to offer paid leave to workers. But, as
a business owner, you will likely find it difficult to attract
and retain skilled employees without providing paid vacation,
holidays, and sick days.
The most common practice among U.S. employers
is to provide employees with a minimum of 10 paid vacation days
after six to twelve months with the company and three weeks
after five years of service. Some companies also offer a fourth
and a fifth week of vacation after a decade or more. Because
many organizations use this seniority system, providing workers
with progressively more vacation time can act as an incentive
for long-serving employees to remain with the company. Extra
paid vacation days may also be offered as a performance-related
bonus.
As well as giving workers the rest they need to
recover from an illness, paid sick leave discourages employees
from coming to work when contagious and unproductive. Companies
typically offer between four and 10 days of sick leave a year,
sometimes more based on the seniority or rank of the employee.
To better manage the cost of providing an income to employees
when they are unable to work due to a serious illness or injury,
consider enrolling employees in a short-term and/or long-term
disability plan.
There are certain types of leave that most employers
are legally obligated to allow, though these may be unpaid.
Employers must, for example, permit workers to take time off
to vote, serve on a jury, and fulfill military training commitments.
Under the Family and Medical Leave Act (FMLA), organizations
with 50 or more employees are required to grant eligible employees
up to 12 weeks a year to recover from a serious illness, to
care for a sick family member, or to handle the birth or adoption
of a child. States and cities may also require employers to
provide workers with additional forms of unpaid leave.
Instead of allotting a certain number of days
for each type of paid leave, you may want to consider establishing
a "paid time off" (PTO) bank. Companies with a PTO policy combine
vacation, sick time, and other forms of leave other than paid
holidays into a single bank of days. Employees can use these
days at their own discretion, and they are not required to specify
whether they are taking vacation, a personal day, or sick leave.
Compared with traditional leave programs, PTO banks offer workers
greater flexibility and autonomy, making it less likely that
healthy employees will call in sick at short notice for personal
reasons or take advantage of unused sick leave. PTO banks are
also easier for employers to effectively manage and administer.
There are some potential disadvantages to moving
to a PTO bank, including the possibility that employees who
would not otherwise use all of their sick days will end up taking
more time off. Workers also tend to view their PTO allotment
as vacation time, and they may come to work sick to avoid using
their paid time off. On the other hand, the perception that
a company offers a large number of days that could be used for
vacation can give the organization a competitive advantage in
attracting qualified employees, especially young people who
appreciate having time for recreation but do not expect to get
sick.
In developing a paid time off benefit program,
you should attempt to balance both the needs of the business
and the interests of your staff. To minimize unscheduled absences
and avoid abuses of paid leave benefits, establish clear guidelines
on when, and under what conditions, employees are permitted
to take leave. On the other hand, you may find it necessary
to structure your program to encourage hardworking employees
to take time off to rest and recuperate.
If workers appear to be taking too much or too
little time off, examine the reasons why. Employees who are
shirking their responsibilities or who, conversely, feel they
cannot afford to take a vacation are often signs of a company
culture in need of an overhaul.
Growing Your
Business on a Small Marketing Budget
Marketing is a challenge when the amount of money
your business can afford to spend on advertising and public
relations is limited. But, with a bit of creativity, you may
find you do not need a big marketing budget to build your company’s
reputation and spread the word about your products and services.
Here are some ideas to help you kick-start your
marketing efforts without draining your cash reserves:
Identify your core customers.
Marketing dollars are often wasted through indiscriminate targeting.
Think about who is most likely to patronize your business and
what type of customer you wish to attract. By pinpointing the
group of people you are trying to reach, you may be able to
rule out more expensive forms of marketing, such as advertising
in mass media outlets or large-scale direct mail campaigns.
Concentrate on the classifieds.
A small display ad or a few lines offering your services in
the classifieds section of a newspaper or trade publication
can bring in more business than you might expect. In addition
to posting a phone number, refer potential customers to your
website for more information about your company.
Network, network, network.
If your customers are based locally, seek them out by attending
community meetings and events where you are likely to run into
them. Chamber of Commerce and Rotary Club events are good places
to meet members of the local business community, but you may
also be able to make valuable contacts at softball games, holiday
parties, or school fundraisers. Always have your business cards
with you, and don’t be embarrassed about distributing
them to anyone who might be a potential customer.
Keep the customer satisfied.
All business owners know how important it is to provide efficient
and friendly service to customers. But there are many additional
ways you can make customers feel special and encourage them
to come back. For example, you may want to offer an unexpected
discount or bonus item to a client who places a large order.
To improve the chances that a good customer will return, send
a thank you note with a personalized offer of a discount on
future business.
Ask for customer referrals.
When clients compliment your company’s products or services,
ask them to tell their friends about you. If you explain that
you are in the process of growing your business and greatly
appreciate their patronage, many customers will be happy to
recommend your business to others. Consider offering incentives
to existing customers for providing the names and contact details
of people who may be interested in doing business with you in
the future.
Be your own PR agency.
You don’t need to hire a professional to establish relationships
with media outlets that could be useful in publicizing your
business. Start by sending e-mails to reporters and editors
at local newspapers and trade journals covering your industry.
Include information about yourself and your company, and offer
to make yourself available for interviews as an expert in your
field. You may also want to suggest ideas for guest editorials.
Make the most of trade shows.
You may not be able to afford a large booth at trade shows --
or any booth at all. But even if you are not among the exhibitors,
trade shows can provide valuable opportunities for forging and
improving relationships with clients and business partners.
Arrange as many meetings as you can in advance and make a list
of people you intend to track down once you arrive.
Use the Internet to expand your market.
Most businesses now have web addresses, but the quality of websites
varies greatly. If you can’t afford to hire professional
web designers, consider bartering your products or services
in exchange for help with your website. Step up your networking
by writing a blog or participating in online communities relevant
to your industry.
Try something new.
Your marketing strategy should evolve as your company grows.
Just because a particular marketing tactic has worked well in
the past does not mean it will always be the best way to bring
in business. Paying attention to customer feedback and changing
market conditions can help you develop fresh ideas for building
relationships with new and existing customers.
Checking the
Credit Scores of Job Seekers
Bringing the right employees on board can make
or break your business. While most of the people you are likely
to hire are honest and motivated to do a good job, some employees
lack the proper work ethic and may even steal from the company
or disclose sensitive information to competitors.
Because of the legal, financial, and security
risks you run as a business owner when you hire employees, it
is essential to screen job candidates to ensure that their reported
professional experience and personal details are accurate. In
addition to checking the references the candidate provides,
you may want to conduct searches that tell you more about the
applicant’s background, including investigations of the
candidate’s criminal and credit histories.
Why is it useful to look into a job candidate’s
personal finances? A history of bad credit may be a sign of
irresponsibility and could be a negative indicator of the candidate’s
future job performance. In addition, the employer could be faced
with a negligent hiring claim if it is subsequently shown that
the company failed to conduct proper background checks on an
employee who committed acts resulting in harm to others. Finally,
depending on the position, an employee who is under financial
pressure could also pose a security risk, becoming subject to
bribery or vulnerable to offers from competitors attempting
to buy confidential information.
Many employers use outside consumer reporting
agencies to conduct background checks on job candidates or existing
employees being considered for reassignment or termination.
Before ordering the credit report of a job applicant or current
employee from a consumer reporting agency, you should take steps
to comply with federal laws. Under the Fair Credit Reporting
Act (FCRA), the employer must obtain written authorization from
the job seeker or employee before requesting information on
the individual’s credit history from a consumer reporting
agency.
While the FCRA does not require employers to obtain
written authorization from job candidates to conduct background
investigations in-house, it is seldom practical to gather financial
information on a candidate without ordering reports from one
of the three nationwide consumer credit reporting companies:
Equifax, Experian, and TransUnion. These reports may be obtained
by contacting these credit bureaus directly or by using a consumer
reporting agency that performs background investigations that
include credit checks.
If information contained in a third-party agency’s
report results in a decision not to hire or reassign the applicant,
employers are required under the FCRA to alert the individual
in the form of an adverse action notice. The notice must include
the name, address, and phone number of the consumer reporting
agency that supplied the report, a statement that the agency
is not responsible for the decision and cannot give specific
reasons for it, and a notice of the individual’s right
to dispute the accuracy or completeness of any information the
agency furnished.
While a credit report can be a useful tool in
determining whether a job applicant is suitable for employment,
it should seldom be used as the deciding factor when hiring.
A 2003 study conducted by organizational psychologists Jerry
Palmer and Laura Koppes of Eastern Kentucky University showed
that credit checks are not a valid predictor of employee job
performance or turnover. In fact, the study found that employees
with a greater number of 30-day late payments on their credit
records received, on average, higher performance ratings than
workers who paid their bills on time.
In some cases, refusing to hire a job seeker because
a background check revealed a history of credit problems could
even result in legal action against the employer. A candidate
who is turned down for a position because of bad credit may
file a lawsuit against the prospective employer on the grounds
that creditworthiness is irrelevant to the duties of the position.
Given these potential pitfalls, you may want to use credit checks
as a hiring criterion only when there is a clear and compelling
reason for doing so.
If a credit report on a job seeker reveals problems,
it makes sense to discuss the findings with the applicant before
reaching an employment decision. You may find that the candidate
has experienced personal setbacks, such as divorce or sickness,
and is in the process of recovering financially. Keep in mind,
too, that some people with low credit scores may be bad at managing
money, but nonetheless great at their jobs.
Cafeteria Plans
Provide Tax Savings and Flexibility
Section 125 "cafeteria plans" can help
business owners and employees lower their tax bills. Under Section
125 of the Internal Revenue Code, workers are permitted to withhold
a portion of their pre-tax salaries to pay for premium contributions
to employer-sponsored insurance plans and to cover qualifying
unreimbursed medical and dependent care expenses. Because Section
125 benefits are not subject to FICA or income taxes, cafeteria
plans can help employees lower their taxable income, while reducing
the payroll and workers’ compensation tax liabilities
of their employers.
What’s on the
Menu?
As the name suggests, employees
who participate in a cafeteria plan are invited to choose from
a menu of employer-sponsored benefits. In some cases, both the
employer and the participating employees share in benefit costs.
The company’s contribution may consist of an annual benefits
allowance that employees can use to pay for benefits or take
as salary. This system provides flexibility for workers, while
helping employers gain greater control over their benefits expenditures.
The most basic cafeteria plan feature is the premium
only plan (POP). Also known as premium conversion plans, POPs
allow employees to withhold part of their pre-tax salary to
fund their premium contributions to employer-sponsored insurance
plans, including medical, dental, disability, accident, and
group term life insurance. A POP is easy to set up and administer,
and it does not require the employer to offer any new benefits.
Flexible Spending Accounts
A cafeteria plan may also
include a flexible spending account (FSA), which provides employees
with the opportunity to pay for dependent care and/or unreimbursed
medical expenses using pre-tax dollars.
To take advantage of the FSA option, an employee
must estimate before the start of each tax year how much he
or she will spend on medical or dependent care expenses, and
commit to having a set amount withheld from each pay period
to help cover these expenses. The agreed-upon sum is deducted
from the employee’s paycheck before taxation and deposited
in the individual’s FSA. Employees pay for qualifying
expenses out of pocket and then submit a claim to the plan administrator
for reimbursement.
Unless an unanticipated change in family status
occurs, employees are not permitted to change or cancel a Section
125 agreement during the tax year.
While nearly all taxpayers incur some health care
costs not covered by insurance, most find that their unreimbursed
medical expenses do not exceed the 7.5% of adjusted income floor
that would allow them to qualify for a federal income tax deduction.
But, by contributing to a medical FSA, employees get a tax break
on these miscellaneous health care and dental expenses, which
may include deductibles and co-payments, prescriptions, over-the-counter
drugs, and orthodontia. The maximum amount that may be contributed
to a medical FSA is $5,000 a year.
The dependent care FSA allows employees who pay
for childcare or eldercare services to save money up-front,
rather than waiting to claim a deduction or credit on their
tax returns. Heads of household and married couples are permitted
to withhold up to $5,000 annually of their pre-tax earnings
to pay for dependent care services that enable them to work,
look for work, or attend school full time.
Qualified dependent care expenses generally include
care for a child under the age of 13, as well as in-home or
daycare services for a spouse or adult dependent incapable of
self-care. Individual employees should, however, calculate whether
they and their families would save more by paying for dependent
care expenses through an FSA or by claiming the child and dependent
care tax credit.
The biggest drawback associated with FSAs is the
"use-it-or-lose-it" deadline imposed by the IRS. This
rule stipulates that employees forfeit any funds left in their
individual FSAs at the end of the year. The remaining balance
is retained by the employer to offset administrative costs and
to help pay for future benefits. This rule was modified in 2005
to permit cafeteria plan sponsors to extend the deadline for
using the funds for up to 2½ months after the end of
the year. There is also a grace period of 90 to 120 days during
which employees may submit claims for expenses incurred during
the coverage period.
Most business owners find that Section 125 cafeteria
plans are simple to set up and administer. Because cafeteria
plans encourage workers to take an active role in managing their
benefits, companies can use these plans to increase awareness
among workers of the value of their employer-provided benefits.
Bringing Democracy
to the Workplace
When recruiting workers, employers strive to hire
people who demonstrate not just the skills needed to do a job,
but also poise, maturity, and a solid work ethic. Individual
candidates may have specialized knowledge and abilities of significant
value to employers. Yet, having hired qualified and capable
employees, companies organized as command-and-control hierarchies
may disempower, or even ignore, some of their most talented
people. In these businesses, the degree to which individual
workers are included in the broader decision-making process
is usually based on rank, rather than the potential value of
their contributions.
Flattening Hierarchies
While management theorists
have long advocated that employers flatten hierarchies and encourage
employee participation in decision making, many companies remain
stuck in the authoritarian paradigm. In this command-and-control
model, workers are expected to follow the orders of their superiors
and comply with an often lengthy and complex set of policies
and procedures. When lower-ranking employees challenge the decisions
of their supervisors or managers, they run the risk of being
accused of insubordination.
This top-down approach may be reasonably effective
when goals and the methods for achieving those goals are clearly
defined. But when workers are expected to apply their own knowledge
and creativity to a task, inflexible rules and chains of command
can be counterproductive.
Imagine, for example, that an employee working
on a project discovers she needs some materials not kept in
stock. Company rules may require her to obtain permission from
one or more managers before ordering the supplies. In larger
organizations, she may even have to fill out forms detailing
her need for the supplies and then await a decision from a manager
she will never meet.
While employers may believe these chains of command
are effective in controlling costs, demanding that employees
"go through the proper channels" to get the tools
or materials they need to do their jobs can hamper productivity.
In addition to feeling that their time has been wasted, the
perception that they are dealing with seemingly pointless layers
of bureaucracy may cause employees to lose enthusiasm for their
work.
Empowering Employees
Business owners may recognize
the theoretical benefits of allowing workers who have demonstrated
competence and responsibility to take charge of their own work
and become involved in decision making. Employers may, however,
balk at the concept of organizational or workplace "democracy,"
imagining it places management at the mercy of the whims of
the workers. But democracy is not a zero-sum transfer of power.
Compared with autocratic systems, democracy represents a decentralization
of power in which individuals are accorded not only certain
rights, but also a greater degree of responsibility and accountability.
Suppose the worker mentioned in the example above
was permitted to order her own materials as she deemed necessary.
If she has no knowledge of the company’s financial position,
she will have little incentive to consider carefully whether
the materials are truly vital to the completion of the project.
If, on the other hand, she believes she has a stake in the success
of the business, she will make her decision as a manager or
owner would, weighing budgetary constraints against her desire
for the materials. In short, workplace democracy encourages
employees to consider the best interests of the company, rather
than their own short-term gain.
There are many ways to create a more democratic
environment in the workplace. Even privately held companies
can share financial details with employees and encourage discussion
about ways to reduce waste and increase revenues. Employees
may also be asked to rate the performances of their managers,
other employees, or job candidates. If a specific problem arises
in the business, managers can request input from workers who
may have knowledge relevant to resolving the issue.
Democracy in the workplace
does not eliminate the need for effective leaders. Business
owners can demonstrate their leadership not by micromanaging
their employees, but by choosing the right people and giving
them the tools and the freedom they need to do their jobs well
and to fully participate in building a successful enterprise.
Podcasting
Your Way to New Business
In a crowded marketplace, getting your message
out to potential customers can be a time-consuming and expensive
process. But, by taking advantage of new technologies, you can
reach a large, yet targeted audience without making endless
sales calls or spending a ton of money on marketing and advertising.
With the number of Americans using mp3 players and web-enabled
cell phones growing at a strong pace, communicating with prospects
via podcasting and other online tools is rapidly becoming the
next marketing frontier.
What Are Podcasts?
Podcasts -- a term coined
by combining the brand name of Apple’s mp3 player and
the word "broadcast" -- are simply pre-recorded audio
files delivered via RSS (Really Simple Syndication) to computers
and mobile devices. While podcasting is often compared to radio
broadcasting, podcasts are digital files that are created and
stored online, often for several years.
Users interested in listening to a particular
podcast download the file to an "aggregator" website,
such as My Yahoo, iTunes, or Juice. When listeners subscribe
to a particular RSS "feed," each new program the podcaster
produces is automatically sent to the subscriber. Users can
listen to podcasts at their convenience on their desktop computers
or download the files to their mp3 players, cell phones, or
other portable computers.
Best of all for a small business with a limited
marketing budget, an audio podcast can cost next to nothing
to produce. With just a basic computer microphone and podcasting
software that can be downloaded for free from several sources,
you can create a podcast on almost any computer, recording and
editing it yourself. If you have some money to spend and are
looking for a more polished approach, you can also hire an advertising
or marketing agency that specializes in producing podcasts for
commercial purposes.
While podcasting is still a relatively new technology,
many businesses are already producing podcasts that deliver
news and information about products or industry trends. Podcasters
employ a variety of formats to convey their marketing messages,
but they often emulate familiar radio formats, such as talk
shows or news and commentary programs. Podcasts also come in
the form of tutorials or educational programs. You could, for
example, think about the types of questions posed by your customers
and answer them in a series of chatty but informative programs.
If you plan to produce a series of podcasts, the content should
follow a consistent theme and schedule so that listeners know
when they will receive your program and what to expect when
they download it.
Where Can I Post Podcasts?
The most obvious place to
start when posting podcasts is your own website. When new or
existing customers visit your website looking for information
about your products or your company, a podcast can supplement
the written content and graphics, allowing you to deliver your
message more directly and at greater length. You can also make
your podcasts available through search engines or post them
on specialized podcast hosting websites.
Visitors who come to these directories looking
for information relating to your products or industry may come
across your podcast while searching or browsing. If they like
what they hear, you will have a new subscriber and, possibly,
a new customer. Listeners who are particularly impressed by
your podcasts may even pass them on to others.
The web users currently
downloading podcasts tend to be younger and more technologically
savvy than the average consumer, but these demographics are
set to expand, especially as more Internet-enabled cell phones
come on the market and more new cars come equipped with mp3
jacks and multimedia players. Rather than turning on the radio
and hoping to hear something they like, audiences will create
their own listening experience with the programs they have selected.
By producing compelling content aimed at people who are interested
in your products, your podcasts could end up on the personal
playlists of both loyal and potential customers.
Greater Mobility
through Wireless Networks
Tired of tripping over tangled cables? You can
free yourself and your cubicle-bound employees from their desktop
computers by installing a wireless network in your offices.
Wireless local area networks (WLAN) can enhance productivity,
while offering greater scalability and flexibility than traditional
wired local area networks (LANs).
Like cell phones, WLANs transmit data over radio
waves without the use of cables or wires. Employees equipped
with notebook or handheld computers have the freedom to move
around the office while remaining connected to the network.
A wireless network also allows multiple users to share printers
and other computer peripherals, such as scanners and fax machines.
Technology Requirements
The basic equipment needed
to set up a WLAN are one or more access points and network interface
cards or USB adapters for each device connected to the WLAN
that does not have built-in wireless hardware. An access point
that transmits a signal to the surrounding area is connected
to broadband service or another wired Internet connection. Larger
offices may require several access points or additional devices
known as range extenders to provide full coverage. An access
point may be built into a WLAN router device, which allows users
to share an Internet connection and provides a layer of firewall
security.
When weighing your wireless networking options,
your main considerations will be speed, range, and security.
A WLAN won’t be effective unless it is fast enough to
transfer information quickly, has a strong signal that reaches
users throughout the business premises, and is protected from
hackers and unauthorized users.
There are a number of different wireless technologies
to choose from, including 802.11a, 802.11b, and 802.11g. Developed
by the Institute of Electrical and Electronics Engineers, Inc.
(IEEE), this series of standards was created to ensure compatibility
between products sold by different vendors. Each protocol operates
at a different frequency, and ranges and transmission speeds
vary. The slowest, but also least expensive, of these options
is 802.11b, which operates on a 2.4 GHz radio band and has data
transmission rates of up to 11 Mbps.
If your business uses high-bandwidth applications,
such as Voice over Internet Protocol (VoIP), you may prefer
the 802.11a standard with its 5 GHz range and data transmission
rates of up to 54 Mbps. While the 802.11a technology offers
greater speed and less interference than the 802.11b standard,
an 802.11a signal covers a far smaller area and is less able
to penetrate brick walls and other obstructions.
Operating on the 2.4 GHz frequency and with a
maximum data transmission rate of 54 Mbps, the 802.11g standard
combines elements of the 802.11b and 802.11a protocols to provide
a high-speed wireless network that covers a wide area. But 802.11g,
like 802.11b, operates on the unregulated 2.4 GHz frequency
and is prone to interference from appliances that also use this
frequency, such as microwave ovens, Bluetooth devices, and cordless
phones.
Currently under development, the 801.11n standard
is designed to operate on both the 2.4 GHz and 5 GHz frequencies;
it promises data rates exceeding 200 Mbps. Products that use
this new standard are in the testing phase, but they should
soon become available.
Security Considerations
Because wireless signals
can be intercepted, concerns have been raised about security
when sending sensitive information over WLANs. The Wi-Fi Protected
Access (WPA) encryption standard used by the 802.11g protocol
offers a degree of protection, while businesses requiring a
higher level of security can shield their data using password-protected
virtual private networks (VPNs). Like all networks, WLANs require
proper firewall protections and software to ward off viruses,
spam, and spyware.
Wired networks continue to offer certain advantages
over WLANs, including greater reliability and better performance.
The equipment needed to set up a wired LAN is also currently
less expensive than wireless devices, although WLANs are often
less labor-intensive to install.
There are many other factors to consider when
deciding whether a wireless network would work for your business,
including the size and the design of the area you wish to cover.
But if greater mobility would significantly improve the productivity
of your workforce, it may be time to cut the cables and go wireless.
Building and
Motivating a Sales Team
The success or failure of a business venture depends
to a large extent upon the quality of its sales force. Without
the right team of sales professionals to pitch your products
and line up new customers, your company’s growth will
likely stall. Yet recruiting experienced salespeople with strong
track records can be difficult for smaller businesses or start-up
companies lacking the financial resources of their larger, more
established competitors. There are, however, plenty of ways
for your business to develop its sales function without breaking
the bank or taking on too much risk.
Recruitment Options
Companies have three main
options when building a sales force: recruiting top producers
who can hit the ground running, hiring less experienced staff
who require training, or outsourcing sales to a staffing firm.
Luring successful salespeople away from your direct
competitors may, at first glance, appear to be the shortest
route to increasing sale volumes. These sales professionals
know the market, are familiar with the types of products and
services your company is selling, and may have useful customer
contacts.
Sought-after salespeople will, however, demand
large commissions, and they are unlikely to remain loyal to
your organization for long. While it may seem sensible to recruit
professionals with substantial experience, keep in mind that
a salesperson who has not been trained by your company may lack
important knowledge about your particular line of products and
services.
Hiring a salesperson with little or no experience
presents certain risks but may prove to be a sound investment
in the long run. It seldom makes sense to take on a young person
with no job experience, but a candidate who has spent a few
years in the workplace and is eager for a new challenge could
be the right fit for your organization.
You should, however, allow enough time for a new
salesperson to learn about your company’s operations,
product lines, and customer base, as well as your approach to
doing business. In addition to providing on-the-job training,
consider sending your new recruit to seminars that offer instruction
in specific sales techniques. It may be unrealistic to expect
a new hire to start closing sales until training is complete.
A further option is to contract with an outsourcing
firm to sell your company’s products. Outsourcing companies
usually charge large premiums for access to their established
sales forces, but they offer greater flexibility and the opportunity
to reach a wider range of customers than a small in-house sales
team could. Outsourcing can be particularly attractive if you
are planning a very rapid expansion of your business or looking
to move into geographically distant markets. Some outsourcing
firms may be willing to negotiate a largely commission-based
arrangement that can make the up-front cost of outsourcing more
manageable. Many sales staffing firms also offer a trial period
that will give you time to explore whether outsourcing meets
your company’s needs.
Compensation Options
If you decide to employ
in-house sales representatives, it is essential to motivate
your staff using attractive compensation packages and performance
benchmarks that are both challenging and fair. Rather than setting
arbitrary sales targets across your organization, consider sitting
down with each salesperson to discuss what sales volume he or
she believes is achievable. A sales professional is likely to
feel more committed to accomplishing a goal he or she has chosen
personally, even if the agreed-upon target is the same -- or
even higher -- than the one you would have set yourself.
A compensation plan for sales staff typically
includes a base salary large enough to satisfy basic needs,
commissions tied to performance and sales volumes, and bonuses
to reward specific behaviors or achievements. In addition, you
may want to establish guidelines for the number of prospecting
calls, sales visits, or presentations you expect each representative
make in a given time period.
It is advisable, however, to remain flexible when
it comes to compensating sales representatives. There is no
set formula for motivating salespeople; different arrangements
will work better for different individuals. Over time, you will
discover what types of incentives are most effective within
your organization.
Keys to Creating
a Sticky Website
Driving traffic to your company’s website
is a challenge, but converting visitors into customers is even
more difficult to achieve. Very few businesses with an online
presence are unique; most peddle goods and services that are
similar or identical to those offered by competitors. To capture
the attention of potential customers in the increasingly crowded
World Wide Web, a creative approach to marketing is essential.
Effective website design is a core element of any online marketing
strategy, especially for companies engaged in e-commerce. Whether
visitors opt to stay or to go depends to a large extent on whether
your site is designed to be "sticky."
Design with the
User in Mind
Sticky website design does
not necessarily involve flashy graphics. Using attention-grabbing
graphics makes sense in sidebar advertising, but it may be counterproductive
if used on your own site. While animation and bright colors
undoubtedly draw the eye, images that move or flash can also
be distracting and time-consuming to download. When a visitor
comes to your website, he or she is already "hooked;"
the goal is to turn the visitor into a customer. The graphics
on your homepage should reinforce your company’s market
profile and lure the customer with images of the products or
services your firm is selling. Avoid cluttering pages with large
amounts of text or too many pictures, as this may confuse or
overwhelm the visitor.
Making the website easy to navigate will prevent
visitors from becoming frustrated while browsing. Websites are
not all laid out in the same way, but certain commonly used
design elements will be familiar to visitors. Typically, a list
of the page options most likely to interest visitors is posted
toward the top of the home page, either horizontally or on the
upper left side. A site map will help visitors get to the desired
section in as few clicks as possible. To keep visitors from
getting lost in the site, provide links between pages with related
content and a "Return to Home" link on all pages.
An "About Us" section should be featured
prominently on the site. New customers may not be willing to
invest time browsing through an unfamiliar website until they
have checked out basic information about the company, such as
location, contact details, and management profiles. This section
also provides an opportunity to pitch your organization to the
visitor, explaining in a few short sentences how your firm differs
from competitors.
Stay Fresh and Informative
Updating your content and
pictures is especially important if you rely on repeat business.
Having recent news items and new product announcements on your
home page will make your website appear fresh and relevant.
If your firm caters to a clientele with specific interests,
consider adding pages with informational articles, general advice
or tips, and links to sites related to your business activities.
If appropriate, include interactive features, such as a calculator
or a discussion forum. You may also want to encourage visitors
to sign up for e-mail newsletters or special offer alerts.
If your website sells products, include an "About
Our Products" section with information likely to be of
interest to the customer, such as details of how the items are
made, where the materials are sourced, and the quality controls
used in the manufacturing process. Again, this section provides
an opportunity to differentiate your company’s products
from similar items offered by competitors.
Make Buying Easy
There is, however, one part
of your website that should be anything but sticky: the e-commerce
function. The goal is to make it as easy as possible for prospective
customers to select the items they wish to buy, proceed to the
checkout, and complete their transactions. It is helpful to
add a "Frequently Asked Questions" page to this section
to answer questions regarding shipping charges and delivery
policies. If you have not updated this section recently, look
into whether the purchasing process is as streamlined and intuitive
as current technology allows.
Review your company’s
website regularly to ensure that each page effectively communicates
the firm’s core marketing messages and does not include
any outdated information. Inexpensive software programs that
analyze web traffic patterns can be useful in identifying design
flaws that should be corrected or popular features that may
be expanded. A seamless website, attractive to the eye and rich
in the right kind of content, will encourage visitors to stick
around.
Building the
Value of Your Business
Caught up in the day-to-day issues involved in
running your business, you may not be thinking about how much
your company could, ultimately, be worth when the time for a
transition arrives. But the choices you make now, both large
and small, can add to or detract from the future value of the
company. While changing market conditions will demand flexibility,
your exit plans should inform your current growth strategy.
There are many ways for a company to grow, including
entering new markets, developing new products, acquiring complementary
businesses, hiring more employees, and increasing sales and
marketing expenditures. An owner may attempt to grow the business
rapidly by tapping into outside financing or to expand organically
using the company’s own revenues. With so many strategies
to consider, you should develop a long-term plan to guide your
business as it grows.
Your decision regarding the ultimate disposition
of the company will influence what business form you choose.
It may, for example, make sense to opt for a C corporation structure
for a business that may go public or an S corporation form if
a private sale is planned.
Transferable Assets
Work on building and maintaining
transferable assets. These may include not only property and
equipment, but also intangibles, such as a customer base, a
solid reputation, brand recognition, and business processes.
Depending on the type of business you operate, your firm’s
intangible assets could prove to have substantial value at the
time of transition. Distinct intangible assets include copyrights
or trademarks, proprietary lists of customers or prospects,
and long-term contracts. The value of the business in excess
of the owner’s equity is known as goodwill; this may include
assets such as an attractive location or customer awareness.
Companies also derive intangible benefits from
having a strong management team with the knowledge and connections
required to maintain the business after the owner retires. In
many cases, having a skilled and loyal workforce can also be
considered a transferable asset in a sale.
Financial Performance
When growing your business,
your goal should be to establish a self-sustaining enterprise
with steady revenue growth. The financial performance of a company
is often measured by its free cash flow, or the cash that a
company generates before interest, taxes, depreciation, and
amortization minus capital expenditures. In assessing the value
of the company, a buyer may, for example, project a company’s
earnings over the next five years based on the current cash
flow. This projection will take into account any outstanding
debt, as well as whether revenue growth and margins have a history
of consistent growth.
Regardless of your time frame for transitioning
the business, you should regularly review the products and services
your company offers. Businesses are often more efficient when
they focus on their core competencies, rather than diversifying
too broadly. If your company has product lines or offers services
not closely aligned with the firm’s core business, consider
whether these areas are profitable or represent a drag on the
company’s resources. Selling off non-core assets may also
be a useful means of paying off debt.
You may also want to restructure agreements or
contracts that may be objectionable to a potential buyer, such
as a long-term lease, licensing contracts, employment contracts,
and loan agreements. On the other hand, you may need to formalize
verbal agreements to ensure the business’ relationships
with key customers or suppliers continue after the transition.
Plan ahead before you sign a lease. Long-term
leases are an asset provided the terms are favorable, the location
is suitable, and the size is right. If, however, the company
is likely to grow out of its facilities before the lease is
up, or if potential buyers may want to move the firm’s
operations, a short-term lease may be more appropriate.
If you want a more detailed
analysis of your company’s value, call in professional
business appraisers familiar with your industry. Even if you
have no immediate plans to leave the company, an estimate can
help you identify ways to maximize the value of the business
in preparation for a future exit.
Helping Employees
Balance Work and Eldercare Responsibilities
As life expectancy increases, more workers will
be involved in caring for aging family members. While the occasional
absence from work to shuttle an elderly relative to a doctor’s
appointment or pick up a medication may not seem particularly
disruptive, the productivity costs to employers can add up over
time. An estimated one-third of large employers nationwide have
eldercare programs to help employees cope with these responsibilities
while continuing to do their jobs, but smaller companies are
less likely to have formal programs in place.
Unlike childcare needs, which are generally predictable
and finite, eldercare issues often emerge over time as an older
person gradually loses his or her ability to live independently.
In some cases, problems may arise suddenly due to a health crisis
or death in the family. Both situations can produce conflicts
for an employee who feels responsible for helping a parent while
holding down a full-time job. Workers may, for example, struggle
to find the time and energy necessary to hire a home health
care aide for a parent recovering from surgery or an illness,
or secure a new housing situation for a relative whose disabilities
are permanent.
Partnering with
Care Management Firms
To help workers resolve
these issues, employers may partner with care management firms
that provide guidance and practical assistance to people seeking
services for elderly family members. An employee typically has
the option of obtaining advice from a geriatric care manager
via phone or e-mail, or through a consultation that takes place
in the elder’s home. These firms can refer families to
locally available services for the elderly, including retirement
and assisted living communities, nursing home facilities, home
health care services, and daycare centers; as well as resources
for assistance with transportation, shopping, cleaning, and
meal preparation. Geriatric care managers can also help family
members evaluate which facilities and services are appropriate
based on the individual’s specific care needs.
To provide short-term relief to workers with eldercare
issues, employers may contract with care management firms that
specialize in connecting employees with back-up dependent care
services. When a crisis arises and regular care arrangements
break down, employees can call the firm to help them schedule
alternative arrangements quickly. Often these services assist
employees in locating care for both children and adult family
members. A back-up care program can make it easier for employees
to get to work when, for example, a caregiver unexpectedly falls
ill, a school or daycare facility closes unexpectedly, or a
family member is sick and requires home care for a short period
of time.
Flexible Spending
Accounts
Concerns about financing
eldercare will be pressing for some workers. Employers may choose
to subsidize the cost of certain types of care, especially emergency
services. Companies can also offer employees the option of opening
dependent care flexible spending accounts (FSAs), which allow
workers to set aside pre-tax dollars from their paychecks to
cover certain types of dependent care expenses. Because, however,
FSAs may not be used to pay for all types of eldercare services,
employees must be made aware of the restrictions that apply
to these accounts.
In addition to establishing
formal programs, employers should be prepared to manage eldercare
issues in the workplace on an individual basis. In some cases,
the best solution for an employee caring for a family member
is to telecommute, move to a flexible work schedule, or take
a leave of absence. Managers and supervisors should be sensitive
to the needs and feelings of employees as they cope with these
situations, especially when serious illness is involved. Employees
may also benefit from professional counseling to help them deal
with the physical, emotional, and financial strains that often
come with caring for a dependent relative.
Competitive
Intelligence: Strategies for Success
In today’s rapidly evolving marketplace,
businesses that once relied upon traditional networks to supply
them with clients and customers are now forced to become more
aware of the competitive landscape in which they operate. Increasingly,
market researchers are seeking out intelligence that can enable
them to better understand their external competitive environment,
including information about rival firms, industry trends, regulatory
changes, and the demands of potential and existing clients.
Gathering Research
As practiced by most market
researchers, competitive intelligence (CI) gathering is not
akin to cloak-and-dagger corporate espionage. Instead, researchers
generally adhere to accepted legal and ethical guidelines while
trawling publicly available resources for clues about future
developments in the industry. The data is then mined and analyzed
in an effort to assess the implications of those developments
for the individual organization. In the course of collecting
CI, a marketer examines published materials available through
sources such as the Internet and court records, and he or she
may interview or network with industry experts, clients, and
people familiar with competitor firms.
An obvious place to start when gathering CI is
online. Trade journals and industry association websites are
sources of potentially useful material, as are business and
general newswires. While these news services will likely synthesize
much of the market information of interest, you may also want
to seek out more diverse online sources that provide updates
on industry developments less widely reported. Depending on
your business, these sources may include filings with the Securities
and Exchange Commission (SEC), public record search services,
market research services, government agency websites, and legislative
monitoring services.
Networking is an invaluable source of knowledge
about competitors. Gossip overheard at an industry event or
conference can provide insight into rival firms that is not
available in published form. Meeting with others in the industry,
either formally or informally, also allows you to ask questions
and probe for information that is of particular use to your
firm. Even a casual conversation with a staff member from a
rival firm can alert you to potentially important changes in
the organization and in the industry as whole. It is also possible
to network online through blogs, discussion groups, and e-mail.
Analyzing Data
Competitive intelligence
is about more than simply investigating rivals; the objective
is to create a more successful organization relative to competitors.
However interesting, the information gathered will only prove
valuable if you are able to place it in a context relevant to
your own company’s market position. Information must be
translated into "actionable" intelligence that can
be applied directly to business planning and development. An
analysis of the data collected can result in recommendations
for new initiatives or changes in strategic direction, such
as adjusting pricing structures or enhancing services.
When a business is able to predict more accurately
which practice areas are likely to generate more or less business
in the future, its leaders will be able to make more effective
decisions about how to allocate resources. CI can also be useful
in determining whether offering a particular product or service
that appears to be in demand constitutes a sound business decision
given market saturation levels.
While conducting competitive
intelligence research requires some investment of resources,
gaining a more thorough understanding of the competitive environment
can help you avert some costly mistakes and anticipate a market
for services that may not yet exist.
What’s
the Return on Your Marketing Investment?
Whether it takes the form of advertising campaigns,
branding initiatives, or targeted networking, marketing is an
integral part of any firm’s business strategy. But, unlike
other parts of a business plan, the results of marketing efforts
can seem difficult to measure. Are new customers calling because
of your marketing initiatives? If so, which initiative produced
the most bang for your buck? Consider whether your current marketing
activities were selected because there is clear evidence that
they are effective, or simply because your competitors are doing
the same thing.
Cost-Benefit Analysis
Given the costs associated
with marketing -- and the risk of losing out on potential business
when marketing is ineffective -- your firm can hardly afford
not to calculate the return on investment of your current marketing
strategies. A cost-benefit analysis may, for example, reveal
that your company is sinking money into a series of expensive
ads generating little business, but a blog that costs nothing
to operate is attracting high-profile clients.
Among the leading reasons why firms fail to measure
their marketing efforts is the perception within the organization
that measurement is too hard, too costly, and too time-consuming.
It may be inaccurate to judge a particular marketing initiative
or technique based on such amorphous targets. Just because one
ad failed to produce the desired results does not mean another
ad, or the same ad placed in different media outlets, would
not produce better results.
While the aggregate return on the annual investment
in print advertisements will be a strong indicator of the usefulness
of this approach, a closer examination of any changes in business
activity immediately after a particular ad has been placed could
yield some startling results. Only by carefully mining your
marketing data will you discover exactly which approaches worked
and in what particular contexts.
Measuring Results
Before launching each marketing
initiative, define your objectives and consider how you will
measure whether those goals were reached. If, for example, you
place a series of ads in newspapers, find out if the volume
of phone calls or if the number of website hits increases immediately
after the ads appear. If your company issues a press release,
log any press inquiries, monitor the media outlets to see if
the story receives coverage, and check for a noticeable increase
in phone or web traffic after the stories appear. Be alert to
any changes in business activity following less formal networking
events, such as speeches or presentations.
A useful measurement tool is an intake system
that surveys new or potential customers on how they came to
contact your company. This information can be gathered when
they first call your company, place an order, or log on to your
website. For a more in-depth profile, ask existing clients to
complete a market research/customer satisfaction survey, which
can be sent out by mail with business reply envelopes.
Many businesses spend too little on marketing
and even less on tracking the success of their marketing initiatives.
These companies may, therefore, tend to underestimate the potential
impact of marketing campaigns. By spending a bit of time and
money assessing which approaches are working, you can better
target your marketing budget expenditures and determine whether
it makes sense to devote more -- or less -- resources than you
have in the past to getting the word out about the products
and services you offer.
Choosing the
Right Retirement Plan for Your Business
You’re an entrepreneur and you’re
not looking back. You’ve opened your own business, whether
alone or with other partners, and you’ve found some success.
Now you’re thinking about retirement, not just for you,
but also for any employees you may have.
Offering a retirement
benefit plan can help your business attract and retain employees,
while making it easier for you to save for your own retirement.
Fortunately, choosing a plan may not be as difficult as you
might imagine. Basic retirement plans for small businesses can
be relatively easy to establish and administer, although you
may want to reconsider your plan choice or offer additional
features as your company expands and your personnel needs change.
Here are some of the retirement
plan options available to business owners:
SEP IRA: The Simplified Employee Pension
(SEP) is an IRA-based plan that is funded solely by the employer.
Employees are fully vested in the plan from the time they join.
Business owners do, however, have the flexibility to vary contributions
to a SEP from year to year, or to make none at all. The SEP
is often a good choice for sole proprietors or businesses in
a less stable financial position. Contributions can be set at
a maximum of 25% of the employee’s compensation or up
to $45,000 in 2007. The limit for self-employed taxpayers is
20% of compensation.
SIMPLE IRA: Savings Incentive Match for
Employees (SIMPLE) IRAs, which are restricted to businesses
with 100 or fewer employees, are usually funded by both the
employer and the employee. The employer must make matching contributions
on behalf of eligible participants, generally the lesser of
the amount deferred by the employee or 3% of the employee’s
compensation. Because employers are required to contribute a
set amount each year, this plan is best suited to businesses
with consistent earnings. Employees may defer as much as $10,500
in 2007 to a SIMPLE plan, and those who are age 50 or older
may contribute an additional $2,500.
Profit-Sharing:
Profit-sharing plans are relatively easy to
administer and tend to be
popular with small businesses. The plans are funded solely by
the employer on a pre-tax basis, and contributions are discretionary.
Many employers also require workers to remain with the company
for a certain number of years before they become fully vested
in the plan. With profit-sharing plans, the employer and employees
can take out loans against the value of the funds in the account.
401(k): The 401(k) is an employer-sponsored
plan that allows employees to make salary deferral contributions
on a pre-tax basis. Earnings in 401(k) accounts accrue on a
tax-deferred basis, but they are subject to income tax upon
withdrawal. While employers have the option of matching a percentage
of their employees’ contributions to 401(k) accounts,
they are not required to do so. The employer can set a vesting
schedule for the portion of the funds contributed by the employer.
The employee is responsible for managing the investments within
the account. Employers may permit 401(k) plan participants to
take out loans against their accounts, but this adds to the
complexity of a plan. Employee contribution limits for 2007
are $15,500 for most workers or $20,500 for those aged 50 or
older. The employer’s and employee’s combined contribution
in 2007 may not exceed $45,000 or 100% of the employee’s
pay.
Because the 401(k) plan has more reporting requirements
than the above plans and is more costly to administer, it is
generally best suited to companies with at least 25 employees.
Businesses with large disparities of pay between employees may
also encounter problems with the 401(k) nondiscrimination tests,
which can limit the contributions of highly compensated employees
if the company’s lower paid workers do not contribute
comparable percentages of their incomes.
Safe Harbor 401(k): The Safe Harbor 401(k)
offers the same benefits as the traditional 401(k), but it may
allow employers to maximize contributions and still satisfy
nondiscrimination rules. With a Safe Harbor 401(k), employers
must make matching contributions for employees, but they have
two options: Companies can make contributions for each eligible
employee (even if the employee does not contribute) of 3% of
annual compensation, or the company can match 100% of the first
3% of employees’ deferred contributions, plus 50% of the
next 2% of employees’ contributions. While the mandatory
employee match is larger with a Safe Harbor 401(k) than with
most other plan types, the Safe Harbor may permit employers
to make more pre-tax contributions on their own behalf.
Defined Benefit Plans: With the rise
in popularity of 401(k) plans, defined benefit plans faded from
the spotlight. However, they can still be an attractive option,
particularly for business owners with few employees who are
looking to accelerate their personal savings. Using a defined
benefit plan, business owners may be able to set aside significantly
more than they could with a defined contribution plan. In 2007,
the maximum annual benefit is $180,000, and the amount of yearly
compensation that may be considered for benefit purposes is
$225,000. On the other hand, defined benefit plans can be more
complex and costly to administer than other options, and they
are usually more expensive to fund than defined contribution
plans.
Deferred Compensation
Plans: A deferred compensation plan is often established
by companies that already have a qualified plan, such as the
401(k), to provide additional retirement benefits to key executives
or employees. This type of plan represents an agreement whereby
one person (or legal entity) promises to compensate another
for services to be rendered currently, with actual payment for
those services delayed until sometime in the future. Using a
deferred compensation plan, an employer can offer an employee
extra income that will not be taxed until some future date,
usually upon retirement, death, disability, or termination of
employment. Because these plans are not governed by federal
pension laws, making them "nonqualified," they can
be extremely flexible.
Investing In
Employees Through Tuition Reimbursement
In a rapidly evolving marketplace, having a workforce
with cutting-edge skills gives a business a distinct competitive
advantage. But attracting and retaining highly skilled workers,
while ensuring that the knowledge of long-serving employees
does not become obsolete, can be a struggle, especially for
smaller firms. While most larger companies can afford in-house
training programs tailored to specific types of employees, smaller
businesses with a diverse group of workers typically lack the
economies of scale to make sponsoring a targeted learning and
career development program feasible.
Employers of all sizes can, however, support workers
in furthering their education by instituting a tuition assistance
program (TAP). Compared with other benefits programs, TAPs are
relatively inexpensive to provide. The IRS allows companies
to claim a tax deduction of up to $5,250 per employee, per year,
for the reimbursement of educational expenses. Since only a
small group of employees tend to apply for tuition reimbursement
at any given time, employers can usually offer this benefit
at a reasonably low cost.
When designed properly, TAPs can also be a very
effective means of retaining valued staff members. Because educational
assistance programs are generally not subject to extensive regulation,
companies have considerable flexibility in tailoring their TAPs
to fit their individual business needs. The following are some
issues a company may want to consider as it develops a tuition
assistance program:
Who will be eligible to participate? Some
employers restrict their TAPs to employees who have been with
the company for a certain period of time. Others reserve assistance
for employees in certain positions or for full-time staff members.
Companies may also have a competitive application process, which
allows them to decide whether to subsidize the tuition of employees
on a case-by-case basis.
What types of educational programs will be
reimbursed? The educational needs of employees vary greatly
from company to company. Businesses with a less-educated workforce
often support employees in pursuing high school equivalency
exams or undergraduate degrees. Firms with highly skilled workers
may help pay for post-graduate degrees, but they may restrict
the types of post-graduate courses they will subsidize to those
that are relevant to business goals. Employers also have the
option of financing specialized certification programs for employees
who want to learn new skills or update existing skills that
are relevant to the work they do. Certification programs usually
take less time to complete and are less expensive than degree
courses.
Will employees be permitted to choose their
educational provider? Some companies will reimburse employees
for credits earned from any accredited institutions, while others
restrict their workers to certain colleges or programs. While
distance learning programs, especially online courses, have
been touted as a more convenient alternative to classroom-based
programs for adult learners, they may not be the best choice
for certain students or for learning certain subjects. Prices
for courses and degree programs at different institutions can
also vary widely, as can the quality of instruction. With many
options available, a company may want to seek advice from an
independent educational consultant, who can help employees select
the program that best suits their individual needs, as well
as the needs of their employer.
How much money will the employer reimburse?
Companies may choose to reimburse tuition costs up to a
set dollar limit -- often the amount of the allowable tax deduction
-- or there may be no pre-determined limit on assistance. To
ensure that students take the investment in their education
seriously, firms sometimes commit to subsidizing only a certain
percentage of tuition costs, regardless of the tuition amount.
While some employers help workers pay for additional expenses,
such as textbooks and application fees, others do not. Accounts
can help employers clarify the tax and other financial issues
surrounding certain types of reimbursement.
In what time frame will tuition be reimbursed
to employees? Employers typically opt for one of two reimbursement
models: voucher programs and grade-time models. With voucher
programs, employers give workers a fixed amount of money, which
can be used to pay the bill in advance. Companies that use a
grade-time model, on the other hand, do not reimburse students
until they complete their courses. When considering which model
to adopt, companies should take into account whether employees
likely to use the TAP can afford to wait for assistance. If
the firm does not cover costs upfront, it may want to offer
employees guidance on how to obtain financial aid.
Will there be minimum performance standards
for reimbursement? Some companies only reimburse students
if they achieve certain grades or complete a certain number
of credits. To avoid disappointment or confusion, employers
should take care to explain these standards to employees before
they embark on a course of study.
Will employees be required to stay with the
employer for a certain time period after taking advantage of
a TAP? One of the biggest concerns employers have about
providing tuition assistance is that employees may jump ship
after earning a degree or certification. Many employers therefore
require students receiving assistance to sign an agreement that
they will remain with the company for a certain period of time
after completion of the course or return the tuition paid by
the firm. Companies often vary the level of commitment they
require from employees based on the amount invested.
Will incentives for participation be offered?
While some companies view tuition assistance primarily
as an employee fringe benefit, others see an employee who has
enhanced his or her skills as an asset to the business. Employers
may want to offer workers who meet certain educational objectives
cash bonuses or promotions that take into account the additional
skills employees have acquired.
Employees who receive recognition for their educational
achievements are more likely to remain loyal to their employers.
Will employees participating in educational
programs be granted paid or unpaid leave? Policies on the
amount of company time employees may take to attend classes
or study for exams vary. Some employers allow workers to take
some paid time off, while others require employees to complete
all coursework on their own time. Many companies find, however,
that permitting employees who are taking classes to telecommute
or work flexible hours, at least during exam periods, can reduce
stress.
How will the program
be administered? If your company is setting up its first
educational assistance program, human resources staff members
may need some additional training in running TAPs. It is also
possible to outsource administration to a firm specializing
in supporting these programs. Organizations such as the American
Council on Education’s Center for Lifelong Learning provide
free resources -- such as policy templates and sample employee
enrollment forms -- to companies in the process of developing
educational assistance programs. Some educational institutions
may also provide businesses with guidance on setting up a TAP.
The Virtues
of Volume Software Licensing
As a small business owner, you may assume you
have little negotiating power when it comes to buying software.
But as soon as a business needs to run a single software product
on several different desktops or laptops, it is time to consider
entering into a volume licensing agreement with the software
manufacturer or an authorized reseller. In addition to offering
a discount on the initial software purchase, the software vendor
may also provide volume business customers with additional technical
support, training, and easy access to upgrades as they become
available.
Off-the-Shelf Software
Purchasing a new desktop
or notebook computer equipped with preinstalled Original Equipment
Manufacturer (OEM) software is usually the least expensive way
to buy licensed software. But if the OEM software included in
your computers does not fully meet the needs of your business,
you must buy software products individually or in volume.
Picking a "shrink wrap" software product
off the shelf at a retailer is generally the most expensive
way to acquire software. When you purchase a software title,
you are actually obtaining a license, which provides the right
to use the software. Each shrink wrap box contains an installation
disk and documentation for a single license. By breaking the
shrink wrap of the box, the buyer is understood to have agreed
to the terms and conditions set by the software manufacturer
for use of the product. If you install software for which you
have a single license on more than one computer, you are breaking
your agreement with the manufacturer and violating the law.
Similarly, if you download software online, you
are asked to accept to a "click wrap" license that
limits its use. Buying individual boxed software products from
a retailer, or purchasing downloaded software programs online,
therefore only makes sense if you expect to need just a few
copies of the software.
Licensing for Five
or More
If, on the other hand, you
wish to run a software title on five or more computers, volume
licensing is an option worth exploring. Many software manufacturers
and software resellers have volume licensing programs tailored
to small and mid-sized businesses. Purchasing software products
through volume licensing can cost 20% to 30% less than buying
each copy individually. Vendors often give business customers
the choice of paying for licenses upfront or over time. Discounts
may also be offered on future upgrades, or upgrades may be shipped
automatically at no additional cost as part of a subscription
agreement.
Installing and managing software on multiple computers
is also easier with volume licensing. Even if all the computers
in your office run the same software program, each individually
purchased copy has its own authorization identity key. If the
paper document with this validation key is lost, it may be impossible
to reinstall the program should the need arise or to demonstrate
that you qualify for upgrades.
With volume licensing, the licenses and authorization
keys are stored electronically and can be tracked and managed
online, without the need for hard copies of proof of purchase.
A single CD-ROM and validation key may be used to install a
single software product on multiple workstations. New desktops
can usually be added simply by contacting the software manufacturer
online and purchasing a new license.
Software vendors may also offer software maintenance
services to business clients with volume license agreements,
such as assistance with upgrades, free training, product support
services, and the right to use a single software license at
home, as well as in the office. These added services may decrease
your company’s reliance upon on-site IT support.
Volume licensing agreements
come in many forms, with varying pricing structures and levels
of service and commitment. If you plan to purchase software
from a range of providers, signing a deal with a single reseller
that can manage the licensing of different products may be a
better choice than the licensing programs offered by software
manufacturers. The right volume licensing arrangement can provide
your company with affordable, up-to-date versions of high-quality
software programs, while simplifying IT management and compliance
tasks.
Planning for
the Life Stages of Your Business
Innovation. Perseverance. Accomplishment. Every
business owner committed to success starts with an idea, works
hard to make it happen, and believes in the potential for great
things. That doesn’t make the journey easy, just possible!
As an entrepreneur, your responsibilities double,
for you must manage the success of your business, as well as
focus on your own personal wealth accumulation and preservation.
Building financial freedom is an ongoing process begun in a
business’s infancy and continued throughout its growth
and maturity. Depending on the stage of your business, you will
have different needs and priorities. For example, startups often
must raise capital or secure financing, while owners of more
established businesses may be focused on developing exit strategies
and retirement. Let’s take a look at some of the important
considerations and opportunities at the various life stages
of your business.
Surviving Infancy
While most young companies
ride into existence on a wave of energy and enthusiasm, it is
challenging to survive infancy. This phase of growth is usually
the toughest to weather financially. Oftentimes, startup entrepreneurs
funnel their own personal savings into the company and use their
assets as collateral for loans. All this, and the business may
not be generating profits. But this is the risk business owners
take on, because success tastes so sweet. Like most of the uncomfortable
phases we experience growing up, this too will pass, and most
easily with a solid business plan.
A great complement to your business plan is a
fine-tuned marketing strategy. In order to promote your company
and generate business, you must make your product or services
known. Then, when the money comes in, cash flow management becomes
paramount. Even profitable businesses will flounder if they
fail to have cash on hand to meet their financial obligations.
If you need more incentive, know that wise cash flow management
will be very attractive to potential lender and investors. Success
in these areas will help you achieve a measure of stability
and get you on track for the next phase: growth.
Managing the Adolescent
Growth Phase
With a growing client base,
steady income, and profitability at hand, the successful business
owner faces a whole new set of decisions. Should you offer new
products and services? What role should investors play in the
company? Do you need to hire more staff? What benefits are best?
Don’t feel overwhelmed. All of these questions have answers,
and the right choice for you will depend on your specific situation.
During these teenage years, it’s important
to manage the ways in which you reinvest in your business capital
with an eye on your own financial future. One area of concern
is asset protection. Businesses often start out as sole proprietorships
or partnerships, but it may be in your best interest from both
a tax and liability perspective to consider structuring your
business as an S corporation or a limited liability company
(LLC).
In the early stages, benefits can be a significant
cost burden, but they play an important role in your company’s
success and your own financial security. In addition to providing
you with the resources you need personally, attractive benefit
plans will help you attract and retain qualified employees.
Three areas to consider are health, retirement, and insurance.
Health insurance is a key benefit for both you
and your employees. There are a number of different types of
health insurance plans available, including Fee-for-Service
Plans, Preferred Provider Organizations (PPOs), Point of Service
(POS) Plans, and Health Maintenance Organizations (HMOs). A
newer, cost-effective solution is the Health Savings Account
(HSA), which allows employers and employees to set money aside
on a tax-favored basis when coupled with a high-deductible health
plan (HDHP).
Qualified retirement plans offer tax-advantaged
opportunities for both your business and participating employees.
There are many options, including Simplified Employee Pensions
(SEPs) and Savings Incentive Match Plans (SIMPLEs), which are
relatively cost effective and easy to administer; more flexible
plans that allow you to save more annually are 401(k)s (variations
include Safe Harbor and Solo-Ks), profit sharing plans, and
defined benefit plans. To enhance benefits for key employees,
consider nonqualified plans such as deferred compensation or
executive bonus plans, which can help you selectively reward
and retain your best and brightest.
As you accumulate wealth, protecting your earnings
and way of life is paramount. Planning for li
