Kim Noh

The 2021 holiday sales season will give businesses a chance to continue their online migration from 2020 trends, with opportunities for more refinement and improvements.  The key is to bring as much as possible online and integrate all of your customer touch points into an omnichannel of positive experiences.

Let’s take a look at some trends in retail that we can apply to many other industries. These trends will strengthen our businesses and position us well for the future.

Strong E-Commerce Presence

As people increased online shopping and delivery last year, the trend is expected to continue beyond the pandemic. For this reason, all businesses should strengthen their online presence, especially their e-commerce presence.

Many retail establishments benefit from a complete ecommerce solution, including a storefront, shopping cart, online payment process, and automated fulfillment. They can expand their online effectiveness with these features:

• Enable chat features between customers and store clerks to simulate the conversation the customer might experience in the physical store
• For clothing, post detailed sizing charts, imitate the dressing room mirror with try-on automation, and use photos of models in all shapes and sizes
• Create how-to videos to show customers ways to effectively use the product
• Expand photography so customers can see all angles of the product as well as how it can be used
• Display and sort user reviews to help customers decide
• Implement clear navigation and search options so customers can find what they want. Today, many customers research online, then visit the physical location to finalize their transaction.

Expanding your business’s e-commerce presence doesn’t just apply to retail. For example, businesses in the services space have implemented appointment-setting and payment processing. Real estate agents have enhanced virtual home tours. Many businesses with physical goods and documents have beefed up delivery options and implemented curbside pickup.

Each business has a unique sales cycle that a customer goes through when purchasing goods and services. The question for business owners to ask is how they can bring most of that experience online.

Mobile

The vast majority of transactions are now occurring on mobile devices. If your business’s mobile presence is not optimal, then you’ll want to make that a priority this year to catch up with your competitors.

Social

More and more consumers are using social media channels – Instagram, YouTube, TikTok, Snapchat, LinkedIn, Pinterest, Twitter, Clubhouse, and Facebook — to discover and purchase items that delight them. Wise business owners will invest more budget into attracting customers from this channel.

Holiday Seasons

With the move to online shopping, the holiday season has been extended from just one day or one weekend to entire months. Consumers are shopping earlier and all year long. Retailers and other businesses can benefit by always having some kind of sale or attraction going on. Here are the key holidays for the fourth quarter:

• Columbus Day
• Halloween, the second most profitable holiday (Christmas is first)
• Veterans Day
• Thanksgiving Day
• Black Friday
• Small Business Saturday
• Hanukkah
• Cyber Monday
• Christmas Eve
• Christmas Day
• Boxing Day
• Kwanzaa
• New Year’s Eve

How does your business fare when it comes to a fully online experience? Use these trends to boost sales growth in 2021 and beyond.

If you grant credit to customers or take recurring credit card payments, the unexpected can happen: a customer fails to pay on time, the credit card expires, or the check bounces. What can a business owner do to spend as little time as possible on these items but get the cash collected?  Plenty.  Here are our ideas:

Re-examine your credit policy

Is there any way you can have credit customers pay up front? Perhaps you can collect a deposit to minimize your risk. Perhaps you can request final payment right before you deliver the final product.  Perhaps you can convert credit terms to a layaway situation, like they use in retail.

The best way to speed up collections is to change your payment terms if at all possible.

Be proactive

If the client is late with a payment, respond quickly.  Send them proactive reminders. Give them a call just before the payment is due if you have this luxury.

If the customer pays by credit card, monitor credit card expiration dates, and send reminders to update the card before it expires.

Make it easy and clear on your website support section how a customer can update their credit card number on file at any time. Automating this process will save you a ton of time.

Payment failures and disputes

It’s inevitable that you will experience customers whose credit card payments, ACH withdrawals, and checks fail or bounce. As a business owner, you need to have solid procedures for you or your employees to process these exceptions.

When a credit card payment fails, make sure your shopping cart, merchant account, or gateway processor notifies you of the failure. Contact the customer right away to correct the situation. The same is true of bounced checks or failed ACH deposits. Assess any extra fees and flag the customer account if you want to place any future payment or credit restrictions on them.

You may also have customers that report disputes to their credit card company. Respond timely to these transactions as there is always a tight deadline, and make sure you have all of the documentation you need at the time of sale if this comes up.

Develop solid collections processes

If the payment is late, start your collections routine.  Send out friendly reminders at first; then get progressively aggressive as the payment grows later and later.

Follow-up steps are very important. Make sure your customer is getting your notifications, and give them a call before you have to take legal steps with them.

Finally, if necessary, turn the payment over to a collections agency who can impact the customer’s credit report and possibly collect your money.

We hope you do not have too much of this activity in your business. But if you do, being proactive is a great way to reduce it. Check to see if you have all the processes described above in place to handle collections in your business so that your cash continues to flow.

While Net Profit and your cash balance are probably the first two numbers you look at on your monthly Profit and Loss Statement, don’t stop there.  There are a lot more gems you can glean if you dig a little deeper and look through the following six lenses at your data.

1. Automation Opportunities

Look at your labor detail reports as well as professional and outsourcing expenses to see what areas might be ripe for automating.  Is your admin spending too much time scheduling meetings?  If so, automate everyone’s calendars.  Are you finding places where duplicate data-entry is driving up costs?  Get Zapier or another integration solution.

On the flip side, cancel tech spending where you are no longer using the app and get those expenses off your books.

2. Duplicate or Excessive Expenses

Where are you paying for things twice on your Profit and Loss Statement?  Where could you scale down?  As an example, if you are renting 5,000 square feet but now only need 2,000 because everyone wants to work from home, see if you can re-negotiate your lease or sublet that extra space.

Do you have redundancy in your insurance policies? Perhaps your liability and your business umbrella both cover workers compensation.  See what you can do to reduce the overlap.

You might only need three phone lines but are paying for five.  Retainer and recurring expenses should be inspected carefully; are you getting what you’re paying for?

3. Outsourcing Opportunities

Are their companies that can do tasks or work cheaper and better than how you are doing them now?  If so, outsourcing could be a profitable option to look into further.

4. Indications of Fraud, Theft, or Excessive Risk

As owners, we need to protect our business investment, and we should always be on the lookout for signs that our investment may be at risk.  If your numbers look odd or unexpected, you should be skeptical and investigate further.

5. Tax Savings Situations

Investing in tax planning almost always yields great results, especially this year with new tax relief available to qualifying businesses. Get help from a tax professional to see if you qualify or are close to qualifying for tax deductions, credits, and savings.

6. Sales Growth

This list would be remiss without mentioning the obvious opportunities of finding ways to grow sales. Your sales results can give you an idea of where more growth can occur, where promotion opportunities exist, and where completely new revenue sources can be created.

After you’ve examined your cash number and your net profit, try these six new filters to get even more ideas to run your business better.

Many people have complained about the worker shortages this year. If you need additional workers in order to grow your business, here are some ideas for your consideration.

Where to Look for Workers

We may think of workers as only being employees, but there are a lot more options if you’re open-minded.  Here’s a list of places to find workers of all kinds:

• Recruiters
• Employment agencies
• Online job portals, such as Indeed, SimplyHired, and ZipRecruiter.
• Social media, including LinkedIn Jobs
• Your own website, email list, or employee referrals
• Temp agencies
• Specialized online job portals that cater to your industry and business type
• Virtual assistant organizations
• Day labor online sites and pickup areas
• Job matching sites such as Upwork, Fiverr, and Freelancer.
• Colleges, when you need interns and entry-level workers
• Your local unemployment office
• Small business development centers
• Virtual assistant agencies or businesses
• Chambers of Commerce and other business organizations
• Professional organization directories where a license is needed, such as hair stylists, dentists, or CPAs
• Friends, colleagues, competitors, and neighbors; your own personal or business network
• Craigslist and local classified ads
• High school guidance counselors if you want to hire straight out of high school
• Outsourcing to a company that provides the labor that does what you need
• Volunteer matching sites

Options for Adding Workers/Labor

There are many ways you can increase labor in your business. The obvious is hiring employees.  Beyond employees, there are many more options than you might first think:

• Contractors, where you have a contract for a particular job and meet all of the IRS and other compliance requirements
• Temp workers, where you “lease” an employee who stays on the temp agency payroll or hire them outright with a limited term of employment.
• Part-time workers on your payroll
• Companies that you outsource the work to and contract with as vendors to provide a particular service. They may outsource your labor needs or simply have labor as a component of the product or service you have contracted them to supply.
• PEO, or professional employer organizations, act as a client’s employer and hire their employees as well as manage payroll and other HR compliance tasks.
• Interns, which are unpaid positions. Check your state and local rules for laws regarding hiring interns.
• Volunteers.  This is common if you have a nonprofit organization.

With all of these options available, it should be a bit easier to find ways to add labor and grow your business.

If you’re a business owner who wants to continually find ways to increase your profitability, then you’ll want to learn about direct and indirect costs. Breaking out your expenses into direct and indirect categories can help you arrive at the most profitable volume of sales for your business.

Direct Expenses

Expenses that fall into the direct cost category are ones that relate directly to the items you sell. Here are some examples.

• If you have a flower shop, the cost of the flowers is a direct cost. So is the cost of vases, ribbons, cards, and the labor to put the arrangements together.
• If you are a law firm, the labor and any materials or supplies spent on serving a client is a direct cost.
• If you own a pool building company, the costs of the concrete, tiles, filter, pump, and labor to build the pool are direct costs.
• If you run a toy store, the purchase of the toys is a direct cost.

Direct expenses, unlike indirect expenses, will vary proportionally to the volume of items you sell. The more you sell, the higher your direct expenses. The less you sell, the lower your direct expenses.

In general, direct expenses should be recorded in Cost of Goods Sold. You can get your Gross Profit figure by calculating Sales less Cost of Goods Sold (or COGS). Gross Profit Margin is an important percentage to know in your business. It is computed as follows: (Sales – COGS) / Sales.

Some small service companies might not bother to break out labor into direct and indirect on the Profit and Loss statement each month, but it can be useful to break out periodically or when you are re-evaluating your pricing and profitability.

Direct expenses are important in making pricing decisions, but so are indirect expenses.

Indirect Expenses

Indirect expenses are expenses that you need to incur to run your business, but are not directly related to the items you sell.  Here are some examples:

• Telephone
• Rent
• Insurance
• Utilities such as electricity, gas, water, and garbage pickup
• Administrative labor, such as a receptionist or supervisor
• Education and training
• Professional services, such as legal, HR, IT, or accounting
• Office supplies
• Hardware and software
• Business permits

Fixed and Variable Costs

Direct and indirect costs can each be further broken down into fixed and variable costs. For example, HR expenses, education, and training will go up as you sell more and hire more workers. That makes them variable costs.

Other indirect expenses will remain flat no matter what your sales volume is, such as rent. That means they are fixed costs.

Pricing Your Items

When calculating your sales prices, use direct costs to be sure your profit margin is high enough to cover an allocation of your indirect expenses.  In other words, sales price should always cover all direct costs plus a profit component, plus enough to cover indirect costs when considering the volume of your sales.

The lower your sales volume, the higher the price per item should be. A higher sales volume gives you more room to spread out your indirect costs over more sales. That leads to either higher profits, or you can lower your price to be more competitive.

If you have questions about direct and indirect costs or want help validating your pricing decisions, please feel free to reach out any time.

You may already be doing your part to help save the planet. From recycling to driving electric cars, to avoiding the use of plastic bottles and carrying reusable bags to the grocery store, there are myriad ways for all of us to make a difference—both big and small. However, it may be important to stop and ask ourselves: Are we currently doing enough?   

If you have considered pursuing an even more sustainable lifestyle, guess what? There’s an app for that! Actually, there are a few different apps to help you accomplish the goal of tracking your carbon footprint. In doing so, you can physically see your carbon environmental impact.

Below, we have detailed some of these apps and their benefits. Take a look! If you have any questions, please don’t hesitate to reach out.

Capture

Capture is an app that calculates users’ monthly CO2 targets by asking a series of questions. These questions include things like, “How many flights a year do you take?” and “What kind of diet do you adhere to?” Capture also utilizes GPS tracking to predict emissions from transportation.

Specifically, the app was designed to not only make planet-friendly living possible, but also make the process easy—or, easier—for those interested. With the capture app, users can conveniently “track, reduce, and remove CO2 emissions from everyday life.”

Interestingly, the app can be used single-handedly or with colleagues. If you are a numbers person who likes measuring and tracking, Capture is for you.

Almond

UK-based, Almond’s mission is simple: to help as many people reach Net Zero carbon emissions as possible, and in just four easy steps:

1. Understand your carbon footprint
2. Discover responsible brands
3. Earn offset coins when you make a switch
4. Offset your carbon footprint

Almond allows you to scan products to not only learn about that particular item’s story but also see what’s in the product (i.e., if it’s environmentally-friendly). Then, you can earn money with crypto rewards to plant and protect trees, which offset your carbon footprint. The more you earn, the faster you can grow your forest to achieve a carbon-balanced lifestyle and reach your personal CO2 Net Zero.

Pawprint

Pawprint allows individuals to fight climate change in the palm of their hands. This online tool helps to measure, understand, and reduce your carbon footprint.

Known as the “Eco companion,” this app delivers the following:

• Science-based data you can trust
• Carbon-reducing tips and challenges that suit your particular lifestyle
• Better insight into how your carbon footprint measures up to the rest of the UK (this app is also UK-based)

One factor that sets Pawprint apart from other carbon footprint tracking apps, is that all of its data is validated by Mike Berners-Lee’s Small World Consulting, an expert in the industry.

Of course, there are plenty of other smartphone apps and tools available to help you better track and reduce your carbon footprint, including The Extra Mile, My Planet, and Carbon Footprint. The trick is to find the app or tool that works best for you and your lifestyle.