The Unfortunate Truth of E-Commerce Failures

e-commerce failures

Technology has been changing business for a long time now, but recent developments are particularly groundbreaking. A new survey from MarketingSignals reported that the unfortunate truth about e-commerce businesses is, 90% fail within the first 4 months of starting up. In contrast, the survival rate of the first YEAR for brick and mortar stores is 78% according to the Small Business Administration. In other words, almost 8 times more brick and mortar stores live to see their first birthday than e-commerce sites do. Let’s identify why there are so many E-Commerce failures.

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.

Why Is There SUCH a Stark Difference?

One word. Marketing. According to MarketingSignals, “Poor online marketing performance coupled with an overall lack of search engine visibility [was the reason for market failure].” In simple English, if people don’t know you exist, how can they buy from you?

E-Commerce businesses are vast but fail at a rate larger than normal commerce businesses

It’s probably fair to assume that most people don’t think all you need to do is put an e-commerce plug-in on your website, and you’re golden, but few probably realize the amount of effort and resources (time and/or money) required in order to be successful. The survey points this out.

What Causes E-Commerce Failures?

Nearly 4 out of 10 new businesses failed because of poor online marketing. When you look across the top 10 reasons for e-commerce failure, the top 6 are all marketing related.

The top ten reasons why e-commerce startups end in failure:

1. Poor online marketing – 37%

2. Lack of online search visibility – 35%

3. Little to no market for their products or services – 35%

4. Running out of cash – 32%

5. Price and cost issues – 29%

6. Got outcompeted – 23%

7. Retail giants dominating a large share of the market – 19%

8. Lack of customer service – 16%

9. A poor team – 14%

10. Product mistiming – 11%

How to Avoid E-Commerce Failure

We have outlined before the ways that you can develop a successful marketing plan that won’t break the bank.

“Many tools can be used to increase their [businesses] brand awareness and search visibility in their first few days and weeks, where consumer trust and loyalty hasn’t yet been established.”

Marketing Signals

Unfortunately, they weren’t as forthcoming as to say where. We’re not surprised. In fact, our experience has been that there are no quick fixes. You need to be careful. It’s very easy to get ripped off if you don’t know what you are buying. In our post, “Google Small Business Portal – Marketing Gimmick or Value-Add”, we show how even large companies are willing to take your money.

E-Commerce relies on maintaining a customer base that keeps coming back to your website, which is helped by having a good marketing program

In the end, we found you really do have to put in the hard work. You need to educate yourself on the fundamentals of digital marketing. You can find some great courses offered through SCORE or the SBA. We highly recommend you take a least one of them before you start your business. You might want to consider a mentor or hiring an agency or a consultant to help.

Rome wasn’t built in a day. Neither will your e-commerce business. However, you can put in the work, find the right support, and avoid the scammers to be one of the E-Commerce success stories instead of an E-Commerce failure.

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.

Unretirement: The Secret of a New Workforce

unretirement

I have a term for you that you will start hearing more and more over the next few years: unretirement. The title explains itself really, with the idea being that retirement is no longer a necessity. Now, you can keep your small business expanding beyond what you may have thought possible in the past, staying in charge past when people may see you as “expired.” Because why stop doing what you love because of something as arbitrary as age?

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.

What Is “Unretirement?” Exactly?

As I’ve gotten older, that evil ‘R’ word kept creeping closer. I spent a lifetime of gaining knowledge. Am I to toss that away and sit in a home and wait to kick it? No, I don’t accept that. So, instead of thinking about retirement, I started to think about unretirement. My little 5-foot tall Italian grandmother worked with her sisters until she was 90. It gave her purpose. So, I used her as a model and started ProStrategix. 

The amazing thing was I’m not alone. Listening to an interview with Chris Farrell from NPR’s Marketplace was really eye-opening to me. 

It is time to shift the conversation about aging away from Social Security, retirement, physical decline, and an economic crisis, [and] focus on boosting the odds of healthy, active, and purposeful aging through working longer- including launching an entrepreneurial venture. Older minds who are involved in a community are happier.

Chris Farrell, interviewed on the Small Business Radio Show

So. What to do with this information?

Bam, Unretirement – A Whole New Workforce 

If a small business was willing to look past the stereotypes, this could be a real opportunity to access experienced workers. Age discrimination is a real issue, and people who want to work are often not hired at large companies. Think about it. Since when have you had someone with 20 or 30 years of experience in your market want to work at a small business, knowing it comes with a smaller salary? I bet the answer is never.  

It is a talent pool that is underutilized and underserved. So let’s think about ways to change that and to expand both your employee base and audience.

Unretirement – A Whole New Set of Entrepreneurs 

I was amazed by the statistic Mr. Farrell shared. 

For the first time, 25% of all business are started by people who are 55 to 64 years old. These older entrepreneurs are turning their passion into a business. What is different for these people is that many of these new entrepreneurs start to focus on a business with a purpose rather than just earning more money. 

Farrell, SBRS

Speaking as a Gen X’er, I know that I can be a little cynical when it comes to baby-boomers. However, it seems that they and I are sharing the same goal: work because you like it, not just because you need to. So let’s embrace these new employees for your market.

Working Longer May Keep Us Happier 

As we live longer, the traditional model for retirement really doesn’t make sense. We should embrace the idea of unretirement. Age has value if the aged are willing to learn and adapt. When I think back to my grandmother, who was born in 1914 and died in 2014, I am amazed at how much change she experienced. But in the end, she managed to evolve and adapt. If she could do it, why can’t we? 

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.

5 Ways to Benefit from Your Small Business Size

use size to advantage

A problem that many of our clients at ProStrategix present is that they find their company’s size to be a disadvantage. Maybe your business is struggling against a large company for the same customers? Or maybe you are feeling like a David facing a Goliath. But here’s the thing: your business’s size can be the biggest success. Here are five ideas for how to look at the positive side of being a smaller business.

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.

5 Ways to Use Our Small Size to Create a Business Advantage 

Growth is something you should plan for and that you may soon need, but don’t ignore how your small business’s size can help you now.

1. Create Unique & Targeted Experiences

Make the experience for your customer unique. We don’t have the bureaucracy. For instance, if you’re a gym, how can you make it feel like a family or clique? Anyone can go to a mega gym, but your clients choose to join you. Why? Well, you’re one of the cool kids. Encourage bonding with your trainers, staff, etc. Relationships keep people coming back.

Even a clinic could do the same. Is your staff welcoming? Do they know your patients by name? If they know there’s a backlog, do they take the time to explain to the patient why? Our size allows us to build experiences where people can feel valued, not a number.

2. Customize for Your Clientele

You’ve created experiences that are unique to your own company, but you can also customize and personalize to your existent audience. We can use our small size to create an advantage for our small business. Personalization and customization take time, which is a precious resource. You can’t make every experience personal, but we can avoid the canned “one size fits all” approach. While marketing automation can be a godsend, it can also be a killer on this point. Where you can, the more you can personalize the experience the better. 

3. Be Flexible 

Building on the first two points, experiences and customization are two examples of flexibility. We can use our flexibility to create an advantage for our size of small business. How?

  • Less red tape
  • Provide faster decisions
  • More personal contact
  • More!

Also, don’t forget to reward and recognize your staff when they exhibit flexibility in servicing a customer or client.  

4. Listen to What Your Clients Want 

We’ve talked before about screwing up the sale. Think about this: how many times have you been at a big box retailer searching for something or someone to help? And when you do find them, how many listen? Like, really listen.

Don’t be that business. You’re small and have a dedicated staff that wants to be there working with you. Listen to your customers and help them help you. That can only help you grow in the future. 

5. Be Creative! 

We don’t have long chains of review and approval. Let’s use that to create an advantage for our small business. If you’ve done all of the 4 steps above, it’s probably not that hard to think of creative ways to make things better. If you know your customer on a personal level, and you’ve been listening, they’ll tell what they need. Jump on it.  

It’s Hard to Compete, but Your Size Can Be Your Biggest Advantage 

It will take resources, time and change to bring all of these steps to life. We know that’s the case too. It’s taken us time to figure it out ourselves too. We’ve created a base who feels welcome. They recommend us to others. They feel they’re being heard, and you are being flexible to their needs. So, it’s likely reciprocity will kick in, and they will volunteer ideas. 

All of the five above steps are interrelated. We’ve helped a number of businesses differentiate themselves using these steps, and you can do the same too. The size of your small business doesn’t mean the end of your business, and it will only grow with you as the business grows too.

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 A.I. is Transforming Business Lending

AI and Lending

The rise of Artificial Intelligence has completely shifted all forms of business practices. Specifically, A.I. is transforming small business lending in ways both positive and negative. On the positive side, it helps detect fraud, increases the speed of underwriting, and levels the playing field somewhat. On the negative side, A.I. loan monitoring can be both a blessing and a curse. So, it is wise to be aware of what these changes mean to your small business.

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.

Funding is One of the Biggest Pain Points for Small Businesses

As we’ve said in multiple posts, small to medium size businesses employ nearly ½ of the nation’s workforce, but the sector is often overlooked. Whether it’s healthcare, retirement, or taxes, small businesses rarely have the advantages that big businesses do.

Funding is no exception. Small to medium-sized businesses often struggle with traditional lenders. Traditional lenders make the most money on big loans. Microloans and SBA loans are not their main focus. While SBA loans are hands-down the best option for small to medium-sized businesses, the application process is slow and cumbersome. We’ve discussed these challenges before, but digital lending may help alleviate some of these challenges.

Fraud Detection

Machine learning allows for better fraud monitoring

When it comes to small business lending, underwriters are always concerned about fraud. A.I. has vastly improved the fraud detection process with algorithms based on credit-bureau data, ID verification systems, and numerous other data sources. These algorithms provide a predictive probability of fraud, which can immediately flag risky applications. Thereby, it speeds the process along.

Somewhat Leveler Playing Field

The traditional lending process is laden with bias. Both gender and racial biases are well-documented. A.I. has the potential to lessen these biases, but its track record so far is a bit mixed.

That said, the A.I. models do use a significantly larger data set to help paint a more detailed picture of creditworthiness. This does helps avoid the Paydex paradox. In other words, you need a load to gain sufficient credit history, but how can you do that if you’ve never had one. It’s the “insufficient credit history” trap. While A.I. doesn’t eliminate all bias, it does help to level the playing field somewhat.

Hands-Down, A.I. has Dramatically Improved Efficiency

The best time to ask for capital is when you don’t need it, but few small businesses have that luxury. Historically, the review process for larger loans can take weeks at best, months at worst. Not to mention, the time it takes to collect and provide all the necessary documents and follow-up questions. Even if you didn’t need the capital at first, you could be in more dire straits by the time the process ends.

A.I. has made programs more efficient

The best time to ask for capital is when you don’t need it, but few small businesses have that luxury. Historically, the review process for larger loans can take weeks at best, months at worst. Not to mention, the time it takes to collect and provide all the necessary documents and follow-up questions. Even if you didn’t need the capital at first, you could be in more dire straits by the time the process ends.

A.I. solves this issue with its predictive models. These models dramatically streamline the underwriting process. The model can quickly provide eligibility parameters in hours vs. weeks. Thereby, it makes the process simpler for everyone.

Improved Loan Monitoring Through A.I.

This helps the banks, but not necessarily the small business borrower. However, this is the price we pay for the benefits above. Since lenders now have access to all this data, tracking your business is much easier. Those same A.I. models that were trained to improve fraud detection, level the playing somewhat, and speed things along, also were trained to predict default.

This is where a dose of caution is worthwhile. While improved loan monitoring does make small business lending less risky and more profitable for the bank, it does make it a bit more risky for the borrower. Lenders are a conservative lot. Therefore, given any mixed data, they are likely to interpret it more negatively. So, while you may think the business is fine, the A.I. model may not. It could be much harder in the future to secure a small business loan.

On the whole, the changes to small business lending due to A.I. are mostly positive, but with any new tool, it helps to understand how it can be used for you and against you.

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.

5 Quick Steps to Get Results for Your Small Business

Small business wins

As small business owners, we don’t have the resources in time or money to waste. You didn’t start your business wanting it to fall apart. To help you, here are 5 ways we’ve gotten results for our own small business quickly. While we can’t guarantee the same results for you, they are based on sound business principles that have proven successful repeatedly. Plus, they may help you as well as they helped us.

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.

Blogging allows people to find your website easier

There are several ways to build your brand. Obviously, we believe that blogging is one of them. It helps you connect with your target audience. It helps improve search rankings. It’s nearly free. It’s time-consuming, sure. But, it also forces you to stay up to date with what’s going on in your market, and what matters to your customers.

Ashley Lipman for Lobster Digital Media has some helpful guidance on how to blog better.

2. Get Over Review Phobia

Second, reviews can really help. Reviews help establish your reputation and help build credibility. Websites like Yelp and Google show customers what they need to know about your company. It matters to get results that help your small business grow.

We know that it’s tough to ask for a review. Even we still struggle to ask for honest feedback. But, we found Jason Yormark’s NetBlaze post to be helpful.

3. Social Listening

Finally, we’d be remiss if we didn’t talk about Social media and social listening. Yes, social media is a crowded morass where you need to shout to be heard, but if you are smart about social the importance of the insight. ​listening, you can find what your customers care about, resulting in success for your small business In our posts about marketing content and about how to learn about marketing from politics, we speak about 

social listening

the importance of the insight.  Smart social listening can improve your chances of being heard since you will be speaking about what your customers care about.

4. Cultivate Influencers

Why do big brands, like Pepsi, use celebrities? They want to tap into that celebrity’s fans. Simple. We can’t afford celebrities, but we all have a micro-influencer we know. It’s about building relationships and seeing how you might be able to help each other.

On the smallest scale, it’s your local business community providing referrals for each other, getting everyone the results they want. On a larger scale, TopRank Marketing outlines some good suggestions.

5. Don’t Screw Up the Sale

You might scoff at this, but it’s not always common sense to everyone. Have you ever forgotten to follow-up with a client within a few hours? Maybe, been just a little too pushy and turned someone off? Perhaps, you just sold too much and didn’t listen? If you’ve done any other these things, you likely screwed up the sale. If you want more detail, we recommend you read SmallBiz Tech’s post.

For the Results You Can’t Guarantee, Bring Your Small Business to Us

If you want to get results quickly for your business, these 5 ways are a good place to start. There any many others, and we’ve found these to be the most helpful to us. If you want to learn more or if you think your small business needs more targeted tips, that’s where we can step in and help.

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.

The New SBA Bill: What You Need to Know

SBA legislation

The SBA reauthorization bill is making its way through Congress. This legislation may be a boom for entrepreneurs in the technology, biotechnology, medical, and any other research-intensive industries. So learn what you can do to prepare. And tell us if you will need help in managing your small business before it is too late.

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.

R&D Funding Enhancements is the Potential Biggest Boon for Entrepreneurs

Senator Mark Rubio (chairman of the Small Business and Entrepreneurship Committee in the Senate) said during a recent speech at Cape Canaveral

[Access to] “patient capital” [for] “the new industries, the new ideas that fuel sustainable, long-term growth, and it comes particularly concerning when it is not happening in sectors that are critical to our national security and our national economic security.”

“We view it as an opportunity not just to conduct oversight and our proper role to reauthorize, but also as an opportunity to modernize and sort of adjust the SBA to the 21st century needs of our country, and to sharpen it as a tool that serves our national interest,” There are some provisions in the current bill that would enable the SBA to provide capital for R&D intensive industries. It’s unclear if it will make it into law, but it is encouraging.

Marco Rubio spoke about investments and entrepreneurship for small businesses in Florida recently.

Concern From Abroad – SBA Bill Could Level an Unfair Playing Field

There has been concern highlighted in Congress about foreign government subsidies, namely China, negatively impacting domestic markets. This isn’t Trump slapping on tariffs willy-nilly. This is a bit more grounded in reality.

“When a Chinese train-maker, whether it’s for urban mass transit or whatever, bids on a project, they are going to be able to undercut any domestic competitor, not to mention any international competitors, because they don’t have the same profit motives that our companies would,” Rubio said in the interview. “They are prepared to bid on projects that make no financial sense because they want to dominate that industry.”

“We are not competing against private-sector firms. We are competing against companies with the full backing of the Chinese government,”

– Sen. Marco Rubio

It’s unclear what the SBA’s bill can do about this situation, but it is encouraging that there is recognition. Subsidies do alter the economic realities that small businesses and entrepreneurs face which is important for everyone to know.

A Bill Strengthening Small Strengthens the Community

The Small Business Administration helps to protect small businesses and campaign for their needs in congress

Nealy ½ of Americans work for small businesses. There simply isn’t a group that is more closely tied to the communities they serve and expand. Congress has talked about strengthening the competitiveness of small businesses against large corporations and foreign competition, though not much has been done. There has been some draft language in this legislation that could help improve access to capital, reduction of security threats, as mentioned in our post about small business cyberattacks. However, no one can say if they make it into the final bill, or whether they are able to deliver what they promise.

In summary, there are a lot of potentially beneficial programs and initiatives in the SBA reauthorization bill. There are reasons to be hopeful, especially if you are in the medical and or technical fields and are looking to expand beyond what you assumed were your limits.

How to Avoid a Common Small Business Mistake

Common Small Business Mistakes

After years of helping clients, we’ve found that the most common small business mistake is poor cash flow management. Cash flow is one of the key financial documents you should monitor and keep up to date. Your accountant can help you. QuickBooks or other software can do it for you. If both make your head spin, we can help you too.

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.

Why We All Should Care about Small Business Success

Every business has ups and downs when it comes to cash coming in. Customers pay late. Things get delayed. Projects start late. The problem is we all have monthly costs, such as rent, payroll, etc. going out regardless of how much is coming in. That’s what results in people living paycheck to paycheck, or being forced to be overly thrifty with their money. Cash flow management is developing a strategy that creates a buffer so you always have enough to weather these fluctuations.

“[The most common small business mistake] owners make is that they don’t understand their cash forecast, and business can be going very well, but you can run out of money,”

— Karen Mills, the former administrator of the U.S. Small Business Administration (SBA) during President Barack Obama’s presidency in Yahoo Finance

In 2017, small businesses created 1.7 million new jobs. That number rose to 1.9 million in 2018, and another 1.9 million in 2019. There are nearly 31 million small businesses in the US, which employs about ½ of the US workforce. When cash flow falls apart and you face this mistake, your small business is more likely to fall behind. Karen Mills hit the nail on the head when she said that small businesses “…create a path to the American dream, so it’s not only part of the economy, but it’s part of economic mobility.”

How to Manage Cash Flow to Avoid this Common Mistake in your Small Business

Here are four easy tips to learn how to easily combat this mistake in your small business.

1. Know You Average Billing Cycle

What’s a billing cycle? It’s the average time between the date you send an invoice and the date the cash is available in your bank. Available is important because it can take a band 1-2 business days to clear a check. During that time, that cash is NOT available for you to use. Typical billing cycles are between 40-70 days. Cash flow is important for most aspects of business management

2. Keep Enough Cash on Hand

In an ideal world, you would have enough cash on hand to cover your expenses over your average billing cycle. In plain English, you should have enough money in the bank to cover 2 to 3 months of expenses. Now, no one lives in an ideal world, so what can you do?

3. Have a Backup Plan

For many, this takes the form of a line of credit. A line of credit is when a bank agrees to loan you money up to a fixed amount. The interest rate is usually variable, meaning it is set based on the Federal Reserve rate plus some fixed percentage. You would treat this as a regular loan, with TWO major advantages.  First, you take only the amount you need. Second, you can pay it off early

 

Lack of cash on hand always causes problems

First, you take only the amount you need. Second, you can pay it off early without penalties. Most term loans are lump-sum payments. They also tend to carry early payment penalties. This is why lines of credit are much more preferable to loans when dealing with short-term cash flow problems.

4. What to Do if You Can’t Get a Line of Credit

Lines of credit are hard to get. You need stellar personal credit. Plus, you need to be in business for at least 2 if not 3 years. We’ve gone into depth about the challenges you face getting loans and how to avoid them. So if you can’t get a line of credit, your best bet is to get a term loan. It’s not ideal, but it’s better than running out of cash. However, if you don’t qualify for a line of credit, you’re not likely to qualify for a term loan.

We review the alternatives in our post “Denied a Small Business Loan? Try Alternative Lenders”. But always remember, the time to ask for a loan is when you have money in the bank. Don’t wait until you have a cash flow emergency to do it, and NEVER take a merchant cash advance. You’ll only make your problems worse.

In summary…

…to avoid the most common small business mistake, always keep your cash flow forecast up to date. We know that’s more easily said than done, and that it pulls you away from doing what you love. Fortunately, you can turn to us for help.

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.

HRA Changes: What Every Small Business Should Know

HRA Changes

The HRA changes can mean big things for Small Businesses. Why? The new HRA changes allow small businesses to fund employee premiums, using the individual health insurance market. Of the crazy things proposed to “repeal and replace” Obamacare, this one has the potential to be beneficial.

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.

What are the HRA Changes

First, let’s start with what is an HRA (health reimbursement arrangement).  An HRA is defined as

A Health Reimbursement Arrangement (HRA) is an employer-funded account that helps employees pay for qualified medical expenses not covered by their health plans. HRAs are compatible with all types of health insurance plans, and they are owned by the employer.

– Bank of America

How do the HRA changes work?

As an employer, we set aside a fixed amount of money to a worker’s HRA each year for his or her to use. Unlike other health spending accounts, only an employer can put money into your HRA. The money is available at the beginning of the year. HRA benefits can be carried over if we wish to make that our policy

Why is this important?

The new HRA changes allow you to fund employee premiums in the individual health insurance market. So, instead of the hassle of working with an insurance broker to find a group insurance plan, you can set aside a fixed amount for each employee. He or she would then have the flexibility to purchase the plan that works best for them.

What Small Businesses Should Know About the HRA Changes

First, the new rule is set to go into effect on January 2020. The rule will allow for expenses such as medical, dental, and vision premiums.

What’s Changed in the HRA

Historically, health insurance has been tied to large employers. Consequently, it was not designed to serve small businesses or independent contractors. As a result, small business were at a disadvantage when attracting talent. Ironically, this is where the bulk of Americans work.  Thus, why we have the highest rate of uninsured people in the first world.

Even in large companies, management selected the plan. It was one-size-fits-all. If you left the employer, you could qualify for COBRA, but after six months, you were out of luck.

Now, instead of management choosing the plan, employees can. This shifts it from a defined benefit to a defined contribution. Whether this leads to better overall coverage remains to be seen. It’s not all smooth sailing, but on the whole, it’s likely to be beneficial.

First, The HRA changes Create A Lighter Healthcare Admin Burden

The dirty little secret about group health plans is the high administrative costs. It costs the business time to review all the plans.  The broker takes a cut, and the list goes on. The changes to the HRAs lessen these burdens and costs.

Second, It Doesn’t Eliminate the Healthcare Admin Burden, However

The old adage “You don’t get something for nothing” is alive and well. The HRA changes still leave small businesses on the hook administratively in three key areas.

First, you will need to read and comply with a set of documents in order to be eligible. Second, you will have to show compliance and verify that employees are maintaining coverage. Finally, you will be required to provide annual reporting. Technology will likely make this easier, but it won’t go away completely.

Third, and Most Importantly, The Money Is Tax-Free

Employee health expenses were always deductible, but the administrative burden was a hassle. To avoid that hassle, roughly 10% of small businesses were bumping up salaries to avoid coverage. Those companies will benefit significantly from the HRA changes since they will no longer have to pay additional payroll taxes.

Fourth, HRA changes Allow Gig Workers to Get Coverage

The wider scope of the HRAs allows for employers to cover seasonal and part-time employees. Even independent contractors are eligible. Importantly, the coverage is portable. So, if a Gig employee leaves, they don’t lose the plan. 

Finally, No Minimum Enrollment Requirements in the HRA changes

One of the key hurdles for small businesses was the minimum enrollment requirements for group plans.  This left small businesses ineligible because they lacked the minimum number of employees, or had to pay huge premiums because of their small size.

In summary, the key thing small businesses should know about the HRA changes is how this helps us to attract talent. In our post, “3 Ways to Attract the Best Talent More Often”, we mention how small businesses can use personalization to their advantage. The HRA changes help us do just that. Instead of losing talent because of health insurance coverage, we can compete more effectively.

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.

3 out of 4 Small Businesses Were Successes Last Year

Small Business Success

According to SmallBizTrends, 3 out 4 of small business reported that they were successful last year. Were you one of them? If so, you have some planning to do. If not, you may have some fixing to do. 

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.

The Success of Small Businesses is Key to Continued Economic Growth

The success of small businesses is extremely important to the overall economy of the U.S. because of their sheer volume. The Small Business Administration (SBA) puts the number of small businesses at 30.2 million for 2018. In other words, that’s 1 small business for every 5 Americans.

So, What About 2019?

When 3 out of 4 small businesses are growing, that’s great news, right? Yes and No. All economies are cyclical.  So, it is important to understand the projected trends as well. As we mentioned in our blog “The Hidden Risk in the Spike of Small Business Optimism”, the forecast for 2019 remains strong.

In fact, “(74%) also say they expect their business to grow in the next six to 12 months. This is a 12% increase from the 2018 survey.” (SmallBizTrends).

Small Business Success is forecasted to continue for 2019 and beyond

The respondents from the 2019 small businesses were optimistic overall about their future, and the future of the economy as a whole.

Confident in Their Small Business Growth

77% say they are confident their business is going to grow in 2019, a 2% increase from 2018. But close to half of those, or 34.2%, say they are very confident.

Confident in the economy

The confidence also extends to the overall economy. More than two thirds (68%) say they are confident about the economic conditions of the U.S. in 2019. The same percentage of owners feel this way for the next two to three years about the U.S. economy.

What are the most common growth strategies for small business success?

Half said “Improving customer satisfaction and loyalty”, which is consistent with our post “Want to Grow Faster than Your Competition? Focus on Your Current Customers”.  So, it seems successful businesses are doing just that.

1/2 were expanding their customer base

Slightly less than half said finding new customer segments. In “4 Simple Steps to Write a Successful Marketing Plan”, we discuss some tips on how best to achieve this goal. Expanding your customer base can be challenging if you don’t do it right.

1/3 were providing new products

Similarly, about a third said “creating new products and services”, which is also covered in “4 Simple Steps to Write a Successful Marketing Plan”. But, equally important is to communicate the benefits of these new services.

1/4 were expanding locations

A quarter of businesses are looking to expand to new locations. In our post, “4 Tips for Expanding Your Business into New Markets”, we cover how to do this in detail.

Small business growth requires capital

Regardless of what they plan to implement, in most cases, they will need funding. In “Small Business Lending is Booming”, and “How Not to Sound Stupid When Talking to Banks” we share strategies that can help if you are looking for financing. 

In the survey, roughly 4 in 10 are tapping into personal savings to fund growth. Personally, I think that’s a mistake. If they could qualify, they would be better off leveraging those savings as collateral.  However, that’s a personal decision each business must make.

What if you were the Quarter of Businesses that Weren’t Successful?

Not everyone wins every year. If you struggled, it’s time to take stock. We suggest that you start back with the basics.

Time to Get Back to Basics for Small Business Success

Business Model

In “5 Steps to Take When Analyzing Your Business”, we talk about how to take a hard look at your business model to see what’s working and what’s not

Business & Marketing Plans

Once you’ve identified the issues, then it’s time for a new business and marketing plan. Both “4 Simple Steps to Write a Successful Business Plan”, and “4 Simple Steps to Write a Successful Marketing Plan” can help you get started

When writing those, we suggest reading “5 Proven Methods for Accelerating Small Business Growth”, and “5 Ways to Grow Your Business Without Spending a Penny”.

If you’re still struggling, both are free “Want to Learn About Business for Free” and paid services, like ProStrategix, that can help.

In summary, the outlook for small business success looks good. If you are successful, you should be planning for more growth. See “If You Don’t Plan for Growth Now, You’ll Hate Yourself Later”. If you are not, you at least have the wind at your back.

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 Small Businesses Can Help Each Other Succeed

Help Other Small Businesses Succeed

We all buy products and services every day. Why not try to purchase these from other small businesses so we can help each other succeed. This strategy has worked in immigrant communities for years. While it may not be cost-effective at first, it is an investment in your own business. Reciprocity is hard-wired in human nature.

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.

It’s Not Always Easy to Help, BUT it can be done

Why isn’t easy? Two reasons – cost and competition. By definition, small businesses don’t have the economies of scale to effectively compete on price like larger competitors online or off. As a result, costs are usually higher. Consequently, because they aren’t as competitive, they can more easily be pushed out of business. Therefore, the best way small businesses can help each other succeed is to create a network. Your neighborhood local chamber of commerce or LinkedIn are all great places to start.

While there are several factors working against helping other businesses succeed, there are a few ways which are working in our favor. The increased adoption of e-commerce by small businesses provides greater access than ever. This is also why a network can be helpful.

Build a Small Business Network to Help Each Other Succeed

A small business network is a powerful way to help each other succeed. How do you do that? Simple:

Get to Know Your Neighbors. A walk or a drive around town can be very enlightening. See who is there. Walk in the door and get to know them. Helping other small businesses succeed in your community pays dividends in the long-run. Not only can your neighbors recommend you, you also help the local economy create jobs, and make your neighborhood a better place to live.

Go On-line. If you want to help a particular kind of small business succeed, start by looking online for directories. For instance, if you want to buy from women-owned businesses, Hispanic-owned businesses, or LGBTQIA businesses, you can find directories devoted to these types of business owners.

Use LinkedIn. LinkedIn is a powerful B2B tool that you can use to help other small businesses succeed. You likely have small business owners in your network, and you don’t even realize it. Putting out a request to your feed can help start building these links. If you want a less techy approach, you can use your local chamber of commerce or other business/professional associations.

How Helping Other Small Businesses Succeed Helps You Succeed

When you boil it down, business is about relationships. Relationships are sticky. They tend to be resilient. Remember, reciprocity is hard-wired. We’ve built client relationships via referrals both to and from our business. It may cost a bit more to buy from a small business, but it is an investment in relationships. You never know who will be wildly successful, or from where a great business idea or opportunity might come. 

If you are a small business and would like to join our network, feel free to contact us. We’d be more than pleased to add you.

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.