Six Steps to Help Your Company Grow

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Here are six steps that your business can take to not only survive this downturn, but actually thrive and grow during it and long after its yesterdays news. http://www.cbiz.com

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<p>Six StepS to Help Your CompanY Grow in CHallenGinG eConomiC timeS</p> <p>auditing standard no. 5</p> <p>are you afraid? in his 2004 letter to shareholders of Berkshire </p> <p>Hathaway, investor Warren Buffet wrote, Be fearful when </p> <p>others are greedy and greedy when others are fearful. today, </p> <p>many small- and medium-sized business owners are fearful. </p> <p>theyre afraid they wont get the credit they need to run their </p> <p>businesses. theyre afraid their customers wont buy their </p> <p>products, and theyre afraid they wont make their payrolls. as </p> <p>a result, they focus on survival, not growth. </p> <p>smart business owners, however, have a different perspective. </p> <p>they see challenging economic times as opportunities to </p> <p>streamline expenses, maximize profits, and grow their bottom </p> <p>lines in other words to be greedy, as Buffet puts it. any </p> <p>business owner can take six simple steps to make sure his or </p> <p>her company grows when times are tough and emerge from a </p> <p>downturn more efficient, more competitive, and more profitable.</p> <p>Growth vs. Survival</p> <p>Every business wants to grow and prosper, not just survive. it </p> <p>may seem like an insurmountable challenge to do that in the </p> <p>current business environment. Fear causes business owners to </p> <p>question every expenditure, and many feel comfortable cutting </p> <p>costs without too much thought as to where or why, in order to </p> <p>protect their bottom lines. Even businesses that are doing well </p> <p>are holding on to their cash and not investing. But owners need </p> <p>to find ways to cut costs while growing their top line and </p> <p>their bottom line as well. </p> <p>its up to small- and medium-sized business owners to plan to </p> <p>thrive, not just survive. Companies can position themselves </p> <p>to do well in this down cycle, as well as when the economy </p> <p>recovers. Fortunately, downturns are great times to look at a </p> <p>business health and make sure its being run as efficiently and </p> <p>effectively as possible. When times are good, many business </p> <p>owners dont have the time or inclination to do this; good sales </p> <p>numbers hide internal inefficiencies. But when things are slow, </p> <p>wringing out inefficiencies and maximizing revenue are keys to </p> <p>growing and prospering.</p> <p>six stEps to HElp Your CompanY groW in CHallEnging EConomiC timEs</p> <p>auditing standard no. 5</p> <p>recessions and economic downturns are good times for </p> <p>restructuring, as well. if your plan for growth calls for strategic, </p> <p>targeted reductions in personnel, now is the time to do it, not </p> <p>when business is booming. First of all, there may not be time </p> <p>to carefully consider your personnel needs when the emphasis </p> <p>is on getting orders out the door. second, the public perception </p> <p>of layoffs is much different in a weak economy than in a period </p> <p>of expansion. in an expansion, layoffs may be viewed as a </p> <p>sign that the company is in trouble. But during a recession, </p> <p>customers and shareholders are more likely to view layoffs as </p> <p>either an inevitable result of the economic downturn or prudent </p> <p>cost-cutting measures by a proactive management team. </p> <p>(But as we shall see, personnel cuts should be done with a </p> <p>scalpel... and not a chainsaw.)</p> <p>Six Steps for Success:</p> <p>planning and thinking ahead being proactive and not reactive </p> <p> are what will separate winners from losers in this recession. </p> <p>Here are six steps that your business can take to not only </p> <p>survive this downturn, but actually thrive and grow during it and </p> <p>long after its yesterdays news.</p> <p>Step 1: lower employee health care costs.</p> <p>many employers view health care benefits as a line item that </p> <p>needs to be cut during an economic downturn. the common </p> <p>practice is to increase cost-sharing with employees by raising </p> <p>their deductibles and increasing their co-pay amounts. However, </p> <p>this is a mistake. providing employees with a competitive </p> <p>benefits package actually increases the bottom line. this </p> <p>seems counterintuitive at first. However, its important to </p> <p>remember that in any organization, the most valuable asset is </p> <p>the employees. not only are employees valuable in terms of the </p> <p>skills, education, and experiences they bring to the company, </p> <p>but theyre valuable in the sense that good ones are hard to </p> <p>train and even harder to come by. a competitive package of </p> <p>health care benefits can help to retain top employees.</p> <p>six stEps to HElp Your CompanY groW in CHallEnging EConomiC timEs</p> <p>auditing standard no. 5</p> <p>any time an employee leaves, it impacts the company beyond </p> <p>the immediate loss of his or her contributions. Everyone elses </p> <p>productivity decreases because other employees now have to </p> <p>shoulder that employees workload. the people that relied on </p> <p>the departed employee for information or instruction may see </p> <p>a decrease in their productivity as well. morale can decline </p> <p>when top employees leave, which further negatively impacts </p> <p>productivity. moreover, the costs to the company are great: </p> <p>lost relationships and missed sales with clients, losses due to </p> <p>employees who are unfamiliar with the position theyre filling, </p> <p>and the high cost of finding and training a replacement. some </p> <p>authors have pegged the cost of losing an employee and </p> <p>on-boarding a new one at up to $1 million.1 </p> <p>still, its easy to risk losing money in the long term when there </p> <p>are employer insurance premiums to be paid in the near term. </p> <p>How can you provide quality health insurance benefits now </p> <p>without emptying the coffers? First, benchmark yourself against </p> <p>your peers others in the industry with a similarly sized work-</p> <p>force. to be competitive, your plan neednt be in the top one </p> <p>percent of all employers. Being in the top 25 percent will allow </p> <p>you to cut costs while still providing quality coverage. it will also </p> <p>let your employees know that youve researched whats out </p> <p>there and where your offerings stack up. also, know the compa-</p> <p>nies with which you compete for your top employees, and make </p> <p>sure your health plan is in the same ballpark as theirs.</p> <p>another new trend is creating a culture of health and </p> <p>implementing value-based benefits. When a company creates </p> <p>a culture of health, it makes healthy living and active lifestyles </p> <p>a part of the companys day-to-day culture. Employees are </p> <p>encouraged through a variety of means, monetary and </p> <p>otherwise, to make better choices about their lifestyles </p> <p>and their health care. For example, there may be company-</p> <p>sponsored sports teams, walking trails on the corporate </p> <p>campus, or weight-loss contests. the thinking is simply that </p> <p>healthy employees are less expensive to insure, show up to </p> <p>work more often, show up sick less often, and are overall more </p> <p>six stEps to HElp Your CompanY groW in CHallEnging EConomiC timEs</p> <p> 1 nathan, s. (2008). Help execs grip the flying trapeze. Business Insurance Industry Focus, January 2008. retrieved dec. 11, 2008 from http://www.businessinsurance.com/</p> <p>cgi-bin/industryFocus.pl?articleid=23874&amp;issuedate=2008-01-20</p> <p>auditing standard no. 5</p> <p>productive. as Capital ones chief Hr officer matt schuyler </p> <p>said, reducing the need for health-care services in the first </p> <p>place by improving associate healthcreating a culture of </p> <p>health within the organizationappears to be an effective </p> <p>strategy for reducing costs over the long term.2 </p> <p>Presenteeism, or sick employees coming to work, is a </p> <p>major drain on resources. a study by advancepCs, a health </p> <p>management company, showed that of the quarter-trillion </p> <p>dollars in losses u.s. businesses incur every year due to </p> <p>illness, nearly three-fourths come from presenteeism.3 a </p> <p>culture of health can reduce employee illness and help to </p> <p>shorten recovery time, saving businesses literally billions of </p> <p>dollars in lost productivity. </p> <p>similarly, value-based benefits encourage employees to care </p> <p>for and prevent serious and chronic medical conditions that </p> <p>would keep them from being as productive as they might be </p> <p>otherwise. the medications and preventive treatments that add </p> <p>the most value to an employees life those that address </p> <p>killers like heart disease, cancer, diabetes or depression are </p> <p>made the most available by reducing or eliminating deductibles </p> <p>and co-pays for them. likewise, non-essential or voluntary </p> <p>procedures and medications are the most expensive. in this </p> <p>way, employers monetarily incentivize employees to take better </p> <p>care of themselves, which in turns boosts productivity and the </p> <p>bottom line for the company.</p> <p>lastly, dont ignore generational differences when determining </p> <p>changes to employee benefits. generation Y or millennial </p> <p>employees will appreciate and expect exercise programs and </p> <p>opportunities that are both social and recreational in nature. </p> <p>generation x will look for family-friendly health plans, while the </p> <p>Baby Boomers may need access to affordable prescription </p> <p>medications. By tailoring options to your employees </p> <p>demographic profile, you can not only cut costs and improve </p> <p>your bottom line, but also produce happier, more productive </p> <p>employees who boost your top line as well.</p> <p> 2 schuyler, m. (2008). Creating a culture of health: the new corporate mandate. Employment Relations Today, fall 2008, 35-41.</p> <p> 3 stewart, W., matousek, d., &amp; Verdon, C. (2003). The American Productivity Audit and the Campaign for Work and Health. the Center for Work and Health, advance pCs.</p> <p>six stEps to HElp Your CompanY groW in CHallEnging EConomiC timEs</p> <p>auditing standard no. 5</p> <p>Step 2: maximize cash flow.</p> <p>adequate cash to pay bills and meet payroll is the lifeblood of </p> <p>any small- to medium-sized business. never get too caught up </p> <p>in the day-to-day operations of the business or closing sales </p> <p>to forget to collect your receivables. Having an automated </p> <p>collection system in place will provide you with a tool that </p> <p>automatically generates invoices, statements, past due notices, </p> <p>and other tools you need to collect from your customers.</p> <p>always negotiate terms with your customers that allow you the </p> <p>fastest access to your cash. For example, require deposits up </p> <p>front, and specify that payment is due upon fulfillment of the </p> <p>order. if you extend payment terms out to 30 days or more, </p> <p>your customers are getting a free loan from your business. </p> <p>likewise, try to negotiate terms of 30 to 60 days or more with </p> <p>your suppliers. that way, you can have the cash in hand from </p> <p>your customers to pay vendors when their bill is due.</p> <p>another important way to ensure a steady stream of cash is </p> <p>avoiding a single-client situation. not only does over-relying </p> <p>on one customer (such as a local government or major local </p> <p>manufacturer) threaten the viability of your business, it puts you </p> <p>over a barrel when it comes to payments as well. simply put, </p> <p>if your sole customer cant or wont pay, you dont have cash. </p> <p>seek out multiple customers and spread your business around </p> <p>if possible.</p> <p>Step 3: minimize annual taxes.</p> <p>there are several great ways to minimize your annual business </p> <p>taxes in the current tax year. First, always make sure you </p> <p>maximize your deductions. Your accountant can review your </p> <p>expenditures and help to identify deductions for line items </p> <p>such as training or business travel. a great way to increase </p> <p>deductions is to make scheduled donations to charity by year-</p> <p>end, which has the added impacts of casting your business in a </p> <p>positive light and benefiting the community.</p> <p>second, you may be able to expense certain equipment pur-</p> <p>chases immediately instead of spreading out the deduction </p> <p>six stEps to HElp Your CompanY groW in CHallEnging EConomiC timEs</p> <p>six stEps to HElp Your CompanY groW in CHallEnging EConomiC timEs</p> <p>over several years. this can give you a very large deduction all </p> <p>at once and take a sizable chunk out of your tax bill. if you oper-</p> <p>ate on a cash basis rather than an accrual basis, as many ser-</p> <p>vice industries do, then you should consider taking next years </p> <p>deductions now by paying Januarys bills prior to year-end.</p> <p>You can also be creative in your hiring. For example, you do </p> <p>not have to pay payroll taxes on independent contractors, but </p> <p>you do for employees. also, payments to contractors can be </p> <p>structured to your maximum tax savings advantage. However, </p> <p>know that there are strict rules about who qualifies as a </p> <p>contractor and who doesnt. Consult with your accountant or an </p> <p>attorney to make certain you follow the law.</p> <p>Step 4: reduce costs for payroll and flex plans.</p> <p>Flexible health plans are great ways for employers to save </p> <p>on payroll taxes. Why? they dont have to pay FiCa taxes on </p> <p>the money that employees contribute to their flex plans. For </p> <p>example, suppose an employee contributes $2,000 in a year </p> <p>to his or her flex account. at a FiCa rate of 7.65 percent, thats </p> <p>$153 that the employer doesnt have to pay.</p> <p>another key way to lower payroll expenses is simply wise </p> <p>resource management. overtime, at time-and-a-half worse, </p> <p>should be kept to a minimum. if possible, allow employees </p> <p>to take compensatory time or be flexible with their schedules </p> <p>in lieu of overtime pay be creative! Examine employees </p> <p>workloads at various times of the year. For example, if year-end </p> <p>is a particularly busy time for a certain group of employees, </p> <p>while the spring and summer months are slower, determine if </p> <p>these employees can be asked to do more during these times </p> <p>of year. do certain employees have discretionary times </p> <p>during their workdays or workweeks when they could take on </p> <p>additional duties?</p> <p>its also important to reward good time management and </p> <p>build these recognitions into your corporate culture. recognize </p> <p>employees who find ways to save time or reduce duplication of </p> <p>work through low- or no-cost methods (social rewards such as </p> <p>pats on the back, mentions in a newsletter, a gift certificate to </p> <p>a modestly-priced restaurant, etc.). </p> <p>six stEps to HElp Your CompanY groW in CHallEnging EConomiC timEs</p> <p>a good automated time-keeping system can also be a time </p> <p>and money saver. this system should be integrated into the </p> <p>companys payroll system. Without such a system, work rules </p> <p>regarding penalties for lateness, allotted times for breaks and </p> <p>meals, and grace periods are often ignored or circumvented. </p> <p>With an automated system, work rules are built in. penalties </p> <p>are applied automatically when employees break work rules, </p> <p>and its reflected in their paychecks. also, consider reducing </p> <p>grace periods altogether. </p> <p>lastly, its essential to understand how every employee uses </p> <p>his or her time and to determine if theyre being as efficient </p> <p>as they can be. the simples...</p>