Customers and Payments

At a time when customers were few, concessions were made to keep those customers that could continue to pay – even if it was 30 to 60 days late. Some money coming in was preferable to no money coming in at all. Those customers that ultimately defaulted lost their businesses. Defaulting on payment is now not as much of a worry for business owners as it once was as credit lines have also loosened. However, the slow payment schedule is still dragging business down. Before the recession, only 2 percent of businesses had trouble getting paid. After the recession it had climbed up to 14 percent in 2010.

Business Picks Up

Now, business has picked up, but payments still lag. In 2010, approximately 44 percent of businesses experienced slow or lost sales down from 53 percent in 2008 when sales were crashing. Effort to gain new customers is still important, but to make the business more efficient businesses are beginning to pay attention to the slow pay cycle. Creative businesses that create offers that entice customers to pay early or on time will benefit more than those that continue to let payments lapse.

Early Payment Incentive

Numerous companies have found it better to offer a discount at the start of a payment cycle, instead of at the end when payment has lapsed for months and the debt is about to be written off. By offering a 5 to 15 percent discount for early payment, it creates an incentive for a customer to place your invoice at the top of the pile to save them money and you time. Offering a quick savings upon early payment is a valuable strategy if you find most of your customers waiting months to send in their payments.

Offer More Payment Options

Another way to speed up payments is to combine the discount with a variety of different payment options. Accept all major credit cards and PayPal as a way to make sure payment is completed upon purchase, not afterwards on a lengthy payment plan. If you do have to set up a payment plan, ask that the amount be automatically withdrawn from the bank account to make sure it is paid on time.  Tell them that if they pay in cash, you will deduct 3 percent off the top. If this is what you normally pay your merchant processor to do the credit or debit transaction then it is a win-win for you and the customer. It costs you nothing to implement and it saves the customer money. The only thing you’ve done is to speed up the payment, lost the middleman, and offered a valuable perk to your customer.

Bad Economic News Lowers Gas Prices

It’s the type of news no one likes to hear, and so it can come as a surprise that the end result of some bad economic news is lower gas prices. European countries are showing signs of slipping back into a recession. Greece is having re-establishing a government and a plan for recovery. Even China has had a slowdown in their growth. All this bad news amounts to one thing: A lower demand for gas. When demand drops, prices drop also as supply begins to outstrip demand.

It’s Not All Bad News

Even good news can lower gas prices. The fear factor that can be exacerbated at military action or western sanction on countries that are strategic to national interests can end up driving up prices. However, tensions on Iran have lessened enough to not be as big an issue in the overall price of gas. As this bad news goes away the markets ease on gas prices and prices drop.

Expectations Not Met

In a spot of optimism in the economy, the prediction that gas prices would rise to $5/gallon have not come true. The high price of $4.114 was set in 2008. For now, it appears that prices are coming down and may end up hitting $3.50/gallon for the summer. While this is no reason to jump for joy, any drop in gas prices helps the economy to mend.

Businesses Benefit

When gas prices plummets transportation costs for businesses do too. This can translate into a savings for products that are shipped from one area to another. Businesses that must have their employees travel also reap the benefits of lower fuel costs. The fact that prices on commodities do not need to be raised on account of higher transportation costs also helps businesses to retain customers and make better sales.

How Consumers React

Lower gas prices help consumers to feel more confident about the economy and put a little extra money in their pocketbooks. The fact that the prices are falling during the summer period, which is somewhat unusual, is also good for those making plans to travel during their summer vacation. If people decide to actually travel to take advantage of lower gas prices (instead of doing staycations) this means they will spend more into the economy and create profits for businesses that rely on tourists and visitors.  Gas prices may not be the entire solution to economic ills, but it can be one way to oil the engine of economic recovery, particularly when it hits during high travel season.

What This Means

We’re just beginning to understand the importance of startups to the American economy. Behemoth companies have taken so much attention that often they were thought to be the main drivers of jobs, but new data also disproved that notion. It is the startups that bring new job into the economy and without them, unemployment is likely to continue to stagnate at high levels. Another problem with fewer startups is that there is no pressure on wages to increase, as jobs are not as plentiful. This creates the opposite effect where wages fall, and consumers have less buying power. At its most destructive, this cycle will also cause employers to stop hiring and another recession results.

The Startup Risk

Not every startup will do well, and it’s often harder in a touch economy to get funding for a startup. Unfortunately, there is no way to tell if the startups that failed to appear in 2010 were those that would have been successful anyways. Startups have a high risk failure, but once they take off can spur economic growth unlike, older, more established companies.

Older Companies

The larger, older, companies have more stability, but this is precisely why they don’t make great economic drivers. They tend to be less innovative and take fewer chances. They don’t create jobs, they retain jobs, and even that may not be as true for American jobs if they outsource to other countries. While the larger companies are helpful in the economy, they can also compete too heavily to provide an area in the market where a startup can flourish.

Startups Important

As more data comes out,  from the Kauffman study and other sources, it is apparent that in order to startup the economy, startups will have to take center stage. The Obama Administration has made loosening credit for startups a priority with its JOBS (Jumpstart Our Business Startups) Act. They recognize the importance of having this sort of innovation supported within the American economy. It is true that startups have a high failure rate, when compared to more established companies, but they also tend to be drivers of employment and innovation in the American economy. Without them, the American economy will continue to languish as people seek to reduce their financial risk in an economy that no longer upholds the values of entrepreneurship. The current Administration hopes to jumpstart the same business drive that helped America be a model of entrepreneurship for the world by easing funding, and carrying some of the risk should businesses fail.

Target

Target has announced that it will stop selling the Kindle. This e-reader is extremely popular, but it is also well known that Amazon is the biggest online store selling it. When buyers see a Kindle in Target, they automatically check the Amazon site and often make their purchase there, leaving Target without even so much as a commission. Earlier this year, Target sent a nasty letter to its suppliers demanding they help them fight the showroom effect. However, the simplest solution to avoid giving a major competitor business via a showroom effect is to just take the product off the shelf. That’s exactly what Target decided to do.

Best Buy

Target isn’t the only physical retailer that is complaining about the showroom effect. They complain that they also have been bitten by the Amazon, as they tend to offer buyers who scan products in a retailer store an incentive to buy online instead. This can hurt sales, and Best Buy thinks it is the main reason for its poor showing during the holiday season.

Online Stores

This is going to create a huge dilemma for online stores, if their products are pulled from physical store shelves. They need to have a presence in a regular retailer so new customers can see and try out the product, making them more likely to purchase it. However, the majority of buyers want to purchase using cash, not credit, and while purchasing an item online is now possible, many people simply prefer buying at retail stores where they can talk to someone and pay in case. If Target is the first to pull out, others may soon follow if they think that putting a product out will not increase their sales. Ultimately, the showroom effect has to benefit both the retailer and the manufacturer or the relationship of supplier to distributor is undermined. It remains to be seen how retailers, both online and offline, react to Target’s demands that something be done about the “showroom” effect so that it doesn’t cost them money while their main competitor reaps the benefits all to themselves.

For Marvel comic fans, The Avengers film takes several super-hero characters and brings them together in one movie the plot of which is, of course, to save the world. Audiences will be treated to the likes of Robert Downey, Jr. in his role as Iron Man, along with Chris Evans as Captain America, Mark Ruffalo as the Hulk, and Chris Hemsworth as Thor. Other marvel characters represented will be Black Widow, Hawkeye, Loki, Nick Fury, and Maria Hill. It may be tough enough to make a movie with one super-hero ego, but put them all together in one room and even when you might be trying to save the world, it doesn’t mean it’s going to go off smoothly.  The same can be said when you have too many star players in your business, who may not get along together, but who have to work as a team to get the job done.

Teamwork

One of the problems with people, who are used to grabbing the limelight, is that they don’t know how to give everyone on the team a fair chance to contribute to the overall success of a project. An ideal team will get to its goal faster and be more efficient than a single person, if each individual is allowed to contribute their strengths and not blamed for their weaknesses. For that to happen, each team member needs to understand the goal and their role in achieving it. It’s also important to recognize each individual’s contribution, even if their role does not happen to be the official leader. Make sure communication lines stay open and that everyone is flexible enough to meet the changing demands of a project as it is unrolled. Also, while it’s important to make use of each person’s strength, don’t pigeon-hole them into a particular task and not allow them to grow as an individual due to their expertise in one area. In the end, trained team members who can cover for each other is a much stronger organization than one that relies heavily on any single team member, and that includes the leader.

Organizational Tools

If you’re not sure and don’t want to start a project flying by the seat of your pants, then you should take some time out to understand each of your employees best attributes and their appropriate role in your business endeavor. Find out which roles you intend to implement and which person is best suited to that role. Avoid getting dysfunctional characters in the group as this can accentuate negativity in the group. Make sure that they are given the tools they need to complete their project in the desirable timeframe. Set up agendas for how often the team will meet, how to track budgets, who is in charge of implementing ideas, and what responsibilities each individual carries. Only by careful planning and transparent team management that tells everyone what their assigned roles are can a project get off to a good start. Elad Gil stresses the importance of hiring for the right cultural fit, and is worth a read.

Did you see the movie this weekend? How did you like it? Did you see teamwork aspects in the film? Sound off in the comments!

Istanbul, May Day, 2012 (Photo by Jonathan Kramer)

On May 1^st, around the country and the world, people congregated to show solidarity against “economic injustice.” Front and center was people in the Occupy movement that swept the news last year with its New York Zuccotti Park occupation that sparked others to occupy everything from parks, foreclosures, and banks to Wall Street. May Day protests this year were mostly around banks, which were protested with anti-corporate songs and dances. A few protesters were arrested. However, even with a theme as large as economic injustice, some labor unions chose to sit this one out.

No General Strike

The biggest problem for businesses when people occupy or protest is that they can’t conduct business as usual. Some social events, like rallies and cash mobs are good for business and can be very welcome in the business community. Other social events, like protests, can snarl traffic, close gates and routes of transportation, make workers strike, and in some cases, cause property damage. It has been a long tradition of labor unions to strike when needed, but they chose to only represent and not strike to get their voices heard on economic injustice. In this way, businesses remained open while the message of economic injustice prevailed against the large corporations, without harming small businesses. It remains to be seen how this year’s Occupy can regroup and consolidate their message in a way that is not considered too radical for most American’s tastes.

Radical Elements Cause Worry

The majority of protesters are peaceful and what business does not want free publicity to help them gain market share? However, when the publicity is bad or radical elements plot to blow up a 4-lane highway bridge as 4 protestors are alleged to do, it can affect the support by the more mainstream occupiers who are not as radical. In San Francisco, the protest began on Monday night, instead of Tuesday, and a Mission District police spokesperson said that there were instances of vandalism. Windows were smashed and vehicles and buildings spray-painted. Obviously, that sort of violence is not tolerated and causes a great deal of worry both within Occupy and also the business community. For that reason, this year’s Occupy movement is focusing on building alliances and generating a better cash base to help with future protests, since support has dwindled over the year due to radical elements in the movement.

Business Issues

Amongst the complaints is runaway corporate greed, a label which has stuck to some major banks that issued large CEO bonuses while the rest of the country almost went bankrupt. Businesses that take to heart the Occupy message don’t necessarily have to stop doing business or go for a “non-profit” status; they just have to start balancing their profit motive with social responsibility to address some of the protesters issues. For most Americans, capitalism is the ideal system and it is generally a “for-profit” model, but Americans are looking for more progressive ways to do business that don’t harm the individual or small businesses while making corporate entities “too large to fail.”

• Buzz-friendly – A name that rolls of tongue, is catchy, and positive will be more buzz-friendly than a multi-syllable tongue-twister.  A few things to consider are alliteration and translation. It may sound great in English, but if it means something nasty in another language, take a pass. You might get other people’s opinions, too, to see what sounds good to a bunch of people’s ears and not just your own.
• Conveys Benefits – A name that is also descriptive and tells the customer what you sell or the benefits they will get from buying a product or doing business with you is the ideal. This can be a little hard to brainstorm, but it is well worth the effort.  For one thing, if they see your name in a directory next to various competitors, they may not have time to read your business description, and just pick a business by name.
• No Dashes or Extra Punctuation – Yeah, they’re cute and plenty of Web 2.0 companies use them in words like i-phone, delicio.us, and Yahoo! but they’re either done to death or hard to remember. Don’t put hurdles in front of your name that customers will not be able to jump over. If they have to type in your name several times into a browser just to pick up your right spelling, you’re not going to keep them for long.
• Copyrightable – What good is a name if you can’t trademark it? Worse than having a unique name that no one can spell is having a generic name that your competitors can hijack. Imagine the complete consternation of Xerox executives who have trouble claiming copyright infringement every time someone wanted to “xerox” a copy.  Trademark it and then defend that trademark and make sure it is not diluted in meaning.
• No Acronyms – Only the military really loves mindless acronyms or mindless initials bunched together. Everyone else would like to be able to remember the name and know what it means.
• Search-friendly – Find out how your name fares in Google Adwords keyword tool. You may find that people are searching that term quite a bit and it has a low competition. This makes it a good choice for a brand name. However, if the opposite is true and the term has a high competition or no one has any interest in the term or meaning, then you might want to focus on getting a different name.

No Bank Account Necessary

The option isn’t like a money order or prepaid card at all. It is a way to reserve a product or purchase online and within the next 48 hours have to go to a Wal-Mart store or Neighborhood Market with a printed receipt to pay the balance due. The service is called “Pay with Cash.” At that point they have the option to get the item shipped to their house or nearest Wal-Mart store.

More Payment Options

Businesses that pay attention to their customer’s needs and add as many payment options as possible, usually reap the benefit of more sales receipts.  Some businesses make even more sales by opting for discounts on payment transactions that cost them less to process. When considering a new payment option, it’s better to have more rather than less. Some people prefer plastic; others want to pay cash, even when they’re buying online.

More Payment Plans

Another way to spur more sales is to offer payment plans like layaway or installment plans. If you can combine that with cash or credit, it’s a definite winner in a poor economy where people want to purchase, but may not have all the cash they need in one shot.  By working with your customers to get a payment plan that works for them, you can grab more market share if your competitors do not have those plans available. Just make sure the terms are clear about what the risks are if they don’t pay their installments on time, and make sure it is all in writing.

Fotopedia

The baby boomers were a huge blessing to marketers around the world. This cohort not only was huge in numbers, but they often had the same tastes, making it really easy to create products that would appeal to them. Now, though, the baby boomers are retiring and Generation Y is starting to assert their tastes in the market, and the boom that came with the boomers is starting to dry up. Generation Y is not apt to buy many of the same products their parents bought, and so some industries have a hard sell ahead of them.

Technology

There’s no question that Generation Y love their smartphones and laptops, but the same cannot be said of landlines and desktop computers. Wireless cell phones fit into the mobile Generation Y’s lifestyle, so it’s only natural that they may have no need for a landline. They’re simply not home often enough to make it a priority and keep their cell phones with them at all times. When it comes to desktops, the boomers still love them, but Generation Y has warmed up to laptops instead. This is causing a huge shift in the manufacturing of computers and their price point. You might think that email would definitely appeal to Generation Y, but you’d be wrong.  Generation Y is so fast-paced, that they consider email too slow and cumbersome and rely on text messaging instead.

News Outlets

When a boomer wanted news, they’d turn their radio or television on. Or, they might pick up the local newspaper. Generation Y tends to be tied into the Internet at all times through their laptops and smartphones. They have very little need for conventional sources of news and entertainment. They spend a lot of time within social groups being their own entertainment, whether online or off. They get their news from their friends or the Internet where it is shared via social networking sites like Facebook and Twitter.

(Photo credit: Wikipedia)

If you want people all a’twitter over your business, odds are you’ve joined that social network to try to get the word out. However, social networking isn’t just about online presence; it also has to do with engaging your audience. The more engaged and enthusiastic your followers are the better chance they will retweet your tweets and become your own private army to promote your business, which should lead to more money in the bank.  Here are a few things you should do to make sure you are becoming a leader online:

Do make your tweets clear, not cryptic. While adding some mystery can be good, if every tweet is unintelligible, it will only drive people away.

Do comment on news items and stories that you are retweeting. This not only gives your customers an idea of what interests you, but helps them to learn more about you – the owner. Include personal interest stories or even those with a humorous slant. Don’t be too stuffy, after all this is Twitter! A certain casual tone is required to engage followers who are online. Try to provide information that appeals to your demographic that is also entertaining.

Do be positive. No one wants to tune into someone who is constantly complaining. Even if a customer gets online to troll your feed and tries to give you a negative image, you should strive to remain positive. Remember that it may seem like a personal assault, but on the Internet it becomes everyone’s business. Take the high road.

Do use original content – It’s great that you have a finger on the pulse of your industry and that makes you seem with it. However, if you include links to your own original content that goes back to your websites, you will draw followers back to where they can buy from you and see all your original content.

Of course, there are some powerful “don’ts” that should also be followed:

Don’t overuse hashtags and @mentions. These are great for getting attention, but they can backfire because it starts to make your feed look cryptic again. Use them, just don’t overuse them. The proper way to use a hashtag is when you want the feed to be searchable by someone else, like when you are asking a question.

Don’t use apps that auto post location or “fluff” tweets. There is nothing more annoying than seeing the same “check-in” tweet from Foursquare pop up multiple times. The only person that cares where you are is the one that wants to make sure you’re not at home so they can rob your house.

Don’t over-promote your business. Self-promotion is important, but it is not the end all and be all of social networking. If all you do is talk about yourself and never stop to listen to your followers, you will soon lose the few followers you did manage to get. Be generous with your time and attention and help to promote your followers interests as well. They will appreciate it and usually return the favor by retweeting your posts, too.

Oh, we almost forgot, DO follow us on twitter! Business Loan Option on Twitter!