Financially Speaking / Home RSS Feed

By Renata Sternfeld-Allon

Sometimes, small business owners can hurt their own businesses without being aware of it. They do so by creating complexity and taking the focus away from conducting the business, to reporting about it.

It’s a known fact that a directive issued by the boss which trickles down the levels of employees can create more harm than good. Every level down, the directive gets more and more demanding. If the boss says “I’d like to see the numbers,” the first level will say “The boss needs to see…” then, “The boss demands to see…” and so on and so forth. By the end of the day what was asked as a friendly, non-committal request, ends up sounding like a strict demand.

Ron Ashkenas tells a story that illustrates the process in his article in Harvard Business Review. He asked hundreds of managers a few questions: Does the complexity of the business make it difficult to meet client’s needs? Does the complexity cause dissatisfaction from employees? The answer to both questions was yes.
If so, he asked, who causes that complexity? After a short silence, most managers admitted that occasionally they are the ones responsible.

To illustrate this process Ron Ashkenas tells a story; a president of a large company asked his CFO to produce a weekly, nonfinancial, activity report. The CFO asked each of the directors of this multi-branch company to give him a few highlights of the week’s activity. Most of the directors asked their subordinates to do the reporting, and it trickled down to many levels.
Before long, people in the organization were busy producing those reports, and thinking of creative ways to say that nothing is really new. As the report went up again, each of the directors, wanting to look good, embellished it or reproached his subordinates for not making the report look good enough. Soon many people in the organization were busy producing that report instead of producing income for the company.
The president, of course, was oblivious to what was going on. After all he asked for a simple, nonfinancial, report.

The problem was that none of the levels of employees asked what the president was really after. Each wanted to look good to his boss, to appear productive and none of the heads of departments thought they might do the report themselves without input from their employees. The process took a life of its own.

What to do? The solution is not simple – we all need reports, especially if the business is growing and we do not have daily contact with all the departments. The challenge is to make all those invisible source of complexity more visible.

You can read more about it in Ron Ashkenas’ book “Simply Effective” and learn how to reduce complexity in your business.

Image thanks to http://www.flickr.com/photos/13053707@N00/102413554/

Share and Enjoy:

By stella

Over the course of 2010, there is one thing that visitors to ZippyCart.com keep asking us about, and this is which ecommerce software solutions have social commerce tools that they can use to better market their online store. At the beginning of 2010, the social commerce tools available to most merchants via their ecommerce solution provider were very limited, but now the top companies in the space are offering a good mix of social commerce tools. Ecommerce merchants are very concerned about marketing their online store, and they’re constantly on the lookout for the latest and greatest tools to keep them on the cutting edge. The best ecommerce software companies are aware of this desire, and this is why, over the course of this year, they have continued to introduce social commerce tools to meet the needs of their merchants. However there is still 4.5 months left in the year for these ecommerce companies to improve their tools so that they can be atop the pack in 2011 when merchants start to review if their current ecommerce platform is still the best choice to power their online store.

Why Social Commerce?

Social Commerce is a constantly evolving niche as new techniques and methods are being experimented with so merchants can figure out how to best way to expand the reach of their online store. Some of the ecommerce software companies leading the way right now are 3dcart, BigCommerce, Volusion, and CoreCommerce. These companies provide a variety of social commerce features, but two stand out from the crowd. First is the ability to include the addthis button on your site, so that people can quickly share your products on a variety of social bookmarking sites. Additionally they all provide merchants a way to setup some sort of ecommerce storefront on Facebook and other social networks, so that they can generate revenue from other marketing channels. The ability to sell directly on Facebook is different than just using a Facebook shopping cart app. Instead, all of a merchant’s Facebook sales directly integrate with their ecommerce platform, making it very easy to manage sales throughout channels.

Since the niche is so new, there is still a lot of room for innovation and improvement, and ecommerce software companies are all competiting to ensure that they provide the best social commerce tools possible so that their merchants can be successful. Two things that we see becoming key for merchants demanding social commerce tools, are more automation so that merchants can focus on other tasks, and more advanced ways to utilize Twitter. While it is great that ecommerce solution providers offer social commerce tools, merchants have little time to test out new strategies, and want things to be more automated so that they do not have to spend too much time managing multiple stores. Current Twitter tools from ecommerce software companies are a bit basic, and none that we know of have tools like Wishpot offers in their social commerce platform. They allow a merchant to sync up their product feed to Twitter, and define parameters around price drops, sales, and new items. After a merchant sets this up, they then can control the frequency of tweets, and the platform takes care of automatically tweeting products from the feed that match the criteria set by merchants.

The bottom line is that social commerce is now a must for most merchants, as they need to be able to engage with customers via a variety of mediums outside of pay-per-click search and SEO. As the holiday shopping season draws near, merchants should begin to examine how social commerce fits into their social media marketing strategy. If your ecommerce software does not have any social commerce tools, then you should request them now, and in the meantime review other 3rd party companies in the space to see what they have to offer.

About the Author: Nick Grant is the co-founder of ZippyCart.com, the Internet’s leading ecommerce software review website. Merchants in search of a shopping cart to power their online store turn to ZippyCart to read shopping cart reviews and compare the best ecommerce solutions in the industry and determine which option is best for their needs.

Image thanks to http://www.momisteaching.com/

Share and Enjoy:

By Renata Sternfeld-Allon

New bank overdraft regulations that went into effect August 15, 2010 may cost banks billions in lost revenue according to guess who: major banks. Research firm Moebs Services estimates overdraft brought banks $37.1 billion last year, as reported in The Washington Post.

The new rules may help small businesses that are dealing with tight cash flow and were slapped with huge fines. Here are how the rules were before the new regulation:
Let’s assume your bank account shows you have a few hundred dollars in your account. You buy a cup of coffee, you buy stamps, you maybe have lunch. You paid for all of those with your debit card.

A few days later you discover you are overdrawn by hundreds of dollars. How could that possibly happen when you had a few hundred dollars in your account? Quite simply, banks decide which withdrawals they post first. Let’s assume a check you gave a month ago was just now posted into your account, or a recurring automatic payment you forgot about went through.

Regardless of the dates, the bank posted your big check first. That brought your balance to zero. All the other withdrawals, small as they may be, now appear after it. Instead of paying overdraft on one big withdrawal, you now pay for all the small ones – with a fine. The cup of latte for which you paid $3, has now a fine of $37. A few of those and now you owe the bank hundreds of dollars.

This was one of the ways the banks made a lot of money with an unfair but legal practice, and that is one of the problems the Dodd-Frank Wall Street Reform and Consumer Protection Act addresses.

According to the new rules, the banks have to give their customer the option to enroll in overdraft protection or opt out. But many economists fear the new rules are not spelled clear enough, so here they are:

The customer can decide if he enrolls in the program and has the bank honor all of his debit card withdrawals regardless of whether there’s money in the account. Overdraft charges will be accompanied with a fine. If the customer opts out, banks will not honor debit card payments when there’s not enough money in the account to cover them.

The FDIC admits the complaints about overdraft abuse doubled from 2008 to 2009, prompting the agency to write guidelines that include small banks as well. They say the banks have to limit the number of times an overdraft accrues by limiting the dollar amount or the number of times the fee can be slapped, a provision that is not included in the bill, and they call to review the order in which bank post the withdrawals.

What worried bank critics is the idea that the bank will now look for other inventive ways to make up for their lost revenues. Legislation takes years and until the public catches up with the bank shenanigans, the customers lose.

Image thanks to http://www.flickr.com/photos/7578081@N07/2585039824/

Share and Enjoy:

By stella

Usually, hearing “no” is the end of the road when you’re making a pitch. However, being at the end of the road is infinitely better than being in limbo with a “maybe.” Who wants to have their time be wasted by prospective clients or investors who have no intention of working with you? Here are three steps, as recommended by HBR, to get a definitive “no” instead of a willy-nilly “maybe:”

1) Be crystal clear about the ask- Make sure to fully disclose what you’re asking for, people may say no because they’re simply unclear about what is being asked.

2) Set a deadline-This way, they know that their is a define time in the near future at which point a decision must be made. No buts about it.

3) Learn to understand silence- People hate saying no, and will sometimes opt to not say anything at all. Helpfully asking a question when you hear the silence will put the naysayer at ease, enough so that they can more easily express their genuine decision.

Be clear about your request. People often say maybebecause they are confused about what you’re asking of them.
Set a deadline. When meeting a prospective investor, buyer, or customer, explain when you need a decision. A deadline can yield a quicker yes or no.
Know when silence means no. People hate to say noas much as you hate to hear it. When you sense that your audience is going to say no, but hasn’t built up the courage to express it, provide an out. Something as simple as, “I assume it’s a pass for now?” can help the other party be definitive about its decision.

Image thanks to http://www.aboutfreelancewriting.com/2009/07/constructive-criticism-works-put-downs-dont/

Share and Enjoy:

By Renata Sternfeld-Allon

Most small business owners have a lot of great ideas about running their business and how to make it more profitable. But some of us find that those ideas overwhelm us, crowd and confuse us sometimes. How do you know when your ideas are good and when you should act on them?

Rhonda Adams says that the biggest problem facing small business owners is lack of focus, and she has some suggestions, in a USA Today article, of how to organize your ideas and check if they are worthy.

1) Write your ideas down.

As long as they are circling in your head, they are just bothering and cramming your brain. They might distract you or even freeze you. When you set out to write them down you achieve two goals: While writing down the details, you’ll often find that the idea is not completely formulated. Having it down on paper enables you to look at all aspects, even those you skipped.

The other great thing about writing ideas down is that you move them out of your head. You have a sense of achievement for formulating them on paper, and when you stop obsessing about them, there’s more room to think of other things.

2) Create an idea book.

Dedicate a folder, binder or a computer page to ideas brought up by your employees, coworkers or something you thought about. Make sure everybody knows of the existence of this place for new ideas.

Once a year or more often if you like, sit with your coworkers and go over that file. You might find that some of the ideas that looked brilliant 6 months ago are not that brilliant now. On the other hand, you may find that some seed of an idea can improve your product, service, marketing or a new concept.

When you have a new product out and you get feedback or suggestions for improvement from your customers, write it down in a dedicated book. When the time comes to improve the product, you have all your notes in one place and you won’t forget anything.

Having a dedicated book for events is helpful as well. When you go to a trade show, carry it with you. Attach the business cards of businesses you are interested in and add your immediate remarks. When you are back in your office, you have all the information in one place and your remarks can enlighten you to your potential customer’s reactions.

It takes focus and discipline to succeed in today’s marketplace. Make it easier on yourself by getting organized and leaving room in your head for other important business decisions.

Image thanks to http://www.burnthefatinnercircle.com/public/images/great_idea(small).jpg

Share and Enjoy:

By stella

The Cinese e-Business Research Centre released a report announcing that internet sales in China have increased 60% in the first half of 2010. Last year, total e-commerce sales equaled 3.6 trillion Yuan ($350 billion), while the first half of 2010 boasts a total of 2.25 trillion Yuan ($331.3 billion). Growth is set to keep rising as more people gain internet access, and thereby become e-commerce shoppers (about 1/3 of Chinese internet users).

Don’t think this has gone unnoticed.

The release of the report comes hand in hand with MasterCard’s announcement of acquiring DataCash for $520 million. MasterCard’s aim in the acquisition is to drive its e-commerce expansion into the Asia-Pacific area, Europe, and Australia. (not to mention rival Visa’s recent acquisition of CyberSource) DataCash serves as an all-encompassing interface for e-commerce merchants, giving them the ability to process payments across the globe. They develop and outsource electronic payments solutions, alternative payment choices, fraud alerts, and back-office reconciliation for merchants.

Moreover, it seems that MasterCard is making a big statement: while Visa’s acquisition of CyberSource was an attempt to take over US e-commerce (for $2 billion, a pretty penny) MasterCard has replied by saying, “Ha! Visa, we plan to take over the world…for a fraction of the cost.”

MasterCard’s acquisition is bolstered by the numbers from the Chinese e-commerce report, indicating the wide expanse of opportunity available to MasterCard now…and challenging Visa to see what they can come up with next.

Image thanks to http://library.thinkquest.org/07aug/00137/dragons.htm

Share and Enjoy:

By Renata Sternfeld-Allon

In a recent poll, 1,500 leading business owners from 60 countries were asked what, in their opinion, was the most important aspect of running a successful business today.

The answer might surprise you. 80% said the most important aspect is creativity. The business world is becoming so complex, they said, that it demands new ways of thinking.

But creativity is not easy to come by. We are so engrossed in the everyday running of a small businesses that we tend to leave our creativity behind, dormant.

Here are 5 ways to awaken and fuel your creativity:

- You can’t change what you don’t notice. Question the ways you are conducting your business. Are you falling into patterns? Is there a better way to do what you are doing? New technologies, maybe?

- There are 5 stages of creative thinking, according to an article in The Huffington Post: insight, saturation, incubation, illumination and verification. These stages provide a guide to developing creative ideas. More information can be found in Betty Edward’s book “Drawing on the Artist Within” which elaborates on those stages and talks about training your brain, moving between the left side of the brain which controls analytical deductive functions, and the right side of the brain which controls the big picture and pattern seeking.

- Use your passion. Find the aspects of your job that are meaningful to you. Operating without passion might pay your bills but it won’t move you forward.

- Think creatively how you can overcome obstacles and generate new solutions. Not only in your field but in those of your coworkers as well. Helping others might help you think more creatively.

- Have an open mind to suggestions. An idea a coworker brings to the table may excite you enough to think of solutions you haven’t thought of before.

- Creativity needs time. Try to set some time every week when you are not answering phones and not solving problems. Dedicate that time for reflection. Talk a walk, meditate or listen to music. Let your subconscious through by not concentrating on the problems. Sleep on it, as they say, if that works for you. Those moments of rest are very important for clearing your mind and coming up with new ideas.

Creativity is something a lot of us crave, but it is not easy to obtain. We tend to concentrate on solving problems the same way we have been doing it for years. Taking a step back, thinking about the big picture and finding unorthodox solutions will wake up your creativity and make you a better business owner and a happier person.

Image thanks to http://www.flickr.com/photos/25056079@N07/4096117541/

Share and Enjoy:

By sean

Unfortunately most credit card processing rate quotes cannot be trusted, which is why we created TransFS, where all the offers are full-disclosure and fully accurate.

Here is an example of how a merchant account provider has advertised false rates.

Share and Enjoy:

By stella

Startup tips are everywhere, but I came across an article that focused on practical and actionable tips from a proven entrepreneur. Here are the top five you may not have heard elsewhere:

1) Incorporate your startup as a Delaware C-Corporation. American startups which expect to seek outside investment will need to switch to this type of corporation anyway, so why not save time by doing it right away.

2) The cap table should be done by your law firm. Don’t bother trying to modify it because there is too much of a chance you’ll make a costly mistake.

3) Think about Errors & Omissions (E&O) insurance early.Though you may think your business is safe, there are other reasons to get E&O insurance. In recent years, insurance providers have been growing more conservative so establishing a good insurance credit score helps your company show its proven track record for the time when you really need to get it.

4) Make sure to get Proprietary Inventions Agreements from all employees and contractors. Find sample forms online. Your company should own the products of the work done on your payroll.

5) Avoid fixed costs by renting your first out-of-home office on a monthly basis. Though it may be more expensive, paying monthly will give you the flexibility to grow bigger and move out when it’s time, or to go back home if things don’t take off as quickly as you hope.

For the complete list of practical startup tips from HBR, click here.

Image thanks to http://www.flickr.com/photos/7578081@N07/2110710885/

Share and Enjoy:

By stella

In case you missed it, TransFS has been all over the news the last week or so. Being human, it’s only natural to be proud and share your accomplishments… so here is a recap of our recent press hits for you to enjoy (and us to gloat over):