How Innovative Does Innovation Need To Be For Great Small Business Success?
When we think of innovation, our minds usually wander back to the great inventions that we believe changed the course of history, or at least the course of commerce. The automobile, the iPhone, the polio vaccine, the atomic bomb and a long list of other innovations fall into this category. But can we talk? Few of us in small business are going to cure cancer or come up with an entirely new product category that will put us in the running for Time Magazine’s “person of the year” award. However, many of the innovations I’ve referenced here aren’t ideas that came “out of the blue” and this is true for most of the innovations and discoveries whose importance we now recognize. Even Columbus’ discovery of the New World was just a guy going further in one direction than European sailors had gone before – with apologies to the Nordic explorers who may have beaten Columbus to the punch. In any case, Columbus had a better PR firm and social media marketing team behind his (ad)venture. We aren’t all Edisons For the small business owner, the lesson to learn is this: You don’t have to invent something brand new out of whole cloth – simply innovating in one area can lead to outrageous success. Further, the “innovation” can be rather pedestrian. For example, what can be more simple than renting camera equipment? It’s a business that has been around probably almost as long as the invention of the camera. But when Max Shevyakov and Mark Gurevich accidently discovered what a mess the online camera lens rental scene was, they realized that if they did it right, it could be successful. Shevyakov and Gurevich founded Borrowlenses.com which was eventually purchased by Shutterfly. They funded their small business by using their meager life savings and a pile of maxed-out credit cards. But, they understood what the pain points were for their customers and they innovated in ways that eliminated the problems other wannabe lens renters were experiencing. In an interview with Andrew Warner on Mixergy, Shevyakov explains that one of the innovations they made was to only hire people who were themselves photographers – down to the folks who packed the boxes! Every single employee understood the needs of photographers. Innovate for improvement In other words, innovation can be as basic as doing something better in your small business. And if we take that concept further, it usually applies to even the biggest, most forward-thinking, groundbreaking innovations. The automobile was a better way to get to the next town than the horse and buggy. Even the vaunted iPhone was preceded by a number of “smart-ish” phones, including the Palm Pilot and Blackberry products. These innovations lead to a noticeable difference. The difference may be noticed by your customers, it may be noticed by your employees, it may be noticed in your financial records, and ultimately it will be noticed in all of these areas of your small business. A commitment to continual improvement is a commitment to continual innovation. If you make that commitment, you greatly increase your probability of success – even when the innovations seem small. Identifying the innovation that makes that all-important “noticeable difference” in your small business is an area that we discuss at THE Small Business Expert Academy. By...
read moreThis Week in Small Business: Overlooked marketing opportunities, living RICH, and much more
This weeks tips will steer you toward finding new marketing opportunities, make you a happier person and help you find out exactly what kind of entrepreneur you are. Dig in! Marketing and sales Hyperlocal media planning, digging deeper than sites like Facebook and Yelp, is one of the most often missed opportunities when it comes to local marketing. Anthony Iannarino explains why you need to take notes in sales meetings. It may seem like a simple thing, but the reasons are really fairly profound. Carlos Alber is the content marketing guru at 3M. When he talks, people listen. He talks in this article. Can you apply Amazon and Apple’s marketing strategies in your small business? Some smaller brands are doing it with great success. Do you know the social media marketing tools Canva, Post Planner and Shortstack? If not, get to know them here. If you care at all about search engine optimization (SEO) you should be redoubling your content creation efforts. It’s the most effective way to boost your visibility. More on the subject: 10 #SEO Tips For Marketing Your #Startup in 2015. Make a checklist from these items so you can “hit the ground running” with your startup. In case you don’t already have a social media image size guide on your refrigerator door, here it is again. And for image inspiration, check out this slideshare that illustrates how 10 brands used visuals. Leadership, management and productivity You need to communicate effectively and professionally. Here are some simple grammar tips to help keep your written communication looking its best. Shep Hyken interviews Dina Dwyer-Owens, co-chair of the Dwyer Group. She explains how to “Live R.I.C.H.” – which entails respect, integrity, customer focus and having fun while you’re doing it! Sujan Patel, VP of marketing at When I Work, gives us 15 ways to be a happier person. (Can we adapt this article for Grumpy Cat?) Have you ever been haunted by a bad hiring mistake? Not fun. Here are seven missteps you must avoid. Much has been written about big data. This article is good because it gives real examples of how companies have used big data to improve the customer experience. And while we’re on the topic of customer service, this slideshare by Shep Hyken gives a good introduction to customer service on social media. Need summer reading? Here’s a list of eight business books that you might enjoy. An Oct. 1 deadline looms for implementing credit card readers that can handle cards with embedded chips. Are you ready? The seven quick tips for starting your small business strong are all right on the money. And please don’t ignore number four! Entrepreneurship, startups and innovation Silicon Valley giant Intel is setting aside $125 million to grow tech startups that are being fun by women and minorities. If that includes your company, it’s worth checking out. If you have time to listen to podcasts, here’s a good one on alternative financing. Do you have to set out to be a “social entrepreneur” to do good? Ray Hennessey says that all entrepreneurship is “social” entrepreneurship. Scroll through this list of six different kinds of entrepreneurs and see where you fit in. Politics, government and the economy Los Angeles recently passed a law to raise the minimum wage there to...
read moreHow the Obamacare Decision Could Impact Small Business Owners
There are always three June events that keep Americans entertained: The Stanley Cup series, the NBA championship playoffs, and the release of Supreme Court decisions. This year the decision in King v. Burwell, with its potentially profound effect on the Affordable Care Act (Obamacare) is giving the NHL and NBA a run for their money in terms of capturing the attention of the media. Simply put, if the administration loses this challenge, some 5 million Americans will lose the subsidies that underwrite a major portion of their health insurance costs. If it wins, those 5 million Americans won’t see any changes. As written, the law provides subsidies for lower income individuals who sign up through state-run exchanges. Thirty-six states refused to create exchanges, so residents in those states signed up through the federal exchange. However, the language of the bill passed by Congress and signed by the president does not explicitly allow for subsidies to individuals who sign up for health insurance through the federal exchange. The potential impacts for small businesses fall into three general categories: The health insurance status of their employees if the court rules against the administration, The guiding hourly employment regulations and penalties if the court rules against the administration, and The new regulations if the court rules in favor of the administration. It’s safe to assume that a fair share of small business workers used the federal exchange and received subsidies to get health insurance. It’s highly likely that most of them will drop their coverage if the court declares the subsidies illegal. This will put many small businesses in the position of deciding whether or not they should include health insurance as a benefit of employment. However, there is another wrinkle to consider here. Obamacare declared employees to be full-time when they worked 30 hours or more, and businesses with more than 50 full-time employees are required to provide health insurance for those employees or face a stiff penalty. This is why we saw many employers reduce hours to less than 30 per week in the run-up to the law’s implementation The interesting point is that the penalty is tied to the availability of subsidies. If the subsidies go away, so does the penalty and the motivation to keep employees at fewer than 30 hours. In other words, some employees may find themselves working more hours and earning more money than before Obamacare went into effect. This point relates to what will happen to some small businesses if the administration’s argument carries the day. The “employer mandate” which requires businesses with 50 or more full-time employees to provide health insurance or suffer a steep penalty has been delayed several times. We’re now in the first year where it will be fully in effect. So if the Supreme Court upholds this provision of Obamacare, this will be the first year that some small businesses will be facing the penalty. (By the way, the federal government runs a Small Business Health Options Program (SHOP) exchange to help small businesses get coverage. However, aside from Congressional staffers, so few people used the exchange that it is fairly inconsequential to this discussion.) In terms of overall policy going forward, it’s impossible to know exactly what will happen if the court strikes down this major provision in...
read moreHow To Handle Vacation Scheduling So Everyone Can Relax
Closed Gone fishin’. Probably every small business owner would like to hang out a sign like this on his or her business at some point during the summer and get away somewhere to relax. I hope it’s on your schedule, but I also know that your employees will want to get away as well. What are the best ways to handle the scheduling and logistics of accommodating vacation time during the summer? (As a side note, with schools expanding the length of their school year, for many families the summer “vacation” time is getting pinched.) Is closing an option? Some years ago, I knew a family-owned and mostly operated restaurant that just closed its doors for a week or two in the summer. It was run by two brothers whose families were close and they often enjoyed vacationing together, so shutting the doors was their solution to the problem. If you have some dead slow weeks during the summer, consider this approach. However, it’s not a strategy that works for many small businesses. The first step in solving almost every problem that involves personnel decisions, is to have a policy in place and stick to it. Any vacation, or time-off policy, should cover these basic points: The procedure for requesting time off. The person who approves time off requests. The amount of advance notice that is required. Blackout days or weeks. How requests are prioritized and conflicts resolved. In practice, be sure that employees know which dates have already been granted to someone – keep a vacation calendar posted where everyone can see it. When two employees want the same time off, often they are able to work it out between themselves. If they can’t, be sure you are fair and stick to your policy. Consider business needs In terms of managing your business during times when employees are likely to put in for vacation time, consider the needs of your business. Avoid scheduling new projects that require the presence of certain employees when they may be out of town. Meet with your small business team before vacation season is in full swing and discuss any issues like these and encourage them to get their vacation requests in early. As a small business owner you want vacations to be a time when members of your crew can get their batteries recharged. You don’t want to drain them with conflicts and snags in their plans before they even get out of town – let the airlines and long lines at the theme parks do that! Well, that’s enough on the subject. I think I’ll start checking my calendar to see when we can get away this...
read moreLearn This Jeff Bezos Cash Flow Lesson
Jeff Bezos’ Amazon almost never reports a profit, yet the company is on solid financial ground, still popular with investors, and considered the leader in e-commerce and a variety of other tech sectors. Further, Bezos brushes aside any questions or criticism of Amazon’s lack of profitability by touting the company’s incredible cash flow. And this is where there’s a lesson for every small business owner. Mint green with envy Amazon’s ability to generate cash makes the US Mint jealous. How is your small business doing in this regard? If it seems to you like you’re doing well, but you’re having problems making payroll or keeping up with your accounts payable, you need to take a serious look at your cash flow. It’s is an area where even good businesses can improve. Let me give you a metric that will help you gauge where you’re at today. It will also help you target the areas where you need to improve. The ability of your small business to generate cash is captured in something called the cash conversion cycle (CCC). The formula for the CCC is three basic steps: Start with the number of days of inventory that you have on hand, Add how long it takes customers to pay you, Subtract how many days it takes you to pay your suppliers. When this number is low, it means that you have a good cash flow. You won’t believe what Amazon’s CCC number was recently. (I’ll share that in just a few moments). If you consider that formula, you’ll see that it’s a bad thing to have a lot of cash tied up in inventory and accounts receivable and that it’s a good thing to delay paying your bills for as long as possible – not rocket science, but important to know and control. Here’s an online calculator you can use. How low can you go? Writing on this topic for the Harvard Business Review, Justin Fox said that efficient retailers like WalMart and Costco have CCCs in the single digits. However, that’s nothing compared to Amazon, which had a CCC of negative 30.6 days back in 2013. Apple is another star, scoring a negative 44.5. In other words, they don’t carry much inventory, get paid with lightning speed – should we call this Apple Pay? – and are able to hold off their creditors rather well. This is a simple formula to remember and use in your small business. But aside from measuring cold hard cash, it’s more important to consider it as a measurement of how well you are managing your business. Frankly, sales are not always completely in your control, but every element in the CCC formula is generally in your control. You should be able to control your inventory, how long you’re kept waiting for payment and how long you’re able to stretch out payments to your supplier. Your goal should be to drive down your CCC as far as possible. Further, always keep your eye on it. It’s easy to let some of these elements slide. If you take your eyes off these metrics, inventory can build up and client payments can slip. Suddenly, you’re in a cash flow...
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