Alexandra Levit's Water Cooler Wisdom

When Efficiency Strategies Backfire

Most business owners are after the holy grail of work efficiency. How can we do more with less? How can technology help us take a clunky business process and streamline it? How can flexible scheduling help our productivity instead of damaging it?

These are valid questions, but in our enthusiastic pursuit of answers, we are sometimes overzealous in implementing strategies we think will lead to greater work efficiency.

Let's explore a few!

Automating When You Shouldn't

Many leaders make the mistake of believing that because it's possible to automate something it means that you should.

Rather than indiscriminately automating huge numbers of processes so that you can save on labor costs and increase work efficiency, carefully consider each instance of automation.

Also consider how artificial intelligence and human workers can work together to achieve the best result. In most cases, you will need to have at least a few humans involved to provide oversight and ethical or moral guidance. (We futurists call this “human in the loop.")

Introducing Too Much Software

Admiring shiny new software and other business technologies that promise better work efficiency is normal. But if we bog our employees down with too many programs and apps that don't integrate with one another or are redundant in their functionality, we actually risk a productivity down slide. They could end up spending more time figuring out how to use systems than performing their actual jobs.

When considering a new tool, think through the value it will bring to your existing infrastructure and do a limited pilot to determine employee adoption and usage.

Estimating Numbers Instead of Documenting Them

Most business owners were more fastidious in the days when we worked with manual accounting processes every day. Now, in the name of work efficiency, we estimate numbers like revenue and expenses and don't look at the real amounts as frequently. We often underestimate expenses, which can lead to thinking our business is more profitable than it is.

Fortunately, many business credit cards include expense management tools that keep all business expenses in one place, reliably track and report on all the money funneling out of your business and simplify reconciliation. By tracking expenses on a daily basis, owners can instantly see if sales and spending patterns don't line up, or if expenses in a certain category are running amuck.

For the rest of the article, visit the AMEX Business site.

Can You Balance Multiple Gigs?

It's easy to understand why entrepreneurs start multiple businesses. Taking risks and innovating are in their blood. However, even the savviest entrepreneur is human, and we can only focus our energy and resources in so many directions before our cash flow takes a hit.

Let's explore some tips for getting promising new enterprises off the ground while keeping a watchful eye on the business that currently earns you money!

1. Manage your cash flow.

If you need to put aside money for a side business, it's important that you appropriately navigate cash flow in your main business.

Ensure that you have a cash-flow-management plan in place, and review all of your accounts at least once a month so that you can optimize your spending in real time.

It's risky to funnel main business funds into side businesses because if the main business experiences an emergency or setback, you'll need a parachute. You may want to consider using small business loans to help cushion your businesses.

2. Mind your working capital.

Working capital is the difference between a business' current assets (cash, accounts receivable and inventories) and its current liabilities (accounts payable). Your amount of working capital reflects your business' financial health and operational efficiencies.

Ideally, both your main business and side businesses should have strong working capital at all times. Work with a human professional as well as accounting software to gain an immediate, up-to-date and accurate picture of your working capital. If you need to infuse a side hustle with capital, plan for the fact that some sources—such as small business loans—take time.

For the rest of the piece, check out the AMEX Business site.

Biz Innovations Changing Female Lives

In the business world, women haven't always had it easy. Until the end of the 20^th century, it was uncommon for women to work at all. And even once we entered the hallowed halls of American companies, we struggled with unconscious bias and pay disparities. Fortunately, though, 21^st-century business innovation is benefiting women in an unprecedented fashion. Let's explore a few recent innovations that have changed working women's lives for the better.

Business Innovation #1: Flexibility Drivers

Werk is an analytics dashboard that helps organizations offer targeted flexibility options to their workforces. The company's proprietary assessment methodology uncovers how well an organization is meeting its employees' needs and the flexibility programs that will drive the greatest impact and return on investment. Werk aims to make flexibility access equitable across gender lines and invests in individual employee success by offering personalized flex reports with the exact information working women need to perform their best at work and at home.

Also, women's flexwork thought leader Kathryn Sollmann recently launched The Flexwork for Women Alliance. It's a community of recruitment and career firms that partner with progressive employers to offer U.S. women better work/life integration opportunities ranging from job sharing and flexjob creation to returning to the workforce after a long absence and changing your career. The Alliance aims to help greater numbers of women stay in the workforce in a less life-consuming way as they care for both children and aging parents—and achieve professional fulfillment and long-term financial security in the process.

Business Innovation #2: Women-First Networks

Bumble made headlines a few years ago when it became the first dating app to mandate that women had to make the first move. Now, the company behind Bumble is spreading its wings to offer Bumble Bizz, an online network in which women can take the initiative to make professional connections on their own terms. Just like the original Bumble sought to make dating less uncomfortable for women, its younger sibling Bumble Bizz wants to provide a safe forum for working women to collaborate, share and learn alongside one another.

For the rest of the innovations, check out the full article on the AMEX Business site. 

 

2019 Market Trends to Expect

The overall financial health of the global economy, as well as the resources we have available to make intelligent projections, will greatly impact business success in 2019. Let's have a look at two of the major market trends to expect this year.

Continuing Stock Market Volatility

We enter 2019 with the financial sector in a bear market. (A bear market is an economy in which security prices drop 20 percent or more and stay low for a long time period.)

The 2018 market was volatile and the stock market is currently in the correction process. The most critical factors relating to stock market volatility are trade policy and interest rates.

“The trade war can expand suddenly into multiple industries and cause spillover effects," says Juan Carlos Arancibia, markets editor for Investors Business Daily.

What does this mean for your business?

In the simplest terms, market trends indicate a sluggish economy—you should pay closer attention to your finances to avoid unnecessary losses. When it comes to investing, try to avoid having a knee-jerk reaction. If you can, stay focused on your long-term goals even if the pull to sell is strong.

On the customer spending side, if you are in the business of non-essential products and services, you can expect sales to decrease in a bear market. You may need to adjust your offering so that it's more in line with what customers need today.

Finally, it's a good idea to decrease your own expenses so that you don't need to borrow more money during this time. Due to rising interest rates, be very careful with new credit lines so that you don't get into an irreversible debt cycle.

Another of the critical market trends is trade policy. Keep an eye on new tariffs being issued by the U.S. government. A tariff is a tax on an import or export, and recently, we have seen new tariffs levied on goods coming from Canada, Mexico and the EU—not to mention China. These tariffs can increase costs, but you should balance how much of these costs you can safely pass on to your customers (i.e. through raised prices) without damaging your cash flow.

For more of what to expect this year, head on over to the American Express Business site.

Entrepreneurial Accounting: How's Your Reconciliation?

As a business owner who does a fair amount of her own accounting, I come up against reconciliation frequently. And, as a business and workplace adviser to others, I recognize its importance. Reconciliation is part of the ongoing accounting mix that leverages two or more financial records to make sure numbers match.

In other words, it helps owners and accountants demonstrate that the money going out of an account is equal to the amount spent, and that the amount coming in is equal to the amount earned. Account reconciliation provides a mechanism for accurate balancing at the end of each recording period. If you don't do it properly, you will move forward with compounding inaccuracies and will risk your business' overall integrity.

When I started my business in 2004, the new Sarbanes Oxley Act had greatly tightened the reins on reporting reliability. Although the law had the biggest impact on large corporations, it encouraged me to establish strong accounting practices. I'll admit that I struggled with account reconciliation. An ongoing problem involved client payments that arrived significantly after I declared the income. But fortunately, I never experienced strange inconsistencies I couldn't explain.

Over the last 14 years, I've witnessed and personally experienced the following reconciliation pitfalls I hope other business owners can avoid.

Reconciliation Pitfall #1: The Dreaded Spreadsheet

As someone who studies and applies future of work technology, I'm embarrassed to admit that I left my spreadsheets kicking and screaming. I was comfortable with them and grossly underestimated the manual processes involved with reconciliation. I regularly spent hours trying to get to the heart of a single discrepancy and even then, sometimes couldn't overcome the danger of human error. Today, we have the advantage of much more accurate cloud-based solutions to access real-time financial data from any device at any time and track the flow/monitor the status of each reconciliation. Just make sure you certify and secure your chosen system.

Reconciliation Pitfall #2: Non-Standard Processes

I can't tell you how many times I fell prey to this one. I'd do reconciliation one way, my business manager would have another approach, and then our accountant would come in and use a third technique. As you can imagine, this lack of standardization was problematic. To avoid this pitfall, sit down with all relevant parties and draft your organization's reconciliation policies. Store them in an online system connected to your financial data, make sure anyone new coming into the organization understands them and knows where to find them and emphasize their importance.

For more where this came from, check out the American Express Business site.

Strategies for Excelling at Product Development

Product development is one of the most challenging aspects of running a business, because it’s a rare situation in which your offering is already so perfect you don’t need to improve or evolve with the market. You can vastly save a great deal of time and stress in your efforts to create new products and services, or expand on or enhance your existing ones, with five specific strategies.

Put Yourself in Your Customers’ Shoes

Product development is most successful when it is directly connected to an unmet customer need. “If you can create a smooth, flawless experience with no interference or frustrations, it’s likely that people will enjoy using your product. Solve a problem and make lives easier,” said Ali Mahvan, CEO of social shopping company Sharebert. “You're not starting a company to build a product for yourself. You're starting a company to build a product for your customers. Customer feedback has driven every major design and experience decision throughout the building of the Sharebert app and is our number one metric for design.”

 Iron Out a Process

Torrey Tayenaka, CEO of video production company Sparkhouse, wanted to create animated explainer videos to market customers’ businesses, products, and services. Explainer videos are useful because you can produce them without actors and cameras, and while a product is still in the concepting stage. However, the idea is a relatively new one, so Tayenaka needed to build a process that could be easily understood and followed by his team and customers alike. “We took our time in developing a 12-step animation process that we always strive to communicate clearly,” he said.

Take the Airplane Window View

To excel at product development, you must be willing to take a step back and look around you even as you have the urge to charge forward. “We are constantly looking at the big picture, asking ourselves: do we know what we are creating, who we are creating it for and why we are creating it?” said Tayenaka. “If we understand those key points, we can always make sure the ship is headed in the right direction. But on the other hand, if we get too excited about features and specifics, we can lose sight of what’s really important.”

For more where this came from, check out the full piece at the AMEX OpenForum.

The Future of Agile Business

Considering the pace of change in today's world, agile business—the process of making quick decisions based on the information you have and the willingness to adopt new strategies as you go along—has gone from being a competitive advantage to a necessity for many organizations. 

I was curious about how modern business owners view the future of agile business, so I talked with Adelaida Diaz-Roa, co-founder of social travel network Nomo FOMO and Aaron Michel, partner at venture capital firm 1984 Ventures.

Both Diaz-Roa and Michel support agile business in their own enterprises. Diaz-Roa defines it as “having a work culture built around trust, speed, flexibility and transparency. It's about empowering everyone on the team to take risks to achieve the company's mission, knowing that their manager will support them if they fail." 

“Agile business enables a company to be more nimble, eliminate waste and reduce lead times," Michel adds.

Where Is Agile Business Headed?

Agile business got its start in the tech playgrounds of Silicon Valley, but it's becoming increasingly common in large corporations around the world. 

 

“Agile organizations are becoming flatter, trusting employees to act as business owners," says Diaz-Roa. “People operations are more important, leading to an increased focus on individual accomplishments."

For more thoughts of the future of agile business, visit the AMEX OpenForum.

Essential Basics of Cash Flow Management

Cash-flow management involves close monitoring of cash flow, which is the amount of cash being transferred into and out of a business. 

If your organization has positive cash flow, it means that the amount of cash available at the beginning of a period (opening balance) is less than the amount at the end of that period (closing balance). In order to remain in business over an extended period of time, an organization must maintain positive cash flow.

I talked to two experienced owners—Brandon Harris, president of content marketing agency NUMedia and Christine Yaged, chief product officer of finance information portal FinanceBuzz —to share their most critical cash-flow management tips.

1. Stay within your means.

Even if your business is growing rapidly, if you don't practice healthy cash-flow management, you can dig a deep hole from which it's difficult to emerge.

"It's easy to find yourself in credit trouble, missing payroll, taking on expensive loans that further your debt and, eventually, declaring bankruptcy," says Harris.

 

 

“It's your job to make sure you can cover your bills so that all stakeholders are satisfied and things are running smoothly," says Yaged. “Otherwise, you'll severely disrupt business operations and spiral from there."

2. Avoid scaling too quickly.

Sustaining positive cash-flow management can mean being patient with your organization's growth, holding off on expansion plans and tempering your excitement about the business's potential.

“Be careful not to overextend with too many early hires and a bunch of credit card debt," says Harris. “Build your war chest organically, and you'll thank yourself in the long term. I've tried the fast, hard money route, and the stress on your business and your life is simply not worth it."

For more where this came from, head over to the AMEX OpenForum.

Securing a Business Loan for Your Established Organization

There is a great deal of advice for securing a business loan for a company that's just getting off the ground. But what's less frequently discussed is what an owner should do for financial help long after the initial setup.

For many owners, a business loan might mean the difference between surviving and having to abandon the organization. To get to the bottom of this issue, I spoke to Duran Inci, co-founder of marketing agency Optimum7, and Dan Robbins, chief operating officer of skincare company OC Facial Care Center

Applying When Your Business Is Doing Well

Inci and Robbins both have business loan experience. Inci obtained a Small Business Administration loan as well as a separate credit line for his consulting business.

“I wanted to have options in terms of growth, additional marketing, hiring and scalability," he explains. "I believe that businesses should start looking for loans not when things are going bad, but when things are going great."

 

With the common saying “Banks lend when you don't need it, and don't lend when you do" in mind, Robbins applied for a loan while his business was in good shape.

“We'd been paying in cash for store expansion, inventory and all other business aspects," he says. “But last year, I heard [a judge on Shark Tank] suggest taking out loans while holding cash so you can protect your ability to pay interest and keep the the loan afloat, and I immediately changed my way of thinking. I realized that if something bad was to happen and I had no cash, it could destroy our business."

Convincing Banks to Take a Chance

As a result of the recent financial crisis, many banks have gotten stricter about how and when they lend. “You're much better working with a local or smaller bank with which you already have a relationship," says Robbins.

Many lenders will want to review your business model.

“Banks want to be sure you have the ability to pay back or you have collateral," adds Inci. “They are very specific about the terms as well. At the same time, if you have good revenue and decent financials, it's not hard to get a business loan."

If an owner decides to pursue a business loan, what should they be prepared to do to convince financiers? Both Inci and Robbins say that demonstrating transparency to the lender, with the help of a good accountant or bookkeeper, can help.

“Your cash flow and the profitability of the business should look good," says Inci. “Furthermore, the debt to income ratio should not be alarming. If you feel like the terms and/or interest rates are high with private lending, SBA loans are better in this respect. However, you should expect higher initial fees."

On the whole, business loan interest rates are comparatively low.

“If you can take out a loan now and save your cash flow and profit, it's better," says Inci. “Additionally, building that lending relationship today will be more impactful later when you might actually need the loan."

For the rest of the piece, head over to the AMEX OpenForum.

The Pros and Cons of International Entrepreneurship

 

In an increasingly global world, the advantages of international trade can give your business a substantial boost.

According to Abhi Golhar, serial entrepreneur and co-founder of Nurse Practitioners Clinical Rotations, chief among the advantages of international trade are market-risk diversification and less competition.

“If there happen to be increasing regulations in the business owner's home country that may inhibit the sale of the business's widgets, identifying other markets with less regulation could be vital for the longevity of the business," Golhar says. “Also, the business owner may find that by expanding into a different market, there may be fewer competitors, which can result in higher profit margins and more business volume."

Added to the advantages of international trade are lower production costs. 

"Business owners should consider international trade when the cost of labor or products they can source locally negatively impacts their bottom line," says Scott Kacmarski, CEO of business process outsourcing company Reps Direct.

Additionally, becoming proficient in international trade in the early stages of your business can help you avoid prohibitively high costs down the line—another perk of expanding globally.

“The cost of one product or service may seem like a small issue at the beginning," Kacmarski says. “The problem comes when you have many products or employees. High costs then lead to cash-flow problems, and it's harder to go international once your business is more mature and operating at a larger scale."

International Trade Has Its Downside

Of course, there are disadvantages of international trade as well.

For one, if you don't have what Golhar calls “boots on the ground," it could increase your probability of failure.

“When my father opened a business in his hometown in India, his brother—who he trusted completely—assisted him," he says. "Without a partner with an established track record and contacts, international trade can be enormously difficult."

To read more, check out the full piece on the AMEX OPENForum.

 

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