Businesses need to keep on evolving. If your company doesn’t grow and change with the times, it’s likely to get left behind or forgotten as competitors around it adapt to the ever-changing market and the ever-changing needs of customers. One way to help your company grow is to work to stay a step ahead of your competitors at all times. That not only means paying attention to what’s going on around you, but also learning to interpret data and information so that you can put it to good work for your business.
Keep Your Eyes Open
Complacency has been called the “silent business killer.” When things are going really well for your company, it’s all too easy to sit back and enjoy the steady flow of business and profits. But you can’t afford to rest on your laurels and not pay attention to what is going on with businesses and competitors around you.
There are a number of cautionary tales out there that warn of what can happen if a business doesn’t keep its eyes open to what’s going on or becomes so sure of its success that it stagnates. For example, at one point, MySpace was the popular social network and Blackberry was the smartphone of choice. But, MySpace was quickly dispatched by Facebook and Blackberry has been largely replaced by iPhones and Android devices.
Knowing who your competitors are and what they are up to is essential for staying in front of them. Even if your business is in the lead at the moment, it’s always possible for another company to come up with a great idea and quickly push ahead. You don’t have to have spies or connections at your competitors to keep up with them. Press releases and news stories specific to your industry can help you keep up with what’s going on, so that your company isn’t pushed into second or third place by a surprise move. Social media and company websites are also helpful tools for keeping up with the competition.
Anticipate Their Next Move
Anticipating your competitor’s next move, and then beating them to it, can help you stay at the top of the pack. Alternatively, looking at what has worked for your competitors, then adapting those ideas for your own business, might also help you get ahead.
One company that has been able to successfully anticipate the moves of its competitor is Airbus, an airplane manufacturer. A combination of a lower cost to produce its planes and a weakened Euro have put Airbus slightly ahead of Boeing in the airplane production race. Boeing announced plans to cut costs by using more automaton and cutting jobs at its plants. To keep ahead of Boeing, Airbus announced that it would be introducing a new plane, the A330neo, specifically designed to compete against Boeing’s Dreamliner. The move paid off, and Airbus finished 2016 with a few hundred more orders than Boeing.
Know Your Audience
You don’t only want to anticipate the moves of your competitors. To stay ahead, you need to anticipate the needs of your audience. One way to figure out what your customers want and need is to ask them. Find out if there are any service or product gaps in their lives, then develop ways for your business to fill those gaps. If there are any openings, and your company isn’t working on filling them, odds are that a competitor is out there coming up with a plan to fill in the gap.
Take the discount airline industry, for example. Standard airlines long ignored budget customers, people who would prefer to pay less for their ticket in exchange for a “no frills” flight. That gave airlines like Spirit and Frontier a chance to conquer that market. More recently, the big three American airlines have announced basic or budget economy seats, trying to take some of the market claimed by budget carriers. Had the big airlines seen that gap in the first place, the low-cost carriers wouldn’t have been able to get a foothold in the market.
Having a plan for growth will not only help your company stay at the head of the pack. It will also help your business achieve its goals. The team at New Direction Capital can help you put together a map for growth and business success. Contact us today to learn more.
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When your employees are able to work together as a team, everyone wins. Your company ends up bringing in more revenue, customers tend to be happier and employees tend to feel more content and satisfied with their jobs. But there can be many barriers to collaboration, ranging from a reluctance to work together to a concern that collaborative work won’t benefit the company or its employees. Although offering a financial reward, such as a bonus or a raise, can be an effective way to get people to work together, that’s not always possible.
Fortunately, there are ways to encourage collaboration among employees, without having to reach into your company’s wallet.
Make Working Together as Easy as Possible
In some cases, the complaint about working together is that it is just too difficult. Whether the employees are in offices located down a long hallway from each other or offices located in different towns, the time and energy spent meeting up to work on a project can seem like too much to deal with for many people. One way to encourage collaboration is to do what you can to remove the barriers to working together.
Technology is on your side in this case. While face-to-face meetings can be ideal, they aren’t always feasible. Luckily, Skype and Google Hangouts make it easier for employees to connect. They are also more personable than a basic phone call or email exchange, since employees can see their team members while they communicate.
Shared file systems, whether they are a system like Dropbox or Google Drive or a shared folder on the company’s network, make it easy for team members to share files and information with each other. You can also try setting up a social network for your employees to use to communicate with each other and to share information easily.
Encourage Friendly Competition
One of the ways that Gallup, the polling company and management consulting firm, gauges the productivity of the workplace is by looking at employees who say they have a best friend at work. Employees who have a workplace best buddy are more likely to enjoy their work, more likely to feel like a valued member of the workplace and more likely to be productive on the job.
While you can’t make people be friends with each other, you can put things in place that will help them learn to be friendly or that will help them develop workplace friends on their own. Alternatively, you can assign a pair you know to be friends a project to work on together. When friends work together, there’s a built in pressure to do a good job, since one friend doesn’t want to let the other friend down and vice versa.
Along with encouraging friendship among co-workers and employees, you can also encourage collaboration by tapping into people’s competitive natures. A bit of competition might be all it takes to get people who are used to working alone to work together. For example, you can have a contest for the best sales idea, but only award the prize to an idea that is submitted by a group or pair of people, rather than to an idea submitted by a solo employee.
Remember that Small Awards Matter Too
Although plenty of employees would be happy to get a raise or a cash bonus, money isn’t the only thing that drives employees or that encourages them to really invest in your business. Remember that pizza can be a big motivator, too. If you really want to encourage people to work together, have a stockpile of small gifts that employees can give each other.
For example, you can have gift certificates for free food or small value gift cards. Let employees know that they are welcome to give the cards or certificates to their co-workers for a job well done. If one employee works with another and wants to thank the other person for his or her time or assistance, he or she can grab a gift card from the stockpile.
Another option is to have a weekly recognition ceremony, during which you highlight collaborations or partnerships that have been particularly beneficial to the company.
Scaling your company is possible when you have a team of productive and happy employees who work together. Contact New Direction Capital today to learn more about how to put together a plan to take your company to the next phase of growth.
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How much do your employees known about basic financial concepts? If your business is like the average business, the answer might be “not much.” As Inc.com reported, a group of 300 executives earned an average score of just 38% on a basic financial literacy test. More than half of the test-takers were unclear on the difference between profit and cash and 66 percent didn’t understand the effect discounts offered by sales reps had on gross margins.
Your company’s finances shouldn’t be like the Wizard of Oz, hidden behind a curtain. The more your team understands the day to day financials of the business and how those financials affect the company overall, the more motivated they will be to work for the greater good of the business. The return on investment for starting a financial literacy program at your company can be as much as $4 for every dollar you spend.
Help Employees See The Financial Forest Beyond the Trees
One big benefit of having your employees become more financially literate is allowing them to see the bigger picture and how certain metrics have a direct effect on the business or on the continued success of the business. To help your team really understand the finances behind your company, choose a few of the most important metrics, then go into each in depth during a meeting. You can focus on key performance indicators (KPIs) such as revenue growth rate, customer retention rate and the lifetime value of a customer.
Define what each metric means and explain how your company is doing with it. For example, you might not be experiencing the revenue growth you had anticipated. Once key metrics and terms have been defined, zero in on how the roles and jobs of your employees’ can help improve each metric. Your employees need to learn more than just a few numbers. They need to be able to see how those numbers affect the business and what effect raising or lowering them will have on the company, and on the security of their jobs.
Help Employees See the Role They Play in a Company’s Success
Every business wants employees who are productive and who are willing to go the extra mile for the company’s well-being. Showing your employees the direct role they play in your business’ overall success can spur them to do more to help the business succeed. If an employee or manager doesn’t understand why the choices he or she makes on the job affect the company, he or she will be less likely to want to change or want to find ways to improve the business.
It can be particularly helpful to offer incentives to employees to encourage them to work to improve a particular metric, such as monthly sales or customer retention. One option is to offer a cash bonus to managers or employees who work to increase sales the most over a particular amount of time. You can also offer bonuses to employees who find ways to improve other areas of the company.
Financial Literacy Goes Beyond Business
Teaching your employees financial basics does more than just help your business get ahead. It can also help your employees in other areas of their lives. Just as employer sponsored wellness programs are gaining popularity, so are employer sponsored financial wellness programs, which teach employees concepts such as the difference between stocks and mutual funds, how to make a budget and how to track spending.
When employees have a sense of how finance affects their own lives and how they can get their own finances under control, they generally experience a drop in stress levels. Debt falls and the amount people contribute to retirement increases.
The less stressed your employees are, the more likely they are to be productive and happy on the job. There’s a reduction in absenteeism, so your company is able to stick to its schedule and meet its goals. The happier your employees, the longer they remain at your company, so that you don’t have to spend a lot of time and money constantly hiring a new team.
The team at New Direction Capital is here to help you make sense of your company’s financial picture and financial health. To learn more about the virtual chief financial officer services we offer, contact us today.
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Your business can be financially in the black but still struggle to make ends meet every month. In some cases, it’s not how much money your business is bringing it throughout the year, it’s how much cash it has readily available at any given moment that can make or break it. Putting together a cash flow plan for the entire year can help your company weather any slow periods and stay on top of its bills every month. Mapping out your cash flow for the year ahead involves taking a few simple steps.
Know What You Have and What You Spend
Before you make a year-long cash flow plan, it helps to get an idea of how much cash your business actually has on hand. Take a look at all possible sources of cash available to your company. Those cash reserves and sources can be any money you have in the bank, any loans or grants you’ve recently received or any money you’ve received from investors. Depending on how much credit is available to you, you might include the limit on a business credit card as part of your cash resources.
Next, work with a virtual chief financial officer and figure out how much cash your business spends every month. This can involves looking at your payroll, vendor invoices and other expenses. You might have to estimate or use an average number for some expenses, particularly those that vary from one month to the next.
Show Yourself the Money
Along with looking at the cash your company has on hand, also take a look at potential cash sources throughout each month, such as customer purchases or payments. Look at past averages to get a sense of how much your company will bring in throughout the year and look at how your expected monthly earnings compare to your monthly outgoings. Depending on how things line up, it might be that you need to find ways to increase the amount of cash your business brings in each month. One option is to raise the price of the product or service you sell.
If your company has inventory, having too much stock on hand can really eat into your cash flow. You don’t want to order so many items that you are struggling to make ends meet while you wait for the them to sell, nor do you want to have to spend extra money to store inventory that’s moving slowly. In some cases, you might need to sell off inventory quickly, at a reduced rate, to quickly raise cash for your business.
Matching your company’s sales volume to your inventory on hand will help you better manage cash flow year round. Setting an alert to go off when stock of a certain product gets low will help you avoid backorders or customer dissatisfaction.
Build in a Cushion
It can be tough to predict with any sense of certainty where your company will head over the next year. You might have a great year planned on paper, but external factors might get in the way of that plan. Having a cushion of cash, either a few months worth set aside or an extra amount built into each month’s budget, will help your company maintain a positive cash flow even during rough times.
Find Ways to Stretch
Making sure your company has enough cash on hand all year around can mean finding ways to stretch your payments and ways to encourage your clients or customers to pay speedily. While you don’t want to pay late, finding ways to stretch the time between your accounts payable will allow you to keep more cash on hand for longer. One option is to use net-60 terms when you make payment arrangements with clients, which means you have 60 days to pay after getting the invoice.
The flip side of that is encouraging your own clients to pay their bills sooner, rather than later. The earlier your business gets paid, the more cash you have to work with. In some instances, offering clients a discount for early payment can be worth it. You’ll receive less money, but you’ll get it sooner.
Planning out your company’s cash flow for an entire year allows you to focus on other issues as they might come up. If you’d like to learn more about managing cash flow, the team at New Direction Capital is happy to help. Contact us today for more information.
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Applying for a business loan from a bank isn’t a step to take lightly. Obtaining bank financing can help your company advance to the next stage of growth, whether that’s opening a new office or store, offering a new product or targeting a new customer demographic. But it is essential to know what you’re getting into and what will be expected of you before you apply for a bank loan. Here are a few questions to ask to see if bank financing is the right option for your business.
1. How Much Can Your Company Borrow?
Before you approach a bank about a loan, it’s essential that you have an understanding of how much you need to borrow and whether that amount is a figure you can comfortably borrow. To determine the size of the loan your company needs, take a look at your business’ cash flow. You’ll need to have enough revenue coming in or have the potential for enough revenue to come in before you choose an amount to borrow.
It’s a good idea to have as much information as possible to provide to the bank before you apply for the loan. You don’t want to guess at how much you’ll need to borrow. It won’t look so good for your business if the bank determines that the requested loan amount is too small or too large based on your company’s actual cash flow.
2. Does Your Company Qualify for a Loan?
Not every company qualifies for a loan from a bank. Banks use a number of different criteria, from the credit history of a business, the credit score and history of the business’ owners and the cash flow of a company, to determine if a company is going to be a safe or risky borrower.
Even if your company has been in business for years and has a strong credit history and business credit score, a bank might want to look at your personal credit history and your personal finances before it decides to loan money to your business or not. For that reason, it’s important that your own credit be in great shape, not just the credit of your company. If your business is a new business, having a great personal credit score becomes even more important.
3. How Will You Repay the Loan?
A bank will most likely want to see proof that you can pay the loan back and that your company will pay the loan back based on the payment plan you agreed on. When you apply for a loan, it is a good idea to include a plan for paying the back the amount you are borrowing with the application. The plan shows the bank that you have thought the process through and that you will be able to make payments based on your company’s current cash flow.
Another thing worth considering, although you might not want to, is how the loan will be repaid if your company folds or if something should happen to you or another owner of the business. It’s a good idea to have a back-up plan in place in case the worst or the unexpected happens.
4. What is the Cost of the Loan?
Loans aren’t free money, so it’s important to understand the full cost of any money your company borrows. Typical loan costs include the interest rate charged as well as any fees. Another cost to consider is the prepayment penalty. Although many loans do not charge an extra fee if you pay off the loan early, it is possible for some loans to include a penalty if you decide to pay early.
5. Have You Fully Explored Other Options?
A bank loan isn’t your only option when it comes to getting financing for your business. It helps to fully weigh the pros and cons of all your options before deciding which direction to take. Your company might be at a stage where getting capital from an investor is the way to go, or you might be at the phase where options like crowdfunding are more appropriate.
If your company is carefully considering financing, but isn’t sure where to turn or how to get started, the team at New Direction Capital can help. Contact us today to learn more about how our virtual chief financial officer services can help your business.
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