Dante’s Inferno – A Restaurant Trying to Stay in Business

We are going to do something a little different with our posts for you. Across the next three days, we want to show you a longer story with a lot to learn from. This is the story of “Dante,” a client of ours who ran a restaurant. Nearly 700,000 restaurants exist in the U.S., but the number of privately-owned ones by small business owners dropped off in the past few years. There are a multitude of reasons, but at the top of the list a lack of understanding of some critical business fundamentals and access to financing. Trying to stay in business isn’t easy, but we wanted to help Dante as best as we can.

Feeling like your business isn’t going the right way? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

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Dante's Struggle to Stay in Business

A Great Start

When we met Dante, he owned a struggling small upscale dining establishment in Manhattan. During his first few years, Dante has had great success with his restaurant. He had a good location. He had solid reviews. His cuisine was new, and the design of his restaurant was appropriate for his target. But then…

Then People Stopped Coming

When we came in, that initial picture had changed. During his second year of operation, he noticed that he had more tables open than usual. He thought he would change up the menu, spend some money on advertising, and push for more Yelp! And Google reviews. 

After 6 months of this, he started to become increasingly concerned. People had simply stopped coming as often. He didn’t know why. The lack of customers was putting a financial strain on the business. He was late paying some suppliers so his business credit has taken a hit. There were unfortunate problems beneath the surface of the company that Dante couldn’t identify. A friend recommended that he talk to us to help stay in business.

Dante's Worries

In our initial interview, Dante said:

I started my business to follow my dream. The business started out fine, but lately, we haven’t been doing that well. Sales are falling and bills are getting harder to pay. I’m spending so much time thinking about the business that it’s not as fun as it used to be. I’m beginning to wonder if I made the right choice. 

Dante was worried about how he was going to stay in business. He had all the normal concerns. He was worried that the risks they took were the wrong ones. Dante blamed himself for how the business was going. He was anxious about what people would think if it didn’t work out. He was worried about living paycheck to paycheck in order to keep himself afloat. 

Next Time...

How to Help Dante

With companies in trouble, the first step we take is to analyze their business model. In other words, we looked at how he made or lost money, and what the biggest mistakes were behind the scenes. 

Next time, learn how Dante stayed in business and learn about what you can do to prevent yourself from the same problems he faced.  

Fast-Growing Businesses: 3 Things They Get Right

We’ve been in the small business sector for over 25 years, and it’s safe to say that the environment has evolved and changed dramatically in that time. Yet with all of these changes, there are a few trends we can’t help but notice, namely when it comes to small business successes. We’ve seen three things that fast-growing businesses get right, time and again. They are: 

      1. Talent – People are your #1 asset. As machinery and materials were the drivers of the Industrial Revolution, people are the driver of the Digital Revolution. Those who have a competitive edge with talent win. There is a little caveat I would add. It’s not always the best talent on paper, but the more often the best talent that works as a cohesive team.
      2. Staying Current –Most fast-growing companies begin as agents of change, but then, human nature sneaks in. A reluctance to change in hard-wired into human nature. You need to have a natural curiosity and desire to always want to learn more. This can go back to talent. Hiring younger workers can enfuse an organization with new ideas. 
      3. Showing up – Do what you say you are going to do. Prove your value quickly both internally and externally. 

To help you understand how these successes work, we want to introduce you to Jake. 

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Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Jake’s Story – A Fast-Growing Business and a Rocky Future

Jake runs a tech company. He started out a small start-up that grew quickly. This rapid growth put strain on his team. When we met him, he was concerned about keeping up the pace of growth. His team was starting to show some symptoms of burnout, but he didn’t have the time to set aside to think about how to fix it. 

People are your #1 Asset

Clients often ask how can you keep costs to a reasonable level while keeping people happy? Hiring and retaining talent is hugely important, as it was to Jake. The golden rule that employers tend to forget is that people stay for the intangibles more than the money. Money is important, but other things can matter more, such as: 

      • Flexibility 
      • Sense of belonging 
      • Clear and copious recognition 
      • Transparency 

When we talked to the team, we found they felt that Jake was running short on recognition and transparency. When we shared that with Jake. He was open to the feedback. It was clear to us that it wasn’t that he did want to do. He just didn’t have time to breathe with his business growing so fast. 

Mistakes are Opportunities to Learn

Mistakes happened infrequently as Jake’s team got stretched too thin. The team was getting frustrated with each other. They were frustrated for a good reason. Mistakes had a domino effect. One is mistake from someone meant more work for someone else. This was adding to the tension. When we worked with the team, we used this as an example. The mistakes were a symptom of the larger problem. They needed more people. We used this as an opportunity to learn the root cause of the mistake, so we could fix it.

Empowering People to Make Decisions Makes Them Feel Like They are Part of Something Bigger

This is often a scary proposition to business owners. It’s your baby. How can you trust it to someone else? Luckily, Jake did have this problem. He had clear rules for delegation, and his small business’s team felt that they had the ability to make decisions. This is the key to keeping your business growing fast. Delegation is about setting boundaries and accountability. Allow someone to make a decision means they need to know they are responsible for the outcome. It doesn’t need to be draconian or punitive, but it does need to be enforced.

Jake’s Solution

It was pretty clear that Jake was doing a lot of things right. His business wouldn’t have been growing so fast if he wasn’t. However, it was also clear that he needs to hire if he wanted to maintain his trajectory. We recommended and created a hiring plan for him, which we helped him execute. We created job descriptions. Posted them on several hiring sites. Screened applicants. Finally, we recommended those to bring in for a formal interview. Jake hired two people, who were desperately needed, and his business continues to thrive. 

Summary

The key takeaway from Jake is acting before the strains from growth become highly visible. It’s easier to cure a disease if caught early. The same is true in fast-growing businesses. The longer you wait the more repair work is need, and the harder it is to expand. But Jake was able to find his problems and come out stronger overall. 

Will 401ks Become Easier for Small Business to Offer?

401ks: not as easy to access as you might hope

401ks are some of the most important retirement plans that are available to employees in 2019. And there is an important question to ask: are 401ks going to be able to be offered by small business owners easily in the near future? 

The answer is… maybe. It’s not simple, and as far as we can tell, it’s not cheap ⁠— especially if you have fewer than 20 employees. 

Thinking about making changes to your business? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

The New U.S. Department of Labor 401k Rule

What is it?

Well, it broadened the definition of employer associations. On paper, the rule makes it easier for small businesses to group together to offer 401(k) retirement plans. This is done through what is called an Association Retirement Plan, ARP for short. Wow, that sounds great, you may say. But, how are we going to group together? Who’s going to foot the bill or do the work? Ah, and there’s the rub. Like most of the proposals from this Administration, it’s big on words but benefits only a few.

What does it mean to us?

Let me share our story. Like most small businesses, we want to offer healthcare and retirement benefits to our employees, but we can’t afford it. When we heard about this rule, we were encouraged. We thought, awesome, great, let’s check this out. We researched the NYC area for business groups and open plans, thinking surely someone is going to jump on this. What did we find?  

Zilch!  

Yep, nothing. We found myriad Professional Employer Organizations. But they’ve been around for years, as has the Chamber of Commerce. So, we were left with the same choices that we had before.

Professional Employer Organizations (PEO)

What are they?

“Professional Employment Organizations generally contract with employers to handle administrative employment responsibilities, such as payroll and tax withholdings, workers' compensation insurance, and other benefits.”

Jackson Lewis

PEOs have had a somewhat rocky history. While there are plenty of reputable ones. There were laws passed in several states in the early 2000s due to charges of impropriety. At least in New York State, you need to be registered with the State and comply with state regulations, such as requiring yearly financial audits, etc. While under this new rule, small businesses can technically create these groups, the overhead and the expense of running and maintaining one is significant. So, no real win there.

What does it mean to you?

If you want to offer healthcare, retirement, and other benefits, you can contract with a PEO. They do offer premiums that are better than you can get on the open market, but they generally charge about $1,000 – $2,000 per employee for their services. It does take the headache of complying with payroll taxes, withholding, etc., so for some, it may be worth it. One might expect premium costs to go down if more people enroll, but as of yet, we’ve not seen it.

Here’s  brief video on what PEOs are and how they can help you

So, Will the Changes Help Us?

The sad truth is nearly 40 million employees, or roughly, 25% of the total workforce lack workplace retirement benefits. One would think that this executive order and subsequent rule would help. However, in the harsh spotlight of reality, that seems unlikely. While the option exists, the cost remains prohibitive. Going to a PEO was an option before as it will be after the rule takes place. It would seem that they, not us, are the real winners in this case. Again, this is no different from the myriad of actions by this political administration(like Tax Cuts), that sounded great but only benefited a few.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

What to Do if You Get a Bad Review

A one star review can be very bad for business

There are so many review sites these days, it’s hard to keep up. But a bad review can be hard to manage, especially when you’re new. Shifts in technology trends can change many things for a company, and our client Donna learned that lesson the hard way. 

Donna owns a small retail shop that had recently opened in Manhattan. She was growing well and was off to a good start. But while I love New Yorkit isn’t out of the question to say that New Yorkers can be blunt and harsh critics. Donna had one difficult client interaction, which turned into several months worth of headaches. The client left unsatisfied and left a scathing 1-star review on Google. Initially, Donna wrote it off and went on with her day. Unfortunately for Donna that was the wrong thing to do.

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

What Donna Didn’t Know About Bad Reviews

A recent study showed that a bad review on Google My Business can hurt you much more than one on Yelp or Facebook. The study showed that the impact of a poor Google rating had twice the effect of a bad review on Yelp. It had nearly 4 times the negative effect than Facebook. Ouch, right? We can only speculate as to why, but it’s likely that review ratings are part of the local search algorithm. Therefore, businesses with a lower review rating may be shown less. It’s also easier to leave a Google review so that could be a factor as well. 

What Donna Should Have Done

A Bad Review is all it takes to hurt a business

No matter how big or small your business is, someone should be checking and responding to customer reviews regularly. You might be thinking“of course, doesn’t everyone?” But, it’s easy to think that when you are not pulled away by a thousand different things. Plus if it was a negative review, the interaction probably wouldn’t be pleasant for you, either. It would be hard not to get emotionally invested in it. The first step is to try to depersonalize the situation. It’s hard, but that separation is necessary. Otherwise, you can’t follow this golden rule:  the first one who acts irrationally will lose. Acknowledge that you heard them. Focus on the facts. Be professional. Never lose your cool. 

What We Did for Donna

Since Donna didn’t act on the review, it stuck. She started to see her local search numbers fall and her organic traffic took a nosedive. How could one review do that? It was her 1st review. Donna needed to fix this quickly. We started a program offering discounts for a Google review. We were clear that we wanted their honest feedback. It was solely a means of encouraging them to act. And most importantly: it worked. Within 2 weeks, we had 20 reviews. It took a month or so to recover fully. But recover Donna did, and her bad review problem went away. We also encouraged her to hire a social media manager to monitor her comments and act on any comments within 24 hours. 

 

A bad review isn't the end of the world

With how much business is done online nowadays, it is easy to see how a bad review can sink a business. But by keeping on top of it and staying smart, you can avoid problems like Donna’s. And importantly, we are happy to help you do that, because it is important to help your business grow, and we want to be there for it. 

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

How to Use Marketing to Boost Slipping Sales

A woman attempts to boost her sales through marketing techniques

Today, we want to tell you a story about of client of ours named, George. George runs a decent-sized small business and has for a few years, but his sales have started to slip. So we showed him how used marketing to boost his slipping sales.

George’s business might not be the same as yours, but his challenge was one that we all face. How do we understand our customers enough that we can communicate with them effectively? By communicating effectively, how do we get their attention, keep it, and motive them to do something different? If you’re facing marketing challenges, then read on to see what tips we shared with George. If you haven’t, consider yourself lucky… and remember to come back to us if you do face problems.

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

George’s Story: A Classic Marketing Challenge

George’s business model was a bit old school. George produced products that he sold through distributors, and then those distributors sold the products to brick and mortar stores. Yes, this still is the dominant way people buy products. While e-commerce is growing fast, it still only accounts for around 10% of total retail sales. It also varies widely from category to category.

You can use social media marketing campaigns to boost sales

Jason is in health and beauty. This is one of e-commerce’s weak spots. In health & beauty, e-commerce sales account for less than 5% of total retail sales. Nevertheless, Jason was starting to see some negative impact from that shift. His volume was starting to drop off and his marketing needed a booster shot to help the sales. His e-commerce sales were tiny. He’s tried to sell through Amazon’s marketplace but he’s had a hard time breaking through. He has his own e-commerce platform but has struggled to gain traffic and conversions.

How do we understand our customers enough so that we can communicate with them effectively?

So, what exactly did we change in George’s marketing to help boost the sales of his company? And how could we achieve that without wasting everyone’s time and money?

Spend some time walking in their shoes

George was in a tough spot. He didn’t sell much directly to his customers, so how could he reach them? Luckily, he did have some sales through his e-commerce portal. We re-contacted those former customers and offered a nominal fee to participate in a moderated Zoom call. We spent that call discussing their challenges and how Jason’s products helped them meet them. Then, we spent time to understand their motivations. We asked them to take us through their day. We uncovered a lot about how they wanted to feel after using Jason’s products.

After spending time in the customer's shoes, craft a message relevant to what’s motivating them

marketing can help boost sales for a small business

After conducting a few Zoom focus groups, we had a clearer picture of what was motivating George’s customers. They wanted to look naturally beautiful. They were motivated by wanting to look their best, but not looking like they tried. We are own worst critics. We see all the flaws because we know they are there. As long as we know they are there, we are self-conscious. When your self-conscious, it’s hard to project confidence. And, that’s what this was all about, finding the marketing plan that worked

Communicating our message consistently and effectively

Armed with this new information, George was able to upgrade his website, Amazon page, paid digital ads, landing pages, ran social media posts, and more marketing platforms to boost his sales. It was no longer about shades and colors and the like. It was about how to use a combination of his products to look natural, letting the real you shine through. And it was a major hit, helping Geroge in the long run of his career.

How Can You Boost Your Business's Sales with Marketing?

The steps that we took can be used by anyone. It takes time and effort and a little bit of money. However, it is time well spent. Understanding your customer is key to unlocking sales. We hope this case study helps clarify how that might work.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

How to Cope if Your Business is Struggling

A woman trying to cope with her small business's struggles

Small business owners face many challenges. Whether living paycheck to paycheck or attempting to qualify for a small business loan, it’s no wonder that some of us are struggling. We all probably have at some point or another. The most important thing is knowing how to cope if your business is struggling. We’d love to share with you a story about a client of our named Benjamin.

Feeling like your business isn’t going the right way? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Benjamin’s Story of Coping with Business Struggles

business-credit-score

Benjamin is part of a dying breed. He runs an independent pharmacy here in New York City. In smaller cities, most independent pharmacies have long succumbed to the pressures of big chain drugs stores. In NYC, proximity matters, and big-box retailers struggle because their large store formats don’t translate well to the smaller retail spaces in the five boroughs. Because of that, independent pharmacies have hung on. However, it hasn’t been a picnic for owners like Benjamin. He’s faced added pressure, and not only because of needing to pay rent and wages. He’s also had to cope with new workers’ rights legislation such as paid sick time and family leave for part-time employees and other struggles that businesses face. Benjamin’s problems weren’t all due to regulations, but also because of changing customer expectations and needs. 

While your business might not exactly mirror Benjamin’s, it’s possible you’ve had to deal with a major increase in both fixed and variable cost, possibly along with a drop-in demand. Whether this is you now or not, you may want to hear Ben’s story. 

How to Handle It

In Benjamin’s case, he was struggling to deal with both a significant rent increase and raise in the minimum wage. One rise in payment he could manage, but two simultaneously was overwhelming. He struggled to pay the rent and payroll on time. Plus, on-demand prescriptions had started to take off in the city. It’s not huge now, but he could see it growing into a problem. Benjamin knew he needed help.

Deal with cash-flow problems first

Ben had some cash flow issues. Unfortunately, he had come to us a bit late and by then, his business credit had taken a hit. A commercial bank wasn’t an option. Since he needed the money quickly, neither was an SBA backed loan. We were able to secure a loan with an alternative lender. The rates weren’t great, but he had enough cash to give us enough time to right the ship. 

 

Luckily in NYC, we have the Department of Small Business Services (SBS) that can help struggling businesses cope with their problems. If you’re not in NYC, your local city will likely have a similar program(s). However, like most government programs it is widely known. The SBS offers is a “commercial lease program connecting small business owners with free legal services with a dedicated attorney. The free legal services include help negotiating a lease, resolving landlord issues, responding to an eviction notice and negotiating a lease renewal.” We were able to connect Benjamin to SBS to help with renegotiating the rent. 

Staying relevant to your customers

There were two areas where Benjamin needed to focus in order to remain relevant. First, he had to give his customers a reason to come to his store. It wasn’t enough to rely on only the prescription refills to drive them to the store. We need to create something ‘special’, which focused on a unique benefit that only his store could provide. In this case, we partnered with other local healthcare providers to create quarterly health fairs. Neighbors could stop by not only to get discounted/free health screens but also in-store discounts. These events helped increase traffic by 50% and sales by 25%. 

Second, we needed to fix our delivery system. Expectations in NYC is that everything can be same day delivered. Benjamin could do that within his service region, but it wasn’t very efficient. Here, we partnered with a local delivery service, who could bundle deliveries to increase efficiency. Now, this is tricky for pharmacies. Since we are dealing with medications, there are several legal hoops we had to jump through to ensure compliance with the law and to avoid risks to patient safety. Our local delivery company was able to barcode and scan the products, which made this much easier. 

Finally, Benjamin had put little effort into his website, so his e-commerce platform needed optimization. Some keeping up with marketing and technology trends was all that was needed. His customers wanted to refill online, and he was missing an opportunity to send them notifications and reminders to refill. They would have to call Benjamin directly, and sometimes he would call them himself. Both of which were inefficient and not what his customers wanted. By re-tooling his site, we were able to increase refills by 25% and new prescriptions by 10%.

Staying current

Coping with business struggles in medical fields is an important skill

While these fixes would help Benjamin in the short-term, he needed to upgrade his skills or the skills of his team to remain current. Here, we connected him again with SBS centers, which featured instruction in marketing, social media strategies, e-commerce and Web site fundamentals to help small businesses better market themselves in today’s economy. It isn’t going to fix every single problem that Benjamin’s business is struggling with, but it may help him cope with it all a little bit easier

In Summary...

Benjamin’s story isn’t that uncommon. We have all dealt with points in the life of our business when we need to keep up with rising costs and slowing demand. The first rule to remember is that profit is like food, while cash is like air. You can live without food for a while but not air. The first step is to put your air mask on, and then, deal with the issues of slowing demand.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Half of Small Business Owners Worry About Money. Why?

If you worry about money, your business may suffer

Business owners come to us often with a fear that a lot of people have: do I have enough money? Either living paycheck to paycheck or having to take out loans, businesses worry about the amounts of money they have on hand.

A recent study from DaySmart Software reported the #1 worry for US small business owners is making enough money. We’ve highlighted this topic before in our post, “How Not to Live Paycheck to Paycheck when Running a Successful Small Business”. We’ve discussed how to manage costs and not waste money, but thought that we would speak about it again. Because to us, it is clear that this is keeping small business owners up at night.

Money worries can cripple businesses

Feeling like your business isn’t going the right way? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Using Technology to Manage Day to Day Tasks Seems to Help

Being worried about money can hurt small businesses

Going digital vs. manual is one approach offered to quash your money worries. Remember, this research was sponsored by a software company, but the general technology trends are arguably valid. The adoption of software to help with business management tended to do better than those that did not. Some of the reasons offered were reducing manual labor over paperwork, increased customer satisfaction, and more time.

In Which Technologies Are Business Owners Investing?

The simple answer is operations. The second is in marketing. The final is in digital security. All three are sound investments. Simplifying operations by using a simple POS system is much better than manually managing a cash drawer. Automating invoicing and accounting makes a ton of sense. Automating social media is another way to save time and money. Even automating some marketing functions such as e-mail drip campaigns and the like are also time savers. As we mentioned before, security threats are real and are focusing more on small businesses where hackers believe security is laxer.

What’s Holding Business Owners Back From Their Money Worries?

The main barriers to faster adoption are money, lack of expertise, confusion over the right tools, and security threats. Just Google one of these services and it’s clear why business owners are confused. There are a dizzying array of options. The key takeaway from this survey is that business owners are worried about money. Technology can help alleviate that worry somewhat, but we need help to know what would work best to keep on growing as a company.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Did the New Tax Law Help or Hurt Small Businesses?

tax law effect

You may have asked yourself if the GOP tax law helped or hurt your small business. Well, it strangely depends on what part of the country you live in. If you are in Professional Services, LLC or S-corporation in a high tax state (“blue”) like New York then no, you probably got hammered. If you lived in a low tax state (“red”) and were a C-corporation, then it likely helped you.

It’s really such a shame that it’s come to this. We are all small businesses who contribute equally to the economy of the nation. Why can’t we all be treated fairly by new tax laws?

A recent house hearing regarding the Tax Cuts and Jobs Act (TCJA), aka the GOP tax law, illustrates this point beautifully. In the hearing, small business owners disagreed over the impact. Unsurprisingly, it ran with this tired red state vs. blue state divide. Let’s go through what you may want to know.

New Tax Laws in Red States:

Red State

Justin Conger, an owner of a C-corp in Ohio attributed much of his company’s success to the TCJA.

“Construction is a lagging indicator of the economy…If our clients or other businesses are not growing, expanding, or re-investing in their facilities, there is no need for commercial construction services. There is a lot of work to be completed before a project can start; from an owner obtaining financing to architectural drawings being completed, to regulatory approval from local jurisdictions. Businesses all over Ohio are growing and expanding by utilizing the benefits of the TCJA and reinvesting additional generated capital into their businesses. In talking with past, future, and current clients, over 80 percent indicate the reason for their investment in construction services is due to the economy and current tax structure.”

He reported increased hiring and offer higher wages and better healthcare benefit as a result of these tax laws. If true, then he’s behaving much better than Fortune 500 C-corporations, which did not raise wages and just repatriated a ton of cash. They’ve been sitting on this due to the current economic uncertainty, which has been the true victory of this tax law.

New Tax Laws in Blue & Purple States:

Blue State

Most small businesses are pass-throughs, sole-proprietorships, LLC’s, and/or S-corporations, not C, which means they had fewer resources and more administrative expenses. From a purple state, Virginia, one owner, Muneer Baig, expressed his doubts.

“Unlike many of the large corporations that use their savings to buy back shares and increase the value of their business, most small businesses are interested in growing their business. Businesses investing their savings now may not have extra cash in two to three years to continue investing and the projects may not get completed. This can result in a total loss of their investment.”

He also went on to say that he found the code more complex. This has been the complaint of many small business owners, who had to pay increased fees to their accountants. This complaint was strongest among non-C-corporations regardless of state.

A CPA from Rhode Island added a more mixed view. He said that there were benefits in the TCJA, but also believed that Congress should ease administrative burdens.

“Twenty-nine percent of small business owners said filing taxes in 2018 and 2019 was more difficult than it was in 2017. I can tell you tax practitioners said the same thing.”

What Does the Data Say?

The benefits have varied based on where you live. First, growth has been mixed. In Ohio, construction was growing faster than Maine. According to the Bureau of Labor Statistics, Ohio was up 3.5%, while Maine shrank by 4.8%. Second, the same is true with unemployment. Ohio’s rate fell the most 0.7%, the rest ranged between flat to down 0.4%.

What Do Experts Say?

Most economists say it’s a bit of a sugar high, where it will help the economy in the short-term but hinder it in the long.

“Longer-term economic growth would arise from investment, but any incentive effects increasing investment would likely be offset by crowding out from increased deficits,” said

Jane Gravelle.  She went on to say. “Longer-term economic growth would arise from investment, but any incentive effects increasing investment would likely be offset by crowding out from increased deficits,”

“The Congressional Budget Office (CBO) projected a 2018 real growth rate of 2.7 percent without the tax cut and 3 percent with it, for a 0.3 percent growth increase due to the tax revision. Real GDP growth in 2018 was 2.9 percent. This growth rate is consistent with a relatively small first-year effect.”

The New Tax Laws, in Summary

From looking at the data, it’s hard to make an argument that this bill helped everyone equally. It’s also hard to argue that it will have any real lasting and significant effect on the economy as a whole since the places and companies it helped will likely be canceled out by those it did not help. It looks like it is just part of the never-ending saga of Blue vs. Red that’s dividing the country. This cannot go on without negatively impact us all at some point. As part of the business community, we need to stop thinking of us vs. them. Instead, we should think more about making investments in what would help us all.

Is it infrastructure? Or maybe training? Education? It is for us to learn.

4 Key Small Business Issues in 2019

Business Issues 2019

We are nearly ¾ of the way through the year, and while the first half of the year was a good year with a healthy economy and high growth, the back half appears to be becoming one of increasing instability. It has been a long year of lots of changes to the political landscape, and your small business may be facing some issues that are really based on how 2019 has been going so far. What are the four key issues facing small businesses in 2019? Well, it’s a mix of managing growth, costs, your rainy-day fund, and staffing.

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

1. Unemployment Remains Low… For Now

The economy is still growing so people are needed. It now becomes a question of how you can use your team effectively and efficiently. If it weren’t for the clouds of uncertainty on the horizon, we recommend continuing to hire so not to hamper your growth. Our best focus now would be to figure out how to retain our current workforces. It is significantly less expensive and less disruptive to retain an employee than to hire a new one. Until these uncertainty clouds pass, it may be better to focus on increasing worker productivity than expansion.

2. Regulations Are on the Horizon

While we may depart from others on this point, that not all government regulation is bad, full stop. However, we must also recognize the fact that they do tend to affect us as small business owner disproportionately.

Federal regulations … are growing and have a disproportionate impact on small business and free enterprise in America. Federal regulations alone are estimated to cost the American economy as much as $1.9 trillion a year in direct costs, lost productivity, and higher prices. The costs to smaller businesses with 50 employees or fewer are nearly 20% higher than the average for all firms.

U.S. Chamber of Commerce Foundation Tweet

This isn’t the end of the world, but to keep your small business alive in 2019 you’re going to need to be smart about how you go about your financial saving, especially for remaining strong in the long term.

3. Minimum Wage Hikes Impact Everyone

Again, we may differ from others, but a living wage is important for retention. You cannot make the argument on retaining employees and still push for low wages. The two don’t work. Many of the ‘pundits’ pay lip service to retention but shout over minimum wage hikes. Look, labor cost are real expenses. We get it. But, there are no two ways around it. But, you can’t have happy and engaged employees, who are struggling to pay the rent. The minimum wage will likely increase. We argue that we should plan for it.

It may be true that, as the Congressional Budget Office projects, that a federal wage hike to $15/hr could put “nearly 1.3 million U.S. citizens out of a job, reduce business income, and raise prices as businesses would be forced to pass on higher labor costs”. In also equally true, that the current workforce making minimum wage, being trained by us and gaining experience, will leave us for hiring paying wages. Thus, leaving us to foot the bill for additional recruitment, for lost productivity, and for training costs. The small business world of 2019 is one that requires different ways of going about our understanding of wages and the economy.

4. Raising Productivity Requires New Ideas

We agree with the pundits that the government could do more for both workers and small business by providing training incentives and programs that by raising the minimum wage. This helps both parties. It has the net effect of raising wage because of increased skill sets. Also, it has the benefit of increasing productivity, which would offset the increased labor costs. Instead of trade wars, lower interest rates, and higher minimum wage, this would be a much better use of government stimulus and resources.

Conquering 2019’s Small Business Issues

We do face an uncertain the next twelve months. Hopefully, after the election in 2020, we may return to some sense of stability and predictability. However, until then, we need to be ready for almost anything. Making smart choices in people, productivity, and cash management, we should be able to ride out the storm.

How Small Businesses Can Struggle in This Economy

struggling business economy

Small business struggle in a strong economy for two simple reasons: talent and time. Not time in the sense of hours in the day, but burnout. Low employment numbers mean small businesses have to think about recruiting talent differently than in the past. And added to that, burnout is real and can make you far less productive than you want to be. Regardless of economic conditions, the rate of which small businesses close is remarkably consistent, and you can read on to see the signs to be aware of.

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Let’s Start at the Beginning

To appreciate what’s going on today, we have to start at the beginning of this 10-year business cycle. In 2009, we were just beginning to emerge from the most disastrous economic crisis to hit the country since the Great Depression. As a result, small businesses were struggling, and there was a significant drop-off in small business creation. Some major stumbling blocks included access to capital, decreased profits, and a reduced ability to hire. In fact, it was the first time in a long time when small businesses were employing less than ½ of the total U.S. workforce.

That’s a nice history lesson, but it misses some important facts. Fewer businesses were started during the period between 2009-12. Given that the rate of businesses closing is typically constant, fast-forward 3-7 years after the recession and we’re left with a gap. So, there was a lag in the tightening of the labor market. Now, the gap has closed and the competition over workers has increased.

Health Care and the Affordable Care Act

So much has been written about the ACA or ObamaCare. But, the truth is we will never know its true impact because it never was fully implemented. From its inception, significant roadblocks and intentional sabotage makes any clear read impossible. What is true is that the cost of employer-sponsored health care has dramatically increased, peaking in 2017. Because of all the smokescreens and gaslighting from all the vested interests, we still don’t have a clear picture as to why. We only know that the cost of offering benefits has increased the cost of hiring new employees. Hopefully, HRA changes will help alleviate

Hopefully, HRA changes will help alleviate some pressure, but providing health care to our workers is still a major issue. On the campaign trail, several proposals are on the table. Whether or not they have a chance of seeing the light of day will depend heavily on the 2020 election.

Burnout

Burnout is a very real and very constant reality that most small businesses struggle with at some point. But, is exiting the right solution? Perhaps for some, it is. But, we would challenge that perspective for all. Selling your business is an option. However, to do that, the business needs to be structured so it can function without the owner. If the owner is the business, then our options are limited. It requires us to stop thinking like we’re a mom-and-pop shop. Instead, we need to think as if we were a small corporation with systems, process, and structure. These entities can exist long after the owner decides to exit.

Possible Solutions to Help

Let’s look at three possible solutions that may help small businesses struggle in a strong economy.

Talent

If we can break out of our conventional thinking, there are several ways small businesses can be creative when offering packages to new hires. Yes, people are motived by money. But, they are motivated more by feeling valued.

Healthcare

When it comes to health care, there is no simple solution. Since conditions vary widely from state to state, the right solution for your business will require some research. The options to consider SHOP, group policies from a private provider, or adopt the HRA approach.

Burnout

We are less likely to burn out if we have a clear exit strategy. We know what we want the business to be. In addition, we structure it so it can eventually run without us as owners. It’s easier to value a business like this. It’s easier to sell it. Most importantly, it easier to leave when you’re ready.

struggling paycheck to paycheck

How to Handle the Small Business Economy

Small businesses are subject to the whims of the economy. The relationship, however, isn’t always clear. The economy being on the rise doesn’t necessarily mean that small businesses feel the benefit. However, knowing what to do to prepare for an economic boom can keep your business afloat and above the competition.