Category: Restaurant Industry

Safe Harbor for Inventory

Posted on by Paris SBDC

It’s coming up on the end of the year! Do you do inventory every year? Some small businesses do inventory as often as every week, month or quarter. If you aren’t doing inventory at least once a year, you need to!

In one of our past blogs, we talked about taxes as a small business owner and how it is important to find every type of expense that can be taken off of your business’s bottom line so you can pay less in taxes. In this blog we will talk about the Safe Harbor Exception for inventory and how it might apply to your small business.

 

What is Safe Harbor?

There are many definitions and applications for the term “Safe Harbor” but for the purpose of this blog, we will talk about Safe Harbor as an accounting method to simplify your business tax returns. Safe harbor accounting is not intended to avoid taxes, but to minimize what you have to pay within the rules or laws outlined by the IRS.

 

What is Safe Harbor for Inventory?

Remember Aunt Lucy from our earlier blog who knits magical unicorns? Well Aunt Lucy’s business has exploded, and she is now selling her knitted unicorns, along with 50 kinds of massive stuffed jungle animals. Each year, when she counts her inventory of gigantic creatures, she compares it to her sales receipts and (before Safe Harbor) could finally count the sold inventory expense on her business taxes. Before 2018, Aunt Lucy was not allowed to claim a deduction for inventory, until the inventory was sold.

Congress has since then implemented the Tax Cuts and Jobs Act that provided a (potentially) huge tax-write off for small businesses that carry inventory. Aunt Lucy, being the savvy small business owner that she is, decided to take advantage of the new ruling and claim her inventory expense the same year that she purchased the items, instead of when she sold them.

 

How do I change to Safe Harbor Accounting for Inventory?

Changing the method of accounting provided a large tax windfall for Aunt Lucy, and it can for your business too. There are a few rules (of course) to be able to take advantage of Safe Harbor for Inventory:

  • Small businesses with gross receipts under $25 million qualify
  • You (or your accountant) will need to notify the IRS that you are changing to a cash method of inventory. (Form 3115)
  • Each inventory item needs to be under $2500 per unit.
  • If your small business has no requirements to issue GAAP basis financial statements (audit, review, compilation) there may be an opportunity to implement this strategy.

 

What about safe harbor for restaurants?

Safe Harbor rules can also apply to restaurants who make improvements to their property. In the past, if a restaurant remodeled, or updated their “look” the expenses were required to be capitalized and depreciated. With the Safe Harbor rules, small businesses can now count the remodeling as “repairs” and write them off in the same tax year.

 

Talk to your tax expert!

I’m not a CPA, nor do I play one in business blogs! There are a lot of rules and red tape to work through with Safe Harbor, so make sure you talk to an expert to see if your small business is eligible for the deductions, and if it would help you when tax season rolls around.

 

For additional information on Safe Harbor and how it can help your small business save on taxes,  (Check with your accountant) and then feel free to reach out to  us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

Automation for Small Business

Posted on by Paris SBDC

Think of all the daily tasks your business requires to function properly. How many of these tasks are done manually on spreadsheets, by entering data into the computer or through generating individual responses to customers? These repetitive duties can eat up time and bog down a business.

Imagine implementing an app and with the push of a button all your tasks were completed in little time with less effort. Not to mention, the app followed up, scheduled the next marketing email, and tracked useful data that resulted in sales. This is all possible.

Apps have become a necessary part to running an efficient business. These are not finger foods served at cocktails parties, but computer programs built for automating daily tasks. If your small business relies on you to do much of the work at the very least you should consider automation for bookkeeping, a payroll tax and sales tax system, email marketing, and meeting scheduling with automated follow up reminders.

 

What is automation for small businesses?

Automation is the implementation of a computer application or subscription to a service that streamlines workflow and accomplishes tasks that a person would manually have to do. The days of switchboard operators asking how they can direct your call are a simple example of what automation has become. Now it’s an electronic voice giving you a list of choices and numbers to push for service.

 

Does automating really save money?

The goal of automating is to simplify your business. Through automation, a company can reduce effort, time and the costs required to do manual tasks. By freeing up staff, more time can be spent on primary goals that move the company forward. Not only does automation save money it can drive up revenue, complete repetitive tasks faster, at higher quality and without human error. Automating can help with the following:

  • Reduce operating costs by saving time and labor costs
  • Reduce factory lead times with systems that keep production on schedule
  • Improve shipping times and costs
  • Increase returns on investment (ROI) rates by reducing operating costs. Efficiencies in labor expenses means less overhead.
  • Create the ability to compete globally
  • Streamline communications. Plan meetings, set task reminders, follow ups, and work schedules
  • Reduce the need for accounting personnel

 

What processes or things should I automate?

In the Sci fi thriller Independence Day, a giant green-eyed creature sat in the control room of a spacecraft and pushed a single button to launch thousands of ships to invade earth. You don’t have to be an alien creature to instantly launch thousands of online marketing campaigns across all social media platforms. Nor does the result have to be scary. There’s an app for that and you can even add a smiley face to your message if you like. Check out these aps for email marketing:

Take time and review all the manual tasks that your company performs. Look for areas where you can make changes. Consider the following:

  • Bookkeeping especially if you are still doing this manually on a spreadsheet
  • A payroll and accounting app like QuickBooks or a payroll service company with online automation that sends your data for them to process.
  • Invoicing and collections. Keep your cash flow moving with automatic payment due notices that allow customers to pay via credit card, PayPal, Zelle or Venmo.
  • Sales tax collection and payment, especially if your business sells in multiple states. Check out taxjar.com
  • Social media and email marketing apps with a scheduling tool that can launch campaigns across all platforms at once
  • Drop shipping and warehousing automation for manufacturers or print on demand companies
  • Sales and order processing apps or outsource to companies with data and processing services
  • Task management system with follow up reminders and scheduling. This may also include an intercompany communication system

As with any suggestion, do your research and as always do what is best for your company.

 

Top automation tools for businesses:

If you are looking for some proven, great automation tools for your small business, we’ve compiled a list.

*Of course, we don’t endorse or recommend which apps and which automations to use for your business, the following is only intended to get you started and is in no way a complete list:

  • Zapier can automate your work across 5,000 + apps
  • IFTTT is like Zapier. Use this to create automations between apps so you don’t have to bounce around
  • Activecampain for advance email marketing
  •  Hootsuite or buffer are social media essentials
  • Calendly A simple automation tool that cuts out back-and-forth emails for scheduling meetings, phone calls and other appointments with email links to a calendar system (we use that here, at Paris SBDC)
  • Xero As your business grows your accounting needs increase. Xero can minimize the workload otherwise handled by an accounting department
  • Constant Contact Great for emails, newsletters and keeping customers up-to-date

 

 

Are you considering switching a few of your small business tasks to be automated? We can help you evaluate and decide the best processes and automations to have. Contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

Back to School Marketing Ideas for Small Business

Posted on by Paris SBDC

For many businesses, students going back to school can present an opportunity for sales. Unlike a gleeful house fly rubbing its forelegs over a drop of honey on the kitchen table, a few companies are not so thrilled. Losing valuable summer workers, a change in consumer buying habits, and losing the lunch crowd that will no longer be hanging out near their store, can add up to financial losses. The good news is, there are many ways to tap into back-to-school opportunities. Here are a few ideas to think about:

Be flexible:

Offer students part time positions with flexible hours that work with their school schedule. This can include adjusting hours and offering extended breaks for times when an employee needs to study.

Get social:

Create a friend of (your business) social following page where customers and former employees can keep up with what is happening now that they are in school. Offer future coupons, organize quarterly social gatherings, or create loyalty programs to keep interest.

Enlist help:

Outsource influencers that are willing to post products, information or ideas related to your company. With the ease of posting pictures on Instagram, pinning on Pinterest, or TikTok videos, marketing can be done at any time even while in school. Look for influencers with an active and substantial following. Unlike Jessie who hangs out with your daughter. Her promise that if you give her free stuff, she’ll post a picture to all three hundred of her friends, is not going to get the results you want.

 

Back to school marketing is not just for retailers:

Retail sales are on track to be the highest in the past five years. (Despite the looming recession.) The National Retail Federation estimates $36 billion will be spent in back-to-school related sales and $73 billion is expected for back to college spending this year. While it appears that consumers are undeterred by the current high rate of inflation, they are making cuts elsewhere. If you are a non-retail business facing a shift in spending caused by these cuts, marketing is essential.

For the food and restaurant industry, create before and after school specials. Market a “bring a school pal and get a free coffee or soda” promotion. Offer special takeout or boxed school lunches or discount deliveries. Try discounts for kid’s meals during back-to-school shopping hours.

The millennial generation prefers texting to talking. Use short message systems (SMS) for targeting and making people aware of your e-commerce business. Add links with coupons and discounts to direct them to your site.

Tweak your website with back-to-school themes, ideas, and blogs with helpful information. Add limited time discounts on services that create a sense of urgency.

 

Top back-to-school promotional items for 2022:

Curious as to which items are “hot” this year for back to school?  Here’s a list:

  • Electronics are expected to make up a considerable portion of school spending.
  • Shoes and clothing
  • Educational books and supplies
  • Furniture and bedding
  • Stationery

 

Non-retail items to promote:

For health and fitness: Create a fitness challenge that can be followed on social media. Offer back to school specials on classes or services. Discount with a two for one special on manicure, pedicure, facials, and neck massage to relieve post shopping stress.

Restaurants and food service industry: Offer a free dessert with after school specials. Give out cookies or small snacks during peak shopping hours to increase awareness.

Education and teaching: offer an hour of free tutoring services. Raffle a free notebook or stationery with online courses. Conduct how to courses on improving Wi-Fi, computer speed, or organizing your dorm and office.

 

Partnering with schools:

Each year many businesses partner with local schools providing everything from I.T. services, sports equipment, food and beverage vendors to yearbook and class ring vendors. The competition to become a school vendor is fierce. It is more about the relationship than the money that draws the interest of the school administrator. Your company must be reliable and have an edge over the competition. Do your homework and be prepared.

Get your face out there:

The school administrator is responsible for selecting vendors. With endless contacts by vendors seeking contracts, it is often the administrative assistants who act as the dragons guarding the gate. Becoming friends with the assistants can often get you on the administrator’s schedule. Meet with purchasing agents, district officials, or do a presentation at a parent /teacher organizational meeting.

Timing is everything:

Do your research and find out when vendor selection begins. Evaluations, needs assessments and goal setting tends to start at the beginning of the summer for most seasonal schools. Spending starts in July in preparation for opening in late August or early September.

 

Should I partner with local businesses?

ABSOLUTELY!  Teaming up with another business for back-to-school can increase your customer reach. Create an event with food vendors, music and giveaways to draw attention to your company.

Holding a supply drive, a bake sale or fun run event while donating to a school-oriented charity can also bring awareness to your company.

 

Back to school will be here before you know it!  Do you need some ideas on how to promote your small business and take advantage of the back-to-school rush?  We can help!  Contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

Do I need a Blog for my Small Business?

Posted on by Paris SBDC

What is a blog?

I’m sure you’ve heard the term “Blog” and you’ve probably assumed correctly that a Blog is 1- found on the web or internet; 2 – a type of personal or business diary; and/or 3 – Usually geared to teach or sell something.  You would be correct on all accounts.

The very first “Blog” began as a descriptive term for logging onto the internet, or the web. In 1997, a “computer nerd” by the name of Jorn Barger from Ohio, came up with the term ‘weblog’ to describe what he was doing on his website: Robot Wisdom. He explained he was “logging the web” as he searched or browsed the Internet, creating a ‘web log,’ with what he found – which was shortened to ‘weblog.’ In 1999 ‘web log’ was further shortened by programmer Peter Merholz when he decided to pronounce weblog as ‘wee-blog,’ or ‘blog’ for short. The term blog was then popularized by the duo who created Blogger (one of the first and most popular Blog websites of the early 2000’s.)

 

Do I need to have a blog in my small business?

The short answer is YES!

Blogs, in their traditional form have evolved to become much more than just a diary of events or web pages looked at and things learned. Today’s Blogs have become major marketing opportunities and offer the following powerful business tools serving to:

  • Inspire sales which increases revenue
  • Improve conversion rates
  • Foster relationships between your business and customers
  • Promote brand awareness
  • Increase your ranking on search engines
  • Educate your audience
  • Grow your overall business

 

What type of blog should I have?

Blogging has expanded to include things like podcasts (a series of spoken word, audio episodes, all focused on a particular topic or theme, like cooking or true crime), vlogging (video blogging) and micro-blogging (done on sites like Tumblr, Ghost or Webflow that are shorter, more personal blogs.) As far as the type of blog you should have for your small business, you need to ask yourself the following:

  • What do I want my blog to do?
    • Are you selling something?
    • Is your blog purely for sharing information?
    • Do you want to get new customers from your blog?
    • Is your blog meant to be educational?

The type of blog you have, depends on the type of business you own and the goals you want to achieve from your blog.

The blog you are reading, for instance, is used (primarily) to help small businesses in our area. Small business is the backbone of not only our service area, but of America. We aren’t looking to “sell” a product through our blog, but to give useful information to help you succeed.

 

What do I say in a blog and how do I start one?

Starting a blog sounds easy (for some business owners). Others struggle to come up with topics or information they want to share. The most popular small business blogs are fairly short (500-850 words) and talk about (you guessed it…) the business! Here are some tips to make your small business blog successful:

  • Have a Plan! Treat your blog like you treat your marketing materials; with a plan of how and when you want to “launch” information.
  • Be consistent with your blog posting: Make a calendar! Pick a day and time and stick with it. You don’t need to blog every week, maybe every-other week or once a month is plenty – maybe you are in an industry where daily blogs make sense. Whichever you do, do it consistently.
  • Lighten up! If anyone wants to read or see something that brings them down, they only need to turn on the news. Keep your blogs light, stick to the facts and avoid political, personal or religious extremes. (Unless of course, your business IS one of these extremes.)
  • Switch it up: You don’t always have to talk about your business. Some of the most popular blogs have short videos or recipes thrown into the mix. Don’t be afraid to toss in something unusual.

 

I don’t sell anything. Do I really need a blog?

Yes, you still need a blog! And if you own a small business, of course you “sell” things.  You may not sell widgets, yard art or crochet unicorns, but if you are in business, you ARE selling something. It might be more service related, maybe your business is consulting or reporting. An extremely popular fashion blogger named Gabi Gregg (Young, Fat and Fabulous Blog) sells nothing, but has become so popular with her blog that promotes body positivity and plus-size women’s clothing, that companies are clamoring to be on her blog (and pay for the privilege) just to get reviewed or even mentioned. She’s done blogs in Glamour magazine, MTV Online, Essence, and Black Enterprise.

Incidentally…this blogger’s “non-business” (that doesn’t “sell” anything) makes over 6-figures a year with her personal net-worth of over a million dollars!

 

I don’t have time to write and maintain a blog!

This may be very true for a lot of small business owners when you already have too many demands on your time. Here are some ideas to help with getting your blog writing done:

  • Hire someone: There are many different blog writers out there who can write the blogs for you. Many bloggers enjoy business blogs, or even those unique niche-market blogs.
  • Have your employees “take turns” writing blogs: You may even find an employee who really loves it and can dedicate the time to doing it.
  • Ask around: Look at the blogs of your business associates and/or competitors. Ask questions and find out who does their blogging.
  • Look at using college interns: College age students make great bloggers. They already understand the internet and what people are looking for, they are also less expensive than professional bloggers. (Just be careful to edit anything a blogger writes before it goes on your site!)

 

 For additional information on starting or maintaining a blog for your small business – we may not be able to bring your blog 6-figures, but we CAN get you started!  Please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

 

What is the Best Business to Franchise

Posted on by Paris SBDC

What is a Franchise? 

**Check out our Introduction to Franchising for young entrepreneurs in our learning center! 

 

A franchise is like a temporary lease or contract with an established company for the rights to sell the franchisor’s goods or services using their established business model and trademark.

A franchisor is a business that grants the license or agreement to franchisees (investor).

Starting any business can be a risk. An estimate of twenty percent of new businesses will not survive beyond the first year. Fifty percent make it to five years and thirty percent make it ten years or more. A possible way to minimize the risk of starting a new business is to consider a franchise agreement with a company that already has a well-established name brand and business strategy to follow.

In the nineteen-eighties I worked at a McDonald’s restaurant.  As an entrepreneurial spirited teenager, I imagined one day owning a franchise of my own. At the time, it cost the owner of the restaurant one-hundred thousand dollars to get on a six-year waiting list for a franchise contract. While I was babysitting a sizzling vat of French fries, I thought back to when I was eight years old and bought a pair of hamsters with grand plans to breed them and make money. If I sold the babies for a dollar each and used some of the money to buy more breeding pairs, I’d make thousands of dollars, I had calculated, as surely every kid in school needed a soft, fuzzy hamster. Thank goodness for a mother with a low tolerance for smelly, short-tailed mice.

 

How does a franchise work?

There are many costs involved in owning a franchise. Firstly, you must pay the franchisor a franchise fee. This allows you the right to sell goods and services under the franchisor’s brand name for a limited time with support for a specified number of years. These said contracts or agreements do not give the investor (franchisee) any rights or ownership of the franchising company.

Contracts between the franchisor and franchisee can vary and are complex. Depending on how the contracts are written they can last five years and up to thirty years often with heavy penalties for premature termination. Support from the franchisee may include helping you find a suitable location for the business, training, operation manuals, newsletters, a website, access to workshops, and seminars.

Besides the initial startup fee there is an annual licensing fee and ongoing royalties paid to the franchisor. Depending upon the industry, royalties can vary from 4.6% to 12.5%.

A good thing to know is the Federal Trade Commission’s (FTC) has set rules for franchisors and require that they must give you a list of documents to evaluate any potential investment opportunity.  https://www.ftc.gov/legal-library/browse/rules/franchise-rule

 

What are the risks to owning a franchise?

Owning the rights to sell a brand name or goods is no guarantee of success. There are risks. The financial costs alone can be overwhelming and may include:

  • Grand opening or other initial business promotions
  • Business and operating licenses, food handlers permit and ongoing inspections for certain businesses.
  • Product or service supply costs like foods for a restaurant or production line clothing for a retailer.
  • Real estate and leasehold improvements to house the business.
  • Required equipment such as a computer system, machinery, security systems, visual displays may be required and leased from the franchisor.
  • While the franchisor may provide this, it may not be free and can include travel expenses to seminars or training facilities.
  • Business insurance
  • Compliance with local ordinances, such as zoning, waste removal, fire, and other safety codes
  • Employee salaries
  • Advertising cost locally and or a contribution requirement for national campaigns.

Other risks may include:

  • Limited sales territory
  • Restrictions on goods or services the franchisee can sell or supplier they must buy from
  • Contract terminations and renewal
  • Competition
  • Demand for the product
  • Internet limits on services, areas, and customer solicitation

Ultimately, like any company, success relies heavily on the investor having the skills and business savvy to make it all work.

 

What are the benefits of owning a franchise?

Owning a franchise can bring instant name recognition that a new upstart business may take years to establish. Take McDonald’s for example, in the right location the reward can be worth the expense. Not only is the name well established, but they also have their own university to help train and educate the franchisee about how to run a successful business. With a time-tested brand, surviving a downturn in the economy can be less risky. Established products and methods of selling can help cut the learning curve of a new business venture.

 

Which type of franchises make the most money?

 It’s no surprise that I have yet to see a single hamster factory franchise make the list, but according to Hubspot the top franchises to buy in 2021 were:

  1. McDonalds
  2. 7-Eleven
  3. Dunkin’ Doughnuts
  4. The UPS Store
  5. Popeyes
  6. Sonic Drive-In
  7. Great Clips
  8. Taco Bell
  9. Kumon Math and Reading Centers
  10. Sports Clips

 

While evaluating a business opportunity, knowing if the investment is worth the risk, is paramount. Consider the following:

  • How many franchise locations have opened in recent years?
  • Check out the success rate. What percentage of the newest franchises are still open?
  • Factor in real estate costs. A successful business franchise in one location may not be profitable if you are paying a higher lease or property expenses in a different area, or if traffic is limited.
  • Be sure to read the financial disclosure the FTC requires that franchisors must provide to potential investors. This as well as more information can be found at the FTC Business Guidance Resource Center.

 

 

If you are interested in starting a franchise or if you have questions about what type of franchise is good for your skill set, we can help!  Please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

 

Surviving National Retailers (Walmart, Sam’s, Costco)

Posted on by Paris SBDC

Yesterday, in our online class: Surviving Amazon, we talked about how to compete in business against the retail giant. In today’s blog, we’ll give you more tips on how to survive against other giant box stores like Walmart, Sam’s Club, or Costco.

As a small business owner going up against a giant retailer, the odds of surviving may seem daunting especially while trying to grow a thriving company when they move into your town. To win you must be clever and find your niche. After all, with a little rock David took down a giant.

 

How can I compete against national retailers like Walmart, Sam’s, or Costco?

Going head-to-head in a pricing competition with identical if not similar products rarely works in favor of the small business owner. The purchasing power of big retail stores allow them to buy goods cheaper and undercut smaller companies by controlling the product and pricing. To beat the odds, think more about what your company does well and less about the pressures of the competition.

 

Studying the big box stores for weaknesses can help you find your strengths:

  • Use this comparison to your advantage: For Stephanie, who owns a successful clothing boutique, it was not about offering a cheaper blouse in different colors but sourcing a well-loved local designer and collaborating on a unique clothing collection unavailable to big retail.

Up your service game:

  • If you’ve shopped at the large retail stores, it is easy to wander aisle to aisle and not find what you are looking for, let alone someone to help you locate that obscure little thingamajig with two prongs and a yellow knob. Often, a great shopping experience is about ease, convenience, and a friendly face to help as needed. As Jenny, the design showroom owner found, small things count. Her colorful, well-designed shopping environment, filled with flowers, brought clients in. Fresh cookies and a bottle of special tea to snack on, keeps them coming back.

Specialize by finding your niche:

  • When the big box stores offer nearly everything under the sun, sometimes you must lift a rock or two to discover what they cannot provide. Think of it as the fine art of competing against the bigger stores. Like an artist creating a painting, each creation is one of a kind. That uniqueness when mass produced and sold cheaply loses its value to a more discerning customer. Do more than promote products that sell repeatedly. Be one-of-a-kind with a unique image, specialized marketing, and personalized products. Also, a niche is not always about product, style of service or store merchandising, but catering to a certain type of customer like a contractor, manufacturer, or someone with a unique hobby.

Promote:

  • “Selling loss leaders” is a strategy of promoting a product below its market value. When combined with a secondary product (the leader) a substantial profit can be actualized. In the fast-food industry this is the five-dollar bag of hamburgers with drink and fries’ deal. While the hamburgers are the loss, the fries and drink are highly profitable counterparts of the transaction that make it worthwhile. Promote however you like; with buy two, get the third half price, or buy one, get a baby rattlesnake free…Well, maybe don’t give away baby rattlesnakes. ? We are certain you have heard about many good profit-generating promotions. Use them to make a profit overall.

Reward:

  • People love to be rewarded and if they find value in it, they will continue to come back. Use loyalty cards with discounts or offer cash back rewards when possible. Frequent buyers’ clubs and tier systems where higher discounts are offered when certain dollar amounts are spent, are other good ways to drive loyalty and retain customers.

 

What advantage does small business have over national retailers?

Of the many advantages small businesses have over national retailers: being a local figure in the community with a name and a face is paramount. Remember, you are more connected with people in your community than you may realize. This is a useful tool for marketing, developing new customers, and growing support.

  • As a small business owner, you know how to best serve your community.
  • Small businesses are the backbone of not just local communities but of the twenty-eight-plus million companies in the U.S., 7% of them are small businesses.
  • Small businesses can make adjustments that larger companies often cannot. Like sourcing locations where rents may be less, shorter leases and less construction costs.
  • The ability to “stay lean” allows for higher profit potential with less overhead.
  • The flexibility to change relatively fast and move with market trends is better realized when you are not heavily invested into stocked items that may be a passing fad. More importantly, creating the next trend is what every big box retailer seeks. Trends are typically discovered by clever, entrepreneurial small business owners.

 

How can I use “Shop Local” to my advantage?

 Think about the last time you met the CEO or one of the owners of Walmart, Costco or Sam’s. Possibly while fishing you hit one of their yachts or spilled their wine at that fancy restaurant you save months to visit? We didn’t think so. It is rare to meet them, let alone discover what they are truly like as businesspeople or individuals.

As a small business owner, you are empowered to be the local celebrity that everyone feels glad to have met. You are more relatable than what’s his or her name…You know, the CEO of that big box store? Shopping locally is about caring for people in your community.

Build that sling and find that perfect stone to build your business upon. However, instead of trying to bring down a giant retailer, become like the oyster and polish your small business until you develop a valuable pearl.

 

For additional information on surviving national retailers like Walmart, Sams Club and Costco, or on developing retail strategies to help you succeed, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

Catch or Release? (Part 2) How to Fire an Employee

Posted on by Paris SBDC

It may surprise you to learn that in 2020 and also in 2021, the most searched topic on Google, for small businesses in the state of Texas, was “How to fire an employee.” Sounds a little crazy, with the US unemployment rate peaking at 14.7 in April of 2020. Luckily the unemployment rate has dropped significantly, but the search results in Google still point toward small businesses, having trouble with employees.

We’ve had several blogs on how to find and hire great employees and on how to keep them. Let’s now talk about that uncomfortable subject:

 

How to fire an employee:

Texas is an “employment at will” state, which means employees can be terminated for any lawful reason. (Unless, of course, there is an employment agreement that has guaranteed employment for a specified period of time.) However, just because you, as a small business owner are entitled to hire and fire at will—it doesn’t mean you should. If you need to fire an employee, you need to make certain you have a lawful reason, and you need have documentation of that reason, to make certain you aren’t dragged into litigation.

 

Litigation is expensive, and ultimately winning your case can be both expensive and frustrating. In this blog, we’ll talk about the best way to handle employee terminations, while minimizing the risk to you and your business.

 

1st thing to remember:

Never fire an employee in the heat of the moment.

We get it, Les is late…again. In fact, he’s never, ever been on time and he likes to leave his shift early – asking other co-workers to clock out for him. You, the employer, after covering the first hour of Les’s shift (and missing your daughter’s recital) have had enough. Time for Les to go! But wait! Even when Les wanders in, an hour late…again…and says “Wassup Dude?” don’t lose your cool!

Instead, take a deep breath, formulate a plan, and follow the steps we’ve compiled. We’ve pulled the best information for you from the Harvard Business Review, several local employment attorneys and the Texas Workforce Commission.

 

Step 1:

Give a warning to the employee:

It’s time for Les to go. But first, you need to plan to let him go the correct and legal way. The first step in Les’s termination is to let him know he’s doing something wrong.

  • Put his/her bad behavior in writing: Sit down with Les and have the discussion about his tardiness, and how it is unacceptable.
  • Tell the employee about the consequences: “Les, if you are late again, or if you ask Betty to clock out for you again, you will be fired.”
  • Document everything: Keep a copy of Les’s written warning. Document the day and time of your conversation.

 

Step 2:

Give the employee time to improve:

Maybe Les didn’t understand that being late was unacceptable and he immediately stops the behavior.  It can sometimes happen. Allow some time for improvement. Put a time-limit on when he is expected to improve. It’s okay to say: “Les, you are only going to get one more warning, and then we’re going to have to let you go.”

 

Step 3:

Decide when to fire the employee:

The timing of the employee termination needs to be individualized to the small business. Determine when the best time would be for you and the employees who are still working. If Monday is the best time, do it early so you can encourage them to seek other employment. If Fridays will be the less disruptive time to the staff or your business, do it then.

 

Step 4:

What to say when firing an employee:

You’ve done your homework, given warnings and have given plenty of time for improvement and you still need to fire the employee.  What do you say?

  • Get right to the point: You need to let them know they are being fired FOR CAUSE. “Les, today is your last day. You are being dismissed for cause, and it is time for you to find work elsewhere.”
  • Tell them when they will be leaving: “You will gather the things from your locker and leave the building when we are finished here.”
  • Tell them what to expect: “Your final check will be mailed to you in 2 business days.” Or – here is your final check.

 

Step 5:

Ask for a legal release:

  • Let the employee know of any benefits or severance: Some employers find it beneficial to offer a severance package. For instance, you can offer them a week’s worth of wages, if they will agree to sign a full release of all claims.
    • Keep in mind if the employee is over 40 (a protected class) you must comply with the Older Workers Benefit Protection Act, which requires you, the employer, to give the employee at least 21 days to consider the claims release and to consult with an attorney (at their own expense). They may also sign the release, but you still need to give them 7 days to revoke the release after it’s signed.

 

Step 6:

Make sure they leave the building immediately:

You don’t need to kick the employee out, or hover over them while they clean out their desk, but you do need to let them know they are expected to leave immediately. If they don’t leave, you’ll need to escort them out. Remain respectful and don’t intimidate them with threats.

Turn off their IT access!

Don’t forget to turn off their access to your business computers, terminals and other areas where they might be able to log in.

 

Step 7:

Reassign the employee’s tasks immediately:

This should be part of your Step 1, when planning to terminate the employee. Have someone ready to step into that employee’s position or be ready to assign the employees tasks to someone else. You can also divide up the employee’s tasks, if necessary.

 

What do I do if the employee files a claim for unemployment benefits?

This often happens, and there really is not a lot you can do about it. As a small business owner, you pay unemployment taxes and even if you try to fight it claim, the likelihood that they will receive benefits anyway is high. You want to be careful not to say anything out of line, or you may open yourself to a lawsuit. Instead, experts suggest you comply with requests from the State Work Commission. This may include proof of written warnings and an explanation of why the employee was fired.

 

Can I fire someone without a warning?

You can fire an employee in cases of gross misconduct.

The official definition in Section 201.012 of the Texas Labor Code is as follows: “‘Misconduct’ means mismanagement of a position of employment by action or inaction, neglect that jeopardizes the life or property of another, intentional wrongdoing or malfeasance, intentional violation of a law, or violation of a policy or rule adopted to ensure the orderly work and the safety of employees”, but “does not include an act in response to an unconscionable act of an employer or superior.”

Some examples of gross misconduct:

  • Theft
  • Vandalism
  • Illegal use of drugs or alcohol at work
  • Fraud
  • Sexual harassment or assault
  • Fighting or violent threats while at work
  • Intentionally causing harm
  • Health or safety breaches

 

Make sure you don’t fire an employee for unlawful reasons. Some of those include age, religion, race, color, gender, sexual orientation, marital status or disabilities.

 

 

For additional information on how to fire an employee or on the best practices for termination in your small business, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

Catch or Release? How to Keep Great Employees

Posted on by Paris SBDC

Aunt Lucy, queen of the knitted unicorns (and other massive stuffed animals) hired the very best salesperson: Shawn Sellars.  Shawn was perfect for the job! In his first two weeks, he upsold 80% of his customers, decreased shipping times and was generally, quite pleasant to work with. Everyone loved Shawn!  Things were going perfectly, until week 4, when Shawn quit!

 

Why do people quit their jobs?

You might wonder why Shawn quit after 4 short weeks, especially since he seemed to like the job, the customers, and Aunt Lucy. We asked Shawn: Was it money? Was it the hours? The answer Shawn gave, may surprise you – in fact; MIT Sloan Management Review discovered the main reason individuals like Shawn were quitting their jobs in record numbers:

Toxic work environment:

Apparently, Aunt Lucy’s favorite nephew wouldn’t let Shawn take his breaks, took credit for half of Shawn’s sales and continually berated Shawn in front of other employees and customers.

In fact, employees who feel like their work environment is toxic are 10.4 times more likely to quit a job, even if their pay is higher than what they would get working in the same industry.

 

How do I keep good employees?

You’ve finally found and hired that dream employee! Now how do you keep them? In this example, if Aunt Lucy wants to keep Shawn, she needs to:

  • Clean up the toxic work environment: It may take some investigation, but if you talk to enough people (customers included) you’ll find the areas causing employees to flee.
    • Be open to the idea that YOU may be causing the toxic work environment. Do you yell or criticize more than praise? Are you creating a happy and safe workplace? Are you allowing your nephew to terrorize the workers?
  • Create Job Security: As we mentioned in our last blog, employees are fearful of losing their jobs. Train your employees well and create an environment of job security.
  • Recognize Accomplishments: Another reason individuals are leaving their jobs is because they don’t feel appreciated. Recognize performance and create a reward system. It doesn’t need to cost a lot of money, just be certain to recognize a job well done (and recognize it often).
  • Stay Innovative: Businesses with high levels of innovation keep their employees longer. It may be time to consider that new Point of Sale system, automated shipping or new barcode system for inventory.

 

How to keep employees in a high turn-over industry?

If you own a small business that is part of the hospitality industry, or food services, you probably feel like you are bleeding employees. It is tough, but so are you!  You can make your small business thrive, and here are some ideas how to keep your employees, even if you are in a high turnover industry:

  • Own it: Embrace the fact that your business may be one of those that inherently has a high turnover rate. It doesn’t mean you give up, embrace the “crazy” and create a plan for it.
    • Paragus, a tech company with high turnover began to refer to departures as graduations and celebrated them with farewell parties. They redesigned their business model to significantly reduce the impact of turnover for their clients to ensure they could still provide the same amount of support. They did this by creating teams so that if one person left, the other team members could step in and even train the next new hire.
  • Get new employees off to a good start: Proper orientation can help alleviate some of the uncertainty new employees experience. Appropriate training will also help eliminate the frustrations that cause many new-hires to reconsider their job acceptance.
    • Don’t skimp on how to interact with customers. Customer service training is important, especially in this day and age when tempers seem to be short and complaints are frequent.
  • Reconsider shift schedules: Be fair when assigning shifts and take into consideration individual needs.
  • Give workers authority: Let your employees take the lead on the things they do well and back them up when they make a decision; especially in front of a customer.
  • Offer bonding opportunities: Employees love to work with friends and associates who make them feel like part of a team. Consider team building, out of office get-togethers and other opportunities to bond.

 

It doesn’t matter if you have 1 or 100 employees, implementing a few ideas or changes to make your company a great place to work, will attract new employees and you’ll keep the great workers you have.

 

For additional information regarding how you can keep the good employees that you’ve hired, or on how to attract quality workers in any business, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

The Labor Shortage – How to Hire New People

Posted on by Paris SBDC

A very popular gourmet hamburger chain in Texas reported that pre-pandemic, they would receive well over 100 applicants, every time they posted a job opening. Now however, they tell us their applicants are in the single digits. Are you experiencing the same type of labor shortage, or lack of applicants?

It seems crazy; unemployment is high, but the number of people applying for jobs (at least in our area) is low.  More than a third of Americans without jobs are still long-term unemployed, and federal benefits for these workers, from the pandemic, ended in September 2021. It’s difficult for that to make sense.

 

Why aren’t people going back to work?

Some experts tell us the main reason people are not returning to work has to do primarily, with fear. The Corona virus variants have potential employees worried about their health. Another fear is getting laid off again, similar to when the country shut down. And finally, individuals are skittish about leaving  the job they currently have to pursue new opportunities; creating a scenario where less people are applying for new job positions.

Other reasons companies aren’t finding applicants stem from worker burn-out. CNN Business News reported that worker burnout is on the rise, hitting women and people of color the hardest. Of the working women CNN surveyed, 41% said they had been working significantly more hours than before the start of the pandemic. The employees in the service industry and those deemed “essential workers” have been making up for worker shortages, while trying to maintain the home-life responsibilities. The overall feeling of constant work, without any downtime, is causing worker burn-out.

We understand some of the reasons people aren’t returning to work, but how does a small business overcome those reasons and attract good employees?

 

How to hire during labor shortage:

The good news is individuals ARE returning to work and you, the small business owner, are more than ready to hire. Here are some ideas for attracting new talent:

  • Recognize the underlying fear(s) of potential employees. Talk about the issues and address them. Perhaps you could advertise a guaranteed amount of hours.
  • Partner with the local schools like Paris Junior College: Offer internships or training to students who are interested in a career in your field of business.
  • Double check job responsibilities: Is your current staff doing too much unproductive work? Automating some of your systems may help alleviate some of the overtime or long hours for your current employees. Perhaps a shift in responsibilities or change in job description would help. Maybe you think you need another salesperson, but what you really need is a better system for inventory.
  • Offer flexible schedules.
  • Offer benefits or employee perks.
  • Consider short-term contract employees, or employees from a temp-agency. You may find your perfect employee and ultimately hire them permanently.
  • Be open to different personalities: Business owners may get into a habit of hiring the same types of people. Be open to hiring the introvert, the single dad, the goth-girl, or someone on the spectrum…they may surprise you.

 

How do I attract employees in the service industry?

If you are in a service industry, you’ve been hit hard by the labor shortage. Part of that is due to the fact that many individuals left the service industry for good, in favor of more job stability. Here are some good ideas to overcome the shortage, and to attract potential employment candidates:

  • Get creative in your job posting and recruiting: Is your place of business a fun place to work? Make your job posting playful, reflecting your positive environment.
  • Offer something your competitors aren’t offering. Maybe offer a free meal before or after their shift. A sign-on bonus or a higher starting salary.
  • Incentivize your current staff: Offer a cash bonus for referring a friend.
  • Address those fears again, especially for the potential employee who lost their job during the pandemic. Maybe offer a bonus for staying for 6 months.
    • You might also advertise the ways you have adapted your small business, to make sure you retain your employees if there is another shutdown. (Perhaps you are now offering delivery or curb-side pick-up.)

More good news:

The Bureau of Labor Statistics is forecasting that total employment in the U.S. economy will grow during 2022, eclipsing the previous decade  (2012 – 2022) by 10.8%. That’s good news for small businesses looking to hire!

 

For additional information regarding hiring shortages or on how to attract quality labor in the service industry, or in any business, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

How to Handle a Bad Review

Posted on by Paris SBDC

Betty was a brand-new server at the “Cake and Shake Shack.” She was bubbly, efficient and really quick on her rollerblades, especially when taking big trays of cakes and shakes to the cars who ordered them. One day, Betty ran a cake and shake out to Mr. Keyboard Warrior and his girlfriend. She smiled, flirted just a tiny bit with Mr. Warrior, and gave a wink to his girlfriend when she handed over her soy-kale-smoothie. When she rolled back inside, after pocketing the tiny tip she received, she went on to her next car delivery. Everything seemed fine. Mr. Warrior and the girlfriend drove away, eating cake and sipping shake.  Two days later, after an intense fight and subsequent break up with his girlfriend, Mr. Keyboard Warrior took to his computer to complain about Betty, her attitude, and the outrageous and inappropriate flirting she did, causing the untimely breakup between he and his girlfriend. He said the cake was dry, the shake had spinach, not kale…and he would NEVER return to the Cake and Shake Shack. One Star.

As ridiculous as that sounds, stranger things have occurred to prompt a one-star review of a small business.  In this blog, we’ll talk about how to handle a bad online review, and how to improve your overall star-ranking on Google and Yelp.

 

You got a bad review, now what?

 

How to respond to a bad review:

Maybe you discovered that Betty not only winked at Mr. Warrior’s girlfriend, maybe she slipped Mr. Warrior her phone number and said: “Call me, maybe?” On the other hand, maybe Mr. Warrior’s girlfriend is simply insecure and there was no actual flirtation. The bottom line? You need to do something about that one-star review and you should start by replying to the review online.

  • Lead with an apology

    • Simply say “I’m sorry” but be careful not to admit any wrongdoing. Something as simple as: “I’m sorry you had a bad experience.” You don’t have to admit that Ed, in the shake department, needs additional training on the difference between kale and spinach. Keep it simple.
    • Even if the customer was incredibly rude, and you don’t owe them an apology, still apologize – it will make you and your business look better. Always take the high road.

  • Offer a contact person to talk to

    • Sometimes people just want to vent – give them the main number and a person (maybe you) to talk to about the issue.
    • In actuality, only about 5% of the people who are given a person to talk to will make the call.

  • Talk about how you’ll make it right or do better next time

    • We do not suggest a free meal or a refund in your response online – it may spur more bad reviews from people who are looking for discount or free product.
    • A simple statement about how you are working to improve customer service, or the experience for your customers goes a long way in saving your image from a negative review.

  • Be professional

    • It’s very tempting at times to slap back, or to point out the reviewer’s faults – like Mr. Warrior was horribly rude and barely tipped Betty. Refrain. Remain positive and professional, keeping in mind that others will read your response and you want to be viewed as a complete professional, worthy of their business.

 

How to fix a bad review you didn’t deserve:

Not every review is legitimate. Sometimes you’ll get a review that isn’t from one of your customers, or you’ll get a bad review from a disgruntled employee. Here are a few suggestions for what you can do if you received a bad review you did not deserve:

  • Contact Google or Yelp

    • Ask to have the negative review removed and tell them why.

  • Contact the customer

    • Ask the customer to remove their poor rating…if you have access to their contact information.
      • Make sure you remain polite and never threaten a customer.
    • Listen to the customer, maybe they were having a bad day, maybe they were confused at where they ate. Sometimes simply explaining to them (politely and professionally) will be enough to get them to remove their review.

 

What if Google or Yelp won’t remove a bad review you didn’t deserve:

If you’ve tried everything and can’t get rid of that one-star review, all you can do is respond to the review professionally. For instance, if Mr. Warrior’s comment included something about how bad the pizza was – you can respond that you don’t sell pizza, just delicious cakes and shakes and you would be more than happy to have him come check out your full menu.

Keep in mind that anyone looking at your listing on Google, will read the replies.  Most customers ignore a low review if they can see that you have tried to please the customer, or that the review was posted in error.

 

How to get a higher star-rating on Google and Yelp:

Okay, you’ve gotten a bad review, rather you deserved it or not. You have responded appropriately – now how do you get a higher star-rating? You guessed it!  You’ll need to ask for good reviews. 70% of customers who have had a positive experience will post a review when asked. Here are some other tips to increase your ratings:

 

  • Ask for reviews from happy customers

  • Head off complaints before they complain online

    • Stay aware and if Betty accidently spills cake all over Mr. Potter – apologize and try to make it right by replacing the cake. Try to make the customer happy.
    • Ask them about their experience: were they pleased with their shake? Did you have the cake flavors they were looking for? Try to problem-solve while your customer is still at your place of business.

  • Caution:

    • Don’t ever offer freebies, discounts, or payment in exchange for reviews – it may be illegal in some cases, and both Google and Yelp will flag that type of activity.

  • Thank those who post a good review

    • Always respond to every review. If the review is positive, thank the person sincerely.

 

EXTRA – EXTRA!!

Tomorrow we are offering a class on How to Deal with Difficult Customers!

It’s FREE to attend!  Here’s how to sign up:

TOMORROW’S FREE CLASS

 

 

 

The Review Rabbit Hole:

If you are on your lunch break – or at home, trying to relax, here is a hilarious look at some responses to negative online reviews. We DO NOT suggest you use any of these responses in your own reviews (remember the part about being professional?) …But there are others, like you, who have survived (and maybe even laughed) at a bad review.  Here are some examples – strictly for entertainment purposes.

 

 

For additional information on how to handle a bad review, or for some good ideas on how to increase your star-rating online, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.