Tuesday, June 22, 2010

How do I retain my best employees?

Make Employee Retention a Top Priority

The expression, “good help is hard to find,” has never been more accurate. Competition for talented workers is intense in most locations and specialties, and the “best of the best” know it. If they’re unsatisfied with their current job, they have no qualms about looking for something else.

Retailing motivated, productive employees is a critical concern for small business owners, as they often play a key role in the growth and success of the enterprise. A survey by Robert Half International, conducted by an independent research firm, examined the reasons that “top” employees, those considered good performers by their bosses, left the business. Here’s what they found:

• Limited advancement opportunity: 39 percent
• Unhappy with management: 23 percent
• Lack of recognition: 17 percent
• Inadequate salary/benefits: 11 percent
• Bored: 6 percent
• Lifestyle change, such as moving: 2 percent
• Other/don’t know: 2 percent

The message for business owners is clear, says Max Messmer, CEO of Robert Half. “Helping top performers reach their goals is essential to keeping them. The best employees are ambitious and may not stay in a job long if it lacks growth potential.”

Retaining good employees can be a challenge to small business, particularly when compensation or advancement is involved, but it’s not an insurmountable one. If promotions aren’t an option at your business, you can still find ways to reward extra effort. It doesn’t have to be money. If budgets are tight, consider a more flexible schedule or larger workspace. Praise should be frequent and personalized, but it does not have to be costly or time consuming. A simple thank you note can be an effective motivator.

Take the pulse of employee perceptions in your business. Are they happy doing what they do? Ask their opinions on the work environment and changes that might enhance their loyalty.

Also remember that like any other important business asset, employees require their own form of care and maintenance. Bringing in temporary help during crunch times is one way to ease the workload and prevent burnout. Engage your employees in finding ways to add some fun to the workplace, especially for jobs that involve a lot of repetition. The resulting increase in morale and camaraderie will boost not only loyalty to your company, but also its productivity.


Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties

Tuesday, June 15, 2010

What funding sources are available for small businesses?

Financial expert and SCORE counselor David Plucinsky shares his expertise in this first of a series of articles on how to fund your business.

“One of the most frequent questions asked of SCORE counselors concerns ways to fund a business. The topic is very broad; today’s article addresses general concepts.

Money: You want it, someone has it and you are looking, oftentimes to a stranger to part with it; invest in your idea, lend to your business or provide a grant. No one gives money away, no matter how good your idea or your current business is, unless there is “demonstrable evidence” to support funding. Funding sources want to know that they are not throwing money into a “Black Hole”. Demonstrable evidence is your high quality business plan which addresses:
---- For equity investors (e.g. Angels or venture capital firms), a return on investment
---- For debt lenders, proof there is sufficient collateral and cash flow
---- For grantors, proof the concept is viable plus documenting that a social good will occur

Where to look for funding depends on who you are. Are you an entrepreneur with a great idea? Perhaps an entrepreneur with a proven idea; you have a proto-type or beta site to back it up? You may already be in business and struggling, possibly in business and succeeding, looking to expand.

While there are no hard and fast rules as to where to source funding, certain realities do apply. Banks will not fund a start-up. Organizations like the Small Business Administration (SBA) or the NJ Economic Development Authority do not fund businesses; they provide guarantees to banks once the bank determines that the borrower is credit worthy. Banks require collateral to support the amount of money needed, be it assets in the business (heavy duty machinery, receivables from customers or property), equity in your home or other assets that can reasonably be converted to cash.

Professional investors such as venture capital firms do not fund start-up businesses. Occasionally what is known as “Angel” investors may, however recent statistics prove this to be less likely. Looking for money from those close to you and indeed, yourself, generally known as “friends and family” is your best option if you are starting a new business. Grants are available; these however generally apply to” special circumstances”, the disadvantaged, minorities and those providing a social good, such as creating new jobs. Many SCORE clients believe grant money is “easy” money, this is most certainly not the case, obtaining a grant is very hard work.

As noted at the outset, funding is a very broad topic. Future articles will look in depth at the various forms of funding.”

Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties

Thursday, June 10, 2010

Does it make sense to plow profits back into my business?

As your business matures, the time will come when you will see excess cash and steady profits. Then the question arises of how to further increase the profits of your company. The stock market in recent years has been particularly unkind to the large companies that invested heavily in it. So plowing your profits back into your company may be the shrewdest move you can make in good times.

Lowering your overhead is a logical place to start, particularly if your rental payments keep going up. That may suggest to you that it’s time to buy your current building or look for one to purchase, so that you acquire a manageable mortgage that costs you less per month than renting. And once the space is yours, you can design the layout that will best maximize productivity. Longer term, you benefit from having the value of the building on your balance sheet and may be able to protect some of your profits from taxes due to the depreciation allowance.

Another approach to building value for your company is taking advantage of down markets to buy additional inventory—taking advantage of volume discounts and discounts at the end of a supplier’s selling season—or acquire better equipment. The latter approach might include computerized and electronic systems that can improve internal processes—again enhancing productivity.

However, another use for excess cash is to invest in financial instruments. You may decide, for example, that excess funds are best kept in treasury bills or certificates of deposit (if you can keep them there at least 90 days). Most likely, with available funds in excess of $100,000, you can make transfers between your checking account and your interest bearing investment account, despite the limit on the number of checks you can draw on the interest bearing account.

Lastly, you may want to consider acquiring a smaller company as a way of growing your business and expanding market share. If you go this route, prepare to learn more about business valuation at the same time you’re scrutinizing such assets as property, equipment and inventory, to be sure you really need them.





Richard Strug
Greater Princeton Area SCORE
Serving Mercer and Middlesex Counties