Extra Inventory From the Holidays? 6 Ways to Use it Now and Plan for Next Year’s Product

Holiday sales for any business can have a major impact on how the next year begins. Anticipating for the rush can sometimes leave small and big business with excess inventory and decisions to make with what to do with it now, as well as what to do next year to avoid over-ordering. By following some simple steps, businesses can learn what to do with their current inventory excess and how to better plan for the next season’s holiday rush.  Paying attention to 6 key ways to use extra inventory can keep any business in the black.

Save It: Sure sounds easy and simple. Almost too simple. But if your product or business is in a position to hang onto the inventory for the following year, or for another time to sell, then try and store it. It may be wise to save it for a rainy day.

  • Next Year: Try and use some inventory from this season for the next if the product can withstand a year of consumer shift. Order less of the “new” next year and mix in current with latest product on the shelves.

Sell as “Bundled” Package Deals: Consumers love great products and they love feeling like they are getting a steal of a deal. So, if you can, bundle some of the extra products into a “package” deal for a limited time offer. Combine items and lower the cost per item for a nice price point and great bundled offer. Consumers will benefit from a “deal” and you will move more than one product off the shelves.

  • Next Year: Start by selling bundled deals from “last season” next to the latest product at a slightly higher price. Consumers may not buy the new product but will quick to grab the “last season” product at a sale price.

Offer Discounts Next Year: Who doesn’t love a deal? So, why not offer a double win for a consumer? Offer your product with the added benefit of an automatic discount on ANY item or product the next season. Consumers like to know they will get something now and like even more the idea of added benefit the next year. If your product is one that consistently is updated, the offer alone will create some buzz for this and years to come.

  • Next Year: Consider how many products were sold with the current offer and the offer for the following year when you go to place new inventory orders. By looking at how many consumers purchased that deal this year, you can better assess how much you will need.

Create Promotions: Current products make great promotional items. Offer consumers a “free” product with purchase of another. If the product is one that can go well with other purchases or even be used as a promotional item at an event, raffle, give –away, and beyond, then the price you “eat” may be good for future business and getting your unused product in the market. Promotions are a solid way to grow your brand and product.

  • Next Year:  Factor in any promotional items you may use and reduce purchasing any promotional items this year. Use what you have and refrain from ordering any other marketing or promotional items if you have inventory on hand.

Slash Prices: Sales sell goods. If you can offer a great discount and cut prices on your products, it’s a great way to get buyers to take your extra inventory. Think about all the extra holiday lights, artificial trees, and snowman wrapping paper that go on sale the day after Christmas. Jump on the price slashing bandwagon and throw one heck of a holiday deal.

  • Next Year: Anticipate this tactic and use to your advantage. See what goes the fastest once you slash the prices and consider the profit made from this. If it’s a good solid money maker, ordering a little extra for this same reason next year may be a good move.

Inventory Liquidator: Not the first choice by any stretch, but if you find yourself in a major pickle then go with a liquidation service-but be cautious. Be aware of the risks to your product integrity and brand name. For some this is a last resort option but if you need to move a lot and reduce the bleeding this may be an option to consider.

  • Next Year: Run the numbers of this years liquidation and forecasted sales to see if you can withstand this same hit the following year. If it’s too close to call, order less and start to consider ideas for back order deals or offers.

Business owners know the ups and downs of planning for the holidays and strategic planning of ordering inventory. However when that inventory doesn’t sell in the current year, the worry and stress to move that product rises. By implementing the above 6 ways to use that extra inventory now and plan for next year’s product, business owners can tackle the holiday rush with a smile and game plan.  Nobody said Santa Claus couldn’t come to town all season long.

Let’s Talk Money: 5 Ways Businesses Can Maintain Financial Transparency with Employees

Talking about money with friends, colleagues, family, or any other relationship that exists is usually topic that is avoided. When running a business, this trend also seems to remain true. Businesses are often reserved when it comes to sharing the company financials with its employees for a variety of fear-based reasons. While every business has the choice of who they share what numbers with, the businesses that choose to share with employees can navigate this hard-to-discuss topic with clear direction. In this post we will review the 5 correct ways your business can maintain financial transparency with your employees. Let’s take a look!

Share the Information on a Consistent Basis: Good and Bad

While good news is much easier to share, if you are committing to sharing the financial status of your company’s transactions with your employees, you should embrace sharing the information on a consistent basis, whether the numbers are good or bad. Sharing on a set schedule demonstrates that the company will remain transparent, regardless of the color the company is heading into. Good, bad, or indifferent, remaining on a set quarterly, monthly, or even weekly sharing basis will help with the commitment to being transparent with your employees.

Explain the Numbers: Help Employees Understand the Breakdown

Graphs, projections, charts, oh my. Sharing the financial status with employees is more than just arrows up or down. Sharing takes explaining what it all means. When reviewing financials, help employees understand the numbers they are seeing. Are the projections on track for making the growth expected? Does the company see their value in those numbers? Do you even know what the numbers mean? Sharing and explaining what each dollar in and dollar out means for the company can demonstrate the value of your employees in every transaction.

Review Tough Questions Ahead of Time

Make sure you’re ready to answer the tough questions that your employees may ask. Consider what the employee may see when the numbers come through and be prepared to explain what the company is doing, thinking, or considering when they see the same numbers. Reviewing some potential questions in advance of the numbers will help navigate a potential onslaught of “what does this mean?” question session.

Share in Person

Timing is everything. Companies usually have the time they share news to the team down to a day and time of the week. That usually is paired with a nicely worded email, newsletter, or some form of typed-out document. When it comes to sharing the fiscal information, companies should consider doing this in person when possible. Sharing in person can help reduce office chatter about what the numbers “really mean”, or reduce the misunderstanding of one “0” in the fancy pie chart. Sharing in person allows allows real questions in real time. If a company can find a way to share and provide a follow-up meeting or offer in person reviews, it will ensure staff morale stays high around the company’s financial transparency and communication with its employees.

Demonstrate the Employee Connection in Financial Goals and Reviews

People work harder when they see their value in the end product. Highlight the employee’s contribution to the numbers they see. By demonstrating the connection each employee has to every dollar, they will be encouraged to take ownership of that dollar. By highlighting where an employee fits in the grand scheme, it will help define purpose, passion, and projections to shoot for. The employee paycheck should not be the only financial connection they see to a company.

By sharing and remaining transparent with your company’s financial statements, employees can find increased value and connection to the company that they work hard for. By following these five ways to maintain your business’s financial transparency, employers can reduce the fear that goes into sharing their finances with others. While these methods may not make dinner party discussion about how much or how little one makes easier, it can help the employee, company, and its operating managers feel better prepared to use the company numbers to their advantage.

Should You Allow Pets at the Workplace?

As a business owner, there are a lot of decisions you need to make about the best policies for your office. You may offer your employees unlimited vacation, the option to telecommute to work, or free lunch. Another benefit to consider offering your staff members is a pet-friendly office environment. Although this may seem counterproductive to running a successful operation, it’s becoming more common for business owners to allow staff members to bring their pets to work. Is a pet-friendly office right for your business? Consider the benefits that pets can offer to your team members, such as:

dog_blogLower Stress Levels

The workplace is a fast-paced, demanding environment, which creates stress for working professionals. Forty percent of workers stated that they were very or extremely stressed out on the job, and 25 percent said that their work was the number one cause of stress in their lives. The effects of stress on the body are well-known: high blood pressure, sleep problems, weight issues, diabetes and heart attacks.

One effective way to fight stress is to create a pet-friendly office where employees are allowed to bring in their cats and dogs. A 2012 study found that employees who brought their pets to work reported being less stressed out throughout the day.

Dogs have been proven to reduce levels of cortisol, which is a hormone that is responsible for stress, while raising the levels of oxytocin, the “love hormone,” which causes happiness. A 2001 study found that pets can lower blood pressure levels that are caused by mental stress.

Improved Communication

Employees must be able to effectively communicate with each other, ask each other for help, and create a support system in the office. However, most professionals are too busy with their responsibilities to get to know their colleagues.

Bringing pets to work has been shown to increase interaction between employees. “When I first took the job, I often learned the names of the pets before employees, and it helped me build a bond with everyone,” stated Lisa Conklin, public relations manager for Replacements, a dinnerware retailer.

When a team is able to communicate effectively, they are more efficient, productive and happier. This benefits business owners with a better corporate culture, higher employee retention rates and additional profits due to increase productivity.

Work/ Life Balance

Employees are increasingly demanding a better work/ life balance amidst the longer work  hours common in the US. A pet-friendly office helps to improve that balance by allowing staff members to bring their beloved pets to work. A long day at the office does not seem so bad when your employee’s canine best friend is next to them. Additionally, it takes away the burden of hiring dog walkers or worrying about pets being alone for extended periods of time.

Set Policies When Allowing Pets at Work

If you believe that allowing pets at work could benefit your business, it is advantageous to create rules that all employees must abide by. First, the office should be pet-proofed, which means all loose wires must be hidden, small objects must be removed from lower surfaces and all doors must be closed at all times.

Second, a pet policy should be adopted that allows only well-behaved and friendly pets to be brought to work. For example, a dog that is prone to barking will only distract your workers instead of increasing productivity.

Third, find out if any of your staff members have allergies to pets. If this is the case, they may agree to take allergy medications; however, that must be discussed before pets are allowed on the premises.

If you could benefit from more advice on managing a business, click here to find seven tips to small business success.

How to Keep Your Business Staffed Effectively Through the Holidays

While the holiday season is a joyous time, it can also be a stressful time for many small business owners. Not being properly prepared can leave an employer short-staffed and unable to handle the influx of business. On the other hand, owners who face a slow season during the wintertime can face financial hardship having to pay salaries with no profit coming in. Be ready to keep your business appropriately staffed through the holidays with these considerations:

 

Time Off

Most staff members request to take time off during the holiday season in order to spend time with family, visit friends or take a vacation. Business owners can become overwhelmed by the time off requests, and the business can suffer as a result.

Approving time off during the holidays is tricky – if it’s not managed properly it can not only prevent the business from delivering what clients and customers want but can also create internal strife,” says Samuel Tanios, president and chief executive of Human Elements Consulting, in an article on Glassdoor.

To avoid chaos, make it a policy that employees must request holiday time off at least a month or more in advance. Consider granting time off on a first come, first served basis – just make sure to announce this decision to your team.

If you have a small team, or need all your employees at the office during peak times, establish vacation blackout days, alerting your subordinates that no time off will be granted on certain dates, or offer monetary incentives on these peak days for staff to stay motivated.

 

Staffing for Your Season

Busy Season

The holidays are high-grossing months for many companies. Retail stores, event planning services and catering businesses often experience a peak in business during this time. However, not having the staff to fulfill orders or handle the sales can create a backlog in fulfillment, causing stress for the owner and hurting the company’s reputation.

To avoid this, you must prepare for the holiday time by hiring extra employees at least two months in advance. This will give you a chance to properly train the new hires and be certain that they can handle the fast-paced environment that the holiday season will bring.

 

Slow Season

Some businesses see a significant decline in business during the wintertime. As such, owners have to make staffing decisions to account for lower sales during this time. Being responsible for paying salaries with no funds coming in can put a business in the red, and it can be difficult to make up the difference even when business picks up.

Some small business owners establish mandatory time off for one or two weeks during the holidays, when employees can use their accrued vacation time or simply not get paid. Others offer their staff the opportunity to work part-time, staggering the schedule so that the employees work during different days or times.

Don’t let the holidays hurt your business operations; prepare for a busy or slow season in advance. Two ways to get prepared, no matter what season you are entering are budgeting and lending. Start setting a budget and planning for your expected revenue. You can do this with a Business Budget Smart Sheet, available to help you start getting your spending in order. Another option is a small business loan from IOU Financial, which can help your business stabilize cash flow through the slow season, or hire and train new staff for your busy season.

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Small Business Finances 101: Understanding Income

Income is the life source of your business. All your planning and strategies aren’t going to mean much unless you generate enough income to eventually make a profit. There are two types of income your business needs to track. Gross income is the money you receive from selling your products or services minus the costs of goods or services sold. Net income is your profit after you subtract all your expenses and losses.

As a small business owner, you need to know the most reliable ways to collect the income you owed, and how to properly report the income you receive.

Collecting Payments

  • Extending credit: While it’s nice to extend credit to customers, it can also be a money-losing proposition. People who pay with cash or payment card (debit, credit or gift) are your best customers. The only risk they pose is counterfeited bills or cards, which is a pretty small risk. When you get into checks and merchant accounts, you have to be more careful.
  • Credit cards: Many small businesses (55 percent in 2013) do not accept credit cards because of the steep fees and the possibility of disputes. If you sell online, you have no choice but to accept credit cards and pay the fees. Remember that if you don’t accept chip-embedded (EMV) credit cards, you are liable for the costs of fraud, a source of friction between merchants and card issuers.
  • Merchant accounts are business-to-business (B2B) credit arrangements with clients and suppliers. A 2014 U.S. study of B2B invoices found that a troubling 42.5 percent were paid late and that 5.6 percent were still uncollected after 90 days, which is the usual definition of a default.
  • Checks are not desirable, as too many things can go wrong. This is especially true if you have customers living abroad. It can take forever for a mailed check to reach you. Then there are the problems of stolen or overdrawn checks. Unless you have a long relationship with a customer, it’s best to avoid being paid by check.
  • Direct deposits via automated clearing house, transfers and electronic transfers are quick and safe for domestic payments. International transfers take longer. The only problem is getting your client to agree to make direct deposits.
  • Collections: If you are owed money, you can try to collect it yourself, hand debt collection off to an agency, or write-off the debt. In any event, late payments have a negative effect on your income.

Accounting for Income

Accounting is essential knowledge for your business. Keep your books up to date because delays can cause mistakes that might end up hurting your business and getting you audited by the IRS. You can hire a bookkeeper if you have enough activity to make it worthwhile. Many small businesses use software such as QuickBooks to perform bookkeeping. It’s up to you to evaluate the time you need to spend on using software versus paying a professional to do the work for you.

If you operate on a cash basis, you acknowledge income when it is collected. However, if you use accrual accounting, you report income when it is earned, which is usually before it is collected. Whether you use cash or accrual accounting, you need to keep accurate and timely records. This is especially important for figuring net income, which is the amount you are taxed on. To calculate net income, you must account for all expenses, costs and losses. If you miss some deductions, you’ll pay more tax than necessary.

If you need to stabilize your cash flow, hire a bookkeeper, or expand your inventory to bring in more income, IOU Financial offers convenient, low-interest rate commercial loans to help your business grow. Visit our loan calculator to get started!

Empowering Entry-Level Employees and Staff to Succeed

There is a difference between supervisors and real leaders. Supervisors simply manage their employees, making sure they accomplish their daily tasks and follow the organization’s rules and regulations. A business leader, while being responsible for the workload, also makes it a priority to empower employees to advance in their careers. Entry-level staff members greatly benefit from an invested manager who promotes their strengths, helps them work on their weaknesses, and provides them with career-related advice. There are specific ways a manager can empower entry-level employees to succeed.

 

Setting Objectives and Giving Feedback

In order for your employees to thrive, they need to clearly understand what is expected of them. Instead of just delineating daily tasks, include your staff in the entire scope of the projects. Sit down and create concise and measurable objectives so that you and your subordinates are on the same page about what needs to get accomplished. Goals are important for four reasons:

  1. They provide guidance and direction.
  2. They aid in planning.
  3. They boost employee motivation.
  4. They help managers provide feedback.

Once clear goals have been established, managers must provide regular feedback so that employees know whether they are on track to meeting their goals or not. The only way your staff can grow in their positions is if you point out areas in which they need to improve, tell them what must be done to enhance their performance, and then explain whether they are meeting the previously set benchmarks or need to improve their skills.

 

Mentorship Programs

Mentorships usually pair an entry-level and a senior-level employee together so that the more experienced professional can provide advice, training and other resources to the newcomer so he or she can succeed not just in their current role, but in their career. An employee who is just starting out can greatly benefit from guidance from someone who has succeeded in the same industry, can share their network of contacts and can provide support.

Inc.com believes mentorship programs are “low-cost, yet high-quality, solutions” that show staff that management cares about them, result in better trained and engaged employees, and promote employee job satisfaction and loyalty.

 

Additional Education/ Training

When business leaders are truly invested in empowering their team to succeed, they should help staff advance their knowledge and skills so they can constantly grow in their positions and prepare for more senior roles. Offering paid education to your employees can be advantageous for both the organization and staff. Your business will benefit because employees will become more proficient in their industry and become better assets for the company by being more productive and efficient. In turn, the employees will be more loyal and satisfied with their job.

 

While larger companies can often finance their staff’s education at a college or university, smaller businesses may not be able to afford this. However, it may be possible to provide staff with other trainings or online courses that can advance their professional abilities, such as typing classes or communication workshops.

 

These are three of the ways that leaders can empower their team members to succeed instead of just overseeing their workload. When managers are invested in helping their employees grow, they’re in a better position to accomplish their goals and retain their staff.

 

Looking for more management tips? Check out the Management section of our blog.

5 Ways Business Owners Can Stay Focused on Their Goals

Being a small business owner comes with many freedoms and perks. On the flip side, owning your own small business can come with its fair share of challenges and problems to solve on a regular basis. With so much demand for your time, how do you stay focused during the day while you are pulled in so many directions?

 

Here are five ways to be goal oriented while running a business so you can keep your small business on track and profits on track too!

 

  1. Plan Monthly Milestones

It is no surprise that chunking out tasks or setting shorter-range goals helps achieve the bigger picture. By focusing your energy somewhere in the middle, you can keep your long-term focus on track while also monitoring the progress as you go. Plan monthly milestones and factor those into the larger scheme of what your business model is trying to accomplish. If things look to be on track each month, continue the plan. If you are further away from your business goals a few months in, it may be time to course correct.

 

  1. Outsource When Possible

There is no way one person can do it all and do it well. With so many competing demands on your time, outsourcing some of the mundane or simpler tasks can free up your time and save you money. By finding freelancers to help with web design or a consultant to outline your upcoming marketing campaign, you can spend more time vision casting and meeting with your customers. Hire professionals who you can trust to take on some of the work and let your expertise shine in other areas.

 

  1. Survey Your Customers

You are in business to serve your customers. Why not ask them what they like most or want more of? By looking for feedback you can eliminate the stress and hassle of trying to predict what your customers like. Save time launching a new product or a new service feature by first asking what your customers think. Surveys are simple to set up and also add value to the customer experience. Survey responses might even help you set a few priorities you would have never considered.

 

  1. Plan for Priorities

Set aside time each day to handle the priorities that have to get done. Identify one major thing that you can’t finish the day without doing and focus on completing that task. The other stuff can wait, and if it’s not on that list it may not be as critical as you believe it to be. By setting aside time for priorities,you ensure the key elements of your business are handled each day. Remember to keep your “mission critical” task list short to ensure that it gets done daily and keeps its value.

 

  1. Reflect on Successes/Failures

Many successful businesses are able to not only reflect on what worked but also on what did not. Don’t just chalk wins and losses up on a tally board. Instead,explore why something worked or didn’t so you know what to avoid or do more of in the future. Businesses that survive the long term are ones that can identify where they hit the mark but also where they may have missed. Take the time to pick your head up from the day to day tasks to reflect and reposition based on what you’re seeing.

 

By staying focused on your goals, your business can weather the storm of distractions, market challenges, and day-to-day unpredictable moments. Being a small business owner doesn’t exclude a person from big time distractions, but staying focused in a structured way can help any business owner succeed.

6 Ways Overstocking Costs Your Small Business

When you are running a small business money is often tight. Companies need to make sure they allocate their cash strategically, because too much spending in one area can cause shortfalls in others.

One costly mistake can be overstocking inventory and materials. In a merchandising company, inventory represents the goods that will be sold. For a manufacturing company, overstocking can result from buying too many raw materials and components. In either case, overstocking can create several unwanted costs that can overwhelm the savings that comes from buying in bulk:

  1. Storage costs: When you have a large amount of inventory or raw goods on hand, you need sufficient space to hold the materials. That translates into leasing, buying or building storage facilities and warehouses, which must be secured, powered, insured and staffed. If you create additional warehouse space, you might see an increase in your transportation costs as well.
  2. Deterioration: Many things can go wrong when you have an overstocked warehouse. Often times, your merchandise and raw materials wait longer before they are removed for use. This is a critical problem for items that can spoil, such as foodstuffs, agricultural goods, pharmaceuticals and anything with an expiration date. In addition, every time an item must be moved, it is subject to damage that can ruin its value. Overstocking items can result in additional movements and staging that can lead to wastage.
  3. Shrinkage: The more materials your small business keeps on hand, the harder it is to guard it all. It’s easier for a worker to steal an item when it’s one of many, since its loss is harder to recognize. To help prevent shrinkage, you will have to spend extra money on security precautions. Any way you slice it, shrinkage is costly.
  4. Obsolescence: You might get a great deal on a huge order of some item, only to find out that it has gone out of style before you can sell off your excess inventory. Fads come and go, and the public can be fickle. Furthermore, you don’t want to get stuck with an item when a new, improved version is announced that makes your current inventory obsolete.
  5. Economic downturn: A recession can happen at any time, and with it a downturn in demand. They last thing you want is to be stuck with too many raw materials just as you cut back on production. That’s exactly what can happen if you buy too much at one time. Overstocking is the enemy of just-in-time manufacturing, which is the best way to keep your production in sync with demand.
  6. Unbalanced spending: Overstocking means over-allocating working capital to inventory and raw goods. You then might find yourself short of funds to finance the purchase of equipment, facilities and other capital goods, as well as to pay other expenses and liabilities. For example, you might order extra raw goods in anticipation of increasing production, and then realize you’ll need more trucks to transport the goods. If you can’t afford to buy the trucks you’ll need, your extra raw goods won’t increase production, but they will boost costs.

Sometimes, it does make sense to buy in unusually large amounts, such as when you are certain that all of the purchases can be used quickly to increase sales. If you find yourself short on working capital but want to take advantage of a great deal from a supplier, contact IOU Financial for a quick and easy commercial loan to tide your business over until you turn your purchases into sales.

Top 4 Things to Do When Your Staff Size Doubles

It’s official: your small business is a true success. You have the leading edge against your competition, your business is growing and you’ve jumped from a couple employees to more than you imagined. While this is exciting it is also scary if you don’t know what steps to take. What to do next? Managing new employees while continually growing your business is hard work.  In this post you can learn the top things to implement right away when you double your staff size.

 

  1. Adopt a Policy and Procedures Guidebook

Each company should have a document available for all their employees outlining company expectations.  Think of this as a rule book that has clear and concise guidelines of what you will and will not tolerate as a business. This is a vehicle for you to ensure commitment from employees as well as create a standard to follow. Have employees sign a document of understanding after they read it. This will benefit you and the employee in the long run.

 

  1. Hire a Human Resource Manager

If you are adding more staff, make sure to set aside a position for HR. Every small business should have that one person to filter employee concerns, challenges and daily requests. Having an HR representative is a vital piece of employee satisfaction in the workplace. HR can mediate and act as your conduit to more effective communications with your employees. If you’re on a budget and can’t hire a full time, in-person staff member, you can find plenty of virtual HR companies who can work with you to help support your new, growing staff.

 

  1. Offer benefits

The costs of healthcare and other employee benefits are skyrocketing, but offering employee benefits can help you attract new talent and retain existing staff. Employees that have medical benefits often find that perk too valuable to lose, so they stay longer in the job. In addition to healthcare, consider offering 401k matching and/or profit sharing. 3%, 4%, or even 6% company matching helps and goes a long way. It keeps people working as they see their retirement grow. It is a win-win situation when you have employees that are appreciated.

 

  1. Conduct Training

New staff want to know how to do their jobs well. Empower your employees to be their best by training them on their specific roles and minimize overload. It’s also important for new employees to learn about the history, mission, goals and future forecast of the company they work for, so training is a great time to share your business’s story. Remember, these folks are new, but they have value to add to your growing business right away.

By taking these steps you are setting up for success as you task out the next move for your growing business. Employee satisfaction, consistency and communication are vital in expanding, and it is important to remind yourself why you are growing and why you are where you are today. Ultimately, success will continue if you hire the right people for your team and treat them well.

Need to get your ducks in a row before your business’ busy season? Let IOU Financial help you secure additional capital so you can hire during your slow season, get employees trained, and serve more customers when demand is high!

Timing and Scenarios to Consider Before Giving an Employee a Raise

In today’s environment, employees tend to feel as they are working WAY harder than they have in years past. They are taking on additional responsibilities and feel under compensated. For companies in the position to use raises to reward and retain employees, the common question is often, “When is the right time to offer an employee a raise?” Ultimately it’s your job as a business owner or manager to identify the right time to initiate that dialogue. Small businesses can’t afford to just give away money, so we’re presenting the following scenarios and times that indicate a raise could add to your bottom line when other employee retention ideas just wont cut it.

 

Three Scenarios to Consider Before Offering a Raise:

 

  1. Longevity and Loyalty

Employees with proven commitment and long-term loyalty are great candidates for a raise. They help your small business grow because they have continued positive attitudes and focus driving business in the door and not out of it. Before making your decision, have a discussion with the employee about their long-term goals within your company. Don’t wait until it’s too late (a resignation letter) before evaluating important team members that have demonstrated their value.

 

  1. Innovative Employees

Do you have an employee that routinely steps outside the box to help make the workplace more productive? Is there a member of your team that spearheads new ideas and concepts on their own without shying away from the additional responsibilities involved? This type of employee is self-motivated, driven, and confident. Reward the mindset of goal orientation. Innovation is something that continually drives companies to develop better products, bring in great ideas and help ride the waves of an up and down market. Set an example that being motivated and results-driven is rewarded in your small business.

 

  1. Employees’ Consistent Results

Does your organization have that one sales person that consistently blows their quotas out of the water? Is there an employee that is always on top of their metrics? Maybe you’ve consistently received high praise about a specific employee from customers. Pay attention to specific feedback and achievement of goals among team members over time to identify employees that aren’t just a flash in the pan, helping to ensure you’ll get a great return on the money spent on a raise. Sales people are particularly performance and money motivated, so monitoring progress towards goals allows you to define additional compensation-related incentives.

 

Three Key Opportunities to Offer a Raise:

 

  1. Employees’ Annual Review

Raises mean more when they are awarded less frequently, but often enough that they might be on employees’ minds. An employee’s annual review is a perfect (albeit conventional) time to discuss compensation and consider a raise. It’s when you both reflect on the past years’ work and the value the employee has had on your company. When a positive employee review illustrates proven results, successfully handling additional responsibilities, and team-oriented thinking, a raise is one way to reward and foster that type of work ethic. A raise tied to a performance review can also help motivate your employee with an increased sense of their value and improve their job satisfaction.

 

  1. Hiring Additional Employees

If you’re accomplishing the goals you’ve set for yourself, hopefully, your small business is growing. As such, you’re going to need more staff. While you might be juggling budgets to find the funds to expand the headcount, don’t forget about the folks who have been holding down the fort while responsibilities continued to increase. These employees have been carrying extra weight, probably working beyond their original job duties, and are responsible for putting your company in a position to grow the team. Before hiring that next employee, consider giving these key performers a raise because you will be relying on them to train and help new staff learn the ropes. Offering this raise rewards those who are going to continue to share the growing pains right alongside you.

 

  1. Promotions

When employees think promotion, they’re usually thinking more money too. When employers think promotion, they’re probably thinking about increased productivity and additional value to their company (and yes, more money). When an employer offers up a promotion it says the employee’s work is highly valued and that management is confident that they will succeed at the next level. Of course, the next level comes with additional or different types of responsibilities, which often means a new level of salary, making it the perfect time to offer up a raise. It is a great reinforcement and return on your employee investment.

 

With even the most optimal situation, triple check to ensure you have the funds to provide a raise that is sustainable. Give your employees a roadmap to achieve future raises. Give yourself time to evaluate employee performance by making it part of your annual review process, and maintain consistency and fairness.

 

If you know you need to increase the salary of a few key employees, but need to stabilize your cash flow to make that happen, consider a small business loan from IOU Financial. Many small businesses use working capital to hire more staff, and give promotions when needed.

 

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