/U/Blog

So how do these business owners make the most of this opportunity? This is where the power of Xero’s customer community insights come into focus. Here are some great tips from Xero customers – whose businesses ramp up as the year winds down.

Measure twice, cut once

It pays to start small over the months leading up to Christmas, says Jordana Blackman, the founder of Chicks Who Ride Bikes. She says to refine your customer experience before the busy season hits, since you have fewer customers and therefore, less risk.

Jordana’s take on this is simple. “For example, 54 vendors signed up to the site in a very short period of time,” she says, of her early months in business. “I’m really happy about that. It’s not that there are only 54 vendors out there … there may be 1,000 people who are right for us! But how do you give good customer service to all those people while trying to do everything else?

“The slow-burn approach makes the numbers smaller, but it makes the experience bigger.”

Get dashboard savvy

The above advice can help for the year ahead, but what about the here and now? How can business owners improve operations when sales ramp up? Amy Hourigan of Amy Who Digital, which is now part of MindVision, says don’t underestimate the power of the visual dashboard.

“I have dashboarding software linked to my KPIs, so I can look at my business at a glance. I’d recommend that for anyone. Setting up those analytics has been really important for me – I no longer spend ten hours trawling through data just trying to work out what’s working and what needs improving.”

Think outside the box

While your market may remain more or less the same across the year, there’s a chance that it can diversify or even completely transform in the lead up to the festive season.

Jordana Blackman weighs in on this, when it comes to Chicks Who Ride Bikes. “At Christmas, it’s not just women buying for themselves – as it might traditionally be most of the year round,” she says. “Men are buying for women, too. Cycling is an addictive sport where one piece of kit is never enough! Which means it’s always a good gift option.”

Jordana also flags that your local market may shift to an overseas market over the Australian summer period, or at other times. She gives her own experience as an example. “It’s hot in Australia at Christmas – so it’s not the best time of year for cycling….I’m also going to focus on seasonal cycling periods and industry events, like the Tour de France.”

These business owners all share a similar approach. If the festive season is your busiest time of year – with a little lateral thinking, the gift is there for the taking to put your business in great shape for the year ahead.

Photos: AmyWho MindVision; Chicks Who Ride Bikes.

There is another solution in the wings – one where accountants, bookkeepers and BAS agents can upskill while remaining poolside – or at least at home with their feet up for an afternoon.

I’m talking about Xero Summer Camp – a free, online program that is here to help our partners grow and strengthen their business, and use the downtime to build a solid marketing plan for the year ahead.

Based around six practical themes, Xero Summer Camp has just launched and is now ready for you to drop in for an afternoon or dive as deep as you choose to. Watch the videos, read the content or complete the courses on subjects such as: how to position Xero to clients, how to streamline your business with Xero HQ and how to get Xero Certified.

The other modules also drill into some useful knowledge that can transform how you work in 2017. They are:

• Marketing kickstart: Run a website health check, master social marketing, or get the lowdown on how to run a great event. Learn how to be brand-ready as soon as 2017 kicks in.
• Getting report-ready: Download report templates – take the online courses that show you how to create a management-reporting template or make month-end reporting more efficient.
• Exploring the Xero app marketplace: These online videos and webinars are packed with top app tips that can help you improve the experience for your clients, compile expense reports, streamline staff management or make POS more efficient.
• Getting started with Xero Tax: Quickly master this module in an afternoon, and your clients will return from holiday even happier once they learn they never have to physically sign a tax return ever again, thanks to Xero Tax (and your upskilling!).

So, pull up that lounger and stay up to date with Xero over summer, ready to transform your business – and your clients’ experiences in 2017. Happy holidays.

You can join in and get your wish heard too. Just jump over here and let us know what you’d do if you had one more day in 2016. We’ve already talked to some of our customers and partners around the world and one thing’s for sure, small business keeps us busy.

If we could wrap up time with a bow and put it under the tree, we would. But until that’s possible, we’d love to know what you’d do with that one more day. We can’t wait to see all of your responses and share them with our customers!

Approach my child.

The old woman lifts her gnarled hands and gestures for you to come forward. A modest wooden stool is perched in front of her table, looking decidedly wobbly. You sit down gingerly.

What do you wish to see?

Her voice is a rasp, barely audible above the gusting wind.

“I…I want to know about 2017,” you stammer. The words sound ridiculous as they tumble out of your mouth. “I want to know the future of business. What trends will I need to keep up with? How can I stay ahead of the competition?”

The old hag laughs. Businesssss? She hisses. After a moment’s contemplation, she begins swirling her hands above the crystal orb. The room grows dark…..

***

Ok – now that I’ve got your attention I won’t bore you with any more bad fiction, I promise!

Today we’re looking into our crystal ball to anticipate the future of business in 2017. What trends will emerge? How will the average workplace change?

I might not have psychic powers but 2016 has given us a few clues.

1. Greater Focus on Employee Expectations

In 2017 employees will expect more from their companies than ever before.

This is largely thanks to workplace review websites like Glassdoor which are rapidly gaining traction. Your future staff aren’t just researching the role they’re applying for – they’re also checking out your business culture and whether they can expect work flexibility, fun, decent salaries and special perks.

Businesses can’t control or sensor the reviews on these sites – so if you don’t keep up with trending benefits you could earn a reputation as a dull place to work, and limit your pool of potential future employees. Word spreads fast in the age of digital media.

To counter this risk, increasing numbers of companies are adopting the following perks to increase employee loyalty and satisfaction:

• Free lunches or staff discounts at local eateries
• Fruit boxes delivered to the office
• Pre-paid snack vending machines
• Gaming areas
• Sleeping pods & relaxation rooms
• Yoga or meditation sessions at work
• Flexible hours and job sharing
• Remote working opportunities

We’ve already seen this trend in 2016 and it’s showing no signs of slowing. In 2017 workplace perks will continue to boom, as businesses embark on a race to find the most cost-effective ways of luring in and retaining motivated staff.

2. Wearable Wellness Technology

The rise of wearable technology in the workplace has been predicted for several years, and some companies are already experimenting with it.

You’ve heard of devices like Fitbit which can monitor your quality of sleep and fitness. But the next generation of wearable devices is set to take things to a new level:

• Feel by Sentio (due for release December 2016) claims to monitor your emotions and stress levels. It sends you notifications when you’re in a bad emotional state, with cognitive behavioural therapy exercises to improve your mental wellness.
• Healbe GoBe claims to monitor your actual calorie intake, by detecting glucose levels in the fluid of your skin – no more guessing how much that slice of cake set you back!
• The Gymwatch Sensor (available now) is designed to maximise the effectiveness and safety of your gym routine, by detecting your form and posture and alerting you when you are performing a move incorrectly.
• Levl (due for release soon) helps you plan your weightloss routine, by measuring the levels of acetone in your breath and providing unique insights about your metabolism.

These new devices offer pretty amazing benefits for anyone who can afford them. And with a recent philosophical shift towards promoting ‘wellness’ in the workplace, employers may be keen to get in on the action.

For example, workplace management company Kronos are encouraging their staff to use wearable tech with a rewards based wellness system. Employees at Kronos earn points for monitoring their health and even get lower insurance premiums. Their system is designed to promote a healthier, happier workforce and reduce the likelihood of staff suffering burnout, ill-health or fatigue.

How many companies implement similar programs in 2017 remains to be seen, but it is definitely a growing area. Some experts believe the recent flop of Pebble may push the wearable device market away from consumers and deeper into the enterprise area, where there is huge potential for growth.

It’s worth noting that workplace schemes may face resistance from employees, especially those with privacy concerns. Here’s an excellent article about the pros and cons of this new technology.

3. The Rise of Generation Z

It might sounds like a B-grade zombie movie, but the rise of Generation Z actually refers to the next generation of young people. They’re the follow-up to my own generation, the now infamous millennials. But what exactly is the difference between these labels?

Here’s a basic definition:

Millennials (or Generation Y): Born sometime between the early 80s and mid 1990s.

Generation Z: Born later than the mid-1990s, roughly 1995 onwards.

2017 will be the first year that Generation Z enter the workforce in significant numbers. With their arrival they’ll be bringing their own attitudes towards work, employers and technology.

In many ways Generation Z have similar values to us millennials, but more extreme. If you thought we were good with technology wait till you see their fingers flying across touchpads.

Many of them have known the internet their whole lives (and don’t even remember the dark days of dial-up). They’re more intimate with (and dependent on) social media and smartphone technology than any generation before them. This means they will bring invaluable skills to employers, and at digitally focused companies their careers may be fast-tracked.

More surprisingly, according to a recent survey by Randstad of more than 4000 workers, Generation Z are the first group to care about flexible work schedules more than healthcare coverage. This marks a massive philosophical shift. As more of them join the workforce in 2017 you can expect increasing demands for job sharing roles, part-time work and flexible hours. That staff dental plan just isn’t going to cut it anymore.

4. Virtual Reality in the Workplace

Virtual reality technology has been a booming trend in recent years, especially since the release of gaming headsets like the Oculus Rift and PlayStation VR. These 3D immersive experiences are more accessible than ever for gamers and recreational users.

But what applicability could virtual reality technology have to the workforce in 2017?

Experts have highlighted areas where VR and augmented reality technology could prove extremely useful to a variety of industries.

• Training. Flight simulators for pilots are nothing new, but we can expect a spread of VR technology into other types of training. In jobs where physical risk is involved (e.g. dangerous machinery or substances) or situations which are hard to replicate (public speaking at large events) this technology will be especially useful.
• Architects and design professionals will benefit greatly from VR. Denizen has reviewed the immense potential of VRtisan – virtual reality goggles and controllers created specifically for architects. Another virtual reality product IrisVR already has over 15,000 customers, and 75% of them are in the construction, architecture or engineering fields.
• Team collaboration. Rather than a simple Skype call, increasingly sophisticated VR technology will make conversing with remote colleagues more immersive than ever. Imagine strapping on a headset and noise-cancelling headphones and sitting alongside each other in a virtual boardroom.

This isn’t the distant future, it’s now. In 2016 ‘artificial intelligence’ was one of the biggest trending topics in business. Next year this focus will expand, and virtual reality and augmented reality devices will start to infiltrate more enterprises around the world.

5. Increase in the ‘Blended’ Workforce

In 2017 the ‘blended workforce’ will be increasingly common. This means more companies will choose to employ staff on a variety of different contracts, including part-timers, contractors, and freelancers alongside full-time workers, as part of the growing gig economy.

One reason for this trend is the rise of millennials and Generation Z in the workforce, who are passionate about flexibility and maintaining a work/life balance. These younger workers are more likely to seek part-time or job sharing roles rather than locking themselves into a single position.

What does this mean for employers? For many companies, hiring short-term employees or freelancers holds a lot of appeal. Whether you need a graphic designer for your website, a writer for your blog or a social media guru – there are hundreds of freelancers on websites like Upwork ready to work on your project (sometimes for shockingly low rates).

Of course, this also creates problems for the long-term growth and stability of a business. Part-time workers may be lacking in loyalty or motivation, and a temporary or short-term workforce needs to be continually re-trained. There’s also the risk of staff disappearing in the middle of important projects, a growing culture of disposability, and tension between permanent and non-permanent workers.

To get the best out of a blended workforce HR managers will need to undertake a delicate juggling act. They need to ensure that permanent staff don’t feel undervalued or insecure, but simultaneously create challenges and incentives for employees on short-term contracts. Some companies may increase the appeal of full-time positions by offering flexible hours or remote working.

6. Regular Feedback Instead of Reviews

Yet another side effect of the arrival of millennials and Generation Z in the workplace is that annual performance reviews are being abandoned in favour of more regular feedback systems.

While previous generations were generally happy to work towards a yearly review and financial bonus, younger workers tend to favour more immediate feedback. As a generation they have grown up receiving instant validation on social media posts and tweets, and this means they will value more direct and open communication with their bosses and peers.

The recent survey by Randstad supports this notion. It revealed that about a fourth of Generation Z members would like feedback from their manager regularly, while only 2 percent want annual performance reviews. Many would like feedback to be after every project, or even daily.

With these shifting expectations it is likely that 2017 will see more management practices shifting towards regular performance reviews – monthly, quarterly, or project-based. Many companies will ditch the annual review model entirely. This will in turn create more dynamic work environments, where informal communication with managers is encouraged and hierarchies are less rigid.

***

So there you have it…Our 6 predictions for global workplace trends in 2017! What are your expectations for the new year? As always we’d love to hear your thoughts.

This speed has its costs, however. Due to their size, small businesses don’t have the capital to cushion a poorly-implemented change. For example, the rise of smartphones and linked technology means we can work from anywhere, but also presents security issues. One socially engineered employee could spell the loss of important client information.

Savvy small businesses work in the sweet spot between early adoption and cautious observance. Inasmuch as new technology introduces risk, it also gives your business an opportunity to grow. Get a jump on the future; prepare your company for these seven tech trends that will change the way small businesses operate in 2017.

1. Chatbots, AI, and machine learning

AI is a computer’s ability to think for itself based on prior knowledge. Machine Learning is the practice of building all the algorithms that help the computer to think for itself. The combination of these technologies is making communication with customers and stakeholders easier through automation.

Look for intelligent apps that use machine learning to curate content, data, or products for customers. In the not-so-distant future, retail transactions might take place through a chat model, where the user logs into an instant message app, tells the chatbot what they want, and the AI offers the best fit based on current stock. This technology could also find its way into support channels where AI locates help documents, bypassing support professionals. AI can work in any chat interface, including phone apps, Facebook Messenger, Slack, Hipchat and SMS.

Slack users already interact with the basic AI chatbot, “Slackbot.” This bot uses simple programs to get weather, serve you a GIF, remind you of an appointment at a day and time, and even speak to other apps.

2. BYOD and MDM

In mid-2015, International Data Corporation (IDC) forecasted that nearly 75 percent of the workforce will be mobile by 2020. A more mobile workforce means more vulnerable data, especially in workplaces with a bring-your-own-device (BYOD) policy. When your employees check email and sensitive customer information on their personal devices, that data can be exposed to threats.

One stolen phone, laptop, or tablet can put your security at risk. Data segregation or “containerization” solves this problem by putting company-owned or sensitive data in silos on all devices. Even small companies need to defend themselves against hacking and social engineering, so secure connections are critical. Mobile device management (MDM) systems help enforce some of these policies, but we’re starting to see more of those systems become native apps. Safari, for instance, lets you bookmark particular URLs that require VPN access. Small businesses in particular can’t afford to open themselves to a security risk.

As mobile productivity becomes increasingly plausible, more business units will (and should) adopt information systems with mobile-friendly interfaces or native mobile apps. For example: cloud-based ERP software with an app for tracking time and expenses and viewing real-time data on the go.

3. Remote offices

Most people who haven’t experienced it for themselves imagine the remote office as a Silicon Valley hipster trend or a form of staycation where the employee works from bed or the beach. While there is a higher incidence of pajamas in remote offices, the dull reality is that most remote workers carve an office out of their homes or the local coffee shop with the strongest wifi connection. And they’re actually productive. Sure, meetings happen on Google Hangouts or Skype, but technology keeps people in touch.

There’s a financial gain behind working remotely: the U.S. alone could stand to save more than $700 billion if those who had jobs suited to remote work could do so. As asynchronous communication through email and chat services becomes ubiquitous, remote workers can batch their tasks and use the long uninterrupted times to get more work done. No celebrations from the sales team or cupcakes to distract you from your work, and the lack of commute saves time, money and oil.

Real estate is expensive, and when your staff gathers virtually, you can save that overhead and expand your talent pool across geographic boundaries.

4. E-commerce

If your store doesn’t have an e-commerce site, potential clients will go elsewhere. Some buyers don’t purchase anything that can’t be delivered, while others are looking for niche products from undiscovered sellers.

Etsy posted growth numbers again in the second quarter of 2016, as companies of all sizes move to the platform. E-commerce sales alone are expected to reach more than $4 trillion by 2020, twice the projection for 2016. Small businesses need to jump on this opportunity and put their products on the web. Now.

5. Connection-as-a-Service

Over the past few decades, the job market has shifted from a focus on manufacturing and production to services. The newest trend, as you may have noticed, is even more nuanced: connection-as-a-service. Think Uber or Amazon. Despite a recent U.K. legal decision, Uber maintains that it connects contract drivers to riders in need. Amazon connects sellers to folks who need important provisions (and weird stuff too), and will even bring you groceries.

Connecting customers to services and products is big business, but small businesses can invest in this trend, too. Lots of small businesses are partnering with connection services to make their products more accessible via the gig economy and the delivery economy.

6. Subscription-based businesses

In the same vein as connection-as-a-service businesses, companies are moving toward subscription-based models. Subscription services + automated payments = win. Also, subscriptions let you budget and make sales projections because clients pay a recurring monthly fee rather than a single flat payment.

Subscriptions are taking over in monthly beauty or shaving boxes, wine delivery, e-learning, healthy snacks, crafting, chore completion, you name it. Subscriptions can be built into nearly any service or industry. Combine the thrill of getting a package in the mail or a completed to-do list with the ease of automatic payments. Everyone wins.

7. Influencer marketing

Billboards and radio spots are a thing of the past, but social media rules our lives. Instead of paying for ad spaces on traditional channels, influencer marketing gives the microphone to key “influencers” who have the ear or eye of large groups of people.

Think the Kardashians and product placement on all of their social channels, but with more clarity, and perhaps a better reputation. Remember, you have to disclose if you pay an influencer to promote your product. That doesn’t mean leveraging important clients doesn’t pay off. Influencer marketing has the ability to reach niche and untapped markets and is particularly helpful when targeting millennial customers—who, as Katie Elfering of Forbes reminds us, want to “feel informed and involved instead of marketed to.”

None of these tech trends are particularly mind-blowing to the informed small business owner, but what may be a game-changer in 2017 is the increased rate of change and adoption that we’ll see. Technology tends to have a flywheel effect: adoption breeds faster adoption, which breeds even faster adoption. One thing is certain about 2017: technology will move quickly.

Word of mouth is like the holy grail of marketing. And to help you tap into it, we’ve compiled some tips that you can put into action in your store.

Offer exceptional products and customer service

When you have truly outstanding products and services, many of your customers will talk up your store all on their own. So before you cook up word of mouth gimmicks or referral programs, make sure that you’re blowing away shoppers with fantastic products and customer service.

Invest in your merchandise. Use high-quality materials, see if you can present them better, and highlight the ways your products are superior to others.

In the same vein, you should also invest in your staff. Allocate resources for staff training and happiness. Come up with ways to keep your employees engaged and motivated.

You’ll find that these investments can pay off in the form of delighted, raving customers who tell all their friends about you.

One example of a retailer that’s focused on product and service quality is American Giant. Rather than spending a ton of money on advertising and marketing, the retailer invests in developing high-quality merchandise. American Giant believes that when they provide exceptional products and customer service, customers will naturally spread the word.

As they say on their website:

The pressure to attract consumers leaves most apparel businesses with bloated marketing budgets. We have a different approach. Instead of investing in billboards and commercials, we invest in quality product and great service with the hope that our customers will become our advocates. We’ve found that if we can exceed customers’ expectations, they want to share and spread the word for us.

This strategy worked out great for American Giant. One of their main products, the classic sweatshirt, was dubbed the best hoodie of all time. At one point, the retailer couldn’t make the sweatshirts fast enough, and shoppers had to wait months just to buy it. Not bad for a company that doesn’t advertise.

Spell it out for customers

Sometimes, you need to give people a little reminder to spread the word about your brand. You can do this in-store by putting subtle prompts around your shop to get people to talk about your products.

For instance, some apparel retailers have hashtag stickers in their dressing rooms to nudge customers into sharing photos of themselves while trying on the store’s clothes.

New York & Company, for example, has hashtag decals posted on their fitting room mirrors.

Other merchants are more explicit with their word of mouth efforts. Take, for example, Sleeping Baby, an online retailer that sells swaddle transition blankets for babies. Whenever someone buys their products, Sleeping Baby encloses a postcard with each delivery, thanking customers for the sale and requesting that they post a photo of their baby with their products on the company’s Facebook page.

Because of this, Sleeping Baby’s Facebook page is filled with customer photos and comments. Aside from getting people talking, having all that social proof also increases the likelihood that people will buy.

The key takeaway here? You can get people talking (or posting) just by reminding them to do so. If you have amazing products that customers love, ask them to spread the word. There’s a big chance that they’ll say yes.

Identify and engage brand advocates

Recognize that people have varying word of mouth potentials. Some shoppers are more likely to make referrals compared to others. The key is to identify individuals who are most likely to recommend you to their friends, and then reach out to them.

How do you zero in on these people? Turn to your best customers. Go through shopper data and find individuals who have purchased and interacted with your brand the most. From there, create a campaign to encourage word of mouth and referrals.

One brand that did this well is Sony. According to Marketing Sherpa, to increase signups for its branded credit card, Sony identified their most engaged customers and sent those people an email incentivizing them to refer their friends.

For testing purposes, the company also sent the same email to a control group of non-influencers. Upon doing this, Sony saw that the influencer segment generated results that were 2.8 times better than the control group.

Consider doing something similar in your business. Rather than targeting everyone with a word of mouth campaign, do research on your top customers. Determine who they are, and figure out the best way to approach them.

Run an influencer campaign

Pay attention to the people that your customers are listening to. Aside from their friends and relatives, are there bloggers, social media personalities who influence their buying decisions? Find these individuals and use their platform to spread the word about your brand.

One example of a retailer that tapped into influencers is Kohl’s. Last year, the department store partnered up with a fitness-centric influencer network called FitFluencer to launch the #MakeYourMove campaign, in which they encouraged FitFluential bloggers to publish posts containing fitness tips and product recommendations from Kohl’s.

Looking to use influencer marketing to boost word of mouth? Start by finding relevant influencers in your niche. You can do this on your own by asking customers about the people they follow online. Alternatively, you could use services such as Speakr or Women’s Influencer Network to connect with influencers.

Tip

Want to improve your influencer outreach results? Caitlin Gustafson of Web Talent Marketing shares the following advice:

1. Look for middle-level influencers; they aren’t as expensive to work with and oftentimes they’re still at the stage where they are flattered to be contacted by brands. Sometimes you can find influencers who are willing to do a review or mention your product on social media in exchange for free products and you featuring their review on your own social channels (especially if you have a great social presence.)

2. Look for influencers who may have mentioned your products before but do not regularly do so. It may be that they enjoy your products, but they just aren’t top of mind or they can’t afford to buy them regularly. Just sending a few free products – no strings attached – with a personalized note saying thanks for talking about your product – can get you a few new mentions.

Run a contest and use it to measure word of mouth

Janice Mckay, of Spring Lynn Motorcycles advises retailers to run a contest to generate word of mouth. According to her, doing so not only generates engagement, but it allows you to measure the results quite easily. Have a look at what she has to say below:

Let’s say last month you spent $500 on 4 weekly adverts in the newspaper. You’re not sure who read it, if anyone at all! Plus, you’re not that confident with the wording and with the position of the advert in the paper. It’s totally hit or miss.

Wouldn’t it be far more effective — and engaging for your audience —to spend that same money on a giveaway instead?

The competition entries are a way for you to physically measure how many people have taken notice of your campaign and who they are. This enables you to perform important market research at the same time, so you know if the campaign and if it’s something you should replicate in the future.

Be creative with your competition idea so that its newsworthy enough to notify the media. (Not sure how to notify the media? Learn how to write a press release here.)

And when you have a winner, make sure you get some photos of them with their exciting new prize. This photo and your competition story could make the news and get you:

a) A prime spot in the newspaper.

b) A much bigger space in the newspaper than the adverts you bought.

c) An interesting story that people might enjoy reading compared with a boring, generic advert.

d) An angle which makes you sound very generous with your giveaway offering.

Case in point: I once ran a contest in my business, and it allowed me to improve word of mouth and land some sweet media mentions. It got me a full a page magazine feature, ant the best part is, it cost me nothing! If had a gone with traditional advertising, that type of placement would have cost me upward of $30,000! And wouldn’t have been half as effective, because let’s face it — who wants to read magazine ads?

Sponsor or host events

“You can also notify the media if you are sponsoring an event, or holding one yourself,” Janice continues. “If you hold regular, exciting events, send regular press releases and after a while the media will get to know you as an exciting, forward-thinking business.”

“When sponsoring an event, it’s a good idea to also be involved with a charity – this is more newsworthy and the organization you team up with can also help you get media attention. Plus it means people recognize and trust you as a contributing member of the community.”

Build communities

Getting people together through events, clubs, and whatnot can organically generate word of mouth. When people are part of a community, they’re more likely to spread the word — and even recruit — like minded individuals.

One retailer that’s doing a stellar job at fostering communities is Lululemon. The retailer regularly holds local classes and events, and these initiatives bring people together. Lululemon events are fun and educational, so attendees get a ton of value out of them.

Another example is American Express. The credit card company runs Open Forum, a website that provides insights, inspiration, and connections to help entrepreneurs grow their businesses. In addition to thought leadership articles, the site lets users ask questions and seek advice from fellow members on just about anything about their business.

Through Open Forum, American Express has managed to empower entrepreneurs, while building their brand at the same time.

If you have a highly engaged customer base, you’re in a perfect position to implement a community building initiative. Come up with ways (hint: ask your customers) to bring people together in a fun or even educational way. Be it through meet-ups, online groups, or classes, see if you can launch something that would cultivate relationships and get people talking.

Your turn

How can retailers improve word of mouth for their stores? Let us know in the comments.

David Barrett was just 6 years old when he started programming. Since he has attended the University of Michigan, written 3D graphics engines for the video game industry, and with Travis Kalanick built a peer-to-peer file transfer technology called Red Swoosh. In 2008 David started Expensify and has since been relieving the world’s frustrations, one expense report at a time. We chat to David about the triumphs and challenges on his business journey.

Why did you want to run your own business?

DB: It’s not that I’m set on running my own business. I’m just set on working somewhere great, and starting my own business was the most straightforward way to do that. Ultimately, “great” is in the eye of the beholder. In my case I wanted to work with people possessing three qualities:

• Raw talent. The sort of people who casually move mountains without realizing others think it’s impossible. The value of raw talent is obvious.
• Strong ambition. People who are committed to spending their life in the pursuit of some great personal goal. The value of ambition is less obvious. But I find ambitious people are far easier to work with because they waste less time on stupid things that don’t matter: their time matters to them more than someone who just wants a paycheck.
• Deep humility. People who understand the limits of their own knowledge and not only respect, but truly welcome the opinions of others. This is the least obvious, but probably the most important. Because without humility, people who have talent and ambition are nightmares to work with, and tear the team apart.

I wanted to work in a company that only had great people, and I just couldn’t find it anywhere else, so I decided to build it. And let me tell you, it is great.

What was the the biggest surprise you found when you started your business?

How much easier it is than everybody says. Everybody makes it sound like it requires magic skills, contacts, money, expensive education, genius ideas, etc. In practice it just requires a decent idea to start, and a tremendous amount of hard work. Not to say starting a business is easy: far from it. But it’s much, much easier than people claim, and the amount of “inspiration” required is far less than the amount of “perspiration”. If you are able to work hard and avoid getting distracted by legions of people who are constantly trying to waste your time, you’ll do fine.

What was the hardest thing about getting started?

Confidence. Everybody around you wants you to fail, and thus will discourage you at every possible step of the way. Not outright, not overtly. But most people don’t try, and thus are relieved to see you fail as it reinforces their decision to keep going back to that job they hate, getting the paycheck they think is too small, working for the person they think is stupid.

What has been the most rewarding moment?

There are so many, it’s hard to pick. Just yesterday I was talking with one of my people, who was talking about how one of their people, was training one of their people, on how to let a candidate that they interviewed go. I realized at that moment that we had finally built a self-sustaining system of training the next generation of leaders in the company. Because the only way to get great people is to build them from scratch. You hire people with no experience right out of school, and heap as much responsibility as they can handle onto them as early as possible. Ultimately, technical skills are so much easier than leadership skills. It was incredibly rewarding to realize that we had created a self-reinforcing system of leadership development that didn’t involve me whatsoever.

What’s the one piece of advice you would give someone else about to start their own business?

Choose how much time every week you want to devote to starting your own business, and then start doing that. Even if you have no idea what to do. Just spend those hours every week trying to come up with an idea. Even if it’s just staring at a blank piece of paper, stare at it for that many hours. There’s no excuse to wait, except for the excuses you invent to fool yourself.

Understandable or not, it’s a mistake however. The fact is, profits are only one small piece of the puzzle for SMBs looking to grow a company in the long term.

“KPI numbers can seem like a bit of a foreign language to many,” says trades advisor, mentor and coach, Andy Burrows.

“If tradespeople want to improve and grow their business, there are key principles they need to focus on. It’s really not too difficult, it’s just a case zeroing in on what’s important and then changing some of your behaviours”.

Burrows says that most electricians have a ‘gut feel’ when there’s something wrong, but lack the objectivity that comes with a better understanding of their key performance indicators.

“You need to ask yourself: What gross profit percentage are you achieving? Are you generating a decent rate of return? What revenue figures do you need to achieve to make the business work? Because that’s how you measure success.”

The only way to truly understand the health of your business is by understanding the metrics most relevant to it. Done well, you’ll have valuable early warning alerts about potential problems and accurate indicators of the health (or lack thereof) of your business. Ignored, you might find yourself working too hard, for too little return on a business that isn’t sustainable.

The good news is that a basic analysis of the fundamental KPIs isn’t necessarily difficult, and with the right knowledge, some simple advice, and the use of some uncomplicated tools, you can get a handle on the numbers most relevant to you.

First things first

The first step is deciding what you need to measure. Every business is different, as is every business owner, so the stats that matter most won’t be the same for everyone.

Your accountant is an excellent place to start when deciding where best to spend your time. They’ll look at your industry, the size of your business, your particular goals, and where you are in your company’s life cycle.

Some key metrics they’re likely to recommend tracking:

• Cash flow
• Debtor days
• Profit per hour

The important thing is to understand why you’re following any particular metric and what those results actually mean for your business. Again, use your accountant or advisor to help you understand what you need to know and why.

Getting a handle on your cash flow

Cash flow

Noun

• The total amount of money being transferred into and out of a business, especially as affecting liquidity.

While important metrics can vary from business to business, cash flow is a constant. Without cash you’re out of business so being able to anticipate when a bill is likely to be paid, more or less, is crucial.

Cash flow forecasting is important to identify shortfalls in cash balance, particularly as an early warning system for such shortfalls. Having a good idea about your upcoming surpluses or shortages gives you planning confidence and ensures you can pay your suppliers and employees.

So how’s it done? It’s essentially a case of measuring ‘cash-in’ and ‘cash-out’, but that can be more involved that it might sound and working out the numbers with a spreadsheet can be tricky. An easier way? Let your advisor or coach figure out this number quickly (and they will, especially if they’re using a for-purpose debtor and cash flow management tool) and move on.

Understanding your debtor days

Debtor days

Noun

The average number of days your customers are taking to pay you, calculated by dividing debtors by average daily sales.

Debtor days are the ratio of how quickly your debtors are settling their invoices, or the difference between when you issue an invoice and when the debtor pays the invoice.

The amount of debtor days you’re facing will depend on several factors: Industry expectations, any early payment incentive schemes you have in place and how effectively you’re chasing overdue invoices. While the calculation is fairly straightforward (debtor days = debtors ÷ sales x 365), actually arriving at the final figure can be fairly labour intensive, so again, a skilled advisor, coach or accountant is likely your best bet.

Once you’ve established what your debtor days figure is, you can then compare it to your industry average to see how you fare.

Deciphering profit

Net profit per hour

Noun

• Net operating profit / total revenue producing or billable hours

One of the biggest questions that you need to answer is this: “Am I profitable?” It is, very much, the ‘bottom line’ for a business and the measure of whether what you’re doing is successful. You answer this by establishing your net profit per hour (net operating profit divided by total revenue producing or billable hours).

“The biggest mistake I see people make is not going back and analysing how profitable the jobs they’ve done have been, says Burrows.

“They’re so busy, they’re on to the next thing and on to the next thing, and not going back and asking ‘What is the most profitable kind of work I’m doing?’”

“It’s easy to get really busy doing lots of jobs, and accepting jobs that you possibly shouldn’t. That’s a case of not having very good ‘filtering’.”

Filtering your clients is the secret to finding out which customers are simply not worth having. Either because they cost you more than the revenue they bring in, they consume a disproportionate share of time and money, or they create stress by paying late.

“It could also be jobs that are geographically problematic, i.e. wasting time in-between jobs. It might be taking jobs from people who are really super fussy and constantly micromanaging you. Filtering your clients is about getting to that point where you can ask ‘Who is the best type of client for me to proactively chase?’”

“And you’re only going to find that out by doing analysis.”

(Click here to find out how to grade your clients).

Some aspects of your business will always be out of your control. An understanding of your key performance metrics, knowledge of what they mean and grasping how they will help you reach your goals is something you can always control.

Taking the time to understand them — and seeking help to understand them if you need it — will help you maintain your business’s performance.

Debtor Daddy politely and persistently reminds your customers to pay. Set-up takes just three minutes, then with just a few clicks, Debtor Daddy is on the job. When an invoice is due, relax. Debtor Daddy follows up with perfectly crafted email reminders that get results, meaning you can get back to what you love.

So how do you stay on top of things through the mad rush?

Don’t get stressed – get systematic.

When things are busy, you need to have tight processes in place to stay in control.

Make sure your systems for rostering, ordering stock, customer bookings and payroll are all as streamlined as possible. If you need assistance with putting them in place, goRoster can certainly help.

Fight chaos with communication

Keeping the communication lines open is key to maintaining a calm workplace. Make sure your staff know exactly what is happening – who is working what shift, how many people are in for dinner and any private functions that are booked for example.

Clear communication to your staff will make them feel confident and happy in what they are doing. And the positive vibes will no doubt rub off on your customers!

For instance, say you employ 50 people, with an annual turnover of just 6%. While this rate of turnover is nothing to worry about, if the three people that jumped ship each held critical roles, there’s going to be considerable collateral damage. This includes a negative impact on your other staff in terms of morale, performance and productivity.

Replacing workers is costly

You can expect to spend at least one-fifth of an employee’s annual salary on replacing that worker. This includes everything from advertising the position, the time and costs associated with recruiting, onboarding and training new hires. It also takes into account lost productivity while new employees come up to speed and master their new roles.

So, lose three employees on $65,000 each, and you’re looking at a $39,000 hit off your bottom line just to replace them. Of course, if you lose key executives, this cost will be much higher. In fact, replacing a highly specialised role can cost you as much as double the initial salary.

Zero voluntary turnover not the holy grail

Equally, even achieving zero voluntary turnover may not necessarily be a good thing, especially if your business is changing and your people are rooted to the past. It’s important for any business to bring in new talent and with it fresh ideas, different experience, and new perspectives. In fact, healthy turnover can actually help rejuvenate a business.

Healthy vs. unhealthy employee turnover

The key to managing employee turnover is to first identify whether your current turnover is healthy or unhealthy. And while this is influenced by your industry, profession, and where you’re located, as I said earlier, it all depends on who’s leaving.

Whereas, there’s no one magic number for employee turnover, company culture plays a pivotal role in employee retention.

Culture key to retention

In fact, in any firm that is considered a great place to work, culture plays a key role. For instance, look at Salesforce, which topped this year’s Best Places to Work list of employers with more than 100 employees. The company puts its success down to a workplace culture built around the spirit of “Ohana”, which means “family” in Hawaiian, and the close-knit ecosystem of employees, customers, partners and communities that the company has built.

Likewise, for Rackspace Australia which topped the list of great places to work for companies with fewer than 100 employees. The company takes its culture very seriously with a team of ‘culture instigators’ who allocate a percentage of their time to making sure everyone feels included and has a say.

Exit interviews

When people do leave your business, exit interviews are an important learning tool. Candid feedback here is invaluable. But rather than asking them to tell you why they are leaving, ask them for suggestions on how you could improve the business.

Stay interviews

Of course, rather than leaving it until the horse has bolted, an alternative to exit interviews is to hold regular “stay interviews”. Instead of finding out why someone is leaving, find out what you could do to make sure that person sticks around. You can conduct these interviews as part of your regular employee happiness surveys.

Remember, it’s expensive to recruit a new employee. If your company culture is the reason why your employees leave, then it’s a perfect time to have a good look at how you recognise performance, provide opportunities for growth, and the quality of manager-employee-co-worker interactions.

How is your business supporting the most important needs of your employees for meaningful work, market compensation and benefits?