Customer ServiceCustomers are the lifeblood of any business, so it's important to keep them happy. When customers are happy, they're more likely to buy from you again. By harnessing the power of artificial intelligence, small businesses can take their customer service to the next level. AI-enabled tools can help by providing faster responses to queries, automating repetitive tasks, and offering personalized recommendations. In short, AI provides a better customer journey and personalized experience. In addition to automating basic tasks, artificial intelligence can be used to provide 24/7 customer support. A chatbot, for example, can answer questions and solve problems.
SalesEvery small business looks for ways to increase sales and revenue. But did you know that AI can help you do just that? By providing targeted product recommendations, upselling opportunities, and personalized discounts, businesses can make the most of their limited resources. Additionally, this technology can help identify areas of improvement and potential growth. According to a McKinsey report, companies that used artificial intelligence achieved a 20 percent operating profit margin, compared to just 2 percent for companies without AI. The increased performance is due in large part to the ability to offer customers more personalized services and products than ever before.
Reduce CostsAs small businesses strive to cut costs, artificial intelligence can be a valuable tool for automating tasks, eliminating manual data entry, and reducing the need for customer support staff. By taking advantage of AI technology, small businesses can save time and money while improving their efficiency and productivity. Companies that are constantly collecting data from customers, such as through transactions or web forms, can analyze all that data to identify patterns and trends. Using this analysis, artificial intelligence can predict customer behavior and streamline your marketing campaigns across all platforms.
Better Decision MakingGood decision-making is critical for any business owner or manager. AI can help by providing data-driven insights that can guide decision-making in areas like marketing, product development, and operations. It can also help assemble the best teams to increase productivity.
Increasing EfficiencyEfficiency is key for any business, large or small. AI-enabled tools can help small businesses increase their efficiency by automating and optimizing processes and providing real-time results. Small businesses can see a 40% increase in productivity by utilizing AI in various ways. For example, AI can speed up processes and tasks that would otherwise be slow and tedious for human workers. In this way, businesses can operate more efficiently and get more done in less time. Implementing this technology into small businesses can be a game-changer in terms of productivity and output.
SecurityAs businesses become increasingly reliant on technology, security concerns are top of mind for many companies. AI can help small businesses enhance their security measures by providing fraud detection, intrusion detection, and data encryption capabilities. By incorporating AI into their security protocols, small businesses can give themselves a much-needed boost in the ever-evolving digital landscape.
Final ThoughtsThe adoption of artificial intelligence by small businesses can have a significant impact on their profitability. AI will likely benefit all businesses by making life easier, increasing efficiency, and improving productivity. Artificial intelligence is no longer a futuristic concept, it is permanently changing the landscape of business. Capitalizing on the power of AI is a key strategy for small businesses looking to grow and succeed. The benefits that AI can bring to an SMB are many. Begin exploring how artificial intelligence can help your business grow today. FINSYNC continues to support your small business with updated accounting and business knowledge to help you grow, scale and succeed.
Why Inflation Is HighRising prices at the gas pump and in grocery stores have been one problem, but inflation has spread beyond, to housing, car sales, and many other areas. The primary reason is that the nation still has not been able to keep up with consumer demand after COVID. Supply chain interruptions, labor shortages, increase in shipping and insurance rates, along with China’s lockdowns have all negatively affected production lines for goods and services. Even though wages are rising, many companies are unable to retain employees. Take truck drivers, for example; there are 80,000 unfilled trucker vacancies in the US alone. Globally, the shortage is wider spread. Another cause of high inflation has to do with Russia’s attack on Ukraine, which both directly and indirectly fuels inflation. Russia is an important manufacturer of natural resources like oil, coal and gas. In addition, Ukraine is one of the largest exporters of grains and fertilizers. Together the war-driven instability in these countries is enough to destabilize the global supply chain system for decades. Despite global challenges, there are steps small businesses can take to help weather the storm and even come out ahead.
Inflation AccountingA great place to start tackling inflation is accounting for it correctly in your operations. Many companies take advantage of what is known as inflation accounting, which is when financial statements are adjusted according to price indexes rather than traditional cost accounting. These adjustments paint a clearer picture of a firm’s financial position during high inflationary periods. Here are the two main methods used in inflation accounting:
1. Current Purchasing Power (CPP)
Under this cost method, monetary and nonmonetary items are separated. Monetary items are subject to the recording of a net gain or loss. Whereas nonmonetary items, or items that do not have a fixed value, are updated into figures with an inflation conversion factor related to the consumer price index (CPI).
2. Current Cost Accounting (CCA)
This approach values assets at their fair market value (FMV) rather than historical cost, and fixed assets are recorded at replacement cost value on the balance sheet. Additionally, depreciation of fixed assets is to be calculated at replacement value.To calculate the inflation rate, divide the CPI at the end of the period by the CPI at the beginning of the period multiplied by 100. By adopting inflation accounting, you can match your business revenues accurately compared to current costs to provide a more realistic profitability breakdown.
Comprehensive Cost AnalysisThere are hundreds of inflation articles centered around businesses employing price increases. The reason is this tactic helps an organization in the short term. Even consumers might be on board with the higher prices, especially if they believe these are only temporary. However, to overcome inflation in the long run, a company must look beyond price increases to reduce the financial volatility across the entire organization.
Short-TermThe beginning of an inflation crisis is a great time to get granular about your organizational costs. Don’t just look at the price your suppliers and competitors are charging, but perhaps create alerts to be notified of price fluctuations for raw materials and other supply chain data. Getting ahead of these increases will provide valuable information such as surfacing a supplier who is price gouging unnecessarily. Another initial cost strategy is to understand your capital structure. Take a deep dive into your cash, credit, and debt to determine which loans need immediate repayment. Restructure your financial management by obtaining new lines of credit as a fallback in case situations last longer than anticipated.
Long-TermKeep morale high to prevent employee attrition. The last thing your company needs right now is to lose its top talent to a competitor who is almost surely hiring. Losing employees could mean months of lost productivity and massive resource expenditure on identifying, hiring, and training replacements. It may also be time to update your technology stack. Take a lesson from Tesla, which now utilizes robots and AI to construct and build electric vehicles. Start learning new applications like automating your HR and payroll, or integrate new software to help roll out digital marketing strategies. Another cost-saving tool is to redesign products to reduce the impact of expensive materials. Go back to the drawing board to create innovative products that retain their quality without the dependence on finite resources. Overall, inflation can present a valuable opportunity for many organizations to nail down their cost structure. Regardless of whether inflation is here to stay, companies that adapt their business operations quickly and decisively to rising costs will be in the best possible position to maintain margins and growth. Sign up with FINSYNC to simplify your cash flow management to ensure your business has enough money to succeed in any economic environment.
Importance of Customer Relationship ManagementCustomer relationship management (CRM) is a process for managing all your company's relationships and interactions with current and potential customers. By increasing this bond or connection with your customers, you decrease the amount of work it will take to make a purchase. By implementing a solid CRM process, you build brand loyalty with your audience. This strong association users have with your company has many advantages, such as being top of mind when faced with a related problem. This scenario exemplifies the importance of social media and how your audience views your brand. Recent studies have shown that a prospect needs to see or hear the advertiser's message at least seven times before they will take action to buy a product or service. Therefore, consistency is key to refining campaign strategies around vibrant images and product videos that are memorable and initiate buzz. Finally, the better your relationships are, the more comfortable customers will be when addressing an issue with one of your products or services. Do not underestimate the power of a good review. When you engage with your customers, even if you are troubleshooting problems, this valuable time can set them at ease and provide the potential for you to improve your merchandise.
Principles of Good Customer RelationshipsEach time a potential customer interacts with your business, whether on your website, social media, email campaigns, or newsletters, their experience must be consistently enjoyable. In providing a service such as real-time customer support, you begin building a mutually beneficial relationship. You learn something about the customer, and they discover a new product or offering within your company. Here is a short list of things to consider when fostering these relationships.
- A customer's need for a positive experience far outweighs the goods and services you offer.
- Get inside their head and convey that you understand their pain points while being able to offer appropriate solutions.
- Personalize your communication by customizing your omnichannel messages about the different products you offer.
- Share knowledge in an email, newsletter, or blog article, and keep your audience updated on the latest research and industry trends.
- Exceed expectations by building rapport and always going above and beyond in all areas of your organization.
- Listen and learn what your customers value the most.
Customer RetentionCustomer retention is the ability to retain customers over time. This concept is a percentage of how many customers are retained and focuses on the long-term strategy of good relationship management practices. The best consumers don't just buy one product or use your service once. The average repeat customer spends 67% more in the 31st-36th months of their relationship with a business than in months 0-6. Therefore, customer relationship management is a slow, consistent process that needs to be encouraged and nurtured. Not only do repeat customers come back again and again, but they also refer more people and bring in new business. Ask for regular feedback from the entire customer team. Once buyers develop a sense of trust, the word will spread.
Implement the Right ToolsCRM tools are the most extensive and fastest-growing enterprise application software category. Around 65% of businesses adopt these customer platforms within the first five years. Proving there is a clear need for companies to work with large volumes of customer data all in one place. These software tools allow you to see the entire customer journey in a way that has never been possible in the past. Choosing the correct software for your business centers around your goals, how you implement your customer experience, individual processes, and reporting capabilities. Over the past 5-10 years, customer relationship management has become a vital part of sales and marketing initiatives to develop engaging customer experiences. Receiving consistent, up-to-date, reliable information is critical for optimizing your systems, processes, and understanding of your customers. If you’re looking for more helpful tips, the FINSYNC blog is a great resource to learn more about industry trends and other tools to help your business succeed.
An organization in which all members understand and act upon their roles and potentials is unstoppable. Additionally, employees who feel valued about what they do, drive performance and productivity and positively influence the health of the entire business.By setting goals for your organization in a clear and concise format, you will empower your staff to excel at time management, improve their focus, and provide a framework for their future accomplishments. Continue reading to learn more about the goal-setting process and how it enhances your team members and overall organization. By the end, you will understand why goal-setting yields success and how setting a strategy for reaching your individual and organizational goals increases your business success.
Importance of Goal SettingSetting goals is vital for your business in that they establish direction for the company to expand and grow. It is essential to know where you are headed so your team can accurately visualize the destination. In creating a growth process that is transparent and inclusive, your team will be much more motivated to establish ownership. Deadlines trigger behavior, so something as easy as creating a time block specific to achieving a task can significantly impact the ability to accomplish the goal. Goals guide focus and create momentum throughout your company. When we complete an objective, satisfaction happens when we check it off the list. Then immediately after, we are naturally focused on the next step. Finally, goals promote self-mastery. Instead of just going through the motions with the day-to-day, prioritizing responsibilities enables your team to decide what is important to them. By establishing a goal framework, like OKR or SMART, employees will accomplish the organizational targets while boosting their skills and abilities.
SMARTWe couldn’t mention goal-setting without including the SMART goals framework. This acronym stands for Specific, Measurable, Achievable, Relevant, and Time-based. These elements work together to help you and your team create your goals.
Define clear, specific, and unambiguous goals. There should be no room for interpretation. Think about who, what, when, where, why, and how. If your main goal is to implement a DXP, the specific rendition would be: I am going to transfer all marketing materials from our existing CMS to a new DXP over the next three months.
Determine which metrics you will use to measure your goal. Setting up milestones will help you stay on track and keep up motivation. Apply distinct metrics such as moving over 200 documents per week or instruct individual access and profiles set up by the end of the week.
Before working toward a goal, decide if it is achievable now or whether there are preliminary steps to complete first. If your team does not currently have the experience needed to work with a new interface, the first step is to set up training sessions.
Is the goal within the big picture of what we want to accomplish for the business? If a goal doesn’t contribute to the broader objectives, it might not be worth pursuing. For example, if your marketing department doesn’t currently optimize multiple marketing channels, then perhaps a digital marketing platform is not the correct tool.
How often do individuals create new goals every year without time constraints? If there isn’t an urgent need to accomplish these objectives, they will likely not be achieved. Therefore, it is helpful to define what should be accomplished halfway through the process. If setting up a DXP is the goal in three months, then at six weeks, you should have 50% of the information transferred over.When it comes to defining SMART goals, be prepared to ask yourself and your team many questions. This framework sets boundaries and defines each step along the way.
Business ValueAs an employer, it can be challenging to keep your staff motivated and locked in a space where they are consistently contributing. This is why aligning your mission keeps everyone on the same road and discourages the divergence and distraction that can derail progress and overall results. Businesses set goals to impact the organization, and if your company regularly tracks its goals, you can utilize past pursuits to dictate your decision-making process. For example, suppose your marketing team has been monitoring sales, impressions, CTR, traffic, social media, etc. Now you can use that information to set your business strategy for the next year based on this performance. Therefore, the key benefit of using business objectives is to align teams towards a common goal. These goals act as a contract between employees, managers, and the organization. They provide the framework for accountability and promote conversations between team members to survey progress throughout the year.
Last WordsWe are at a critical moment where industry leaders, company management, and even those that govern us are not always acting in our best interest. Often, this is because they have taken us to the wrong objective or sometimes with no goal at all. Thus without a specific target or direction, we tend to drift aimlessly. Goals keep individuals within and outside our organizations accountable and enable us to get back on the right track to accomplishing what matters the most. Stay up-to-date with the latest trends and other tips and tricks FINSYNC brings to small businesses.
Definition of OKROKRs are a goal-setting methodology that can help your team set and track measurable goals. The benefit of this framework is that it's easy for your employees to laser focus on the results they obtain from their efforts. Essentially, OKRs bridge the gap between the long-term vision and the day-to-day activities of your staff. Managing workload and timelines has evolved towards aligning project scope, people, and resources in the project management arena while producing successful results. It is easy to have project goals. But how do you create measurable objectives every week to ensure you hit these goals? The answer is objectives and key results. Objectives are where you want to go with the project, i.e., increase brand awareness, and create more followers. Objectives are qualitative and time-bound goals, either weekly, monthly or quarterly. A set of key results supports each objective. Key results are how you plan to achieve your goals. Each key result is a metric that points to specific tasks or initiatives to measure your progress towards your objective.
All Hands on DeckIt is critical to implement goal initiatives that are transparent and clear to all those involved, which is why everyone in your organization needs to be engaged with OKR. All employees need to have input on what is achievable over the next quarter and 12 months. After leadership sets the OKRs, teams, and individuals can determine where they will achieve the most significant impact. Empowering employees can facilitate purpose and ownership to their everyday tasks.
OKR vs KPIKPI stands for key performance indicator, and at first glance, OKRs appear synonymous with KPIs; however, there are distinct differences. The main difference is that KPIs tend to look at what has happened or how things were. Whereas OKRs define where you visualize something in the future. Similar to how a balance sheet is a snapshot of the company's financial position at a single point in time. A KPI is a snapshot of how your project operates toward your goals without focusing on the result. KPIs are quantifiable ways to measure your initiative against results, and OKR goals are broader and focus more on the company's future. However, both can be useful in organizational strategy and measurement.
ExamplesTo create a development process of OKRs, start with your objective, then single out a shortlist of 3-5 key results that are definitive of the success of your goal. The key results are milestones to guide your process and align your team. Here are a few examples of this process in action: Objective: Increase sandal purchases by 25% for Q2 Key results
- Add 500 sandals to the online store
- Create 50% more digital ads on social media
- Run a 2-week promotional campaign
- Complete wireframe and design
- Connect prototype with existing APIs
- Test and optimize mobile app before launch
- Send out a feedback survey to customers and non-customers
- Reduce cart abandonment by 30%
- Increase customer retention by 50%
InitiativesInitiatives are an optional step that offers more granular checkpoints to help move the needle for your key results. Examples would be individual tasks, projects, and anything else that helps define the work needed to maintain progress. Now that the rules are set, and each team member understands their role, weekly initiatives contribute to the overall plan. Therefore, it is important to develop a system in which each employee can track and check off the components daily or weekly. Each initiative on your checklist should be measurable, specific, and within your control. In addition, these tasks must be flexible and incorporate new developments quickly.
Final ThoughtsKnowing where you want to go is of little value unless you understand how you will get there, making the OKR a valuable tool for any organization that wants to meet its goals consistently. The OKR framework differs from other goal-setting techniques because it pushes team members past their comfort zone and enables them to accomplish more than they thought possible. The result is an empowered team with a holistic goal-setting framework that they help construct. Connecting the work to your company's big-picture goals drives employee motivation, delivers better outcomes, and increases your company's success. FINSYNC’s all-in-one accounting platform will simplify your financial management. Learn how to automate your accounting system to help you grow, scale and succeed.
Defining Omnichannel MarketingWhen we talk about channels, this is essentially a medium through which a brand can communicate with its customers. Omnichannel marketing uses a cross-channel content strategy to improve the customer experience and drive better relationships across all possible touchpoints. The channels included are a website, newsletters, email, phone calls, webinars, traditional advertising, social media, banner ads, physical and online experiences, etc. Integrating all available marketing channels increases commitment, engagement, and convenience throughout the customer journey.
Multichannel vs. OmnichannelMultichannel marketing is different from omnichannel in that the different channels are separate and do not interact with one another. For example, a radio ad may not necessarily relate to an online banner ad in a multichannel environment. However, the omnichannel strategy integrates the different channels to provide a seamless customer experience. Multichannel marketing focuses on customer engagement, and the strategy is primarily to cast a vast net to encompass as many qualified potential customers as possible. Therefore, customer engagement metrics like shares, comments, and likes are appropriate within the multichannel approach. Omnichannel marketing concentrates on creating a consistent customer experience. Instead of increasing awareness, this strategy communicates with the people already interacting with your brand to ensure their experience is sound.
Customer FirstIf your business involves retail sales, omnichannel marketing will put the customer at the center of the strategy to ensure they are not encountering any friction with their purchase. For example, a potential customer is searching for a new dress on her home laptop. She opens an email ad that discloses Macy’s is having a sale on dresses, and she opens her social media to read the rave reviews. Next, this potential customer has her location services on her phone turned on to send her to the address of the closest Macy’s store, which is where she can try on the dress. Later she would receive an email rating her experience at that specific store. It is essential to create an omnichannel strategy to ensure the user receives the correct marketing information at the correct time within the proper channel.
Tips for a Successful Omnichannel Campaign
1. Map the customer journey
- Map the stages of the communication touchpoints between customers and brands across all marketing channels.
- Choose the appropriate channels to engage with these customers throughout their journey, from brand awareness to conversion.
2. Measure everything
- Data analytics allows you to personalize emails and create messages for your customers who are more likely to respond.
- Utilizing the right metrics enables you to better report on the successes and failures of your campaign. This data is vital for campaign optimization.
3. Segment your audience
- Once you analyze your data, you can segment users into different categories based on common behavior patterns such as demographics, lifestyles, and location.
- Track customer behaviors such as cart abandonment, subscribers to blog articles, and those who have not purchased within the past year.
4. Personalize the messaging
- Ensure the context of your messaging is relevant to the user.
- Send messages via the appropriate channel when they are the most active.
5. Select tools
- For your marketing strategy to improve over time, you need to test each campaign to determine which segment is performing the best and other crucial information.
- Is social media getting enough engagement or do you need to create specific ads and landing pages for each product?
- Provide ample customer support throughout the entire customer journey. Do not fall back on robots if a user has a problem.
- Many customers now seek support on social media so make sure you quickly respond to any questions, issues, or concerns right away.
What Is Radical Candor?As a business owner or manager, the most critical factor that determines the success of an organization is the relationships you have with your team members. It would help if you established an unwavering commitment to being genuine, caring, and reliably honest. These are all elements that represent radical candor.
"Radical Candor is about caring personally and challenging directly, about soliciting criticism to improve your leadership and also providing guidance that helps others grow. It focuses on praise but doesn't shy away from criticism―to help you love your work and the people you work with." Kim ScottWithin an organization that practices radical candor, the purpose of management is to guide individuals to become better at what they do and enjoy their jobs more. Managers must "care personally" and "challenge directly" and develop these relationships with their team members. This level of trust and support is ever-present, even when delivering criticism. For example, you hired a new salesperson to sell your product, and she is doing a phenomenal job. You have tripled your sales this month alone, and she is just getting off the ground. However, you noticed that she says the word "like" a lot during her presentations. After a while, you lose track of what she is saying because all you hear is "like" repeatedly. Many owners and managers would ignore it because she still produces impressive results. However, you must care about the individual personally and challenge them directly under radical candor. You would be doing your salesperson a disservice if you did not communicate this with her because you can directly see how she is holding herself back. Radical candor is the ability to establish trust and open the door for more direct conversations with your employees to manage them more effectively.
How to Provide FeedbackMost of us were told that if you can't say anything nice, then don't say anything at all. However, radical candor flips the switch and says, if you can't say anything nice, it is your job to say something. To make the unnatural the norm, a great place to start is to ask for and encourage feedback from your employees. Doing this will create a platform of welcoming and delivering constructive criticism, providing team members a safe space to embrace honesty. A great way to employ this cultural shift during one-on-one sessions is to ask them to provide feedback they are afraid to give because they think it will offend you. Give them time to answer and, most importantly, respond positively.
Responding to CriticismMany of us have been conditioned to avoid hurting people's feelings since childhood, even if it makes us disingenuous. However, when that happens, we stop improving because we cannot see these weaknesses. This is why it is essential to respond properly when guidance is offered.
- Repeat the feedback to them out loud to ensure you heard them correctly.
- Thank them for their radical candor, as most people have difficulty presenting this information.
- Lastly, tell them what you intend to change after receiving this feedback.
Steps to Implement
- Train all new employees on radical candor. The first time you introduce this concept can be a shock because people tend to avoid hurting other people's feelings. Therefore, you must create this understanding on Day One when a new person starts work. The more it is practiced, the less of a shock it will be for someone to implement.
- Lead by example. Communicating that you want to improve will demonstrate your seriousness about the cultural shift. Create monthly meetings where your staff is encouraged to provide feedback in areas that require improvement.
- Commit to the journey. It is vital to explain to your team that this new communication approach does not hurt their confidence but builds it up. Employing a consistent two-way communication policy will increase team harmony and decrease employee attrition.
ConclusionReceiving praise and criticism in your business is a powerful tool that makes your organization stronger and better. But receiving this feedback isn't always easy to manifest. Learning how to encourage this guidance with your employees is a critical step to employing radical candor within your company. We were instructed to "be professional" when we were young, just entering the workforce. We then translated this phrase to "be emotionless" or leave your identity behind. However, being professional doesn't mean we need to show up to work like a robot. We need to be more than professional and create an environment where we can develop genuine human relationships at work. The kinds of relationships that are achieved with radical candor are not trivial. It is the difference between workers punching a clock and individuals striving to realize their purpose and dreams. Check out FINSYNC’s free Education Center for more information on workplace best practices that could be educational for your business.
Benefits of Profit-SharingA profit-sharing plan is an employer-sponsored contribution plan where the employer contributes pre-tax dollars to an employee's account based on their business profitability. Companies of all different sizes can offer these plans, and this benefit is entirely up to the employer's discretion. As we slowly wade through the great resignation, one can surmise that when organizations share profits with their team members, this helps increase employee retention. Business owners can also attach a vesting schedule where a certain percentage is attained each year. Besides employee retention, this added benefit also saves on taxes. If your company has had a successful year, implementing this plan will reward your employees without adding extra payroll taxes. As an added benefit, employees can also save on income taxes if they put this contribution towards their retirement, thus reducing their adjusted gross income. Finally, studies show that productivity levels increase when your personnel can partake in the profit margins they are creating. When team members are directly impacted through their efforts and hard work rather than only being compensated for their time, they are more motivated to go that extra mile.
Types of PlansThere are four different types of profit-sharing plans you can use to reward your employees.
1. Deferred Profit Sharing Plan (DPSP)
With this plan, the employer shares the profits made from the business with all the employees enrolled. These funds are managed by a plan's trustee, which can gain more considerable investments over time. This money may be withdrawn partly or entirely within the first two years of membership.
2. Cash Profit Sharing Plan (CPSP)
A cash profit plan involves paying a portion of profits directly to your employees that are taxed as regular income. Business owners may make disbursements in stock rather than cash, especially if you have a vesting program. CPSP can be a good incentive for younger employees who prefer having more money now versus retirement.
3. Employee Stock Ownership Plan (ESOP)
An ESOP enables employees to have ownership in the company either given to them or the opportunity for them to purchase. This plan type encourages team members to do what's best for shareholders since the employees themselves own this stock.
4. 401K Plan
A 401K or retirement plan can be defined as a type of profit-sharing plan that has tax advantages to the saver. There are two basic types of 401Ks traditional and Roth. These differ primarily in how they're taxed. Keep in mind, once money goes into a 401K, it is difficult to withdraw before retirement without paying taxes and penalties.Regardless of the type of plan you choose; the profit-sharing percentage is typically between 10 to 20 percent of the total profit amount distributed. Create guidelines for how much and how often to pay that are appropriate for your firm. Make sure the specifics for each employee are documented in a profit-sharing agreement.
Profit-Sharing vs 401KA 401K plan, named after the 401K tax code section that created it, is a tax-advantaged retirement account. Most of the time, this type of retirement plan involves a funding combination of both employer and employee. The IRS limits the tax-deductible money one can invest in a 401K plan each year. Employees can contribute up to $19,500 to their 401K plan for 2021 and $20,500 for 2022. In addition, an employer may provide a matching plan, which can incentivize prospective candidates to accept a position. Even though some organizations treat profit-sharing as part of a 401K package, it doesn't have to be centered around retirement. Profit-sharing is often not tied to an employee's retirement plan. Meaning an employee can withdraw this money as soon as they are fully vested. Profit-sharing plans are flexible and allow employers to contribute when they choose, as long as there are substantial and recurring contributions. An employer is encouraged to contribute even if you have an underperforming year.
Options to ConsiderThere are specific criteria to establish when determining who is eligible for profit-sharing in your organization. Here are a few things to consider when creating your plan.
- Employee Eligibility - This type of plan requires a particular set of employee criteria to be met before being allowed to enter into a sharing fund. Examples are employment amount of time (1 year), US-based, over 18 or 21 years of age, or a union member.
- Contributions - A business will decide how much to contribute to a participants' plan. Make sure to specify when this contribution happens, either at the end of the year or quarterly. Remember, you can deduct up to 25 percent of the compensation amount paid during the taxable year to all participants.
- Distribution - An employer can select the forms of distribution: lump-sum, periodic, annuities, or ad-hoc distributions. If you decide to create a vesting schedule, show how much is available after each period.
- Investing - When creating a plan, you will need to decide whether to allow your employees to direct the investment of their accounts or to manage the monies on their behalf. If you are selecting the investments, make sure to update actively to secure the value of your selections.
ConclusionRegardless of good intentions, those operating the plan can still make mistakes. Fortunately, the U.S. Department of Labor and IRS have correction programs to help profit-sharing plan sponsors correct plan errors, protect participants' interests, and keep the plan's tax benefits. Establishing an ongoing review program makes it easier to spot and correct mistakes in plan operations. Profit-sharing plans can serve as a powerful incentive for many organizations for employees and owners alike. Employers may find a profit-sharing plan invaluable in today's economy by boosting morale and employee retention while providing a tax benefit to everyone. FINSYNC can help you establish a profit-sharing plan that tracks contributions, investments, and distributions over time so you are ready for tax season and can experience financial harmony within your organization.
Identify GoalsThe way to avoid bombarding your customers with random questions is to have a game plan. The better you understand the population you are targeting and the overall purpose, the more likely you will get results. To define a goal, start by asking the following questions:
- Which customer experience metric do I want to measure?
- Why do I want to measure that?
- What information am I trying to highlight?
QuestionsDevelop multiple-choice questions as well as a few open-ended inquiries that enable the user to write their feedback. Do not ask questions that are too complex, lead the user, or that do not address your business goals. Here are some example questions you could start with:
- Which of the following words would you use to describe our product?
- How would you rate the product's value from 1-10 (10 being the highest)?
- How well does our product meet your needs? (1-10)
- How responsive have we been to your questions or concerns about our products?
- How well did the demo/chat answer your product questions?
- What motivated you to sign up for our product?
- Were there any technical issues that could have prevented you from buying?
- If you could change just one thing about our product, what would it be?
- What can we do to make your onboarding experience better?
- This product helps me accomplish my goals. Answer scale: 1 to 5, Strongly disagree to Strongly agree
- How easy was it to navigate our website?
- Compared to our competitors, is our product quality better, worse, or about the same?
- How likely are you to recommend our product to a friend or colleague?
- May we contact you with follow-up questions?
- What else would you like us to know?
DistributionThanks to social media and platforms like Survey Monkey, distributing confidential surveys is easy and should be performed regularly. For example, transactional surveys are prompted immediately after a transaction has been completed. Consider the timing. When examining your audience, when would be the best time to deliver the survey? Some survey-takers respond more often on the weekend, and others may answer first thing on Monday. Understanding your industry and customers is essential in distribution. You can also encourage responses by giving customers an incentive to take the survey. By offering a week of free services, gift cards, or products, you’ll significantly raise the likelihood of getting feedback. Some companies even give charitable donations in exchange for survey responses. Allowing your customers to help others can produce a loyal audience willing to participate in future surveys.
ConclusionCustomer surveys can be a powerful tool for reaching your clients and gaining information to secure new patrons. Requesting, analyzing, and implementing this feedback is essential to improving your business and ensuring customer satisfaction. It is also helpful to remind your audience that the purpose of the survey is to make your product or service better for them. Customers like to be heard and are left with a good feeling knowing you are striving to be better. Showing customers that you're listening goes a long way. FINSYNC helps you centralize control of payments, process payroll, automate accounting, manage cash flow and grow your business with less time and better results.
Importance of KPIsKey Performance Indicators are vital in gauging a business's successes and failures. KPIs are easily confused with goals; however, they measure goals and targets. If an organization has a sales goal for the month, KPIs will reveal how close you are to attaining this goal. When a business creates tools to measure its goals, it is easier to adjust to stay on track. For example, use leading indicators to predict and forecast future events. Ensure these indicators are both measurable and adjustable, as this is critical if you need to modify your original plan. When you evaluate your KPIs repeatedly, you will see patterns and areas for improvement. Managers may not have set achievable goals if goals are not met month after month. KPIs encourage accountability for employees and the business. If a salesperson repeatedly isn't meeting their quota, the stats will show this information.
Types of KPIsMeasuring the organization's progress over time can be accomplished with indicators like gross profit, revenue, and the number of employees. Setting these KPIs at the beginning of the year or accounting period and referencing them routinely is essential. Here are a few common categories to target different areas of your organization.
- Operational - Indicators like equipment utilization and productivity, labor costs, turnover rate, and scheduling are operational indicators and these measure efficiency and span over a shorter time than many other KPIs.
- Customer - Customer indicators convey your business's relationship with the individuals who use your products or services. Creating tools like customer surveys and satisfaction scores is valuable for isolating customer retention, net promoter score, and customer churn rate indicators.
- Financial - There are hundreds of potential financial metrics you can use in your business, so it is imperative to choose the most impactful indicators as these determine your organization's financial strength. Numbers such as gross profit, sales revenue, operating cash flow, and working capital are just a few examples to measure how a business uses its resources and creates profit.
- Strategic - Strategic indicators are more big-picture and long-term measurements. Company executives can monitor overall organization progress with just one or two strategic indicators such as overall revenue and sales.
- Marketing - Organic traffic, conversion rates, lead sourcing, e-books, blog articles, and newsletters are among the most common marketing indicators. These metrics show how well a particular web page or campaign is performing. Creating marketing KPIs to optimize for better performance and results continually is vital.
Steps to Create KPIs
1. Determine Objectives
Since industries and business positionings will vary, establishing your objectives for your organization is the first step in creating KPIs. If the goal is to increase sales, the KPI objective could be to get more leads around sales/marketing initiatives that would support this goal. Establishing a purpose will help individuals collect the data to understand their context better.
2. Establish Success
If getting more leads is your objective, now you must establish a process to bring more potential customers to the top of the sales funnel. Criteria such as monitoring sales calls, scheduled meetings, or releasing a new campaign will institute a process while observing performance and success.
3. Collect Data
Develop precise and quantitative metric points that you and your team members can easily reference. After determining you want to measure and monitor the number of new sales meetings, it is imperative to reveal these results with the individual salespeople. This visibility will introduce a sense of personal ownership to improve their results.
To efficiently communicate the analytics of your KPIs, you'll need to translate the data into concise reports. Share this information with management and other team members to stimulate collaboration to brainstorm new strategies.
SummaryKPIs are more than numbers you report out weekly or monthly; they reveal whether or not your business is successfully moving towards its goals. This data enables everyone on the team to understand the performance and health of your business so that you can make critical decisions to achieve your business goals. Business objectives must be well-communicated across an organization. When people know and are responsible for their own KPIs, it ensures that their overarching goals are top of mind. More importantly, every part of the work is assigned intentionally and suitably. Stop struggling to juggle all of your small business tasks. Centralize control of your accounting and cash flow by starting a free trial of FINSYNC today.
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