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.

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.

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.

How Can NYC Help Small Businesses

NYC help small business

NYC is one of the BEST cities for Small Business”.  While this is true, NYC can always do better to help small businesses.  If we wish to continue using tax incentives to drive economic growth, we may need to shift that focus to provide direct support to small and medium-sized businesses and the jobs they create. 

NYC is facing a major storefront vacancy crisis.  In fact, the amount of vacant storefronts has nearly tripled since 2016.

A survey conducted by Douglas Elliman found that about 20 percent of all retail space in Manhattan is currently vacant, she said, compared with roughly 7 percent in 2016.

NYTimes

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.

Small Businesses Account for 1/2 of NYC’s Employment.

In fact, New York small businesses employed 4.0 million people, or 50.2% of the private workforce in 2015 according to the SBA.  Importantly, “Small businesses make up 99.8 percent of all New York businesses [in the state]” – SBA   If we can find millions of dollars to help large businesses, why can’t we do the same for small businesses?

New Yorker’s Love their Favorite Delis, Restaurants, and Bars/Hangouts

If there is enough political pressure to kill deals like Amazon, perhaps there will be more support to use those funds to help struggling small businesses, or to spur small businesses growth.  NYC is a large patchwork of neighborhoods, each with its own flavor and character.  These neighborhoods are most impacted by our storefront crisis.  Why?  We form emotional connections with people we see every day – our favorite deli, bar, or restaurant.  We, as New Yorkers, rarely share that same connection with the towering glass office buildings we pass every day.

Small Businesses are Less Equipped to Handle Government Mandates

Bureaucratic red tape and fines, and, the near-constant addition of new, complicated, and expensive government mandates adds a tremendous burden for small businesses.  If we want to support the storefront businesses and keep New York vibrant and unique, we should expand existing incentive programs to small businesses

How Can NYC Help Small Business

First, Extend the Job Program Incentives

Let’s take a page from the Amazon example.  For instance, the state’s jobs program offered to Amazon as a tax incentive should be extended to jobs created by small business.  These jobs are vital to NYC, and NYC could help small business greatly with extension of these benefits.  Small businesses offer entry into the workforce for people from all walks of life.  They provide careers, work schedule flexibility, and create tons of opportunity for workers and job seekers. 

Second, Provide Help with Soaring Labor Costs

NYC is an expensive city.  As such, people need to earn a livable wage.  However, labor costs have soared in New York City. NYC could help small business by encouraging the State to use its direct wage subsidy to provide a needed financial boost to small businesses.  Labor is usually the largest cost for retail, hospitality, and service businesses.  Because of this, they are highly sensitive to labor costs.  This makes a compelling case for why the tax code should be used to support and preserve these jobs.

Third, Commercial Rent Regulation  

Rents in NYC are rising faster than labor costs. This is one key area where NYC can help small businesses, commercial rent regulation.  Commercial tenants typically bear the burden of real estate tax pass-throughs in addition to non-regulated rent.  We also lose out in the new tax code. State and local taxes are no longer deductible for pass-through entities. Since most small businesses are, we’ve lost that tax break. If NYC or the State could help small businesses with some remedy, that would go a long way to reverse the damage from the Tax Cut.  Also, commercial rent control would help small businesses better anticipate and manage costs. 

Forth, Off-sets for Mandates

While I believe in paid part-time sick leave and proposed paid vacation for part-time workers, NYC could help small businesses by including some offsets and/or administrative support to lighten the impact on businesses. Small businesses are ill-equipped to fully shoulder the cost and administration of societal benefits and safety net programs.  Perhaps by adopting a collective system, like worker’s compensation for instance, NYC or the State could help mitigate burdens and send a message that the NYC wants to help all citizens including small business owners.

Finally, These  Are NOT Giveaways

The purpose of these tax benefits would not be to subsidize failing businesses or be irresponsible giveaways.  Rather, they would help the countless successful small businesses that contribute much to NYC.

Summary: NYC is a Great Place for Small Business. But We Can Do More

Even with these challenges, “NYC is one of the BEST cities for Small Business”, as we mention in our blog.  Just imagine how much more successful we could be if we put the same rigor and effort behind small businesses as we do large.

If we want to balance progressive ideals with business opportunity, small business is where to do it. It’s small business who employs the lower wage works. As such, we could have the most impact.

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.

Three Awesome Tips For Cutting Costs in Your Small Business

Cutting Cost Small Business

Even when the economy or your business is going strong, cutting costs in your small business is never a bad idea.  In fact, here are three awesome tips for cutting cost.

The economy is hit or miss — one minute it’s up, the next it’s down.  So, if you’re looking for a reliable way to protect your finances, make sure you cut costs all year round.

Forbes

As we come to the back-half of the year, it’s a good time to look at your expenses and see where you might be able to make some changes. These are the three tips that we use for cutting cost, and we believe they can help you in cutting costs in your small business.

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.

Cut out time-wasting activities

Activities that waste time are one of the biggest strains on business resources.  Small business owners often wish they had more hours in the day.  The truth is however, that we and our employees probably spend too much time on unproductive activities.  If we could remove them, we’d be able to get more accomplished.  We find making a list of what you are doing throughout the day helps.  Take a look at all the activities and see what is least value-added.  Try to remove it one day.  See what happens.  If everything is fine, then eliminate it.

Leverage Technology, cutting costs in your small business

Travel is a killer.  It not only costs time but also money.  With technology today, it is so easy to conduct meetings virtually, saving both time and money.  Some people will want face-to-face meetings, but others may not.  However, it doesn’t hurt to ask.

Cutting costs in your small business by Saving Resources

Space

In cities like New York, space is a premium.  The same is true in any major city.  But, this just isn’t office spaces, it’s server space, storage space, etc.  An e-mail or a file retention policy can help with cutting cost in your small business .  A semi-annual file clean-up can cut down on unnecessary storage.  Also, smart use of shared space can be more cost-effective than renting or owning office space.

Office supplies

Even in our electronic world, we still use a lot of paper and ink.  While these aren’t the most expensive items, wasting them can add up.  Ask yourself, do you really need to print that presentation, letter, etc.?  If so, can you print it more efficiently, side view or double-sided for example? It’s a simple step to cutting cost in your small business

Utilities

Let’s face it.  Most businesses waste electricity, gas, etc.  Therefore, to cut costs in your small business, think about where you might be able to reduce your energy usage.  First, how can you make the most of natural lighting?  Second, could you switch to a more energy-efficient option like LED lighting, for instance?  Third, could you use window shading to reduce AC costs?  Finally, could you install a smart thermostat or smart appliances?  In fact, some electricity companies provide discounts for use or for purchase.  Either way, it’s a great way to cut costs.

In summary, these are just a few ideas for cutting cost in your small business. There are others that we explore in our post “4 Ways to Avoid Wasting Money as a Small Business”.  You’ll probably come up with even more.  A consistent effort is what’s key.

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.

Small Business Cyber Security & Why Be Concerned

Small Business Cyber Security

Small business cyber security & attacks rarely make the news, but small businesses are among the biggest targets. Having had to deal with one ourselves, we know.  In fact, “43% of cyber-attacks target small businesses” according to the Verizon 2019 Data Breach Investigations Report (DBIR).  The most common is ransomware.

Why are small businesses so vulnerable?  Simple, time.  Most of us are so busy running our day-to-day operations.  Who has time to focus on Phishing scams or other cyber-attacks?

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.

Small Business Cyber Security Assistance Act

While it sounds great, it sadly underdelivers. It authorizes the nation’s Small Business Development Centers (SBDCs) to “work with” the Department of Homeland Security to, according to  The Hill, “provide consulting to small businesses on how to strengthen their cybersecurity protocols.”  New materials and education programs are also tools?. -Small Business Trends

Sounds good, right?  Not quite.  While the bill has good intentions, the policy execution has problems.

Problem #1: Have You Ever Heard of SBDC?

Right.  I didn’t think so.  So, how can they provide “consultation” on small business cybersecurity if you don’t know they exist?  Sadly, this bill does not include funds to drive awareness of SBDC.  Therefore, if you don’t know about it now, you’re not likely to learn about them in the future.  The idea that the centers will be sufficient to “provide consulting to small businesses on how to strengthen their cybersecurity protocols” is like pouring money down the drain.

Problem #2: Raise Your Hand if You Own a Server?

Again, didn’t think so.  Most small companies have switched to, or started with cloud-based applications.  We do.  I bet you do, too.  This makes our data security dependent upon big tech companies.  While this bill is focusing on us, where is the accountability for those hosting the data – Microsoft, Google, Amazon, and others?

Small Business Cyber Security Assistance Act Alternatives

Solution #1: Make Tech Companies Liable for Small Business Losses

While you could sue them for data losses, good luck!  The playing field is completely imbalanced.  If this bill really wanted to help small businesses, it should require big data companies to provide compensation to their small business customers when they screw up.  Regulation of the tech industry is sadly lacking.  Congress is not known for being tech-savvy. 

Solution #2: Cyber Insurance

Who has heard of cyber insurance?  Few have.  It is available, and it’s probably the best option to protect yourself.  It’s just an added cost.  This bill could help small businesses if it would provide some financial guarantees for insurance companies, similar to what they do for the Small Business Administration loans.  Some assistance to help pay for cyber insurance would make it more affordable and accessible.

If this legislation passes, it’s unlikely to do much in terms of helping reduce small business cyber-attacks.  In this jump-start application world, you have two options.  First, put your faith in tech companies acting responsibly with your data, or alternatively, invest in some cyber insurance.

In summary, Congress is woefully behind the times in tech. This is nothing new. This is one area where infrastructure improvements could significantly help small businesses cybersecurity, but in the meantime, we should take precautionary steps to protect ourselves.

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.

Avoid Wasting Money: Small Business Tips

Avoid-Wasting-Money-Business

All businesses (unless they’re non-profit) have one thing in common: they all need to turn a profit.  The easiest way to turn a profit is to avoid wasting money as a small business. So read our tips to learn more about how to save and grow without spending money

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 FREE thirty-minute consulting session. 

4 Ways to Avoid Wasting Money as a Small Business

To start, the first step is to understand what a “deal” means to you.

1. Deal or No Deal?

Often, we as small business owners are bombarded with advice, especially when it comes to deals.  Not all of this advice is bad, however, but whether something is a deal, only you can decide. 

Importantly, the biggest mistake many people make is to focus on price versus value.  In other words, if you focus on the value it provides to your small business, you avoid wasting money. It’s a shortcut to long-term success, in many ways.

Have you ever bought something cheap, and it broke or didn’t do the job, etc., only to have to buy something else?  I think we all have.  But, it teaches us a great less about value.  Value is a measure of quality for a given price.  Granted, value is tough to measure because quality is tough to gauge.  But, the key question is really ‘will it do the best job at that price level’?

2. Minimize Impulse Buying to Avoid Wasting Money as a Small Business

Let’s face it.  We all buy on impulse.  It happens.  There are many who will say “never buy on impulse”.  While that’s great in theory, we all know it’s going to happen.  The key is to minimize it.  So, when the urge hits, take a breather and ask, do we or I really need this?  Therefore, if you are buying something, you should have a reason, even if it’s just to treat yourself.

3. Have a Reason to Buy is a Great Way to Avoid Wasting Money as a Small Business

Building on the last point, you can avoid wasting money as a small business by ensuring that all your purchases have a purpose.  Some small business owners are really good at this.  In contrast, some aren’t.  If you fall into the latter category, then, it’s helpful to make a list of what you spent for a week, 2 weeks, or a month.  Next to each purchase, put a check if it had a reason.  Count how many checkmarks you have.   Granted, it’s a bit tedious. But, it’s a good tool to help track and train new spending habits.

4. Find the Hidden Inefficiencies

Look, most small business owners didn’t start their businesses because they had business degrees.  So, it’s likely that there are some hidden inefficiencies in a small business that are wasting money.  To avoid them, it can be helpful to analyze your business model once and awhile. 

It’s so easy to get caught up in the day-to-day running of the business, you may not even notice that inefficiencies have crept in.  For instance, continuing to use a given service because you forgot to cancel it.  Or, for example, paying bills late because you were too busy to get to it. It’s things like that which can save you from mistakes that will cost you in the future.

Therefore, It’s often helpful to get some outside advice as they can look at your business from an unbiased perspective. Once you have identified the issues, you can avoid wasting money as a small business.

In summary, if I haven’t convinced you by now that these steps are important, maybe this will: 82% of businesses that fail, do so because of cash flow issues. So, let’s work together to prevent that.  

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.

Use Social Media to Improve Small Business Customer Service

social media customer service

Social media interactions can make or break a small business. So, here are some simple ways to use social media effectively to improve customer service in your small business. If you are looking for help, please contact us for more information.

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.

Customers Expect a Quick Response

For instance, ½ of Twitter users expect a response within an hour, a recent study reported. 4 out of 10 Facebook users expect the same. Therefore, timely responses are key. Importantly, if you wait more than an hour, you risk disappointing a large portion of your customers. As a result, your small business customer service suffers. Because social media is so immediate, it can help to improve small business customer service greatly.

First, Using Social Media to Improve Customer Service Response Times

Where Social Media Chatbots can Help Customer Service

When a customer sends you a message, it’s important to address it quickly. Often, people use Facebook Messenger or Twitter, and they expect a response within an hour. That’s why chatbots are so important. It’s relatively simple to set up a frequently asked question trigger. The chatbot can use these triggers to help deliver a timely response. For example, if your business often gets questions about your services, the chatbot can deliver custom responses based on a generic term “services” or “what do you do”.  In addition, they can be triggered off of a specific service item.

Chatbots are a Quick Fix not a Solution

This approach can be used across a number of simple questions. However, if the question is more complex for instance, you should program the bot to have a live operator take over. Chatbots are good, but the can seem fake. If relied on too heavily, they can do more harm than good.

Second, Don’t Argue. You Won’t Win

As Michelle Obama said, “When they go low, we go high.”. Always keep your head. Regardless of how insulting or false a review may be, always take the high road. As tempting as it may be to take the Donald Trump approach, it rarely succeeds. For example, it can make you look petty, vindictive, and defensive. While it may grab people’s attention, the potential damage to your brand is significant.

Use Social Media to Bridge to Your Benefits

Instead, think of it as an opportunity to re-sell your benefits. So, if someone didn’t like what you did, ask them why. Importantly, it makes them feel heard and defuses the situation. Also, you may learn something new. If you can solve their problem, awesome. For instance, they may edit their review, or at least take the sting out of the original. Finally, every comment allows you to repeat your benefits.

An Example Interaction of How Social Media can Improve Customer Service

For example, let’s consider this interaction:

User: Product X sucks! It’s a waste of money! Don’t use it!

You: I’m sorry that you had a bad experience. Might you tell us why you feel this way?

User: It’s so complicated to use. I spent 30 minutes trying to make it work, and it’s still not running. I wasted $X on something I can’t use.

You: Typically, each box contains a step-by-step guide. Attached is a copy in case yours was missing. We’d be happy to set up a time to walk you through it. When it is set up properly, we believe Product X can provide [benefit], and we want to make sure it’s doing that for you.

User: Thanks! I never saw the guide. This is much clearer.

User: I used the guide and got it to work in 5 minutes. This was awesome. 

You: We’re thrilled that…[repeat benefit]

Avoiding a Bad Review

These interactions are critical. They not only affect your ratings and search engine rankings but also help your brand and reputation. Therefore, it’s important to be friendly, empathetic, and human. More importantly, if the bot is chatting, it has to sound human and not artificial. Otherwise, even the best responses can sound canned. As a result, even if it resolved the customer’s problem, they are less likely to react as positively as you would like.

Lastly, Utilize User Groups as a Social Media Tactic to Improve Customer Service

A user community can be very helpful in providing a balanced response from multiple sources. For instance, members have a way of self-policing other members. Also, they can provide supporting and independent points of view. You will need to set guidelines and have a bot filter, but they are worth the effort. Finally, having a moderator can help ensure that the group runs smoothly.

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.

Why Small Businesses Fail While Others Succeed

Why-Small-Businesses-Fail

Why do some small businesses fail while others succeed? We would like to build on the point raised in Mr. Nugid’s article “Avoid These 4 Big Reasons Small Businesses Fail” in Inc. magazine. Plus, we add others we’ve learned based on real-world experience helping small 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.

Small Businesses Fail due to lack of sufficient capital

We’ve seen small businesses fail for this reason, over and over. It generally falls into two camps: first, a business who has been in business for less than 2 years, and second, a business, who waits too long before applying.

Small business who fail because they have less than 2 years experience

We had a young woman entrepreneur who was struggling with her business. She was profitable, but it was coming at the expense of her salary. So, this wasn’t a long-term solution.

Like most entrepreneurs, she was playing multiple roles. When she was selling, she’d gain clients. But, to service those clients, she’d have to stop selling. Therefore, she was seeing a seesaw effect in her cash flow. The obvious solution was to split the role to ensure constant and predictable cash flow.  

You would think this would be a slam dunk, right? Profitable, proof of concept, good personal credit, etc. Wrong. As we’ve discussed, in our post “What’s Holding Women Back”, and several others, we discuss the bias in the banking industry.

New businesses without personal guarantees or collateral will struggle, and women and minority-owned business will struggle more. I wish there were a ready-made solution for this, but there’s not. Maybe this will change as we discuss in our “Small Business is Booming Post”. But for now, you are typically left with two choices, enter the alternative lending market, or provide some personal guarantee.

Small business who fail because they wait too long

We had a client who had an amazing green concept. He secured an initial round of equity funding, but he didn’t use it wisely.

He was an idea guy and had a terrible time focusing. He hated numbers and analysis, which eventually was his downfall.  He never took the time to understand his cost structure. 

So, his profitability varied wildly from customer to customer. In some cases, it was so bad he was basically paying the customer so that he could perform the service. Unfortunately, we didn’t get to him until he made the biggest mistake possible. He entered the merchant cash advance market.

In our post, “Why You Should NEVER Use Merchant Cash Advances”, we go into great detail about these sharks. But, the moral of this story was that he waited until he was desperate to look for capital. Thus, this is why he failed.

Lack of Addressable Market

Mr. Nurgid highlights this as one of the key reasons small businesses fail. Maybe, that’s because he deals with credit card processing. In contrast, we have not seen this be as big of a factor as the lack of differentiation.

Small Businesses Fail Because of Lack of Differentiation

Now, this we have seen as a major cause of why small businesses fail. We would break this into two groups: first, lack of a clear positioning, and second, poor marketing execution.

Lack of a Clear Positioning

In our post, “4 Simple Steps to Write a Successful Marketing Plan”, we cover positioning in more detail.  We also offer tools that can help you build one.

A good positioning defines what’s unique about your brand within a competitive context. It’s a simple formula: For [customer], who are [demograhic, geographic, etc. subgroup], [Business] is the ONLY [category] that provides [benefit]. That’s because of [support point 1] and [support point 2]

For instance, we had a Dermatologist client who was struggling to gain patients. She operated in the crowded cosmetic market, where you can get a Groupon a day for a Botox special.

With physician overhead, they couldn’t compete and win on price. They needed to stand out, or they were headed out of business. So, we started with their positioning.

After much research and discussion, we came up with the following:

For women and men over 40, who want to look younger and more refreshed, Derm A is the only practice in NYC neighborhood, that provides the best quality cosmetic results possible. That’s because we employ only board-certified physicians and surgeons. and these physicians have a long track-record of amazing transformations.

See the difference. People don’t want Botox for $7/unit if they aren’t going to look great. This changed the game for them. It was no longer about price, but about results.

Poor Execution

This is a major problem that causes many small businesses to fail. Small businesses didn’t start their businesses because they had degrees in marketing. So, this shouldn’t come as a big surprise.

Getting your message heard by the right audience is challenging to do on a small business budget. In our post, “5 Ways to Grow Your Small Business Without Spending a Penny”, we discuss some options to consider.

Poor execution generally comes from poor planning. For instance, we had a client who was spending all his money in search and social media advertising. This was a problem for him for two reasons.

First, he was offering services in a very crowded space. In other words, the number of people competing for the same keywords was very high. Second, he was getting a terrible ROI.

While search, Facebook, etc. can be effective, they are usually not efficient spends for small businesses. At $1-$2/click. and standard conversion rates, you are paying $50-$100 per conversion.

After going through the “4 Simple Steps to Write a Successful Marketing Plan” with him, which was much more targeted and less expensive.

Poor Hiring

On this point, we agree.  We just lived through it. Poor hiring can cost you dearly, and waiting to fire them can add to that cost. 

This is always a mistake.

According to the U.S. Department of Labor and reported by HR Exchange Network, the average cost of a bad hire is at least 30 percent of their first-year salary. In other words, a bad mid-level hire who makes $75,000 per year will cost you $25,000 and who knows how much wasted time. Let them go.

Inc

For instance, we had a client who kept a toxic employee for too long. This person caused several strong performers to resign. So, not only did they waste his salary, they had to recruit and train several new people.

Small Business Fail by Scaling at the Wrong Time

This is an incredibly tricky situation. If you build scale too soon, you can burden yourself with unnecessary costs. But, if you scale too late, you can burden yourself with unnecessary costs due to overtime and inefficiencies. So, when is the right time to scale your business? We share our thoughts and examples in our post “3 Signs that You Are Ready to Grow Your Small Business”.

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.

Google Small Business Portal: Gimmick or Value-Add?

Google Small Business Portal

In June 2019, Google launched the Google Small Business Portal.  We were intrigued by it, so we gave it a try.  Here’s what we learned.

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 is it?

This quote from Anthony Ha from Techcrunch sums it up well.

So, on the new site, they can enter their company name and website (assuming they have one), then answer a few questions about their business and their goals. Google will then create a customized, prioritized list of actions, which may involve launching ad campaigns, or building up their online presence, or installing Google Analytics.

Techcrunch

Is it a Gimmick of Value Add?

The truth is, it is both. Here is a quick slide show of what it looks like:

Regardless of the options we chose, we wound up with the same recommendations. 

Google Small Business Portal Value-Adds

Google Analytics is definitely a value-add for any small business. It can be a very powerful tool if you have the time to learn it and use it. G-Suite is both a value ad and a gimmick. It depends on your business. If all you need are the basics, G-Suite is awesome. If you need more powerful tools, G-Suite is the poor man’s substitute to Microsoft, in our opinion.

Google Small Business Portal Gimmicks

There is a static flow that you need to follow if you want to get all the suggestions. In other words, when we tried it, if we didn’t sign up for G-Suite, we couldn’t go any further than the first page. As we mentioned, G-Suite is great, but it’s just not great for us. The next step was Google Ads, which is definitely a gimmick. While search advertising can be very useful, it’s not always right for everyone. If you’re a small business, you’re likely not going to rank highly, and therefore will have to pay more per click. While $1-2/click doesn’t sound that bad, if only 2% (industry average) actually convert, you will be paying $50-$100/lead.

Should you use Google Small Business Portal?

If you are Ok with what G-Suite provides and want to explore or can afford search advertising, it’s a very user-friendly guide to Google’s products. However, if you don’t necessarily want to spend money on Google’s products, you won’t get very far in the guide. Given Google Small Business Portal’s forced path, we are luke-warm about it. The hype was much better than the actual experience.

However, as a small business, the Google Small Business Portal may help you raise brand awareness, which was on the “4 Simple Steps to Write a Successful Marketing Plan

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.