3 small business leaders on what it takes to survive the pandemic economy
Now more than ever, business leaders are having to take the roads less traveled when it comes to allowing their businesses to succeed. The pandemic economy has caused many to struggle, and many are stepping out to talk about what they've learned. Read this blog post to learn more.
Building a business is never easy, but 2020 has been a unique calamity. In the U.S., which has suffered more COVID-19 deaths than any other nation, the economy entered its worst downturn in generations. Although central bank stimulus and government programs such as the Paycheck Protection Program have helped cushion the blow, a return to growth will depend on the creativity and resilience of millions of entrepreneurs and business managers.
Lindsay Gibson, COO, TextNow
Over a decade, TextNow built its business, an app that allows users to send and receive calls and text messages for free, by hosting ads for hotels and airlines and the like. Within weeks of the COVID-19 pandemic hitting the U.S. and Canada, one-quarter of TextNow’s revenue disappeared. The company closed its Waterloo headquarters, as well as offices in Portland, Ore., and San Francisco. All employees started working from home.
Lindsay Gibson, the chief operating officer, stayed relatively calm. A 16-year career at cellphone maker BlackBerry taught her how to navigate an organization on “a downward slope,” as she puts it. At BlackBerry, she once had to cut 250 jobs on her first day in a new role. She remembers it as the beginning of five years of doing more with less.
Her strategy then, and now, was to make plans. Plan A at TextNow was to slash revenue targets and cut expenses. The company eliminated 19 jobs, froze hiring, and ended employee perks such as personal trainers and free lunches. Biweekly companywide Zoom meetings were instituted to keep staff up to date and fortify plunging morale. For three months the mood became “very conservative, very heads down, and very focused,” Gibson says.
The company quickly found opportunities for growth. With so many people unable to visit friends or relatives, TextNow started testing a video chat function. Amid the economic downturn, hundreds of thousands of people could no longer afford to pay their AT&T or Verizon bills, so TextNow’s appeal increased. As school moved online, teachers began using TextNow to communicate with parents and students.
By July, TextNow was growing again. It lifted the hiring freeze and recruited a chief growth officer to beef up marketing and help win customers. TextNow is on track to meet or exceed its new revenue targets, Gibson says.
Brian Butler, president and CEO, Vistra Communications
Brian Butler is used to dealing with disaster. The Gulf War veteran — who still suffers from injuries and hearing loss sustained during his Army service — oversaw a munitions plant in Virginia at the time of the Sept. 11 attacks, helped coordinate Hurricane Katrina relief from the Pentagon, and started his marketing and communications business just before the 2008 financial crisis.
So in January, when he first read about a virus sweeping China, he started to prepare. In February he ordered five laptops for a core group of employees and by March had purchased 35. When other companies found themselves struggling to find equipment, his staff was settled and working from home. “I was a planner in the military,” Butler says. “I heavily rely on my ability to think and plan before I do.”
Still, in just a few months, Vistra lost two clients and three major contracts, including a hospital, a large beverage company, and a tourism agency that canceled events, contracts, or big projects. The company responded with an online campaign it called “V Positive.”
“We put up positive messages on a weekly basis,” Butler says. “That generated more good leads for us, just by doing that. So while in some areas we lost a few customers, in some areas we gained a few.”
In late May, the video of George Floyd’s death led to worldwide protests against police killings of Black Americans. Butler is Black, and 48% of his employees are people of color. Vistra started a new business line that offers tailor-made diversity training to customers.
As the months of working from home passed, Butler says he focused more on his staff’s well-being. He gave each employee $150 to “buy something that will help them work better.” The company, which already holds weekly and monthly video calls for staff, started including more informal Thursday morning coffees and Friday afternoon sessions with his father, a chaplain. Butler says the idea stemmed from his experience in the Army, where every battalion has its own chaplain. “And I thought, Hmm, why does it have to be different in the workplace?”
By late August, most of the clients the company had lost in the early days of the pandemic were back on Vistra’s roster. Butler says he’s working from his home for the foreseeable future, just a few miles from the office — and a few feet from the bedroom where he founded his company 13 years ago.
Melissa Wirt, founder, Latched Mama
Melissa Wirt thought she knew about juggling responsibilities. She founded Latched Mama to provide affordable, functional clothing for nursing mothers six years ago, when she had just two children. Today she’s the mother of five.
Then in February, the coronavirus shut down the factories of some of Latched Mama’s suppliers in China. It took a few more weeks before it hit her team — most of them working mothers — in Virginia. “So many moms’ lives, within a 24-hour period, were turned upside down,” she recalls. “Kids stopped going to school on a Friday and didn’t go back on a Monday.”
Wirt’s mother came up from Florida to help take care of her kids. Another mom couldn’t come to the office anymore when school and day care closed. “So her husband is now coming into work” and is on Latched Mama’s payroll, Wirt says, and the woman is doing social media work for the company from home.
In other ways, the work-from-home lifestyle proved a boon to Latched Mama’s business. Women are treating themselves to more comfortable clothes, boosting sales from last year, Wirt says.
Her staff, many at home or working half-shifts, weren’t able to pack and ship fast enough to meet the elevated demand. One of her employees got COVID-19 during the summer, and fear of the virus remained high.
So Wirt recruited teenagers, including a 16-year-old neighbor, to work part time. She also hired two people to manage shipments and warehousing, scooping them up from a nearby distribution company that went bust during the pandemic. “In some ways it’s an amazing problem to have,” Wirt says. “But it’s also hard as a small business because you also have to keep your employees safe. It’s just a lot of balls in the air at the same time.”
Productivity has ticked down. But Wirt says she feels that’s a small sacrifice in an unprecedented year.
“If we need to cut some profit to be able to make sure that people can relax and take a deep breath and be there for their kids and get through this pandemic together, then that’s what we’re going to do.”
SOURCE: Dmitrieva, K.; Kazakina, K.; Greenfield, R. (07 October 2020) "3 small business leaders on what it takes to survive the pandemic economy" (Web Blog Post). Retrieved from https://www.benefitnews.com/articles/3-small-business-leaders-on-what-it-takes-to-survive-the-pandemic-economy
The Business Case for Providing Health Insurance to Low-Income Employees
Low income employees without health insurance could be detrimental for a business. This study explains why providing health insurance for low income employees is crucial for successful performance in the workplace.
After the failed negotiations over the repeal of Obamacare earlier in March, the Trump administration appears to be on the brink of proposing a new health care bill. While the details are still sketchy, it seems likely that the new bill will leave many lower-income Americans without access to health insurance.
I believe there is a case to be made that, should this take effect, the private sector has a strong incentive to step in. The provision of health insurance by organizations is a sensible business decision—especially for low-income individuals. In fact, a number of studies—including one that I co-authored—highlight that health insurance coverage can be beneficial to the bottom line of businesses, and should be endorsed by managers as good corporate strategy if they seek to increase their productivity.
Health insurance for low-income employees is good business for at least three reasons: it is linked with reduced levels of stress, more long-term decision-making, and increased cognitive ability, as well as (perhaps somewhat obviously) increased physical health — all of which are crucial components of higher organizational performance.
Health Insurance Can Reduce Stress
Among other positive outcomes, health insurance significantly decreases the level of stress employees experience, as a study described in a recent working paper shows. Johannes Haushofer of Princeton University and several colleagues worked with an organization in Nairobi, Kenya — the metalworkers of the Kamukunji Jua Kali Association (JKA) — and randomly allocated some employees to receive health insurance free of cost for one year. In other words, the researchers sponsored a health care plan for a proportion of JKAs’ employees, whereas others continued working for JKA as usual.
In addition to collecting data through surveys — for example on the employees’ self-reported health and well-being, and their household characteristics — the researchers did something rather unusual: they collected saliva samples from all respondents, which were later tested for the stress hormone cortisol. These measurements occurred at two time points, at the start of the study and at the end.
The researcher’s results were striking. Not only did employees who received free health insurance report feeling less stressed, but this decline correlated with a reduction in the cortisol measured in the saliva sample. The decrease in cortisol was comparable to roughly 60% of the difference between people who are depressed, and people who are not.
This is important for organizations because employees who experience higher levels of stress are more prone to burning out, and less likely to attain high levels of performance. Stressed employees hurt the bottom-line — and interventions that reduce stress benefit it.
Health Insurance Can Lead to More Long-Term Decision-Making
But health insurance can do more, too. A paper I co-authored with Elke Weber of Princeton University and Jaideep Prabhu of Cambridge University that was recently published in the Proceedings of the National Academy of Sciencesfocuses on one reason why low-income individuals have difficulties escaping their destitute situation. As research has found, we show that poor people are more likely to make decisions that favor the short term, even when these decisions involve smaller payoffs than larger payouts they might receive in the future.
In our study, we find that this is partially the case because low-income individuals experience more pressing financial needs than their richer counterparts. Because they are so pre-occupied with making ends meet, they are unable to even consider a possible larger payout in the future. This way, they remain captured in what Johannes Haushofer and Ernst Fehr of the University of Zurich so aptly call the “vicious cycle of poverty.”
However, we also find that interventions that serve to reduce levels of financial need that low-income individuals experience can make them more likely to make more long-term-oriented decisions. One such intervention may be the provision of health insurance. With a safety net they can draw on when health problems arise, poor people may be less likely to experience their financial needs as pressing — and as a result, make more long-term-oriented decisions.
This can lead to significant improvements for organizations as well. Companies require their employees to make many long-term decisions. In many cases, a more long-term orientation is necessary for companies to thrive.
Not Having Health Insurance Can Hinder Cognitive Ability
Finally, health insurance can give low-income individuals peace of mind. A seminal study led by Anandi Mani of the University of Warwick investigated the cognitive consequences of poverty. The researchers found — in concordance with an increasing body of evidence — that lack of money saps people’s attention. While they did not specifically study health insurance, it is easy to extrapolate their research to this question. Given that everyone’s attention is limited, the more people’s concerns weigh on their mind, the less attention they can pay to any one concern.
To illustrate this finding, imagine a case where a low-income employee uses her car to come to work every day. She lives paycheck to paycheck and depends on her steady stream of income. Every day, even when she isn’t driving, she worries about what she would do if her car broke down. Such thoughts circle in her mind incessantly — they are always there, no matter what else she tries to focus her attention on.
Obviously, such worrying thoughts have detrimental consequences for her performance. Constant ruminations make it more difficult to focus on tasks that matter in the moment. Now replace the car in the above scenario with her health; let’s assume she has a chronic condition that requires medical attention when it breaks out. This is not an uncommon case: over 34% of employees have chronic medical conditions, which are even more widespread amongst low-income individuals.
Although many of these physical ailments cannot be cured, their accompanying cognitive detriments can be. Thoughts such as, “How will I pay for the doctor? How can I afford my medication?” could be eradicated with the provision of health insurance. This is especially important for low-income individuals who are more likely to have such worries. And with an increased ability to focus on their work, employees are also more likely to be productive members of the organization.
It is unclear what will happen in Washington D.C. in the next few months. Will Obamacare be repealed? Will millions of low-income individuals lose their health insurance? In the absence of a resolution, managers may have to step up. There is a business case to be made for providing employees with health insurance, which may make them less stressed, improve their long-term decisions, and lead to increased attention on the task at hand — and the case is especially strong for low-income employees.
SOURCE:
Jachimowicz J (29 May 2018). [Web Blog Post]. Retrieved from address https://hbr.org/2017/04/the-business-case-for-providing-health-insurance-to-low-income-employees
Employers prefer paper-based approach for open enrollment
Sure, technology is great, but can it ever live up to a face-to-face sit down? Let's take a look at the facts from Employee Benefit Advisor.
Fewer than half of businesses use technology to handle annual enrollment or manage time off, Affordable Care Act reporting or benefits changes during the year, according to a recent white paper by one of the nation’s leading ancillary benefits providers.
Citing a 2017 LIMRA report entitled “Convenient and Connected: Employers and Benefits,” Colonial Life highlighted several reasons why employers are resisting the digital age. They believe their organization isn’t big enough (32%), a technology solution is too expensive (24%), they don’t have enough staff (16%), in-person meetings are more engaging, or it’s the preference of their broker or plan administrator (tied at 15%).
In fact, Colonial Life post-enrollment surveys from 2009 to 2016 show that 98% of employees understand their benefits better through 1-to-1 benefits counseling and 95% describe the personalized attention they received as valuable.
Steven Johnson, vice president in premier markets and enrollment solutions at Colonial Life, was surprised by the prevalence of “manual and outdated ways.” However, he also understands the tendency to resist change— noting, for example, how some people still maintain landlines in spite of a reliance on smartphones for calls, text, e-mail, social media and GPS directions.
“Slow adoption of technology can be especially true in the workplace,” he says. “Heavy dependence of the fax machine at many workplaces still baffles me with so much advanced technology available to perform the job better, faster and cheaper.”
For those employers looking to add capabilities to their benefits technology programs, the report noted that LIMRA found most cited cost reduction (36%) or control of benefit data (35%). Rounding out the list was reduced staff time (32%), improved benefits communications (29%) and better employee experience (27%).
Among the features most sought after for either benefits administration systems, enrollment technology or both, LIMRA said low cost led the way (87%), followed by data security (86%), ease of use for employees (85%), it’s accessible all year (80%), employees re-enrolled annually or all insurance benefits are on the same platform (77% apiece).
Colonial Life stressed the importance of providing personalized resource materials, such as web content, e-mails and one-to-one meetings, as well as ample time for employees to make wise choices for themselves and dependents. Another recommendation was that insurance carriers make available benefits counselors to help guide employees through their decisions.
Johnson urged benefit brokers and advisers to help educate their clients on affordable enrollment technology solutions that will greatly enhance the experience for their employees while also reducing administrative burdens and challenges for employers and plan administrators.
“A trusted benefits adviser can share case study examples from companies of similar size and industry to illustrate the benefits of adopting a benefits admin solution for enrollment,” he says. In addition, he suggests that employee survey feedback can be shared to help advance the argument that “the overall experience is far better for those who’ve used technology to help them make their important benefits decisions.”
Source:
Shutan B. (13 November 2017). "Employers prefer paper-based approach for open enrollment" [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/employers-prefer-paper-based-approach-for-open-enrollment?brief=00000152-1443-d1cc-a5fa-7cfba3c60000
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5 Reasons to Make Friends with Your Competitors
Originally posted July 21, 2014 by Marla Tabaka on www.inc.com.
When I owned my coffeehouse (2001-2004) people frequently asked me if I hated Starbucks. I didn't. After all, Starbucks is responsible for re-introducing the culture of coffee in the United States and for establishing it in countries where the cafe culture never before existed. Starbucks put the romance into the coffee experience. Without those romantic notions consumers wouldn't have given a second look at my drive-thru, or stop by for a fireside chat over a delicious cuppa joe with their friends. Thank you Starbucks!
Still, the truth is that the coffee giant made it impossible for an independent coffee retailer like me to compete, so I didn't. Instead my business became what Starbucks is not. It too became a household name but for reasons far from its convenience and fast service.
Stop viewing your competition as the enemy and instead use it as the catalyst to brilliance. Instead of investing your precious energy into hating or envying your competitors use it to become the very best entrepreneur you can possibly be. Here's how.
Give your customers another reason to choose your brand.
I knew that my delicious, fair trade coffee wasn't enough to bring customers through the door so I gave more dimension to the consumer experience. I added open mic nights, brought in great bands, and did art shows and book signings. I even opened a private conference room to local businesses and organizations.
What can you offer in addition to your products or services? When you stand out from the competition by offering something of value that your competitors don't, you give your customers a better reason to choose your product or service. How can you help your customers go beyond a simple purchase and truly experience your brand?
Keep the price down to remain competitive.
When I purchased my coffeehouse I knew that I would have to bring down the cost of goods. It forced me to move outside of my comfort zone and negotiate with vendors. In many cases I found new suppliers, and I never stopped negotiating.
Don't get complacent about costs. Just because your suppliers have served you for years doesn't mean they can't do better. Also keep an eye out for new materials, parts, or products that will create a cost savings.
Innovate, innovate, innovate.
What sells today may not sell tomorrow. I've had too many entrepreneurs come to me for coaching because their once successful business became a cash drain.
Watch what your competition is doing to stay ahead and learn from their wins, as well as their failures. Don't get complacent! Don't get so caught up in the day-to-day operations that you neglect coming up with the next great idea. That's the mistake these entrepreneurs made and, sadly, it's often too late to breathe life back into the brand.
Upgrade your skills.
When you allocate all available cash and human energy to your business it's virtually impossible to invest in training and education for yourself. Keeping abreast of the latest technology and trends, and constantly honing your leadership skills will help you gain and maintain the competitive advantage.
Make a list of your weaknesses and make a plan to build upon the skills you need to overcome them. If you cannot acquire those skills yourself, then outsource or hire someone who can provide necessary skills to compete effectively.
Embrace new technology.
As technology improves and evolves the marketplace changes, sometimes drastically and often overnight. You must be ready to adapt or change according to industry trends and business in general, or your competition will leave you in their dust.
Social media is a great example. Believe it or not I still hear from people who don't even have a social media presence and don't believe they need one. Last year I worked briefly with a caterer whose business took a nose-dive over a period of two years. We narrowed down the cause to a lack of online presence. Her closest competition added a customer-facing backend to their website and aggressively engaged in social media. But she simply refused to understand why this would make a difference and sadly, made no attempt to catch up with her competitors. Her doors are now closed.
Embrace competition and your whole world can change. This simple shift in your mindset will keep you engaged, aware, and in the lead.
The 3 Essential Factors for Growing Your Business
Originally posted April 9, 2014 by Mike Michalowicz on www.americanexpress.com.
Hoping to scale your business this year? You can do it--if you have these 3 elements in place.
Congratulations! You’ve achieved a measure of success with your business. You’ve created a great product, and you’re getting the word out. Your income is increasing, and you’re ready to take the next step.
If you’re looking for the formula that will help you build your business exponentially, I’m about to give it to you. Now, don’t make the mistake of thinking there’s a worry-free, easy road to success. If that were true, businesses would never fail.
What I will share with you, though, is a reliable formula for scaling your business up—a tested and proven method of making it work harder for you. It’s not an effortless path, but you will arrive at your destination.
And here’s the key before we get started: You can’t just pick one of the following three elements and expect exponential growth. The magic solution is the intersection of all three of these elements, working together, to create a successful, profitable business.
Uniqueness
Better isn’t better; different is better. You must find the point of difference that you offer—that thing your company does that no one business can provide. Therein lies your opportunity.
Think about Starbucks for a moment. There are other coffee companies, but none are so ubiquitous or successful. Here’s why: It’s hard to differentiate yourself sufficiently. Some coffee shops may offer a slightly better product, some of them might even do it for a slightly better price, but unless a company can find a way to be significantly different, then Starbucks remains the default for many latte addicts.
Different is better. If you’re going to defeat a category leader like Starbucks, you must give prospective customers a compelling reason to choose your product.
Recurring Business From Top Clients
Start by taking a look at your industry, and determine who the top spenders are. Then create a strategy for how to get access to them. Next, look at your own business, and find a way to clone your best clients—either by converting middling clients to better ones or by finding ways to connect with more big spenders.
Don’t underestimate the importance of your community as a source for new clients, even if your business is a one-time use sort of outfit. Think about funeral homes: I can’t think of a more single-use type of business, but in providing excellent service, a funeral home can pick up additional business from the families and friends who see and value the excellent work the business is providing. Find a way to cultivate good, repeat business.
Systems, Systems, Systems
Here’s a simple, incontrovertible truth: You can’t scale your business exponentially if you insist on handling everything yourself. There’s just not enough of you to go around.
The solution is to systematize everything that makes sense. Look—and look hard—at every aspect of your business for ways you can streamline, automate and delegate your way to maximum efficiency. If your business can run an entire cycle—from landing a client through billing a client—while you’re asleep, then you have limitless potential to scale your business. Systems are more efficient and infinitely reproducible.
Putting It All Together
So when does the magic start? It’s when you get all three elements working together. It's when your coffee shop brings in loyal, repeat clients for large catering gigs because they’ve spent countless pleasurable hours at your shop, which is run by a reliable manager, offers fresh local food and has a gift shop stocked with the work of local artists. It’s when your accounting firm—staffed by mobile accountants who travel to businesses to meet with busy entrepreneurs—is invited to speak at a chamber of commerce meeting and sign up your community’s business leaders for your unique service, while explaining the system you’ve created that automates your billing and receivables process and makes you super efficient.
Being good in your field isn’t enough if you want to scale your business up. Landing clients isn’t enough, and systematizing isn’t enough. Think that challenge is too great? Here’s the encouraging part: Achieve in these three areas, and you’re virtually guaranteed success.
Focusing your attention where it really matters—on uniqueness, recurring business from good clients, and systematization—is a delicious recipe for success.