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How Small Businesses Can Foster Positive Electronic Word of Mouth

Posted: 24 Jan 2020 04:00 PM PST

Word-of-mouth marketing (WOMM) means that people spread about the word for a company and its products or services, either encouraging or discouraging others from buying its products or services. About 72% of consumers use this method to learn about new products and services (Christoff, 2019). WOMM is extremely important for SMBs, because most small businesses may not have the famous brand names as big organizations do. Also, small businesses may not have much to spend on traditional marketing (Salesforce, 2018). Thus, many small businesses heavily reply on WOMM to acquire new customers, promote their products/services and grow their business. 

What is electronic word-of-mouth marketing?

WOMM can happen both online and offline. Due to the popularity of social media use at a personal level, social media has greatly affected the consumer decision-making process and purchase behaviors in the online environment. Today's consumers trust their social media connections' product recommendations and online reviews/ratings when they are making purchase decisions. Some consumers follow social media influencers and buy the products recommended and used by the influencers. Today's e-commerce environment has become a social commerce environment (Wu, 2018). Thus, electronic word of mouth (eWOM) becomes extremely important nowadays.

How small businesses can use electronic word-of-mouth marketing to their advantage

I frequently hear two questions about eWOM: First, how can I have my loyal customers advocate for my business, products or services on social media? Second, how can I reduce negative comments on social media? In other words, many organizations want to know how to foster positive eWOM and reduce negative eWOM in the online environment. Based on my research and consulting experiences, I would like to provide the following suggestions.

First and foremost, make sure that your products and services meet or exceed your customers' expectations. If your customers love your company, products or services, they are more likely to write positive comments online and recommend your company to their friends and connections. 

I conducted focus group interviews with young consumers and explored their expected relationship-building strategies from online vendors. Several of my participants said that they want the online vendors to make their expectations real (Wu, 2018). The product quality and delivery time need to meet customers' expectations. 

Especially for online shopping, consumers can't physically see the products and need to wait for the products to be delivered to them, they want the online vendors to be honest to them. Online vendors need to provide accurate and detailed product descriptions. They also need to make sure that the customers can receive the products within the estimated timeframe. 

Second, engage with your customers. Customer engagement can happen both online and offline. If your small business is a multichannel company or a brick-mortar company, you can engage with your customers both in-person and online. 

Many brick-mortar small businesses are family owned and community-based. Some customers like the personable atmosphere when they buy products or get services at these SMB stores. You may establish personal relationships with your loyal customers by offering exceptional services and inviting them to attend your company events. 

No matter whether your company has a physical store or not, you can engage with your customers in social media brand/fan communities. You can build online brand/fan communities and encourage customer participation online, cultivate connections, and create enjoyable experiences in the social media environment. Positive interactions in the social media environment can foster positive eWOM and maintain a long-term relationship with your loyal customers. You can develop brand/fan communities by using social media sites, such as Facebook, Twitter, LinkedIn, Instagram, and Pinterest, or create your own independent online community in your company website/blog. 

Third, provide effective customer care via customers' preferred channels. If your company is an online small business, you'll mainly engage with customers on your company website and social media sites.  You want to make sure that you provide consumers two-way communication channels. If there are problems with the products, your customers know how to contact you and solve the problem. Online shopping is different from onsite shopping because consumers cannot physically see the product, touch the product or try the product on. Your customer may need to return or exchange the products. Therefore, you need to make sure that your customers can easily contact you if they have questions or concerns. 

There are multiple customer support channels, such as 1-800 customer service phone numbers, a customer support email address, as well as a social customer care and chat function on the company website. You may choose the appropriate customer service channels based on your customer base. Specifically, young consumers are tech-savvy and prefer an online type of customer services, such as social customer care and chat function on the company website. 

When your customers contact you, they expect quick responses. If your customers ask you questions in your social media sites or send you an email, please reply to them and answer their questions promptly. 

Fourth, invite your customers to review your business/products/services on your company websites. Many consumers would read online reviews before making a purchase decision. Because online reviews are influential, retailers can invite customers to rate their experience and write reviews soon after the products are delivered (Tuten & Solomon, 2018). Thus, you can send your customers emails to invite them to review your products on your company website. If you provide good products and services to your customers, the review results will be mainly positive. It's fine to send emails to invite your customers to write reviews. However, you should not pay or provide incentives to get positive review results, because consumers want to see objective review results.

Finally, be responsible for your mistakes and respond to negative comments quickly and effectively.  Small businesses only have to foster positive eWOM but also need to reduce negative eWOM. To reduce negative eWOM, all customer concerns and issues need to be handled effectively. There are business review sites, such as Yelp, Google, Facebook, Amazon (related to e-commerce), and TripAdvisor (related to restaurants, hotels, and travel). Thus, your customers can write reviews not only on your website but also on business review sites. 

You may check what your customers said online. If there are negative comments, you can contact the dissatisfied customers and resolve the issues. For example, Yelp allows business owners to respond to customer comments either publicly or privately (e.g., sending them private messages). If you made a mistake, own the mistake and correct the wrongs. Offering an apology may help. However, an empty apology alone may not be enough. You also need to take action. Research findings suggest that dissatisfied customers would expect the company to initiate systematic changes, such as changing corporate policies. Also, some customers would expect the company to offer compensations (e.g., giving a discount for future purchases) or give them a refund (Wu, 2015). You need to listen to your customers, understand their concerns, evaluate the situation, and provide a workable solution. If issues are resolved, negative eWOM can be reduced.

Conclusion 

eWOM significantly affects consumers' decision-making processes. Specifically, WOMM is very important for small businesses.  By providing exceptional products/services, engaging with customers, and having two-way communication with customers, small businesses can foster positive eWOM in the online environment. 

References

Christoff, C. (2019, June 28).  How to improve word-of-mouth marketing for your small business?  Retrieved from https://www.business.com/articles/improving-word-of-mouth-marketing.

Salesforce. (2018, April 9).  3 Ways SMBs can develop a proactive word of mouth marketing strategy.  Retrieved from https://www.salesforce.com/ca/blog/2018/04/develop-word-of-mouth-marketing-wtrategy.html.

Tuten, T.L., & Solomon, M. R. (2018).  Social media marketing.  Thousand Oaks, CA: Sage.

Wu, M. Y.  (2015).  Customer relations in social media: Motives for social media usage, expected crisis response strategies from organizations, and electronic word of mouth (eWOM).  China Media Research, 11(3), 65-72.

Wu, M. Y. (2018). Ethical customer relations in electronic commerce environment: Dialogic communication and making customers' expectations real.  China Media Research, 14(3), 34-43.  

Top New Year’s Goals for Job Seekers in 2020

Posted: 24 Jan 2020 03:00 PM PST

Different people have different goals for the New Year. Some will want to embark on a weight loss program while others will want to start saving money. If you are a job seeker, you must understand that there is no shortcut to finding a better job. So here are the top New Year's goals for job seekers.

Decide what you want

First things first: Before you set your New Year's goals, you need to decide what you want out of your career.

Well, as silly as it may seem, you will be shocked by the number of job seekers out there who when asked what they want won't tell you what exactly they want.

Unfortunately, if you don't know what you want out of your career, you can set any goal.

Note that if you don't know what you want out of your job search and career, you will end up taking any job that comes your way which ultimately will enter you into an unfulfilling career.

When deciding what you want out of your job search and career, you also need to decide whether you should pursue your career or switch careers.

Update your resume

It is said that about 98% of resumes need some help. So you are left wondering whether yours is in this bracket list or not.

It's simple if you have been looking for a job for a long time now but you aren't getting interviews, you need to update your resume.

Also, even if you are getting invitations for interviews, you still need to improve your resume if it's been a long time since you updated it.

You must have developed some useful skills or accomplished some projects after you last updated your resume.

Make sure to include all these and keep it ready both in soft copy and hard copy.

Here are some resume improvements you need to consider:

Do away with paragraphs- As a rule, resumes should be readable enough. Besides, recruiters don't read resumes, but they scan them. Adding bullet points and removing too many paragraphs makes your resume readable even from a distance.

Make use of figures- Of course, you must have spearheaded a project that brought profits to the company you worked with previously or anything else that brought profits. Make sure you quantify your accomplishments. For instance, you could say, I spearheaded a "xx" project that saw the company grow its profit 10 times".

Network even more

If you have already built a network, strengthen it by networking even more.

Networking is a great way to land your dream job. Remember that networking involves talking to people.

It's so unfortunate that while some people like networking with others some find it difficult.

If you are job hunting, you have no option but to network. Strengthen your network by joining job-related groups both online and offline.

Join LinkedIn groups. There are plenty of career-related groups there. Become a member of relevant professional organizations and be part of their daily undertakings. Participate in events and seminars. Interact with people in your field and know them in person. Don't just focus on finding a job but on networking as a goal. This is the only way you can build a genuine network.

Tell the public that you're job hunting

As pity as it may seem, your New Year's goal should be to get a job and getting a job involves a lot than you can imagine. You must let people know that you are looking for a job.

After all, you never know who your next employer will be or who will connect you with your next employer.

A mistake most job seekers make is to think that only work colleagues or school mates are the only people who can help them secure a better job.

Your family, friends, and consociates can connect you with your next employer only if they know you are looking for a job.

People will be happy to pass along information if they know you are job hunting.

Come up with a plan

Creating an action plan and making sure you know how to meet those goals you set should be in the list of your next year's goals.

Having an action plan will help you to stick to one item at a time. You just can't chew two pieces of meat at one time and when it comes to job hunting, if you try to multitask, you will be going the wrong path.

Following a one-step-at-a-time approach will help you know if an opportunity is the right one for you.

Be prepared to take a risk

They say no pain no gain and no risk no reward. Taking a risk should not miss in your list of new year's goals. Remember that some of the amazing steps you've taken so far have been successful due to the hard work and faith you put.

Learn new skills

As you work on your job hunting goals you should also improve your work-related skills. Note that change is happening each new day. And because employers are looking for people with relevant skills, you also need to learn new skills to remain relevant in the job market. When you keep on learning new skills, your resume stays up-to-date and that shows employers that you are committed to learning and you understand what needs to be done to be successful in your field.

Build a brand of yourself

Most people think that branding is for companies and large organizations which isn't true.

Being a job seeker, you can build a personal brand for yourself. This is a fantastic way to tell employers what you are looking to achieve in your career.

Your personal brand can be your elevator pitch, especially in times when you aren't able to present yourself to potential employers.

Building a brand of yourself as a job seeker can involve creating a video resume, an online work portfolio showcasing your skills and abilities or even creating a personal website.

You can also create a blog and keep it updated with new content regularly. Just make sure you are consistent across all platforms.

Don't change anything from your name to your qualifications to make it easy for employers to find you.

Volunteer

Take part in local projects, join local organizations and charities during your free time and this will show how passionate you are.

Volunteering is not only a way to give back to the community but also shows employers how dedicated and reliable you are.

Volunteering will also help to keep your resume updated.

Don't stop learning

Learning never ends. Keep learning as your new year's goal. Learning helps to add to our knowledge base. You just need to identify skills and certifications that employers want candidates in your field to have and go out there and learn them.

Remember that learning doesn't limit you to getting a new skill, you can also spend time with other people in other departments to learn how the other side of the company you work for works.

Ideally, you should not allow yourself to stagnate in your career.

Update your LinkedIn profile

When was the last time you updated your LinkedIn profile? If you happened to ask this question to job seekers, you may be shocked by the answers you could have received.

Most job seekers take their LinkedIn profiles for granted. They don't realize just how powerful this professional social media platform can be in their job search process.

A study suggests that 73% of recruiters hire candidates through social media (particularly LinkedIn) and 93% of recruiters find out more about a candidate through their social media profiles before making a hiring decision.

The good thing about LinkedIn is that the platform will tell you when your profile is 100% completed.

Get a mentor

A mentor is someone who you can turn to for professional guidance. Having a mentor will help you grow your career.

A mentor will be there for you in case you feel you are lost.

Contact hiring managers directly

Have you been applying for jobs online? If yes, then your new year's goal should be to knock at the doors of recruiters and hiring managers in person.

It's not a secret; most of the resumes submitted through the online application process go unnoticed. Who knows maybe yours has been going unnoticed for a long time now?

Change tactics and contact hiring managers directly.

Eat well

Taking care of yourself and your loved ones shouldn't miss in your list of new year's goals. Remember that job hunting is a stressful and tiresome exercise. You need the strength and energy to overcome the times when your resume will be thrown in the dust bin in front of your eyes so, eat well and exercise.

Tips to achieving new year goals as a job seeker

No matter how good your new year's goals are, you won't see success with them if you don't follow these tips.

Set the right job search goals

If you have been setting New Year goals and you haven't been seeing any success, chances are that you are setting unrealistic or goals that aren't right for you. Or chances are that you've been setting generic goals instead of specific ones.

For instance, saying "I want to earn more money" is a generic goal.

The more specific your goals are the higher the chances of achieving them.

Ideally, when setting goals, you should make sure you are maximizing your strengths, minimizing your weaknesses, and moving toward opportunities.

Collaborate with others

Once you've set clear and achievable goals, you need to collaborate with others. Now we talked about networking even more.

When you network, you get input from other people in your field and outside your field. You never know the people you connect with could help you with advice on how you can achieve certain goals.

Final thoughts

Did we miss your new year's goals on our list? Let us know what your goals are in 2020 in the comment section.

Environmental Scanning: How CEOs Can Stay Ahead of the Curve and Beat the Competition

Posted: 24 Jan 2020 01:00 PM PST

A leader's biggest regret can be missing a clearly identifiable trend or failing to make a single change that would have been essential to making a key pivot or decision. In business, the CEO has the responsibility to see opportunities.

"Environmental Scanning" is a business term used to help leaders survey the landscape of competitors, customers and new innovations for products and services. In the same way, faith-driven CEOs should be looking for opportunities to make a difference in the lives they lead and in those who come into contact with the company.  The CEO who is prepared to lead in the future is one who prepares today.

Introduction to environmental scanning

One of the most essential roles a CEO will fulfill in a company that stays current is the ability to scan the horizon, pay attention to the changes that are occurring, and build a strategy to meet the marketplace's new demands. Environmental scanning allows the leader to move out of the view of the immediate day-to-day and take a macro view of the organization. The environmental scanning process will move an organization from reactive mode to a proactive mode as they pre-adjust to meet market changes and new customer expectations. 

Although many business leaders have never conducted an environmental scan, there are several ways to conduct a scan of the external factors that impact a business. The most popular is known as Porter's Five Force Model. Harvard Business School professor and consultant Michael Porter first described this model in a 1979 Harvard Business Review article. In it, he describes forces outside a business that significantly impact its performance and operations. Those factors include:

  1. Threat of substitute products or services
  2. Bargaining power of suppliers
  3. Threat of new entrants
  4. Bargaining power of the buyers
  5. Rivalry among existing competitors

This kind of analysis can offer a quick assessment of your business, with each area given a rating of strong, moderate, or weak.

An environmental scan enables the company's leaders to be ready to react and respond to changes in the marketplace. A watchful leader is not only able to react to changes that will influence the business but also turn those opportunities into positive results. This can include innovations that propel the company to reach new customers and markets. 

There are many different factors for leaders to consider when scanning the horizon for components that can impact business performance. When thinking about the responsibilities of being prepared for the future, CEOs and leaders would do well to remember the words of one of our greatest presidents, Abraham Lincoln, who said: "You cannot escape the responsibility of tomorrow by evading it today."  

The future will come to the business and the marketplace whether companies or leaders are prepared for it or not. Stuck in past business models and frameworks of thinking, many businesses choose to ignore external changes. Because of the inability of the leader to understand the signs of the time, the company misses opportunities, which ultimately can mean lagging profits, lower production and lesser outcomes.

Many companies that were once successful and seen as leaders in their fields have closed their doors because they did not correctly identify changes in external forces. When companies are not prepared for changes that are thrust upon them, they often fall behind. If the situation is bad enough they end up shuttering their operations because they could not change fast enough to retain market share in comparison to those who wisely adapted to external forces. Many of the companies that have closed due to external forces could have remained a leader in their field if the leader and the organization had paid attention to the landscape of external forces and adapted their business model to meet new demands.

In contrast, the CEO and leader who prepares their organization well by developing a proper perspective of what the business really is all about can adapt during changes in the eternal forces in the marketplace. This is why I led my company, CEO Experience, to encourage well-prepared CEOs and other business leaders to conduct an environmental scan once a year to review shifts that can and will impact business performance.  

The 4 elements of environmental scanning

Staying alert and keeping watch are two concepts that will help CEOs to stay ahead of changes in the marketplace. Below are four areas that CEOs should watch for to remain an alert leader in their business. 

Examine the areas to become aware of and to be prepared for coming changes to the market. Well prepared CEOs can use these changes as a platform to conduct an external scan of their environment to be ready for any potential change that might impact the business.

1. Shifts

CEOs and leaders should pay attention to early shifts of behaviors and shifts in thinking. Leaders should help their teams by training them to pay attention to the shifts that are happening around them. Leaders should conduct a scan of the changes of thinking about the value of your product or the way you do business, as well as a review of the shifts occurring in the culture or community. Well-prepared CEOs should always consider others before themselves. Leaders who will lead in the future understand what others are thinking before everyone recognizes what others have thought. With that in mind, leaders should seek to get into the minds of their customers and potential customers to understand their desires before others articulate their demands. 

When a business examines what a customer wants before the customer knows what they want, the business is sure to be wanted. Steve Jobs once reminded the team at Apple: "Some people say, 'Give the customers what they want.' But that's not my approach. Our job is to figure out what they're going to want before they do. I think Henry Ford once said, 'If I'd asked customers what they wanted, they would have told me, "A faster horse!" People don't know what they want until you show it to them. That's why I never rely on market research. Our task is to read things that are not yet on the page."

One of the ways to read things that are not on the page is to pay attention to the shifts that are happening in the mind of the consumer. CEOs must stay current on culture with the idea that everything they read can help them read between the lines and discern what is coming next. 

2.  Starts

In business and life, there is always something new that is happening.  Changes often create a sense of urgency to act. In business, existing companies would be wise to pay attention to new things or starts in the marketplace. This scan could include new entrants into the market, newly developed products, or new attitudes or desires of customers. 

One example of a new start in the fast-food industry in the past few years was when McDonald's started offering a one-dollar menu of some of their items on their menu.  Other fast-food chains became aware of this new start and quickly followed suit, so as to not lose market share based on customers flocking to McDonald's lower-priced menu. The starts of others can help existing companies know when they should begin something new.  

3. Substitutes

Every business leader should conduct a scan of new or better substitutes for your business and product. As an old proverbs states, "there is nothing new under the sun," so no company or organization should feel that they have the one and only unique product. It is important for leaders to identify how the consumer might substitute another's product for theirs, and what changes they should make in their current product to stay ahead of the competition. 

There are always false substitutes that will come into the marketplace, seeking to mirror your products and services. Some of those substitutes can happen locally, but in a worldwide economy many substitutes can also happen internationally. This warning should inspire the well-prepared CEO to build products and services that are not easily replicated or duplicated. In fact, if your business or product is able to be duplicated in a short period of time, this means you have not built your business to last. CEOs who wish to become market leaders must strive to build and produce products that are not easily mirrored.  

4. Signs

The well-prepared leader is one who pays attention to the signs present in the culture. A scan of these signs would include a review of the economic, social and judicial changes that would impact the business. A leader should review any signs of new things that will impact their business or how they do business at the local, national and international levels.  

There are always signs of what is coming if leaders will open their eyes to see. CEOs should train and teach their teams to notice signs from the customer about changing expectations which might come in the form of new or more complaints and new suggestions for more features of a product.

Another place to notice signs is to pay attention to the stock market as a potential sign of how well the economy is doing or which types of industries are on the rise.

Another area to review might signs of change from the generational workforce completed by studies to how new workers are responding to assessments and studies. Every well-prepared leader will pay attention to the signs that are before them so that they can stay on track to building a successful organization not only for this day but for days to come.    

Environmental scanning is an indispensable preparation tool

A quick environmental scan can help the CEO and the company they lead to gain a competitive edge. Such an evaluation can enable leaders to see the changes, pivots and movements that either will impact the business or determine which can be harnessed to help propel their business forward.

This four-step environmental scan can be a quick assessment of changes and shifts in the market that any CEO can conduct with their team to help their organization stay or get ahead. The well-prepared leader is an alert and aware leader who can see things before other leaders can see them. This kind of leader can make changes because they see things more quickly than others and will quickly change from just being in a market to becoming a market leader for that market.  

What is Next-Gen User Experience?

Posted: 24 Jan 2020 10:00 AM PST

The term user experience (UX) is something a lot of businesses are still struggling to understanding. According to most scholarly articles user experience is about a person's perception around a brand, product, system or service. That perception is built across key factors like efficiency, ease of usage and overall utility.

While this definition may be simple to comprehend, the issue with our species is overcomplicating simple systems.  With terms like growth hacking, retargeting, marketing automation etc. floating around there is a lot of confusion in what's what and how it works.

This article will be a basic review of how digital has evolved and remapped our user journey and how user experience is the way forward.

The digital landscape

When we talk about the conventional landscape, when conventional mediums (Like television, radio, outdoor etc.) were what controlled our attention and our media spend; the journey from ideation, to production, to execution and analysis of media was very disconnected. Each of these journeys sat in their own silos and kept it that way.

There was a lot less accountability and we were focused more towards brand building as a long-term investment that would eventually lead to sales.

But with the mainstream adoption of the internet, new mediums (web, mobile, wearables etc.) emerged and deepened integrations. New tools and technologies connected siloes and created a new concept 'the user journey'.

Although the internet was launched in the 60s it took almost 40 years for the innovation to become mainstream. The main reason behind this late adoption was the lack on understanding on the technology and the development of uses around it as well. So while there is a need for quick adoption of new innovations to drive society forward, there should also be a clear understanding that each innovation requires its time and place to become mainstream.

The user journey

The user journey is a massive concept. With the advent of the internet and the revolutions it brought on, we now have the power see our users at their point of origin (with us) till their point of conclusion.

This insight is massive because for the first time it lets us see where we stand in terms of our efforts (be it our product, our service, our brand our marketing spends or our sales effort).

It builds a whole new layer of accountability, that seeks to empower organizations to analyze their performance on the fly and quickly enhance their user journeys so that their can address any breaks and bleeds in their overall experience.

Now that is what scares a lot of people. The toughest lesson I have had to teach people (both organizations and individuals) is that a user is a mirror to your organization. Their journey with you is important because it determines both your long-term success and your long-term growth. If it is a broken journey, analyzing it real-time and fixing issues as they happen leads to an overall improvement. Its simple, make your people understand that accountability, transparency are tools for improvement and not for control.

Evolving your user experience

Now let's move from a conceptual direction towards a more practical approach. Suppose you are a startup who has just launched an electronics e-commerce store. You are looking to win users quick, who will be driven to your store not just once, but multiple times.

The old journey would be to build web/mobile User Interface (UI) and User Experience (UX) that would evolve as your own user learning evolved.

This evolution (overtime) would lead to a drop in your users. An analysis of your findings and a reengineering of your UI/UX which would take weeks if not months. As an e-commerce startup you are in a very competitive space. Business is built on trial and error – what you need is not an elimination of the trial and error process but an evolution of it, and here's how I did it.

Since I have personally worked in the e-commerce space and help brands evolve their business processes, I have experience with this scenario first hand. Teams would spend weeks testing out scenarios, flows etc. that optimized our user experience. But the dropout we experienced as a result was unacceptable.

Calling it collateral damage, an investment towards improvement was just smoke and mirrors. This bothered me so much that I got on my computer and started searching terms like bootstrapping your UX, behavior driven UX etc. and that's how I ended up on Userpilot. This was a gamechanger for me and Userpilot quickly became my go-to solution in terms of stepping up my UX game. With Userpilot I was able to fix my dropout/UX issues in a matter of minutes (the old time-frame was a min 2 weeks or so). We maximized our adoption because we were able to trigger the right experience, to the right audience in their journey with us. This helped us reduce churn significantly because we were building experience real-time.

With 88% of online shoppers saying they won't return to a website with a bad user experience, do you think you have months to figure out user fixes? You need solutions that work real-time.

Another thing that is very important to understand is that user experience is not just about your website, apps and/or digital channels. It works across all your channels, as a strategy to improve and innovate your user journey.  Let's take a look at the aviation industry, it is a very service led industry and with a service led model there is a very regular analysis of what works and what doesn't with respect to the user journey.

According to Uxdesign.cc, there are 7 stages to a traveler's journey(Planning, Booking, Pre-Trip, Departure, Flying, Arrival, Post-Arrival). These are 7 stages where one misstep on the airlines part can open them up to severe reprimand from their customers.

So instead of being reactive to customer complaints, being proactive to customer needs is the solution here. An example is something as simple as waiting for your bag to appear at the end of your flight. According to a BBC report; airlines still mislay 25 million bags a year. Through airlines are saying they are getting better; most countries are telling them (by law) to integrate technology into their mix and solve these problems ASAP.

With the introduction of Artificial Intelligence (AI), Machine Learning (ML), Natural Language Processing (NLP) etc. we have the capacity to now automate the communications/messaging end of the 7stage journey. An example would be Coseer – which through the above-mentioned tech stacks can sift through countless customer communications (E-mail, SMS etc.) and understands how to engage with them like humans. This is good because it allows for people to offload a layer of tasks onto technology while they can focus their efforts on key areas (like overall service improvement within aviation, pricing etc.)

The future of user experience

With more and more technology evolving the way we communicate and engage with users; we now possess the ammunition to design next-gen UX. Organizations need to now understand that time is of the essence. While some of you may feel that customers need to cut you some slack, others are automating their user touch points, build AI led experiences and overhauling/reengineering their UX on the fly.

We have seen titans of industry turn to ashes, when they did not realize the next wave of disruption. In order to become the best, you have to give in and let your users guide you. We all need some help!

Accounting and Cashflow Management Tips for Small Business

Posted: 24 Jan 2020 07:00 AM PST

Needless to say, cash flow management and accounting are the pillars of every entrepreneurial setup and without these insights in place it becomes extremely difficult to keep the venture up and running for long. While accounting keeps a track of all finances coming into the business or going out of the same, cash flow management is a critical aspect for startups as it enables them to sustain themselves in this extremely competitive global landscape. Most importantly, cash flow management also allows businesses to analyze their current positioning in regards to the existing financial hierarchy; thereby determining positive or negative flow of cash. 

Understanding accounting

Accounting, in regard to business, is defined as the complex process of recording and analyzing the existing and upcoming financial transactions of the concerned organization. The entire process involves the likes of summarizing the cash flow, analyzing finances, and eventually reporting the same to the concerned authorities.

Cash flow management: the necessary aspects

The entire process of cash flow management starts with an analysis that determines whether the business is earning or losing money, which eventually determines the subsequent course of action. Therefore, in order to understand cash flow management in detail it is necessary to understand the components of cash flow analysis in detail. 

  • Accounts Receivable: This aspect determines the amount and assets that clients and customers owe to the businesses, both in the long and short term.

  • Accounts Payable: This aspect determines the money or debt that is owed by the concerned firm to the suppliers

  • Shortfalls: This factor comes into the mix if the business owes more than the existing liability and there is a deficit in the existing calculations.

Most startups fail to ascertain the mentioned concepts and thereby end up incurring massive losses. For small and medium sized businesses, it is necessary to keep a close eye on the accounts receivable, accounts payable, and shortfalls, in order to make room for positive cash flow and eventually profits. 

Cash flow management tips

Now that we have established and talked about the main components of cash flow analysis, it would be appropriate to shift the attention to the best strategies for efficient business accounting and cash flow management.

  1. Determining the break even point

The first strategy towards efficient cash flow management is to determine the breakeven point of the concerned venture, via select breakeven analysis. Determining the same would allow the business to pin point the exact time when the venture would start becoming profitable. Moreover, breakeven analysis also makes sure that the grim combination of negative profits and negative cash flow is kept at bay. This strategy is a great way to initiate cash flow management as businesses can march ahead and plan things with an envisioned goal in mind. 

The best approach towards determining the same is to calculate the fixed costs and pair the same with initial investments. Businesses can either opt for the dollar-based method or the unit based method, depending on the ease of calculation.

  1. Concentrate on cash flow management more than profits

Instead of concentrating on profits, it is important for startups to keep focusing on the cash flow management even when the breakeven has been achieved. If the business cash flow is constantly increasing, profits will automatically start showing after a certain point of time. However, there are instances when profits slow down after a certain point of time after the concerned business has achieved the break-even. This is when it is necessary to strategize Cashflow in a different manner, either by increasing costs or by reducing expenses. 

  1. Keep cash reserves in place

Every business experiences shortfalls and this is where cash reserves come into the scheme of things. Every startup, therefore, must look to keep a significant sum handy, in order to combat sudden shortfalls and even sustain for a period of three to six months.

  1. Make room for a worksheet

A good way to efficiently manage accounts and cash flow is to maintain a worksheet. The most essential aspect of maintaining the same is to keep a track of cash inflow and cash outflow in addition to the existing and upcoming projections regarding the same. 

  1. Collect deferred payments ASAP

There are quite a few customers who take time to make payments and in order to manage cash slow efficiently, it is necessary to collect the deferred payments, as soon as possible. The concerned business can delegate individuals for keeping an eye on the receivables and to collect the same within a certain timeframe.

  1. Improve business visibility

While analyzing cash flow, maintaining worksheet, and keeping cash reserves can help startups with cash flow management, another underrated way is to improve online and offline visibility, precisely to attract customers in an effort to make them pay better and bigger. However, online visibility should be prioritized and businesses should concentrate on becoming brands in a manner that has been portrayed here. Once a business acquires exceptional online visibility, it becomes easier for it to reach the breakeven point sooner.

  1. Extend the credit timeline

While it is a good practice to collect receivables as soon as possible, accounts payable should be settled as late as possible in order to keep the cash flow positive for a longer period of time. If the supplier payments can be held off for a significant amount of time, it becomes easier to keep the cash flow intact whilst minimizing the need for additional cash reserves.

  1. Liquidate assets

In order to maintain positive cash flow while settling accounts payable, it is necessary to opt for unconventional methods like asset liquidation. This technique means businesses can and should consider selling any obsolete piece of equipment if it isn't adding any value to the organization. This way, that particular asset can be liquidated as cash which can be used to stabilize the tumultuous finances. There are quite a few companies that sell of excess inventory in order to purchase newer items. This process is quite effective but extremely underutilized.

  1. Opt for small and long-term financing

Businesses can rely on smaller lines of credit, in order to make purchases on an emergency basis. That said, smaller financial credits can also be used to minimize the gap between receivables and payables while keeping a tab on the shortfalls as well. Besides short term financing, long-term financial support can also be used to purchase bigger set of equipment or adding a greater chunk of investment into the business. While long-term financial support does attract sizeable interests, it makes sure that the working capital is preserved and business operations are initiated smoothly.

The importance of cash flow management cannot be understated

While these are some of the most efficient and rewarding strategies for managing business cash flow and accounting requirements, it eventually pans down to positivity of the concerned situation. In any given case, a business would be best served if the cash flow is on the positive side sans any kind of massive shortfalls to deal with. This is why concentrating on cash flow management is of paramount importance instead of focusing way too much on profit making. 

Needless to say, cash flow management is slowly becoming an integral part of a company's financial management and in the next few years it would evolve into an indispensible business tool. Moreover, a business will eventually see drier spells in due course of time and this is when cash flow management and proper accounting practices will make sure that things do not go out of hand.

How to Know an Investor Is Offering You a Good Deal

Posted: 24 Jan 2020 05:15 AM PST

  • Before pitching a business investor, prepare a numbers-driven pitch deck and executive summary.
  • Know which type of business investor you are pitching, and adjust your presentation accordingly.
  • Have legal professionals review any and all deals business investors offer.
  • Avoid red flags that signal you're dealing with a bad-faith business investor.

Every business needs funding to launch and grow. Often, that funding comes directly from the founder or a business loan. For some businesses, though, getting to that next level requires the help of a business investor. That avenue can be rewarding but carries unique challenges of its own, starting with finding investors and then successfully courting them. However, the biggest challenge is securing a favorable deal that positions your business for future success.

Whether you choose to court venture capitalists, angel investors or crowdfund your investments, you need to recognize a good deal from a bad one to avoid getting burned. A bad investment deal at the outset will inevitably cast a long shadow over the life of your business, so choosing the right partner and establishing the right terms is key.

This guide will help prepare you to court business investors and land an investment deal that will be mutually beneficial and help you grow your business into a success.

 

Editor's note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs.

 

How to find business investors

Unless you already have a business investor or group in your network, it can be difficult to know where to begin. Before you start searching for angel investor groups or venture capitalist funds to contact, it benefits you to sketch out what type of business investor you are looking for. Remember, an investor is as much a partner as they are a source of funding; you need to choose the right one, and that requires planning.

"If you are an entrepreneur who is interested in raising capital, the first thing you must do is to 'design the perfect investor,' said Nicole Toomey Davis, a serial entrepreneur and business coach. "Once you can clearly design the perfect investor for you and for your business, then you can identify – and pitch to – only those who are already interested in your type of business, your location, and the amount you are trying to raise."

That might only be a few dozen individuals, she added. Narrowing your focus in this way ensures relevancy and makes getting in front of these targeted business investors much easier. Further, it is easier to keep them engaged with your pitch since they are already your target demographic.

To identify investors that fit your persona, you have to network. This could involve joining trade organizations or business associations, as well as exhibiting at trade shows. It can also involve cold calls or sending an executive summary of your business to investor groups you've identified as suitable for your business.

Stay diligent, even if you don't get any bites at first; networking is often a numbers game. Once you get your foot in the door with business investors that match your persona, you have an opportunity to secure their funding and partnership. [Looking for other sources of nonbank funding? Click here to read about more small business financing options that don't require a traditional banking institution.]

The different types of business investors

There are several kinds of small business investors, each of which is best suited to fund businesses in different circumstances. Depending on your preferences and needs, you might find that venture capital is best for your business. Or perhaps crowdfunding platforms offer you the deal you need. You can determine this when designing your investor persona.

Here's a closer look at some of the most common types of small business investor:

  • Venture capitalists: Venture capital is generally geared toward small companies in the early stages of growth. Oftentimes, venture capital is focused on businesses with high-growth potential. Generally, venture capitalists offer funding in exchange for equity in a company.

  • Angel investors: "Angel investor" is another term for a private investor or seed investor. This type of business investor provides funding generally to startups or entrepreneurs in exchange for equity in the company. Angel investors tend to be high net worth individuals who use their own money to fund businesses, unlike venture capitalists which tend to be larger institution investment firms.

  • Crowdfunding platforms: Crowdfunding platforms, as the name suggests, bring together a large number of people who provide small dollar investments to fund businesses. While each crowdfunding investor might only pledge a fraction of the money your business needs, collectively, the crowd can provide enough capital to get your business off the ground. It is a form of financing similar to peer-to-peer lending, however, instead of debt financing, crowdfunding platforms are investment-based.

Whether you partner with investment firms, private investors or a large group of crowdfunding microinvestors, pursuing investment opportunities offers an alternative to securing funding from financial institutions or taking on debt.

How to secure an investment

Once you create an ideal business investor persona and identify investors who fit the profile, come up with a compelling pitch. An investment pitch and associated pitch deck should be a short, punchy presentation that conveys both the premise of your idea and the value, with numbers to back it up. Investors hear from a lot of entrepreneurs, so you need to make your idea stand out with a brief but effective pitch.

You might have to pitch many investors before you are offered a deal. Keep at it, and try your best to analyze what worked well and what didn't after each pitch. Generally, pitching your idea isn't enough; you need to offer concrete, numerical projections that are grounded in reality to really captivate people who are considering investing in your business. After all, why would someone purchase private equity without a clear road map as to how and when they would receive a return on their investment? [Want to create a better investment pitch? Here's how to do it.]

What makes a good investment deal?

If you create a detailed investor persona and an effective pitch, eventually your hard work will pay off, and you will be rewarded with an investment deal. However, not all investment deals are created equal. How can you tell the good from the bad? Don't just jump at the money. Stop to think where the deal in question can get you down the line and how it might influence the overall growth of your business for the long term.

"When you make a deal with an investor, you need to realize this is something that's going to last. You can't just think about the short-term outcome of it," said Jesse Silkoff, founder of MyRoofingPal. "Sure, you'll be financed, and maybe under terms that seem ideal to start off with, but what about in a year? Two years? Five?" 

Perhaps an investment deal will support the creation of full-time jobs you need to drive your business forward. But if it comes at the cost of giving up a majority stake in your own business, is it worth it?

Money is important in business, but, ultimately, what matters is equity, or your stake of ownership in the company. When an investor chooses to fund your business, they're buying equity of their own; that gives them influence over how things are done. For many small business owners, retaining control is a top priority.

In addition to maintaining the right balance of equity and control, small business owners should consider how an investment deal takes employees into account. Finally, any clauses about how profits are distributed in the event the company is sold should be closely scrutinized.

"A good offer from an investor leaves plenty of equity in the hands of the founders – preferably with little or no vesting – it includes a pool of options for current and future employees, and doesn't include ratchets or extreme preferences that take all the profits when the company is sold," Toomey Davis said.

"As an experienced entrepreneur and entrepreneur coach, I recommend entrepreneurs make sure they are getting a reasonable salary as part of the deal and that they invest alongside their investors to get the same preferences that investors are getting," she added.

Securing an investment deal isn't just about the money. An investor in your business is a partner, so you should always start with a relationship based on trust. Look for honesty and transparency when courting investors, and trust your instincts.

"Good and fair investors want to reduce risk and earn a healthy return by being sure both sides of the deal are legally and fiscally sound upfront," said Baron Christopher Hanson, lead consultant and owner of RedBaron Consulting. "Good and fair investors want you and your team to operationally and sustainably run an excellent business that makes customers happier than your competitors. Good and fair investors want to be paid out fairly and via healthy dividends, profits, or interest – and, yes, a little more if things are late, behind schedule or not exactly to plan."

"However, good and fair investors will never try to slit your throat, make huge fees upfront by brokering your deal to others or charge such a high cost of capital that your business chokes a slow and painful death whilst they bask on a yacht," Christopher added.

How to avoid a bad investment deal

Perhaps more important than spotting a good investment deal is avoiding a bad one. Look for red flags when discussing any potential terms with a business investor and take the following steps.

Have your team review the terms of the deal

Your team of professionals and advisors should always review any deal before you sign. They are your team for a reason, and their input could raise questions that would otherwise go unaddressed. Any investors who try to prevent you from collaborating with your team should not be trusted.

"Any investor who coerces you or bullies your business plan into working with their advisors and legal team only – usually under the guise of saving money and time – should be shown the door," Christopher Hanson said.

Avoid unreasonable ROI demands

Investors expect a return on their investment; it's why, after all, they are investing in businesses in the first place. However, small business owners need to understand what reasonable expectations are and what are just greedy money grabs designed to pull the rug out from under founders.

"It is not unreasonable for an investor to get back their invested capital and a reasonable return upon a sale before the common shareholders get paid, but terms that insist investors get multiples of their investment back (i.e., two or three times their investment) just about guarantee nothing for founders," Toomey Davis said.

Avoid excessive fees or commissions

If you are looking for investors, be sure you are talking to someone who is ready to write the check themselves. Plenty of middlemen and brokers will attempt to insert themselves into the process to siphon off funds in the form of excessive fees and commissions.

"Any seemingly high fees or commissions or 'points' just to raise or broker initial and subsequent funds upfront – especially from 'other investors in their exclusive network' – is typically suspect and nothing more than a dangerous broker situation," Christopher Hanson said.

Beware of "vulture investors"

Not all investors operate in good faith. A true business investor wants you to succeed and will work with you to craft a mutually beneficial deal that supports your business's long-term growth. Another class of investors, called vulture investors, are more interested in creating untenable situations that result in their takeover of your company.

"Be very wary of vulture investors who prey upon entrepreneurs by drafting dangerously strict repayment terms, deadlines or sums – usually in exchange for seemingly low interest rates. Their goal is for you to default so that the business or property or creative recipe becomes theirs by your default or inability to meet their doomsday deadlines," Christopher Hanson said.

Watch out for swindlers

Not everyone who poses as a business investor is interested in investing. Some people are just out to secure sensitive information about your business so they can use it against you in the marketplace. Carefully vet anyone you are considering pitching. Make sure they are who they say they are and that they aren't involved with any of your competitors. "Not every investor is what they seem. Watch out for people posing as investors, who are actually swindlers, working for your competitors," said Marsha Kelly, a marketing consultant at Best4Businesses. "They are trying to get inside information about your marketing strategies, suppliers and financials, which they plan to exploit. Research all investors thoroughly before you share proprietary information about your business operation."

Finding the right business investor to fund your business can be a challenge, but it is well worth it when a fair deal is reached. Partnering with a business investor in good faith can get you the much-needed funding to launch and grow your company in a way that will ensure success for years to come.
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