All posts by Reinaldo Lopez

How to Handle Compensation Disputes

As a business owner, there’s a good chance you’ll encounter compensation disputes at some point. It’s only natural that your employees will want to maximize their salary, especially your top performers. How do you handle compensation disputes and keep the peace?

 

The Common Reaction

It’s normal for employers to be caught off guard or even annoyed with this type of situation. Often it hits you out of the blue, and it’s difficult to immediately formulate a response because there are so many variables. If you acquiesce and increase an employee’s salary, it can trickle down and impact your business in numerous ways. The same is true for denying the request.

As Karen Dillon, author of HBR Guide to Office Politics puts it, “As a manager, you’re starting with an impressionist painting of how people are paid and whether it’s fair. Also, it’s rare that giving the raise is entirely up to you — and there are a hundred things you have to account for. With a decision like this, there are always ripple effects.”

 

Hear Them Out

Before entering into any sort of negotiation, hear the precise reasoning behind the dispute. Of course you’ll be more receptive to listening to a linchpin employee with years of experience over a new hire with minimal influence. But it’s important to gather as much information as possible. Never shut the idea down right away because this can drive a wedge between you and your entire team.

 

Consider Key Factors

From there, you’ll want to perform some considerable research. Look at current market conditions to determine how your employee’s salary compares with individuals in similar positions. Next, check the projected salary for the next three to five years.

Assess what the employee’s overall performance and dedication level have been like during their time with your company. Have they consistently exceeded expectations, or have they merely been so-so?

Finally, you must consider whether or not increasing their salary is even a realistic notion. Would doing so take a huge chunk out of your profit margin? Or would it merely be a tiny divot?

 

Weigh Your Options

At this point, you should have a pretty good idea whether your employee’s dispute is valid. After examining your company’s financials, you’ll also know if it’s economically feasible. Base your decision on this information.

 

Resolving Compensation Disputes

If your employee has sound rationale and it’s feasible, negotiate to find a number that both parties are happy with. Otherwise, reject their request. If you choose the latter, do it with respect and tact. Explain your logic rather than simply saying, “no.” You may also want to give feedback on what they can do to potentially earn a raise in the future.

Compensation disputes are never fun and can potentially cause a rift between you and your workforce. Taking the right approach should enable you to come up with a reasonable solution that makes sense for both parties.

Is It Time to Push Your Business Model Into the Future?

What are two common traits shared by some of world’s most successful companies? That’s easy — innovation and adaptability.

When you look at the Googles, Amazons and Ubers of the world, you’ll see that they’re willing (and eager) to implement a “future business model.” Rather than basing their company around what works at the moment, they have a penchant for pushing the envelope and testing the limits.

The question is: Is it time to push your business model into the future?

 

Characteristics of a Future Business Model

According to The Harvard Business Review, there are four primary characteristics of a future business model.

  1. It substantially outperforms the status quo from the customer’s perspective
  2. It tends to violate traditional constraints
  3. It builds brand presence before markets have been clearly defined
  4. It enables adaptation as conditions change

The companies that adhere to this business model are highly customer-centric and meet an intrinsic need that other competitors are failing to fulfill. This often involves defying current boundaries and may go against conventional logic.

There’s a high level of experimentation associated with a future business model where buzz is usually created before a product ever actually hits the market (think Amazon drones). Smart companies also understand that perpetual change is inevitable and develop an infrastructure that enables them to evolve as needed.

 

Major Trends

To get a better idea of what a future business model looks like, it’s helpful to look at some current examples. A PowerPoint presentation from the Center for Service Innovation points to four specific emerging trends that more and more companies are implementing.

  • Sharing economy – Uber and Airbnb are great examples
  • Servitization – This focuses on meeting the increasing needs of consumers rather than just “selling a product”
  • Open innovation – Think open-source software, which facilitates and encourages collaboration to optimize a product
  • Sustainability – Environmentally-friendly products and social responsibility are huge right now

 

Is This Something Your Company Should Push?

A future business model is by no means for everyone. It takes a combination of key insights, comfort with perpetual experimentation and a certain level of courage. It also requires plenty of trial and error and a willingness to make mistakes.

Not all innovations hit their mark. In fact, many fall short. But there are some serious advantages of implementing this business model.

Here are some of the biggest:

  • You can outperform competitors who are stuck in the past
  • It enables you to scratch an itch that competitors cannot
  • It makes you incredibly flexible and adaptable, which is becoming increasingly important in the 21st century (Just think about the demise of Blockbuster)
  • You can gain a reputation for innovation
  • It can potentially lead to massive success and profitability (Just look at Google and Apple)

 

It’s important to point out that a future business model doesn’t necessarily mean you have to be clairvoyant or reinvent the wheel. According to The Harvard Business Review, “Succeeding does not require predicting the future. Instead, a great future business model is based on an accurate directional read of the future, providing flexibility and optionality as the future unfolds.”

In other words, you simply need to have a pulse on what’s going on, be truly in touch with your demographic and be on the lookout for new (and sometimes radical) ways to meet their needs.

“Adapt or perish” is a fitting quote that encapsulates the philosophy behind a future business model. Although it requires you to “put yourself out there,” it’s viable for certain companies and can pay dividends in some cases.

 

 

How to Turn Your Business Dreams into Habits

The whole notion of “turning your business dreams into reality” may sound cliché, but goal-setting is important. Business dreams can be the initial spark that gets you to take action. To convert the abstract into the tangible, turn your business dreams into habits, which involves a three-step process.

 

1. Develop a “Blueprint”

The first and most essential step is to decide what your ideal vision is. You need to look at things on the macro level and have a clear idea of your overarching dream. You can liken it to building a house where your ideal vision will serve as the “blueprint,” which will guide you during construction.

By looking at that blueprint you will know what materials are necessary to build the house, and you can follow it until your business dream has fully materialized. Be as specific as possible and stay away from nebulous terms like, “I want my business to be successful,” or, “I want it to be profitable.” Instead, opt for tangible, measurable goals like, “I want to increase sales by 25 percent by [X date].”

 

2. Create a Series of Smaller Goals

Next, you’ll need to figure out the sequence of steps that must be accomplished for your dream to become a reality. Again, be highly specific and really think it through until you know exactly what needs to be done.

For example, if your dream was to increase sales by 25 percent, you might:

  • Hire two high caliber salespeople
  • Launch a rebranding campaign
  • Enroll in a course on conversion rate optimization (CRO) for your website
  • Increase sales by 10 percent in Q1
  • Increase sales by 15 percent in Q2
  • Increase sales by 20 percent in Q3
  • Increase sales by 25 percent in Q4

 

Once you have your sequence of goals defined, it’s time to build habits around them.

 

3. Engage in Daily Habits

Figure out which specific habits you need to engage in to accomplish your smaller goals, which will ultimately actualize your business dreams. Here are some habits that would increase the likelihood of increasing sales by 25 percent:

  • Reading one high-end blog post every day about attracting and retaining top tier salespeople
  • Reading one blog post every day about maximizing employee productivity
  • Reading one chapter a day in a book on branding
  • Completing an assignment each day for your CRO course
  • Spending one hour a week brainstorming new branding ideas
  • Spending one hour a week doing market research to identify industry trends

There’s one more important point to make. Not everything will work out as you plan. It’s just not realistic. You should account for this by creating a “pivot,” which means having a backup habit to overcome any challenge you face along the way. Being flexible and adaptable should reduce any friction and help you stay the course.

The process of turning your business dreams into habits essentially involves reverse engineering. By completing daily habits, you can accomplish smaller goals, which should eventually enable you to accomplish a major goal on the macro level.

 

 

Is it Time for a Second Location?

Growth and expansion are natural goals for most business owners. At some point, you’ll want to take things to the next level. But is it time for a second location? It’s wise to ask yourself a few key questions before taking the plunge.

 

Has your primary location reached its full potential?

Some business owners jump the gun and launch a second location without their flagship store ever truly reaching its peak. This is problematic because you may give less attention to your main moneymaker, which ultimately hurts your company as a whole.

Ideally, your primary location will have reached at least 80 percent of its potential before moving onto a second location. You’ll want things to be operating nearly flawlessly to minimize any painful setbacks.

 

Is your business model replicable?

Many business owners have experienced unbridled success at their first location only to fail at their second. To warrant the opening of a second location, your current business must be replicable. You’ll want to know for certain that you can duplicate the positive results you’ve seen initially.

Perhaps the most integral aspect of duplicating your business is having sound leadership at your second location. You can’t be at two places at once, so other managers will need to step up to the plate.

 

Is there enough demand for a second location?

Perform plenty of market research to gauge just how receptive consumers are likely to be to a second location. Will the projected revenue justify the additional investment, marketing, maintenance and overhead costs?

Be particularly diligent with your market research if you’re branching out to an entirely new city. Demand can fluctuate considerably depending on the locale.

 

Do you have adequate cash flow?

Cash flow is essential for getting things started out on the right foot. If you’re already struggling financially, it’s going to be an uphill battle the entire way. Ideally, stay away from partnering with outside investors and spending other peoples’ money because things can get messy in a hurry and diminish your long-term profit margin.

According to Jennifer Martin, principal consultant at Zest Business Consulting, “The ideal scenario for funding a second location is paying for it yourself.” But if you have to get outside funding, she suggests asking yourself whether you would invest that much in someone else’s business.

“Calculate your success rate thoroughly,” Martin advises, “then add 35 percent to whatever figure you come up with, because no matter how diligently you crunch the numbers, you will always have unexpected expenses.”

 

Are you prepared for the inevitable growing pains?

There are bound to be some curveballs with any type of business venture. It’s inevitable. Make sure that you’re prepared to handle any issues that come your way without them sabotaging either your flagship or second location.

Opening a second location definitely makes sense under certain circumstances and is the logical next step for building your brand. Just make sure that you think it all through before proceeding.

 

6 Ways to Grow Your Business

Congratulations if you’ve been fortunate enough to survive the startup stages of your business! You’ve made it further than a lot of other business owners ever will. But what comes next? There are several different ways to grow your business and take things to the next level.

 

1. Form a Key Partnership

Businesses are constantly partnering with one another in ways that are mutually beneficial. Just think of Apple and IBM, Spotify and Starbucks, UNICEF and Target — the list goes on.

One means of rapid expansion is to find a key partnership that serves as a symbiotic relationship to both parties. Hint: It doesn’t necessarily have to be with a company in your same industry.

 

2. Try a New Marketing Strategy

The great thing about marketing is the endless number of possibilities and combinations. Try experimenting with a new marketing medium if you’re looking to reel in a larger portion of your demographic.

Here are some of the top digital marketing trends for 2017, according to Smart Insights:

  • Content marketing
  • Mobile marketing
  • Conversion rate optimization
  • SEO
  • Online PR
  • Communities

 

3. Open a Second Location

Is your brick-and-mortar business swamped with customers day in and day out? Is it getting congested to the point where it’s hurting the customer experience?

If so, you should definitely consider opening a second location. Of course this requires an investment and will come with some intrinsic growing pains. But the payoff can be huge. Just be sure that you have a definite means of getting financing and carefully consider the optimal locale.

 

4. Add a New Product/Service

If you’ve had good results with your existing product or service, you may want to take a stab at offering another. This could complement something that’s already popular or could strike out in an entirely new direction. The important thing is that it genuinely fulfills the needs of your built-in demographic.

Be sure to perform plenty of market research to gauge receptiveness and develop a plan for raising awareness. For more on a successful launch, consult this resource from Kissmetrics.

 

5. Franchise Your Business

Do you have a system in place that’s successful and replicable? If so, there’s always the possibility of franchising it. When done correctly, this can be extremely lucrative because you’ll A) earn an ongoing royalty and B) build even more brand equity.

The only issue is that you need to ensure that you protect your intellectual property and choose franchisees that will be assets, not liabilities. This post from Forbes will give you a rundown on the basics involved with franchising if you’re interested in going this route.

 

6. Go International

In some cases, partnering with a foreign distributor makes sense. If your product/service has flourished domestically, why not take it to a global market? Just look for potential business partners out of the country. LinkedIn is a great resource for this.

Growth is the goal of most business owners. Experimenting with one or a combination of these ideas can be your ticket to expansion without the growing pains.

 

Minimize Employee Turnover by Understanding Why People Quit

A high turnover rate is toxic to your business’s success and longevity. Not only is it frustrating to have to continually replace employees, it can be quite costly.

In fact, a study from The Center for American Progress found that, “The cost of losing an employee can range anywhere from 16% of their salary for hourly, unsalaried employees, to 213% of the salary for a highly trained position.”

If a person earns $40k annually, this translates into a loss of $6,400. In order to minimize employee turnover, it’s necessary to understand what makes people quit.

 

Poor Relationships With Managers

The vast majority of people quit because of their manager. It’s not that they necessarily hate their job, it’s that there’s friction with their boss. Information from The Wall Street Journal reports that, “About half of employees had left a job at some point ‘to get away from their manager.'”

It should be a top priority to educate your managers on how to build strong relationships with employees. They should develop excellent communication skills, be able to deliver consistent feedback and treat employees with respect. If you can overcome this obstacle, you’ve literally won half the battle.

 

Micromanagement

High employee expectations and an overarching vision for your company is great. However, when you or your management team “hover” causing your employees to walk on egg shells, it can be incredibly draining. In fact, dealing with chronic micromanagement is another main reason why employees decide to leave.

An article on Forbes suggests, “Employees whose ‘hands are regularly tied’ are 28% more likely to think about greener pastures elsewhere.” This can be particularly frustrating for younger millennial workers who don’t typically like relinquishing full control to a superior.

The key is to find the right balance between delegating tasks and allowing employees to utilize their own creativity and talent. Be sure that you’re giving employees a sense of autonomy in their jobs and they’re more likely to stay.

 

Lack of Development Opportunities

Most people have a desire for at least some level of personal growth and progress. When there’s stagnation, engagement and overall job satisfaction tend to decline. If your employees feel like hamsters going around in a wheel but not getting anywhere, this can lead to disillusionment.

Consider the following:

  • Promote from within
  • Continually challenge your employees to trigger growth
  • Give employees a chance to showcase their skills and talents
  • Develop existing skills
  • Offer career advancement opportunities
  • Offer periodic raises

 

A Lousy Culture

There’s also the issue of culture. According to the same article on Forbes, “Employees who give their work culture low marks are nearly 15% more likely to think about a new job than their counterparts.” If your culture stinks, don’t expect many workers to stick around for the long haul.

Fortunately, there are several ways to improve your culture. Some examples include:

  • Hold team chemistry-building events (e.g. company outings, recreational activities, etc.)
  • Reward consistent production
  • Be sensitive to the needs of employees and accommodate them whenever possible
  • Offer flexible scheduling

If your turnover rate is too high, it’s something you should address right away. Understanding the most common reasons people quit puts you in a better position to minimize employee turnover and build a strong foundation of loyal workers.

 

 

 

Top 5 Reasons Your Business Should Sponsor Community Events

At some point, many businesses are presented with an opportunity to sponsor a community event in their area. Some examples could include a charity event, cultural event or local fundraiser. While you may be reluctant initially because of the financial and time investment involved, there are several reasons to sponsor that can have a positive impact on your business.

 

1. Great Publicity

Even if it’s only for a day or two, putting the spotlight on your business can have some major long-term benefits. You’ll gain significant exposure overnight and can get your brand in front of a much larger segment of your demographic. This will often result in an influx of new leads and ultimately customers.

 

2. Networking Galore

Building solid relationships is the key to opening new doors for any business. The more quality contacts you have, the more opportunities will come your way. If you’re looking to quickly expand your network and gain meaningful business relationships, sponsoring an event in your area is a great way to do so. The best part is that it requires very little effort and energy on your part, and most contacts will come right to you.

 

3. Improved Reputation

Reputation management is serious business these days, especially when you consider how quickly a brand’s reputation can spike or plummet because of online reviews and social media. A positive reputation is a fundamental component of generating initial leads and is integral to long-term sustainability.

Sponsoring an event is great because it shows that your business has a legitimate interest in local causes and that you want to contribute to the enrichment of your community.

 

4. Stronger Brand Equity

An improved reputation almost always results in your business being perceived as more credible and trustworthy. In turn, your demographic is more likely to associate your brand name with something positive, which automatically strengthens your brand equity.

This is important because it goes way beyond the day or two that you sponsor a community event and can have a long-lasting effect. In some cases, this can be the catalyst for increased customers and clients for years down the road.

 

5. It’s Fairly Affordable

While it’s true that this type of sponsorship comes at a cost, it’s pretty minimal when you compare it to many other forms of local marketing. For instance, print and radio ads can greatly exceed the cost of sponsorship and may only yield a fraction of the results.

In many cases, sponsoring an event is a one-time thing. However, you can potentially reap the rewards for years to come. It’s especially effective for local brick-and-mortar companies who are primarily trying to reach a limited demographic within their city or region.

If your business is ever approached to be a sponsor, it’s definitely something you should consider. With five strong reasons to sponsor a community event, the pros vastly outweigh the cons. Not only can this help you forge valuable relationships and bring in immediate leads, it can boost your long-term brand equity significantly.

How HR Can Increase Profitability

All too often human resources is viewed as a necessary evil. Many business leaders regard it as a department designed to provide new employee orientation and take care of laborious paperwork — nothing more.

In reality, HR plays a bigger role than most people think. In fact, HR can increase profitability and improve a company’s bottom line in several ways.

 

Insightful HR Statistics

Research from a business and legal resources webinar from HR Hero indicates that, “60 percent of executives are beginning to see that HR can partner with other departments to increase the profitability and value of a business.” The outdated notion that HR is just there for processing paperwork has given way to an understanding that it actually plays a vital role in the strategic development of a business as well as its company culture.

Another extensive study conducted over the course of two years entitled, People and the Bottom Line, by the Work Foundation and the Institute for Employment Studies found that, “If an organization increased its investment in HR by just 10% it would boost gross profits by nearly $2,000 per employee per year.”

Because HR can be aligned with other areas of operations, there’s the potential for it to have an immense impact. Here are some specific ways that HR can increase profitability.

 

A Better Employee Onboarding Process

When employees are given adequate training and equipped with the right tools, they can perform their jobs more effectively and become more productive. HR plays a key role in the onboarding process and can take measures to ensure that new hires get the training they need and are ready to perform their jobs at the highest level possible.

 

Reduced Turnover

HR is also responsible for selecting the best candidates who possess both the hard and soft skills needed for the job. In turn, they’re likely to find individuals who are genuinely enthusiastic about their careers, which increases the odds that employees will stick around for the long haul.

Reducing turnover is incredibly important because of the costly nature of replacing employees. A study from the Center for American Progress found that the average cost to replace an employee is, “16 percent of annual salary for high-turnover, low-paying jobs earning under $30,000 a year and 20 percent of annual salary for mid-range positions earning $30,000 to $50,000 a year.”

 

Minimize the Threat of Litigation

Sometimes disgruntled employees think nothing of taking legal action against an employer they feel has wronged them. An ugly legal battle can be costly even if you win and can quickly tarnish your brand’s reputation.

Solid HR can greatly diminish your odds of ever getting hit with a lawsuit by emphasizing employee relations and ensuring compliance with relevant laws and regulations at all times. HR can even develop a program to resolve employee issues before they escalate and become a serious problem. This often translates into a big profitability boost.

It’s important to recognize all of the different ways HR can contribute to your business. When functions are carried out effectively, HR can increase profitability and be the catalyst that fuels long-term growth.

 

Creating a Mission Statement

How to Develop a Powerful Mission Statement

Capturing the essence of your company and phrasing it in a clear, concise manner is an important part of brand development and communicating what your overall purpose is. One way to accomplish this is by developing a mission statement that expresses your philosophy, values and goals in a neat and tidy package.

 

What is a Mission Statement?

The Small Business Encyclopedia on Entrepreneur’s website defines a mission statement as, “A sentence describing a company’s function, markets and competitive advantages; a short written statement of your business goals and philosophies.” In other words, it’s a brief sentence that encapsulates everything that your business is about in a way that’s easy to understand. Here are some examples from notable brands:

  • Google – “To organize the world’s information and make it universally accessible.”
  • Nike -“To bring inspiration and innovation to every athlete in the world.”
  • Facebook – “To give people the power to share and make the world more open and connected.”

As you can see, a mission statement is quite simple and nothing overly exhaustive or complex. It simply explains a company’s aims and objectives in a quick, easy to digest sentence.

 

The Purpose

There are three main purposes of developing a mission statement. First, it gives consumers and stakeholders a clear understanding of what your business’s agenda is. Second, it helps to distinguish your company from other competitors within your industry. Highlighting the subtle differences is an effective way to differentiate yourself from the masses.

Third, a concise mission statement plays a key role in branding and establishing a unique identity. Due to the level of competition that many businesses face these days, having a distinct brand has become incredibly important — and a mission statement is the perfect way to carve out a niche.

 

Developing a Mission Statement for Your Business

Coming up with a mission statement starts with some brainstorming and posing some key questions. A post on the Kinesis website concerning leadership suggests asking the following questions:

  • What do we do?
  • For whom do we do it?
  • Why do we serve our clients in the way that we do?
  • How do we serve our clients in the way that we do?
  • Why are we in this industry?
  • Why did we start this business?
  • What image of our business do we want to convey?

Once you come answer these questions, you should have a better understanding of what your specific goals and objectives are. When creating a sentence, make sure that it’s brief and to the point. Also try to use plain, everyday language that people will understand across the board. Finally, try to avoid using generic terms like “to offer great customer service.” Instead, try to be precise and focus on specific details that differentiate your company from others.

 

Although developing a mission statement is fairly quick and easy to do, it can have a profound impact on your business. By injecting your personality into it, you can stand out from the herd, boost your brand and become an influential business in your industry.