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Is Your Future Leader Working In Your Company Now? How To Grow A CEO.

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Is Your Future Leader Working In Your Company Now? How To Grow A CEO.

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As companies face new challenges in a rapidly changing world, leadership has never been more important. Business owners and boards are looking for strong CEOs, but what’s the best way to find them?

One study shows that CEOs hired from outside a company don’t perform as well, on average, as those who are internally promoted to the top spot. A benefit of grooming a CEO in-house are that person’s familiarity and alignment with the company’s culture and growth processes, but today’s demands and disruptions require special leadership qualities that need to be honed and observed at every step up the corporate ladder, says Benjamin Breier (www.benbreier.com), ForbesBooks author of Intentional Disruption: Leadership lessons in Healthcare, Business, and Beyond.

“Company owners and boards of directors can be ahead of the game if they grow and produce C-suite leaders, especially CEOs, from within,” says Breier, formerly CEO of Kindred Healthcare LLC. “Targeting that potential early on, providing the necessary experiences and promoting professional development leads to a CEO who can transition smoothly to what will be the company’s most challenging role.

“Soft skills such as emotional intelligence, authenticity, communication, and empathy are paramount in today’s CEO. They have to figure out how to grow the business, how to be strategic, and how to mix the business with the mission.”

Breier offers the following tips to business owners about grooming a CEO from within the company:

Challenge them in different roles. Breier says one way to identify and build high-potential leaders who can become CEOs is to challenge them with tough assignments in different jobs and give them minimal support. Those who produce consistent results will gain confidence and valuable experience.

“Any young person with leadership aspirations has to be willing to perform any job that they as a leader might ask somebody to do,” Breier says. “No job should be beneath you. See what you can learn, how different jobs work, how to problem-solve, and what people in that space are going through.” The result, Breier says, is that when one who has traveled that path becomes CEO, “they can talk to anyone at any level and have credibility as a leader. They can relate to all employees and make a connection.”

Give rising leaders broad authority. “The buck stops with the CEO, so on the way up to that role, it’s important for the company to provide top managers who are CEO candidates with wide decision-making authority,” Breier says. “Create opportunities where your leaders oversee budgets, strategy and people. You want to breed leaders who are decisive. Encourage them to think like CEOs, with a strong focus on metrics and value creation.”

Look for resilience. Climbing the corporate ladder virtually guarantees some falls along the way, Breier says, and owners or board members looking for strong leadership need to find people with resilience – a proven ability to bounce back quickly from setbacks. “When you’re the CEO and times are tough, everybody in the company is looking to see what your body language is going to be, and what your attitude is,” Breier says. “Part of your job as CEO is to be optimistic, courageous, and forward-looking when the big rock needs to be pushed up a high hill.”

See if they can disrupt in a direction-changing way. Breier says today’s ever-changing world demands CEOs who cannot only handle disruption but prompt it in a way to move their company forward. He calls this intentional disruption, which he defines as “a bold, purposeful, personal and business strategy to create opportunities and kindle successes while counteracting the inevitable disruptions wrought by external forces in volatile times.”

The most successful leaders, Breier says, are proactive rather than reactive and make the best positive disruptors. “Intentional disruption means going on offense and letting the problem weigh your company down. Top leaders must develop skills and tools to counteract forces that are capable of destroying their companies and their future leadership opportunities.”

“The long journey to becoming a CEO does not come from a straight line of victories,” Breier says. “It comes from an accumulation of experiences, good and bad, that expand the knowledge, sharpen the focus and strengthen the conviction of a well-developed leader who’s earned everyone’s trust.”

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Benjamin Breier (www.benbreier.com) is the ForbesBooks author of Intentional Disruption: Leadership lessons in Healthcare, Business, and Beyond, and the former CEO of Kindred Healthcare LLC. He serves on the board for the Federation of American Hospitals, is a member of the Wall Street Journal CEO Council, and a founding member and chairman of the board of the Louisville Healthcare CEO Council. He oversaw multiple acquisitions that turned Kindred into the largest provider of post-acute healthcare services in the country. Modern Healthcare magazine named Breier one of the 100 Most Influential People in Healthcare on three occasions and, in 2010, rec­ognized him as one of the young leaders aged 40 and under making a difference in healthcare. A graduate of the Wharton School of Business, where he earned a bachelor’s degree in economics, Breier received an MBA and MHA from the University of Miami.

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3 Simple-Yet-Effective Ways Product-Based Businesses Can Increase Monthly Profits

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In order to thrive, businesses must have a healthy bottom line. Have you recently taken a long look at your product-based company’s financials and realized that its overall profit is much lower than you expected? Even though your business is making a ton of sales every month, the numbers don’t lie — profits may be much lower due to the money your company has to shell out each month for payroll, the costs incurred for manufacturing your products, and other overhead expenses. This can definitely be quite frustrating for any entrepreneur!

Now you may be thinking, how exactly can I increase profits without having to make massive changes in my enterprise’s operations? Is there a way to grow net profit without the need for more sales or marketing outreach? Well, wonder no more! In my experience as the CEO and founder of CMA Exam Academy (a Certified Management Accountant exam review program), I’ve discovered many simple-yet-effective ways a product-based business can increase its monthly profit. Here are three of them that I’ve encouraged other entrepreneurs to follow:

Prepare & Review Your Budget Now to Save Later

Your profit may be much lower than you thought it would be because you never set up a budget, or you set one up in the beginning of the year or quarter and then forgot about it. Don’t let this be the case any longer! Your monthly budget is your guidebook of exactly what your enterprise needs to function and deliver its offerings to customers. It is important to take the time to put together a spreadsheet that lists exactly which costs are needed for each month’s operations, including subscriptions for your CRM and sales management software, payroll, manufacturing essentials, etc. Include EVERY single cost, no matter how small it is! Better yet, use an accounting system to track all of it.

Once you prepare this budget, it’s time for the second step: comparing it to your business’s actuals. You may have written down the monthly overhead costs in your budget so they are set in stone, but your actual expenses could be much higher without you even knowing it! So take your last month’s financial statement and review the expense lines to identify the largest variances from your budget. For example, you may discover that the costs of office supplies or cloud-based file storage are higher than you budgeted for. Once you note these discrepancies, you can make changes to ensure the actual expenses match your budget.

Look for Waste in Production Processes

You may be completely unaware of waste that occurs throughout your production process. For example, a process that you use to manufacture your products may result in a lot of wasted materials, which can be really costly and lower your overall profit. So see how you can lower or eliminate the waste altogether. Assess all of your production processes to pinpoint any waste and consider changes that can be made to fix it. Even a small adjustment in the process could drastically reduce the waste, so this is a must-do step for every product-based company!

Waste can also refer to costly, unnecessary manpower in an inefficient process. For example, say you have several people working on one element of the production process, when in actuality only one person really needs to work on it. In this case, the extra manpower is a wasted cost — it can even be lowering the overall efficiency of the entire process!

Try to Negotiate with Vendors

Do you work with an array of vendors whose products are used to create your final offerings? For example, do you purchase bulk materials from several sellers to create your business’s products and then buy packaging supplies from another vendor? If so, see how you can negotiate with them to get the best prices for these items. Here are a few ways you can do this:

See if You Can Hammer Out Discounts for Early Payments

Every business owner wants their invoices paid on time so that they always have the funds available for operational expenses. Therefore, see if your vendors would be open to offering you a discount for paying your monthly invoice early. Even if it’s a small discount percentage, it can really add up to a ton of savings! For example, say you usually buy $4K worth of materials each month from one seller. If you can negotiate a 5% discount for paying your invoice early, you will save $200 a month! And if you secure 5%-off early payment discounts with every vendor you buy from, all of the savings would really add up and increase your monthly net profits!

If a seller isn’t open to an early payment discount, see if any of their competitors would be open to one. If one of the competitors is, mention this to your current vendor and it may persuade them to offer you one as well. They would likely much rather agree to a small early payment discount than lose your business altogether to one of their competitors.

Negotiate Pricing

Kind of going along with the last point, see if you can negotiate pricing with your vendors. Again, reach out to your vendors’ competitors to see what kinds of pricing options they offer and how they compare to those of your current vendors. If any of the competitors offer the same materials for better prices, see if your current vendors would be willing to offer the same prices. If they are not, then consider switching vendors — even if the pricing difference is just $50 a month, you will end up saving $600 a year! Always consider the long-term savings.

To Wrap It All Up

Are you looking for ways to increase your business’s net profit? You can do just that by preparing and reviewing your budget now to save in the next month(s). On top of this, assess your production processes to eliminate costly waste. Also see if you can negotiate with your vendors to secure discounts on early payments and lower the prices for your monthly purchases. Following these simple-yet-effective steps may help you save a lot of money and boost net profits, in turn improving your company’s overall bottom line.

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Nathan Liao is the founder of CMA Exam Academy, a top Certified Management Accountant exam review program. As a CMA and CMA coach, Nathan mentors accounting and finance professionals in over 80 countries to earn their CMA certification in as little as 8 months. The unique review framework in CMA Exam Academy has proven to be the key to his students’ outstanding success in attaining their dream of earning the Certified Management Accountant certification. www.cmaexamacademy.com

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US Fed: A fata morgana hiking cycle?

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In early January, the US Federal Reserve’s communications pointing to more hikes and an earlier balance sheet run-off, together with CPI reaching a yearly rate of 7% in December, have triggered a surge in long-term US yields. Over a short span of two weeks, US 10y Treasuries yields rose 24bp from 1.5% to 1.75% and temporarily reached 1.9% (Figure 1).

Figure 1: Evolution of US 10y Treasury yield (last 2 months).

In total return, this was the largest decline of 10Y US Treasuries over the last four decades. Only in February 1980, when Chairman Volcker raised the Fed Funds rate to 21% did long-term US Treasuries have a worst two-week performance, and this was against the background of much lower growth than today. For some, this is enough to (once again) claim the switch to a new regime, where “low for longer” is replaced by rising yields, driven by higher inflation uncertainty and growing interest rate risk. For us this view reflects mostly tactical noise rather than the underlying dynamics of recent yield movements. Over the recent days, US 10y Treasury yields have consolidated again at 1.74%.

Bonds markets seem have become more confident about the near-term US recovery rather than worry about incipient stagflation. The components of US nominal yields show that the recent increase was not caused by the risk component (term premium) but by a higher expected nominal short-term rate. The inflation expectations embedded in this rate remain stable, but the implied expectations for the real rate have risen (real short-term rate). The real short-term rate is closely linked to the economic outlook. In other words, the recent yield movement can be explained by increasing confidence among market participants that the upcoming Fed rate hikes (four hikes are currently priced in for this year) are appropriate and will not derail real growth. However, residual skepticism remains. The risk premium associated with the real short-term rate (real term premium) remains negative indicating limited potential for higher longer-term rates in a sustained growth cycle. Thus, we are not dealing with a risk surge, but with a re-rating of the growth scenario (Figure 2).

Figure 2: Decomposition of US 10y Treasury yield*

 

Don’t be fooled by real yields based on breakeven rates. From this growth story one could hastily derive a considerable upside potential for nominal yields especially in view of still clearly negative real yields (nominal yield – breakeven). But this is a flawed reading. The breakeven rate (derived from TIPS ) is not pure measure of inflation expectations and is subject to substantial market distortions. The US 10y breakeven rates – untypically – trade 50bp above their fair value due to a combination of lack of liquidity, high demand, and limited supply (Fed holding around 20% of the outstanding TIPS volume). Using the fair breakeven value (liquidity-adjusted) to calculate real yields, we see they are almost come back to pre-crisis levels (which is nearly the same as the sum of the real rate expectation and the real term premium in Figure 2 above). The US growth story is thus already priced in and provides very little upside for nominal yields (Figure 3).

Figure 3: Real yields back pre-crisis when adjusted for liquidity distortions*

However, changes in the duration of US Treasuries might provide some small upward pressure on the yield curve. Markets are also repricing the declining dampening stock effect of the Fed’s bond holdings on the US curve. With the upcoming quantitative tightening (QT), the share of duration-bearing securities in the private sector’s balance sheet is going to increase while short-term reserves are becoming scarcer. The additional duration supply translates into upwards pressure on yields. Currently, the QE-induced duration extraction is still dampening 10y US Treasuries by 130bp. With quantitative tightening we expect this effect to diminish by 20bps by the end of the year. However, a lower fiscal impulse than expected (e.g., if the Build-Back-Better framework does not pass) could also result in lower financing need by the US government and reduce the net supply of Treasuries, which could put downward pressure on yields and partly balance the effect from quantitative tightening.

The Fed might break the hiking cycle earlier than markets expect.  The US monetary stance has undeniably become more hawkish. Given the tightening labor market, the expanded balance sheet and political pressure to fight inflation the risk reward of not tightening has indeed become too high. Cautious tightening can avoid overshooting inflation becoming embedded in expectations. However, the Fed also knows that tightening will not fight supply-side constraint-driven inflation. From this side, the pressure is going to ease over the year as we expect the inflationary pressure to abate. Our inflation tracker is already pointing at peak in Q1 2022 (Figure 4).

Figure 4: Inflation in the U.S. may peak in Q1 2022*

Sources: Refinitiv, Allianz Research

*US Inflation Tracker: equally weighted and normalized composite measure comprising 15 sub-segments (underlying trends (modified/trimmed measures), forecasts, market-based inflation measures, expected inflation implied by term structure models, monetary aggregates, consumer and producer price components, labor market indicators, commodity prices, corporate margin & profitability, and proxies for price effect from supply chain disruptions). Official measures: equally weighted and normalized composite measure comprising headline and core inflation reported by national authorities.

The normalization of the liquidity premium in the TIPS market, which should bring down breakeven rates, should also help to reduce the risk of de-anchoring inflation expectations. Instead of CPI and FOMC minutes, the focus of fixed income investors should lie on economic activity and monetary and financial conditions (MFC).

Figure 5: US Financial Conditions and ISM Manufacturing Index
Our baseline is still a cycle with three rate hikes this year and eight in total. This remains a very moderate normalization path by historical standards. On average, nominal tightening in the hiking cycles of the last 50 years reached 3.9pp and real tightening 2.8pp. For the upcoming cycle, we see tightening at only 2.0pp in nominal terms and 2.1pp in real terms. But if the growth momentum slows down further (e.g. ISM falling below 50, persistently weak retail sales as in December etc.) and if we see a noticeable tightening of MFC, then the Fed could break the tightening cycle after only two or three hikes. From today’s standpoint, 3-4 hikes would then have to be priced out. The market would switch from bear-flattening to bull-steepening (Figure 5).

Financial markets signal a shortened cycle. The 2y10y steepness of the US curve is already very flat compared to earlier lift-off phases (75 bps vs an average of 120bps in the 2 months prior to lift-off). Looking at the swap forward curve, we can already see inversion patterns that previously only appeared in late phases of hiking cycles, usually 2 to 3 hikes before the peak (Figure 6). These signals are somewhat at odds with the aggressive pricing on the money market, where currently 6-7 hikes are priced for the next two years.
Figure 6: Forwards at inversion point even before the hiking cycle started

Equity market developments seem to confirm a shortened cycle. Over the last 50 years, 85% of the Fed rate hikes have taken place at a moment when the S&P 500 has experienced a 12-months drawdown of less than 10%. Today we are already at -8.3%. So, we are approaching an area where rate hikes are very rare (16% of all hikes). When they took place, it was mostly in the very late phase of the cycle (Figure 7). One can, of course, emphasize the uniqueness of this post-pandemic cycle and argue that the Fed should not care about equity markets. However, the past has shown that the suppression of risky asset volatility and preservation of the wealth effect feed into the reaction function. For us, behind the tactical noise signals are piling up that the biggest risk in the U.S. bond market might thus not come from the Fed falling behind the curve, but from many market participants positioning themselves too far ahead of the curve. Like the real economy went through a full cycle in less than 2 years, markets might go through monetary cycle without substantial hiking ever happening.

Figure 7: Fed rate hikes and S&P 500 12 Drawdown

Even in the long run US yields will remain subdued. It is difficult to imagine long-term rates reestablishing clearly above 3% on a sustained basis. We currently see the long-term (5 years ahead) nominal equilibrium interest rate in the U.S. at 2.6% of which 0.6% are attributable to the real neutral rate. This equilibrium rate could only shift substantially above 3% if we experience extreme monetary tightening or if massive government spending creates a permanent boost to potential GDP. For some, President Biden’s infrastructure plan could trigger such a GDP boost. However, to double the neutral rate relative to our baseline scenario, trend growth would have to reach around 3.5% (against currently 1.8%) without triggering a permanent surge in inflation. But the equilibrium rate could also reach 3% in a negative stagflation scenario.

Figure 8: US equilibrium rate scenarios for a 5-year horizon*

In that case, the driver would be permanently de-anchored inflation expectation (over 3%) while the neutral interest rate would decline as the growth potential is impaired. On a fundamental basis it is therefore hard to justify the regime shift narrative. It is much more likely that, behind all the current market noise, the low for longer regime will prevail (Figures 8 and 9)

Figure 9: Scenarios for US real neutral rate (r*) for a 5-year horizon

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A Time Of Invention And Reinvention: How Entrepreneurs Can Tap Into Creativity

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The COVID-19 pandemic has forced many businesses to adapt or make major changes. The challenges presented required leaders to think creatively in order to solve problems and generate new ideas that can keep their companies competitive.

Now with record numbers of people starting businesses and entrepreneurial veterans trying to stay afloat, creative problem-solving is a key separator between success and failure – and in many cases requires an inventor-like mindset, says Jarl Jensen (www.jarljensen.com), the founder and president of Inventagon and the holder of several medical technology patents.

“Creativity is the most important attribute of an entrepreneur,” says Jensen, also the ForbesBooks author of The Big Solution: Deactivating The Ticking Time Bomb Of Today’s Economy. “It’s about innovative ways to tackle a problem and find a solution for it.

“You don’t necessarily have to be born with creativity. Many people have the potential to be creative; it just needs to be nurtured and strengthened. Right now we’re in an exciting place of both invention and reinvention. While you don’t have to reinvent the wheel, you do need to tap into creativity to stand apart, gain traction, and grow your business in an ultra-competitive environment.”

Jensen offers these tips on how entrepreneurs can become more creative and solve problems as a result:

Be prolific – and patient – with ideas. When the proverbial light bulb goes on, it doesn’t always mean the entrepreneur has had an epiphany that will lead to riches. “If you want a good idea to start a business and build it, the most important ingredient is the love of many ideas,” Jensen says. “Because very few ideas are actually good, so you will need the patience to sort through many of them.”

Learning how to habitually plant the seeds to create ideas is the key, he says.

“Take the time to daydream on a regular basis,” Jensen says. “Visualize all the places an idea can take you. See all the people it could help. We’ve been conditioned to think we’re wasting time when we sit idle and daydream, but it is exactly the opposite. Having quiet time to clear your mind and think freely opens the mind to great possibilities.”

Collaborate; don’t make it all about your own brainstorm. Jensen says the typical novice entrepreneur will want to file patents and rent out office space as the rush of a new idea takes over their imagination. But he cautions, “Don’t be foolish about your idea; it needs time to prove itself worthy of an investment.”

Engaging others around you in discussion about the idea is imperative, Jensen says, because it results in different viewpoints, new angles, and perhaps a more refined idea that can work.

“Collaboration that drives a company forward includes the sharing of and disagreement over ideas,” he says. “It’s the vigorous discussion, the opposing voice that helps refine and improve ideas. An effective partnership stimulates creativity and builds trust among team members that each is encouraged to contribute creatively.”

Stay focused. “It’s easy to waste time with too many ideas that are not going to work for you and your business,” Jensen says. “Know your company’s North Star – its mission statement – and what it needs to succeed. Does your idea align with your North Star? Adapt the solution to the problem. Shift negative thoughts into a positive mindset to provide concentration and clarity.”

“Your success as an entrepreneur is largely contingent on your ability to solve problems effectively,” Jensen says, “and the best tool you have is your creativity, and knowing how to cultivate it and harness it.”

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Jarl Jensen (www.jarljensen.com) is the ForbesBooks author of The Big Solution: Deactivating The Ticking Time Bomb Of Today’s Economy. He’s the founder and president of Inventagon, a company creating simpler research and development solutions for organizations across the globe. Jensen holds patents for medical technologies that have reached sales of over $1 billion. He founded EuroMed, a company he sold in 2016, and has written five books about the economy and its relationship with society.

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5 Ways To Strengthen Your Business Relationships And Grow Your Company

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Another record year for entrepreneurship could be in store for 2022. But how many of these new business owners end up succeeding will depend on more than the quality of the products and services they offer.

Creating and nurturing customer relationships allow businesses to offer a more personalized and enticing customer experience, which produces the buyer loyalty that is vital to a company’s long-term success, says James Webb (www.jamesharoldwebb.com), a successful entrepreneur in the medical and fitness sectors and author of A Country Boy’s Journey To Prosperity.

“Relationships are the greatest asset an entrepreneur has,” Webb says. “To retain customers, it requires a process that turns every touchpoint with a customer into an opportunity for communication, trust, and mutual growth.”

But Webb emphasizes that an entrepreneur’s success is also highly contingent upon the strength of other business relationships as well.

“Good relationships with employees bring new meaning to work, strong productivity and new ideas that carry the business forward,” Webb says. “Relationships with financial partners allow you to take risks. Mentors and colleagues can help you view strategy and processes through a different lens.

“The more you cultivate all of these business relationships, the more you, they, and your business can grow. But you can’t take them for granted. Relationships are gardens that need tending.”

Webb offers these tips to entrepreneurs on how to strengthen their relationships with customers and other business associates:

Invite customer feedback. Webb says to truly know where your company stands with customers and what you can do to improve and better meet their needs, you need to survey their thoughts about your products and services – ideally in person. “Most of the time unsatisfied customers don’t approach you with a detailed list of things they’d like for you to improve on,” Webb says. “They just leave for one of your competitors. So set aside time to get their feedback and show them you care.”

Make your customer feel valued through the entire experience. “Consider the customer experience from start to finish,” Webb says. “Find opportunities to go the extra mile and make shopping with your company enjoyable. Positive words will spread like wildfire about your business, especially on social media, and remember, negative words can spread, too. Make customers feel they’re a part of something special by making them feel special.” A key part to the customer experience equation, Webb notes, is providing good website content that gives them insight and a quick path to solutions.

Encourage a sense of ownership among your employees. Webb says giving employees a voice in major decisions, more responsibility and allowing them to own stock are ways to create a sense of ownership and strong ties between your employees and your business. “Inspiring your employees to love your business as much as you do will strengthen your company’s foundation,” Webb says. “Your business will be that much more likely to survive setbacks and grow.”

Be generous with compliments. “Employees know you can’t give them a raise every time they do a good job, but recognizing them when they do good work makes them feel appreciated and goes a long way toward making them want to stay at your company,” Webb says.

Value your vendors. People who service your company regularly are a big part of the infrastructure that keeps your company rolling. “Treat them like honorary employees,” Webb says. “Everyone from your suppliers to your web designer is an important part of your extended team, and nurturing these relationships with nice gestures and consistent communication will just make your company stronger from the ground up.”

“It’s critical to be humble enough to understand that you need great relationships to succeed as an entrepreneur,” Webb says. “I’ve seen talented people fail because they thought they could do it alone.”

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James Harold Webb (www.jamesharoldwebb.com) is the author of Redneck Resilience: A Country Boy’s Journey To Prosperity. His career in radiology saw him rise from a technologist to becoming a leader in the industry as the entrepreneur of several companies focused on outpatient medical imaging, pain management and laboratory services. In 2014, Webb turned his attention to the fitness sector and developed, owned and oversaw the management of 33 Orangetheory Fitness® franchises throughout North Texas. They were all sold to a private equity group in 2019. He currently owns the franchise rights for Dallas, Austin and Houston for BeBalanced Centers, a homeopathic hormone weight-loss franchise. His team has three stores open with plans for another 15 to 20 over the next four years.

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What Every Small Business Should Be Implementing

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The majority of the difficulties associated with establishing a business stem from failing to accomplish the small things correctly. The basics will lead you to the top, as any competent instructor has stated at some time.

If you’re thinking of starting a small business, make sure you follow these 10 small business rules:

1. You must keep track of your finances.

Lack of capital, is the leading cause of small business failure. You must undertake proper financial planning and fully comprehend the business levers that might affect your cash flow.

Do you purchase stock?

-What amount of cash should you have on hand?

-Do you have a system in place to collect money from clients?

-How long do you have to wait for them to pay you?

-Do you have any loans that you need to repay?

-Do you rely on suppliers whose prices fluctuate according to market conditions?

2. You must create a data-driven culture.
The better your business decisions are, the more data you can track and utilize to make them. Business often necessitates certain “intuition feel” judgments, but it’s preferable to provide your instincts with as much knowledge as possible.

Tracking your company’s key performance indicators (KPIs) and understanding why they rise or fall may help you make decisions that will help you develop and stay on track.

3. You must participate in Lean Planning.

Rather of creating a long-written document that you utilize once and then file away, it’s critical to create a strategic and financial plan and track it on a frequent basis.

Planning is a continuous tool that should be used to understand the assumptions you have about your business and whether or not those assumptions are valid, or whether you need to make changes and adapt your assumptions.

60 percent of small companies in America fail due to a lack of cash, not a lack of profits—by utilizing Lean Planning, you can rapidly determine if you have made any financial assumptions that will have a negative impact on your cash. Maybe you assumed you’d get paid every 30 days on the dot.

By engaging in ongoing planning and then tracking the actual results of your business against your plans, you can quickly determine if you are getting paid every 45 days, and if so, you can increase your credit line quickly and appropriately, keeping your business cash healthy—before you get into trouble.

4. You must have a strategy in place for attracting and keeping top employees.

We are continuously on the lookout for top talent in our industry, therefore we make it a point to follow talent in our region on a regular basis and design outstanding retention programs and rewards.

Take some time to consider your company’s culture and what you want it to be, and make sure that culture is factored into your recruiting selections. We utilize LinkedIn on a daily basis to follow and acquire talent.

5. Every day, you must listen online.

Even if you just operate from 9 a.m. to 5 p.m. Monday through Friday, your business is “always on.” Every company should set up internet alerts to monitor what their customers are saying about them, their rivals, and the market in general.

Google Alerts is a fantastic (and free) tool for “listening” to what’s going on online. Be the first to know when a consumer leaves a negative review or when someone praises your company online. Use these methods to remain ahead of the conversation and capitalize on it. You need to get a business phone number too.

6. You must engage in marketing that generates a return on investment.

Small companies frequently tell us that they have no idea what marketing is. What should they spend their money on? Is it effective? Is it better to promote on the radio or on the internet? Should they believe the Groupon or Comcast salesperson who tries to persuade them to distribute discounts to the general public or buy local TV ads? What is it that works?

What does not work?

Small company operators should begin in venues that are both free and simple to access. Begin by forming relationships with local companies and company owners. Find out what it is that they do that is effective. Find out how visitors find your website and where they come from by using Google Analytics and your website.

Customers should be questioned about how they learned about you. And if you do decide to promote, make sure you know how to track it. Make a unique offer and keep track of it. Only provide one type of service or product. Repeat your successful marketing efforts after learning what works and what doesn’t. If you won’t be able to measure the results, don’t invest the money.

8. You must communicate with your clients.

Every company should communicate with its clients as frequently as feasible. If you own a retail store, talk to your customers at least once a week (if not every day). Discover what they enjoy—and what they despise.

If you own an online business, send a brief survey to your consumers or ask a few survey questions after they check out. Make a call to them. People enjoy talking and being asked for their viewpoint. Negative feedback might be difficult to hear, but it’s important to hear it and understand how you can improve your business for your consumers.

9. You need to know your competitors.

Both your direct and indirect rivals must be known and understood. You should always be aware of your rivals’ activities, including what they are doing, how they promote, and how they price their products.

You may be the only one of your kind in your town or sector, but that doesn’t mean you don’t have indirect competition. In my town, a small do-it-yourself tie-dye store has no direct competition.

They do, however, provide activity-based events and compete with all of the other businesses that host birthday parties and group activities. They also compete with other tie-dye merchants at Saturday Fairs and Markets. Even if they don’t have direct competition, they need to know how to position themselves against all of their indirect competitors.

10. You must have a larger goal in mind: a mission.

People like to work for companies that are more than a simple money-making machine. That isn’t to say that you can’t set sales or profit targets; it only means that if your employees believe they are part of a larger purpose, they will work harder and be more loyal.

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Boomerangs: What Both Sides Should Consider Before Working Together Again

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After months of the “Great Resignation,” another workforce trend is developing – ”boomerang” employees, or those who are returning to companies they left.

In some cases, businesses are pursuing former employees to rejoin them; in others, ex-employees, either unsatisfied with a new job or having been on the sidelines a while, are seeking a return to their old workplace. The reacquainting process in interviewing and rehiring can mean some awkward moments, and for both company leaders and ex-employees, there are important considerations before deciding to work together again.

Boomerang employees can be a powerful force for your company if they come back for the right reasons. If they found the grass was not greener on the other side, a boomerang employee may be your biggest advocate on culture. They save companies time and money in the usual recruiting process and strengthen the business because they’re a known commodity.

And for returning employees, there’s often a renewed sense of appreciation for where they work and whom they work with. They feel more appreciated. But it can be dicey if issues that led to them leaving are still there.

Here are some tips for former employees when considering a return to a company, and also some advice for leaders when weighing whether to bring a former employee back:

For the returning employee

Do your homework. It can be a good thing to go back, but only if the company addressed whatever issues caused you to leave in the first place. If it was leadership, have they fixed that? It’s important to do your homework to find out what changes have been made that would encourage you to want to work there again.

Ask your employer the hard questions. Employees should feel comfortable asking tough questions, such as, “What steps have you taken to make sure I won’t dread coming to my job anymore? Why won’t you allow more people to work remotely? How have you improved the work culture since I left?”

Sell them on the benefits of rehiring you. New employees take both training and time to ramp up at a new job. When ex-employees pursue a job at their old company, they should emphasize their track record with the company and their familiarity with processes and people – strengths that save the company time and money to recruit and interview other candidates.

Be prepared for changes. The job the employee left may have changed, thus when that person returns to his former employer, they may be reporting to new people and using new processes. A real selling point about an ex-employee returning is that person embracing flexibility and having added skills that make them even more valuable. They should promote those while being prepared to view their old job with new eyes.

For the employer

Sharply focus interview questions to determine compatibility. Most importantly, the company needs to identify why the employee left the first time. Do those issues still exist? The leaders should ask specific questions related to the ex-employee’s recent experience and about their whys regarding returning. Have they added a new skill set that makes them even more valuable? If any prior issues with the company are resolved, does the leader sense a long-term commitment this time?

Don’t be desperate. Although numerous companies are struggling to fill open positions, it’s important that the company doesn’t get desperate because of hiring needs and welcomes back a toxic employee. As much damage as they did the first time they worked for you, it will be multiplied by 10 times if a high-performing employee watches the company bring someone back who underperformed and caused issues the first time they were there.

Don’t make it all about money. While many companies are increasing pay packages to find high-quality workers, that shouldn’t be automatic when welcoming back former employees. That could alienate other employees who stayed with the company and have not gotten increases. For the return engagement to work, it can’t all be about money and benefits. It’s important to find out what it is about their overall workplace experience that will help keep them there. Is it a more specific career growth plan, or working from home?

In the movies, they say the sequel is rarely better than the original. But the second time around can be better for boomerang employees and their employers, as long as both sides are upfront and appreciation is equal.

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Eric Harkins (https://ericharkins.com) is the president and founder of GKG Search & Consulting, a Minneapolis-based consulting firm that helps organizations acquire and retain top performers. He is the ForbesBooks author of Great Leaders Make Sure Monday Morning Doesn’t Suck: How To Get, Keep & Grow Talent. During his 25-year career in corporate America, Harkins has held leadership positions ranging from manager to chief talent officer and chief administrative officer. He is a motivational speaker, executive coach, and an expert in helping companies create a culture that high performers want to be a part of.

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Your Business Needs Insurance

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Many startups perceive insurance as a luxury, shelving it until they are further along in the company’s lifecycle. However, any business serious about sustainable growth should not postpone this decision.

There is always a risk is involved in the process of starting and growing a company. Having adequate insurance is key to the success of your business and an issue every business owner needs to consider. Business insurance for startups provides valuable protection against the unexpected. Without coverage, threats like theft, fire, data breaches, or lawsuits could disrupt or damage your business.

Once you understand how insurance is vital to your business, you will be better positioned to determine how much of it you need. Business owners must weigh the cost of insuring against various risks and the economic impact of an uninsured loss.

Running a business comes with inherent risks. Protecting your assets is important, yet many new companies often have insufficient insurance. How much insurance should a new business owner secure, and what are the liabilities for being uninsured? That all depends on the needs of the business.

The startup ecosystem is diverse and may or may require different types of coverage. For example, startups that work in the software area will have to protect themselves most from client lawsuits alleging professional liability. Startups working in biotech, proptech, or fintech face constantly changing and often unclear regulatory requirements may need to focus on compliance first.

Thoughtful diligence is needed during the process of deciding on the type of business insurance your startup needs. What kind of insurance best fits your startup? What is the appropriate amount of coverage? Do I need insurance this early in the game? Below are a handful of reasons your business should have insurance:

The Law Requires it

The Law requires businesses with employees to have certain types of insurance: Unemployment, workers’ compensation, and disability are a few.

Failure to carry required coverage could result in fines, penalties, and “cease and desist” orders.

You Could Get Sued

If a liability claim or a lawsuit is filed against you and your business is without insurance, there could be serious and very costly implications. Even winning could cause you to go out of business due to the cost of legal defense. Liability insurance allows you to concentrate on what you do best, running a profitable business.

Insurance Keeps You Up and Running

What happens if your business is affected by an earthquake or flood? P&C insurance covers loss of property, equipment, etc., income lost during a business closure. Business Owners Insurance (BOP) can play a critical role and help a company survive protecting against income loss. BOP also compensates for everyday operating expenses you may have otherwise incurred during that time. Some companies choose to insure lost income and include protection to pay employees for up to 12 months.

Required in Contracts

Some variables come into play when it comes to insurance and contracts: If you lease or rent, the landlord’s policy may not cover you, and you may need to carry insurance. The loan agreement likely contains an insurance requirement if you borrow money to finance buildings, equipment, or operations. Client contracts could specify that you carry insurance.

Common types of insurance businesses should consider:

Workers’ Compensation Board (WCB)

Your business is growing. How do you know if it is time to protect it with workers’ compensation insurance? Most business operations will be required to have workers’ compensation coverage. This covers workers’ medical and wage-loss costs if an employee is injured or contracts an occupational disease while on the job.

Directors and Officers Insurance

D&O insurance is for businesses that are incorporated. In general, D&O insurance provides coverage against the wrongful acts committed by directors and officers. Are you looking to raise money? Many institutional investors, such as venture capital firms, stipulate that a D&O policy must be in place as part of the term sheet before the financing is complete.

Employment Practices Liability Insurance: As your company begins hiring, consider EPLI Insurance. EPLI protects your company from employment-related lawsuits such as sexual harassment, discrimination, wrongful termination, and more.

Technology Errors & Omissions Insurance: A startup providing professional services based on professional expertise should consider E&O insurance which protects against claims that allege damages arising from technology services you have provided. Your customers and partners may even require it.

Fiduciary Liability Insurance: If your company offers employee benefits such as health insurance, stock options, and other benefits, you probably have a person responsible for handling these benefits. FLI protects your company and your employees if someone responsible for these benefits makes a mistake for which they can be held liable.

No company owner can predict what might happen down the road. In a perfect world, natural disasters, injuries on the job, or lawsuits never came to pass, but there is no guarantee that such things won’t happen. For that reason alone, it’s best to have your company insured.

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André Thiollier is a partner with Foley & Lardner LLP

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How to Make Supply Chain Employees Feel More Invested in Their Work

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Supply chain operations typically involve a lot of long hours and repetitive work. That can make it difficult for employees to feel invested in their jobs, leading to errors, lower productivity and burnout.

If supply chains want to optimize their operations, they can’t overlook employee investment. Here are eight ways that management can encourage their employees to invest more in their work.

1. Help Workers Reach Their Own Goals

One of the best ways to get workers invested in the company is to invest in them first. Management should start by helping employees define and pursue their personal professional goals. This will show that the company cares about their development and is willing to put effort into it, encouraging reciprocation.

This process starts with talking with individual employees to help quantify their specific goals. Studies show that those with defined goals are ten times more likely to succeed than those without them. After that, management can create progress charts to monitor growth, encouraging hard work from employees and pushing them to their full potential.

As workers strive toward their individual goals, they’ll become more invested in their day-to-day work. The company as a whole will benefit as a result.

2. Provide Paths for Upward Mobility

Another crucial factor for employee investment is career advancement opportunities. Just 29% of surveyed employees say they’re satisfied with their workplace’s opportunities for career advancement. If workers don’t have anything more to reach for, there’s not much reason for them to invest heavily in their performance.

By contrast, if there are plenty of paths for upward mobility, employees will have the motivation to work harder. Supply chain organizations can promote from within rather than finding outside hires for upper-level positions. That way, workers will know that they can work their way up, encouraging them to invest in the business.

3. Enable Lateral Movement

In that same vein, supply chain organizations should also enable lateral movement. In addition to being able to move upward, workers should be able to change areas or departments. This will help keep satisfied, productive employees if they decide they want a career change or to apply new skills.

Some workers may start to feel burned out in their current role but have skills and interests that apply to another. Letting them change jobs to work in another department could help them find work within the company that compels them. When employees can find the role that fits them the best, they’ll invest more in their job.

4. Reward Investment

Some strategies to help supply chain employees feel more invested are remarkably straightforward. By rewarding those who invest more heavily in their work, employers can motivate employees to do so. Management should establish a system for rewarding hard work, such as productivity bonuses or an employee of the month scheme.

Monetary incentives are particularly powerful, but they’re not necessary if they’re outside a company’s budget. In one survey, 37% of workers said that more personal recognition would drive them to produce better work more often. Recognizing professional and personal achievements, especially in front of others, can provide the encouragement employees need to feel invested.

5. Be Charitable

Another way to help employees feel more invested is to create a company spirit that they want to invest in. If employees can see how their work contributes to a cause they care about, they’ll be more willing to put more into it. Supply chain businesses can foster this by donating to charities or helping local organizations provide community services.

It’s important to ensure these efforts go beyond one-time actions. They should be ongoing, in-depth initiatives so workers know they’re contributing to meaningful change, not just a publicity stunt. For example, some organizations donate profits to education departments, as well as partner with education organizations. This broader but still unified scope helps make a more substantial impact.

6. Be Sustainable

Another way that companies can help employees contribute to things they care about is through sustainability. Since transportation is responsible for almost a third of all greenhouse gas emissions, supply chains often have considerable carbon footprints. Embracing sustainability initiatives can help make up for this and encourage more investment from employees.

Investing in electric vehicles or renewable energy infrastructure can help supply chain companies become more sustainable. As these efforts grow, workers will see that their efforts within the company contribute to a greener future. Publishing sustainability goals and achievements will help raise awareness and drive further investment from employees.

If possible, try to tie these directly to workers’ achievements. That way, employees will have more concrete encouragement that their actions lead to more eco-friendliness.

7. Organize Team Building Events

Even if companies follow other steps, employees will struggle to feel invested if they feel distant from their coworkers. Businesses can fix that issue by planning regular social events to help build a more communal spirit. When employees feel closer to their coworkers, they’ll feel more engaged at work, driving more investment.

These activities don’t have to look like traditional corporate team-building exercises. They can be as simple as an after-hours party where management provides food, drinks and activities. The more casual and less work-related these feel, the better, as that will help develop closer, friendlier relationships.

8. Listen to Employees

Finally, supply chain organizations should seek employees’ advice on what would help them feel more invested. If management doesn’t take the time to listen to workers’ feedback, the employees will feel undervalued and won’t put in as much effort. Employees may also have good insider advice for the company, so regular surveys can fuel ongoing improvements.

Workers should have an accessible, always available means of giving feedback. While 64% of HR leaders think such a tool is essential, only 20% have one in place. Creating an HR chatbot or comment box is a simple fix that will help employees feel valued.

It’s important to follow up on these comments, too. Asking for feedback won’t lead to any meaningful change if management doesn’t also act on it.

An Invested Workforce Will Drive Success

When supply chain workers feel more invested, they’ll give more to the company. They’ll be more productive, produce higher-quality work and foster more positive workplace relationships. In an industry that can easily become dull and disenchanting, those benefits are impossible to ignore.

These eight steps can help any supply chain business motivate and encourage its employees. They’ll invest more heavily in their work as a result.

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8 Effective Strategies for Increasing Engagement Among Supply Chain Employees

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Even in heavily automated fields, employees are the lifeblood of any company. Many supply chain optimization strategies focus on new technologies and workflows, but any effective measure must also consider the workforce.

One of the most important factors to address is employee engagement. Without an engaged workforce, no supply chain will operate at its full potential.

Why Is Engagement Important?

Engagement, the degree to which employees feel motivated, interested and passionate, is hard to quantify but essential to success. Studies show that highly engaged teams are 21% more profitable, exhibit 59% less turnover and 41% less absence.

Despite those benefits, many companies fail to engage their employees. As of January 2021, just 39% of U.S. workers reported being engaged at work. While that figure has risen over time, it still indicates that most employees don’t feel motivated in their workplaces.

In a field like supply chain operations, where efficiency is crucial, businesses can’t afford to overlook this data. Employers must keep supply chain workers engaged, and here are eight strategies to do so.

1. Invest in Employees’ Careers

One of the most important steps to take is to emphasize career development. Surveys show that 94% of employees will stay at their company longer if their employer invested in their career. By contrast, if workers feel like they have no opportunities for advancement in their workplace, they’ll become dissatisfied, eventually leaving.

One solution is to provide opportunities for upward mobility within the company, promoting from within. Another is to offer career development classes or training, equipping workers with new skills. Whatever path a company takes, it should emphasize and promote these opportunities.

2. Listen to Employee Feedback

Another effective strategy for increasing engagement is to listen to what employees have to say. Workers will quickly become disinterested and disillusioned if they feel that management doesn’t care about their opinions. Asking for feedback can help assuage those feelings, but it’s important to go a step further, too.

Businesses must respond to employee feedback, not just request it. If common threads emerge between workers’ suggestions or complaints, there’s likely an underlying issue that needs addressing. Management should take all feedback seriously, thanking employees for it first, then investigating it further. If meaningful change comes from this feedback, companies should highlight it.

3. Create Volunteer Opportunities

Engagement often stems from workers’ respect for the company or a feeling like they’re making a difference in their role. One way to lean into that is to coordinate volunteer opportunities for employees to give back to their communities. In a 2017 survey, 74% of employees and workers said that volunteerism improves their sense of purpose.

Management should look for opportunities to partner with local charities or organize volunteer initiatives. It’s also important to encourage participation, partly to involve more workers and partly to show enthusiasm for the project. Hosting projects like this at least once a year can help employees feel they’re part of something bigger, improving morale.

4. Host Social Events

Volunteer opportunities aren’t the only events outside of work that can boost employee engagement. Social events like parties, potlucks and trips can give workers a chance to grow closer to one another and their leaders. As employees build closer, healthier social relationships within the workplace, work will begin to feel more cooperative and engaging.

Listen to employees to gauge what types of outings and events would interest them the most. Hosting various social events throughout the year can help appeal to different workers, ensuring no one feels left out. In nearly all settings, providing food can be effective, so find people-pleasing recipes to bring.

5. Recognize Commendable Performance

One of the primary goals of boosting engagement is to get employees to perform to their full potential. If companies don’t recognize and reward exceptional performance, they can’t expect workers to strive for these goals. Conversely, if management shows their appreciation for commendable work, more workers will feel motivated to perform better.

In some circumstances, simply highlighting a job well done to other employees is enough to motivate workers. Offering tangible rewards for meeting certain performance goals may be even more effective, as it gives something concrete for employees to work toward. These rewards could be cash bonuses, extra paid time off, gift cards or anything else that workers would want.

6. Pay Attention to Worker Health

Another effective employee engagement strategy is to emphasize worker health. Employees will have an easier time engaging with their work if they feel their company cares about their wellbeing. In supply chain operations, this should include measures to prevent injury, but sponsored workout classes or fitness goals are also good ideas.

Considering one in five American adults experience a mental health issue each year, this strategy should include mental health. Businesses should emphasize the importance of looking after emotional wellness and offer related solutions. Counseling services, support groups and other measures can help assure workers their company cares about them.

7. Remove Inefficiencies and Complexity

Some factors affecting employee engagement aren’t as immediately apparent. One impactful yet relatively easy-to-fix obstacle is inefficient or overly complicated workflows. If employees have a hard time understanding what they’re supposed to do or face multiple obstacles doing it, it will be hard to remain engaged.

The solution to this issue involves two main areas of focus: training and workflow adjustments. More comprehensive, involved training can help workers understand their tasks better, removing mental roadblocks to engagement. Removing unnecessary complexity or inefficiencies in a workflow will then help employees focus on value-adding work, maintaining engagement.

8. Lead by Example

Finally, it’s important for supply chain management to embody the company spirit in their own work. Workers won’t likely exhibit much engagement if the leaders they see don’t appear motivated or passionate about their work either. By the same token, if company leaders are enthusiastic, positive and driven, it will inspire others to be the same.

Studies show that 50% of all workers have left a job at some point because of a bad manager. What constitutes a “bad” leader may vary between people, but leaders saying one thing and doing another certainly won’t help. Anyone in a leadership position in supply chains must lead by example.

Engaged Employees Are Productive Employees

Supply chains become far more efficient with engaged employees. If logistics companies can follow one or more of these eight strategies, they can engage their workforce on a deeper level. They can then maximize their human potential, mitigating workforce issues that plague the industry.