October 25, 2016
“Americans will spend $6.9 billion on Halloween costumes, decorations, and candy this year and many of those shoppers, who will spend on average about $74, will turn to pop-up Halloween shops.” ~ The National Retail Federation
Halloween is only a few short weeks away. As you can see, it’s full of money-making opportunities for businesses (yes, this includes your small business too). Of course, this requires you to do some marketing.
While the money you spend on Halloween marketing is tax-deductible, this doesn’t mean you need to spend a lot of money to make a lot of money. There are lots of great small business Halloween “tricks” you can use to ramp up your marketing while utilizing a small budget, including:
- If you sell any products that people could use in their Halloween themed projects, now is the time to showcase these. If you have a few of these products that lend themselves well to a specific Halloween theme, create a package so you can offer them together at a discounted rate.
- Encourage your customers to use social media to show you what they’re doing here as well.
- Create a special hashtag for sharing your products and your customers’ creations.
- Incorporate Halloween symbols in your marketing. Even a small pumpkin or Frankenstein on the special signs you hang around the office this month are enough to show off some Halloween spirit.
Many of these ideas are also quite easy to put into action. Hopefully, you can use some of them to collect revenue (instead of candy) this Halloween, making it a “spooktacular” one for your business.
October 21, 2016
In late September the World Trade Organization (WTO) revised its previous forecast for global trade for both 2016 and 2017, reducing its growth estimates to 1.7% and 1.8%, respectively. This presents a stark contrast its projection from a year ago, which estimated that trade would expand by 3.9% this year.
And with global GDP expected to grow 2.2%, the WTO notes that 2016 will mark the “slowest pace of trade and output growth since the financial crisis of 2009.” Several issues were presented as possible causes of the diminished outlook, including Brexit’s long shadow, financial volatility in developed countries and the possibility that anti-trade rhetoric will impact trade policy.
The International Monetary Fund’s (IMF) recent World Economic Outlook report was similarly stark, stating that the volume of world trade has “grown by just over 3% a year since 2012, less than half the average rate of expansion during the previous three decades.” The Fund, which in July had forecast 2.2% economic growth for the United States in 2016, revealed concerns regarding U.S. trade and manufacturing, weakening its predicted U.S. growth to just 1.6%.
In the midst of this global trade slump, and looking out onto a horizon of disappointingly slow growth, the leader of the IMF, Christine Lagarde, stated that trade restrictions would leave U.S. workers and families “worse off.” She also warned that “to turn our back on trade now” would “[choke] off a key driver of growth.”
However, all is not lost. As detailed by U.S. News, the strong dollar and weak outlook on global growth may mean that we can expect U.S. manufacturing to “flatline.” However, they estimate that service industries and construction may step as leaders to propel the economy forward.
October 20, 2016
Recruiting and hiring the best talent is a rigorous, time-consuming process, and one that can be especially high-stakes when you are a small business in the midst of growing a strong workforce. And if your hiring decision is high-stakes, keeping your talent on-board is critical.
The Cost of Employee Turnover
Employee turnover carries a high cost, much of it hidden from the balance sheets but no less real. According to INC., the cost of losing an employee is roughly 150% of the employee’s annual salary. Some of these hidden losses include:
- Lowered productivity
- Overworked employees
- Replacement hiring, recruiting and training costs
Why Onboarding is Important for New Hire Retention
According to Small Business Trends, onboarding is a “crucial development opportunity.”
- It’s your chance to make a good first impression, establish expectations, and introduce the new hire to the company’s culture.
- A well-structured, organized onboarding program will reassure, not scare away, your new hire.
- Data from WaspBarCode affirms the importance of onboarding: new hires are “58 percent more likely to stay with the organization after three years” when a well-developed onboarding program is in place.
Tips to Keep Your New Hire Onboard
- Have a written onboarding plan and revise it as your company grows and your culture matures.
- Train your onboarders in the onboarding process so that they introduce the new hire to the company in a structured, organized manner.
- Give new hires time to acclimate and learn their position, the company, and culture. Slow and steady wins the race!
- Establish two-way communications. Give your new hire the opportunity to ask questions and clarify information.
A well-crafted onboarding program provides the long-term benefits of consistent expectations and a cohesive workforce. To start crafting your onboarding program, you can download a Standard Operating Procedure template from North Carolina State University.
October 18, 2016
Like a scene out of the latest sci-fi movie, the robot armies are coming. And while it is generally accepted that they will be friendly to humans, they bring with them an undercurrent of danger. They will arrive initially to serve mankind, to perform tasks considered too mundane or harmful to human health. But as they get smarter, their ambitions may grow, until the next thing you know, they’ve stolen your job!
Sound far-fetched? Far from it. The very near future is likely to bring with it a landscape populated with ever increasingly sophisticated computers and robots. As technologies like artificial intelligence (AI) and machine learning mature, the capabilities of these devices to perform more “human-like” tasks will increase exponentially. The economic impacts of this coming revolution could be dire if the technology is not managed properly. Many experts are predicting that future generation AI-driven robots will essentially be able to perform any task that humans can do today, from driving a bus to operating on a patient. The question then becomes, what will humans do in a world without work?
The threat to the economy is very real. According to the World Economic Forum, jobs lost to AI-driven automation could number 5 million by 2020. And another report, co-authored by Citibank and the University of Oxford Martin School, predicts that in the US alone, a whopping 47% of jobs could be at risk. Even if these worst-case scenarios don’t come to fruition, the disturbances to the global economy as a result of AI-enabled automation will certainly be profound.
Governments and businesses alike need to consider the ramifications of the coming ‘Fourth Industrial Revolution’. Advanced automation will result in a sea change in the way organizations both large and small conduct business. And society as a whole will need to decide how to best harness this technology for the greater good of humanity, rather than allowing it to spawn economic hardship and inequality.
October 14, 2016
Every business owner, especially small business owners, are looking for new ways to save more money, be more efficient, and ultimately as a result increase profits. Let’s explore some ways that small business owners can save more of their hard-earned money!
Get Rid of The Paper
Paperless offices are the way of the future. Thanks to an array of business technologies it is no longer imperative to have paper copies of everything. Document scanners allow businesses to share and send documents instantaneously and they save them on printing and storage costs while making the office a more efficient place overall. This also includes offering your customers electronic invoices.
Think About Leasing
When buying equipment for your office consider leasing it instead of purchasing it outright. Not only do you avoid spending a lot of money upfront for the equipment, but you also will save on maintenance and repair costs too since most lease agreements will also cover these expenses.
Collect a portion of cash upfront from the customers that you extend credit too. It doesn’t have to be a substantial percentage, but if you collect even say 25 percent upfront from your credit customers you minimize your risks, improve your overall cash flow, and save money in your collection efforts.
Payroll Debit Cards
Issuing payroll debit cards instead of cutting checks every pay period is a great way to save money on administrative costs since the expense of cutting checks is cut out, and you lower risk of fraud, which is a major benefit since according to the Association of Certified Fraud Examiners 60 percent of all fraud incidents within a business involve employees.
Getting your business listed in online directories, like the North American Trade Registry, is a great way to make your business more efficient in terms of drawing more customers organically without spending too many of your resources on marketing efforts. Using trade registries is also a great way to generate more sales leads!
October 12, 2016
Video marketing and graphic animation, once a luxury reserved for big business, is an increasing necessity for small business, Graphic and video content engages customers and communicates your message better and faster than any other medium, according to the Rhode Island Small Business Journal (RISBJ). The reasons are simple: the human brain processes visual information 60,000 times faster than the written word while also engaging viewers on a “human level.” Recent statistics reported by Invisia corroborate the efficacy of video marketing, citing increases in conversion up to 80% on website landing pages and 20% or more on website home pages.
Before small businesses list in B2B Directories like the free US Registries, it is good business to have marketing plans in place, strategies for capitalizing on increases in incoming leads, and websites updated with engaging, informative information. Visit the US Registries website at: http://www.northamericantraderegistry.com.
Small business owners often state that graphic animation and video content isn’t apropos to their industry, according to RISBJ. But the medium’s power to engage, tell a story about products and services, and humanize your business is proven. A quick look at some of the websites listed on Forbes Best Small Companies In America, 2016 reveals how video content and graphic animation is utilized across industries to engage customers. From venture capital to manufacturing to consulting to banking to B2B, graphics and video tell the story and bring products and services to life.
Graphic Animation and Video Content: Use an Agency or Produce Yourself?
Most advertising and PR agencies offer high-quality, professional video and graphic animation services. While these services can take a large bite out of small business marketing budgets, 73% of businesses incorporating video into their marketing campaigns “report positive results to their ROI,” according to Invisia. Small Business Trends (SBT) recently reviewed Slidely Promo social video creation platform as an alternative for small businesses. In partnership with Getty Images, Slidely Promo lets businesses “create instant, stunning promotional videos for social platforms” for as little as $49 per month, according to SBT.
To learn more about inexpensive video and graphic animation using Slidely Promo, visit their website: https://slide.ly/prom
October 10, 2016
The United Kingdom’s controversial referendum and impending withdrawal from the European Union (commonly referred to as Brexit) caused shockwaves around the world. Ushering in turbulence and volatility in the European marketplace, the British exit will carry economic implications well across the pond, affecting U.S. businesses large and small.
As reported by CNN.com, Janet Yellen, chief of the U.S. Central Bank and a top monetary policy setting official, warned that Brexit “would negatively affect financial conditions and the U.S. economy.” And however dire that proclamation may be, small businesses in the U.S. may find that there are some positive effects among Brexit’s negative.
- Businesses may anticipate a brain drain from the United Kingdom whereby educated professionals move to the U.S. in order to pursue their careers. This influx of Brits would result in a more competitive labor market, creating opportunities for U.S. businesses to hire top talent.
- Due to higher risk and lower interest rates, more money from Europe will be invested in the U.S. market. Businesses may be wise to seek out foreign capital or investment for their business.
- The E.U. may relax some of the strong regulations that prompted the U.K.’s exit after similar campaigns for referendums have begun cropping up from politicians in other European countries. Decreased regulations may allow U.S. businesses that were previously unable to participate in the E.U. marketplace, opening a new population of European consumers to their products.
- As would be the case with an influx to the talent pool, the competition in many different niches for U.S. businesses may increase as British business owners seek to move operations.
- According to Willie Schuette of The JL Smith Group, should the duplication of the U.K.’s current trade deals not occur, small businesses may be forced to “separate European distribution; meaning lower margins and higher shipping costs.” Further, contractual agreements “will be impacted” as “new rules, agreements and laws” are rewritten.
- Small businesses have to adjust plans to account for long-term uncertainty regarding the actual effects of Brexit, which could take up to two years to finalize. Jeff Stibel, Vice Chairman of Dunn & Bradstreet, described how businesses typically operate well in good economic times and have created back-up plans so that they may survive the tough ones, however “[businesses] are uniformly bad at operating in times of uncertainty.”
- The British pound has fallen after Brexit, while the U.S. dollar rallied. Although a strong dollar is good for American travelers, it will cause U.S. products sold overseas by businesses to be more expensive, and thereby less attractive to consumers.
September 15, 2016
NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist
INDICATOR: August Retail Sales, Industrial Production, Producer Prices and Weekly Jobless Claims
KEY DATA: Retail Sales: -0.3%; Excluding Vehicles: -0.1%/ IP: -0.4%; Manufacturing: -0.4%/ PPI: 0%; Excluding Energy: 0%/ Claims: +1,000
WHAT IT MEANS: If you have missed my economic missives, it was because of the dearth of information. Well, today, the economic data mills released a ton of numbers and they all seemed to say the same thing: Not much is happening in the economy. August retail sales were pretty soft, but we knew that would be the case from the decline in vehicle sales. However, even excluding vehicles, sales were down. People did eat a lot, both at home and in restaurants, and back-to-school clothing sales were good. But that was about it, as almost every other major category was either flat or down. Electronics and appliances did eke out a small gain.
With households not buying, manufacturers stopped producing. Industrial production fell in August as manufacturing output declined. Eight of the eleven durable goods producing industries and seven of the nine nondurable components were either flat or down. Why there was such a major retrenchment is strange in that the numbers looked like something we would get when the economy was in a major downturn. You know something is weird when the strongest sector was oil and gas production.
If the Fed members were hoping to see inflation pressures starting to build, their wishes were not granted. The inflation genie is still in the bottle as the Producer Price Index was flat in August. Energy prices fell sharply, but even excluding energy, wholesale costs went nowhere. About the only positive aspect of this report, at least for the Fed, was that goods inflation has finally flatlined. With services costs rising, wholesale prices could increase, year-over-year, going forward. And as far as the pipeline is concerned, intermediate level, non-food and energy costs are firming. That hints at slowly rising inflation as well.
The one truly positive number released today was unemployment claims. They rose minimally and the level remains near record lows, when adjusted for the labor force. The labor market is tight and firms are just not cutting staff.
MARKETS AND FED POLICY IMPLICATIONS: We will find out next week if the Fed is really data dependent as the recent numbers hardly argue for a rate hike. Vacations and a hot August may have depressed activity, something we will not know until the September numbers are released. Of course, those reports will not be released until after the meeting. The economy is moving forward at the pace we have seen for the past few years. The string of roughly 1% growth rates should be broken this quarter, but that would just start bringing us back to 2%, which most economists think is underlying the growth rate. The recent disappointing data places the Fed in a difficult position. If the FOMC raises rates, then it would give lie to the argument that the Fed is data dependent. If the Fed is data dependent, then the next time a hike would likely come is December, since the November meeting ends six days before the election. It looks like the Fed will have missed another opportunity to start the normalization process because the “data dependent” argument has placed the members in an untenable position. Maybe they should just drop the phrase. It’s dumb, as the data are so volatile, and weak numbers box in the members. With strong data, the Fed doesn’t need an explanation, as the markets will be expecting, if not demanding a move.
September 1, 2016
The world is crossing borders at record speeds. International tourism receipts are increasing, on the back of a strongly growing global middle class and a steady rise in visa-free travel: above average growth for six years straight; and for the fourth year in a row, global tourism spend has grown much faster than merchandise trade. The rise of China is dominant here, with 120 million Chinese now traveling abroad every year; a trend showing no sign of slowing (interestingly, around the world, only tourism from the former Eastern bloc is significantly shrinking). It’s also developed world interest in ever-more global destinations: even North Korea’s repeated arrests of visitors has not deterred westerners from reaching as far as the hermit kingdom.
The same trend holds for international students. 2015 saw nearly 1,000,000 international students coming to the United States (by far the most important destination for higher education); a 10% year-on-year increase, and the fastest rate of growth since 1979. The rise of China again drives the trend; making up 31% of the total foreign student count (India has 14%, Korea 7%, and Saudi Arabia 6%).
September 1, 2016
Bill Dunkelberg, Chief Economist
National Federation of Independent Business
Talk at Aspen was cheap as it always is, with government officials, past and present, calling for more PUBLIC investment in infrastructure, education, training and the like and everyone looking for clues about the direction of monetary policy. The Fed has become the dominant factor driving financial markets, “follow the Fed”. So, PUBLIC investment is the key to raising productivity and stimulating the economy? The last attempt to do this with “shovel ready projects” (which didn’t exist) misfired badly.
“Roads and bridges”, yes, there is a great need to invest, some of this is federal (highways) but most of it is in the province of state and local governments whose resources have been drained by slow growth, lower tax revenues, increased welfare payments, unemployment benefits, pension shortfalls, rising public employee costs, and flight from efforts to tax consumers and private businesses to make up the deficiencies.
As a stimulus, this is a poor choice. Planning and permitting lags are long, and this is a capital intensive business, requiring massive amounts of heavy equipment, not of workers. Environmental regulations pose major barriers to progress in these area. We tried this before and it didn’t work.
“Education and training”, yes, education needs to keep pace with a fast changing job requirements. However, this is not well done by managing education from a large office building in Washington D.C. Innovation is stifled by local politicians and teachers unions and certainly isn’t taught or encouraged in public schools. Educational costs go up but results do not.
Short on revenues, governments at all levels are relying on debt to pay for what little they do. This will only have an unhappy ending as many of our cities have already discovered. Federal spending increases would also be funded by debt because the federal government always runs a deficit, so more spending means more debt (unless taxes are raised). In the late 1990s, surpluses were run and debt paid down under the control of a Republican Congress and a strong economy (which the Fed cannot produce).
The real source of productivity gains is the private sector, driven by private innovation and investment in real capital assets (snowplows vs shovels to move snow). This is not the province of Washington D.C. What Washington D.C. does do is tax away the earnings that private firms use to finance growth, and impose “redistributive” regulations on firms that waste private resources (including time) and lower the prospective return on investments. Compliance costs in financial and educational institutions for example impose large demonstrable costs but real benefits for consumers are less clear. “PC” has become expensive, colleges and universities have very expensive offices devoted daily to these issues, but benefits are less than clear. Meanwhile, tuition rises.
Hiring a worker has become increasingly expensive, paperwork, compliance, taxes, the minimum wage, mandatory health insurance, sick leave and family leave, legal liability, complexity in wage and salary administration, FLRB rulings on unionization etc. Employers are motivated to find a way to hire fewer workers by the government or prevented from hiring workers by the minimum wage.
Interest rates are historically low and large firms have billions in cash stashed away. Why won’t they spend it, particularly on new equipment and expansion? Investment in plant and equipment is all about the future, including the decision to “replace” worn out capacity. It is obvious, then, that business’ view of the future is not particularly positive. Cash has been used to repay debt, buy back shares, pay dividends, and acquire existing firms, but not much investment in new assets.
The process is simple, expected profits or cash flow from an investment are calculated and discounted by an appropriate discount rate which incorporates market interest rates and a risk premium related to the probability that the project will successfully produce the expected returns. Any stream of expected returns will look better if interest rates are lower. When market interest rates are so low, it is the risk premium that dominates. The higher the Discount rate, the lower the estimated value of the investment.
Discount Rate = Real rate of interest + Expected inflation + Risk premium.
The Risk premium (will the bond be repaid?) that financial markets place on a bond issued by a particular company for a certain maturity can be calculated from information about the price of the bond and the terms it offers using current market rates. For equities this is not the case, but implicitly the purchaser of stock makes this computation for expected profits. For greenfield investments (plant and equipment) the choice of the Risk premium is even more subjective. It depends on the expected course of the economy, regulations specific to the investment, the economic performance of customers, tax policy and the Fed. All uncertain.
The Fed has driven rates on risk free assets to near zero levels, inflation rates are below 2% and consumers expect them to stay low for a long time (University of Michigan). This leaves the Risk premium which must be very large to discourage investment with such low capital costs. Uncertainty, measured by the National Federation of Independent Business, is at its highest level in 40 years. Except for weak sales and the economy, “political climate” is the second most frequently cited reason for not expanding a business and is at a record high level. Uncertainty about the economy and Uncertainty over government actions ranked fourth and sixth out of 75 problems that small business owners were asked to prioritize in an NFIB survey this year.
The Fed laments the weakness in direct investment spending, but fails to understand that its policies have produced a major miss-allocation of funds and are one of the major sources of uncertainty that keep the Risk premium high, discouraging risk taking and investment.