Sobering numbers came out this week via a Mastercard survey of small business owners suggesting that COVID-19’s economic destruction of the small business sector is rampant and ongoing.
Per the survey, 38% of respondents in the US and Canada are seeing cash flow problems due to cash and checks taking too long to process and customers making payments late. If their numbers don’t pick up, these businesses will be left in a lurch — nearly half (48%) of the surveyed owners said their business is just one missed payment away from closure.
A 48% clip of businesses on the verge of going under is far from ideal.
In years not plagued by a pandemic-generated recession, only about one-third of owners are concerned about losing their business — a 2019 survey by software firm Proof Factor found that 31% of entrepreneurs feared going out of business. Back in 2011, a Gallup poll saw 36% of small business owners voicing similar sentiments.
However, some hope remains. To combat payment woes, small businesses are turning to a new frontier: digital payments.
According to Mastercard’s latest survey, 64% of small businesses are actively discouraging clients from using cash and checks. Instead, small businesses are looking towards the speed and efficiency of digital payment methods: 57% have indicated that since the beginning of the pandemic, they’ve increased usage of digital services for business-to-business (B2B) payments.
“The pandemic has made it painfully clear how labor-intensive current business payment processes are, especially for small and medium-sized businesses,” Mastercard’s executive vice president of new payments Ron Shultz said in a statement. “With cash flow more critical than ever, weâre seeing an accelerated shift to digital B2B payments as businesses of all sizes look to safeguard their operations today and prepare for the future.”
The survey considered the responses of 1,000 small business owners in the US and Canada between July 13 and 17. For the sake of the survey, Mastercard defined small businesses as having fewer than 100 employees while maintaining an annual revenue between $50,000 and $1 million.
Digital Is “The New Normal”
Despite the worrying numbers about potential business closures, businesses polled by Mastercard seem bullish about digital payment methods.
In fact, two-thirds of respondents said that the necessity for digital solutions is actually an upside to COVID-19. On top of this, 81% said that customer satisfaction levels have risen due to digital payment methods.
The pandemic as a whole has also caused a big shift to digital products; Mastercard found that 76% of businesses have been prompted to become more digital in a world defined by social distancing. 82% claim that COVID-19 has changed how their business sends and receives payments.
Mastercard notes that “positive sentiment, increased customer satisfaction and continued exploration” indicates that digital payments will stick around post-pandemic. The numbers from the survey back this up — 70% of owners are open to investing in technology that will push their payment systems forward while 73% feel that digital payments will be “the new normal” for their business in the future.
How To Accept Digital Payments
If you want to accept digital payments at your business, but don’t know where to start, Merchant Maverick can help. Check out our guide to B2B payments to learn how digital payments can help your business. For the scoop on accepting payments digitally from customers, take a peek at some of the best point-of-sale systems for a cashless society.
For more on payment methods in general, visit Merchant Maverick’s in-depth look at alternative payment options. Small business owners on the go may also want to learn how to accept credit card payments via their phone.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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Smart money has always pegged small businesses as being a resilient bunch. Now, fresh data backs this bet up.
In a survey that collected the responses of 5,265 small business owners worldwide, internet domain registrar GoDaddy found that 71% of entrepreneurs anticipate their business will recover from COVID-related losses within the next year. This optimism is despite the economic wreckage the pandemic has brought to 2020.
The survey, which received responses throughout the month of June, specifically considered the input of micro-businesses — over 90% of respondents had less than 10 employees while half were solo-prenuers. Small business owners from Australia, Canada, Germany, India, Mexico, Philippines, Spain, Turkey, United Kingdom, and the US were tapped for the survey. GoDaddy and Savanta, the data and research firm that aided the study, released the results on August 19.
“As difficult as the last six months have been, it’s inspiring to see global entrepreneurs determined to work their way back to recovery and success,” GoDaddy’s vice president of global marketing operations Melissa Schneider said in a statement. “At the heart of entrepreneurism is the ability to adapt and move forward.”
Other numbers look promising, too. A whopping 63% of respondents expect their business to grow at least 25% within the next three to five years. According to GoDaddy, this number is in line with pre-pandemic expectations.
In a separate blog post on its COVID-19 resources website, #OpenWeStand, GoDaddy revealed that only 3% of the businesses surveyed said they’ve had to shut down permanently.
“This underscores the resilience of the entrepreneurial spirit and offers some hopeful insight into their collective future,” Schneider wrote in that post.
Of course, it’s not all sunshine and roses — COVID-19 has still been a nasty pandemic after all. The survey found that 75% of respondents have suffered reductions in revenue, while another 36% resorted to temporary closures.
COVID-19 Has Sparked The Entrepreneurial Spirit
Perhaps the most poignant part of GoDaddy’s survey is how it revealed that the heart of entrepreneurship is alive and well — especially as COVID-19’s recession is encouraging individuals to come up with more creative ways to make money.
For instance, 30% of those surveyed indicated they had or intend to start a business, non-profit, or side-hustle because of job loss due to the pandemic. And 16% confirmed they had already started such a venture.
Millennials are the most eager age demographic to leap into the entrepreneurial world: 40% of millennial respondents said they wanted to pursue a side-hustle compared to only 12% of baby boomers.
This eagerness to jump into or kick-start a small entrepreneurial dream mimics earlier financial downturns. In previous recessions, businesses started up smaller (but are more productive on a revenue-per-employee basis) than businesses created during boom years, according to research by Northwestern University’s Kellogg School of Management.
“As history has shown us, and this survey tells us, the downturn is likely to lead to a new wave of entrepreneurs and small businesses,” Schneider said. “It’s that spirit of rebirth and innovation that can help lead the global economy to recovery.”
Resources To Thrive In A COVID-19 Economy
While financial woes have indeed impacted many in the world of commerce, there’s still plenty of hope out there that small businesses can survive and even thrive amid a pandemic.
Business owners looking to advance their company throughout these tricky times can visit Merchant Maverick’s guide to marketing during the pandemic. Digital-focused firms may also want to read our tips for eCommerce during COVID-19.
If you’re wanting to tap into your own entrepreneurial beast, take a peruse of the best website builders for entrepreneurs. We’ve also written a step-by-step guide for entrepreneurs looking to start their own delivery business.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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Yelp’s 2016 Request-A-Quote system has undergone an overhaul in the past year, and its newest iOS update will launch a revamped hiring experience to better connect local contractors and small businesses with clients and potential leads. Yelp is hoping users will stop thinking of the site as just for reviews and instead will think of it first when looking for the best small businesses to meet their needs.
These expanded tools will help both small business owners and consumers by streamlining communications and building connections between local businesses and Yelp users.
According to Product Lead Yue Wu on Yelp’s official blog, “The current state of hiring home and local service businesses can often be frustrating and riddled with inefficiencies. Oftentimes, people donât know what kind of details they need to share when trying to hire a contractor, mechanic or landscaper, plus outdated games of phone tag make it hard to get a hold of a professional. Business owners may even have to reject promising leads because they donât match their service offerings. The industry is ripe for innovation and in need of a marketplace solution that helps both professionals grow their business and people easily get things done.”
The new Request-A-Quote system will better connect contractors with clients. On the small business end, Yelp is launching a subscription service called Nearby Jobs, which is aimed at helping businesses better target customers and leads best suited for their services. Request-A-Quote is free and can be turned off, while Nearby Jobs costs $240/month.
Check out Yelp’s quick introduction of its Hiring Experience for Home and Local Services below:
Building Better Bridges Between Businesses & Clients
Nearby Jobs — Courtesy of Yelp
When shelter-in-place orders hit most of the nation in March of 2020, the economy experienced a sudden shift. However, people stuck at home began looking into home improvement projects or local businesses for hire. Compared with the same time last year, interest in home and local services is up 25%, according to Yelp.
“Even in the midst of a pandemic, home and local services have proven to be resilient and an essential part of the local economy with more than four million projects created in the first half of 2020,” said Wu.
It is with this focus in mind that Yelp expanded its Request-A-Quote and Nearby Jobs platforms. The goal is faster quotes and connections to service providers, streamlined appointment scheduling, and an easier vetting process. All of those areas were tagged as important by clients in a Kelton Global Survey.
According to Wu, “Nearly a quarter (22%) of respondents in the Kelton Global study werenât sure where to start their search for a professional while one-third (33%) admit it was difficult to find a professional they trusted. Yelpâs guided questionnaires solve this hiring friction by asking consumers a handful of tailored questions about the specific job they need done within the Request-A-Quote experience.”
Soon, over 100 industries will be represented on Yelp and available for streamlined connections to people on the hunt for their services.
The subscription platform Nearby Jobs will give businesses more control over the Request-A-Quote experience. Wu said, “For businesses looking to grow their company and client base, this unique product allows them to quickly pitch their capabilities and competitive pricing to consumers. This can be an ideal solution for newer businesses looking to earn consumer trust by building out their portfolio of work and growing their online presence.”
All of this is packaged in a new and sleek facelift to the entire Yelp interface. Yelp is modernizing and expanding — the result is, of course, better reviews for all users, too. With customers and businesses finding the right fit and Yelp vetting these experiences, increased and more substantial reviews are a natural and great outcome from this new platform.
Other Ways Your Business Can Tap Into Yelp
Reviews are the bane and beauty of some small business owners’ existence — and Yelp’s edge in the review-generating business is quite large. With consumers and small business owners trusting the reviews from Yelp, adding transparency to the process only strengthens the platform’s relevance and assistance to small business owners.
If you haven’t, create a business page on Yelp and utilize the free tools — including the updated Request-A-Quote. For more information on Yelp, you can read our article, Should I Use Yelp For Business Owners?Â
For more tips on how your business can handle COVID-19, check out Merchant Maverick’s guide to outbreaks and pandemics.
H/T Search Engine Land
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Facebook thinks it has a solution for small businesses facing financial burdens from the social distancing measures necessitated by COVID-19: Paid online events for small businesses that want to host customers virtually.
These events, which Facebook announced during a call with reporters last week, allow business owners to create an event, set the attendance price for customers, and then promote and host the event — all within Facebook’s own Pages ecosystem. The feature is available in the US and 19 other countries.
Curious businesses can see if their Facebook Page qualifies for the paid online events feature through Facebook. Eligible businesses will need to meet Facebook’s partner monetization policies to make money off of events hosted through the social network.
“With social distancing mandates still in place, many businesses and creators are bringing their events and services online to connect with existing customers and reach new ones,” Head of Facebook App Fidji Simo Vice President wrote in a blog post. “People are also relying on live video and interactive experiences more when they canât come together physically.”
That reliance on live video can be broken down in numbers — Simo revealed that the number of live broadcasts by Pages doubled year-over-year in June.
Simo wrote that in the testing phase of paid online events businesses used the feature to host “expert talks, trivia events, podcast recordings, boxing matches, cooking classes, intimate meet-and-greets, fitness classes, and more.”
Because this new feature combines marketing, payment, and live video on a single platform, Simo claims it meets the “end-to-end needs” of small businesses.
Additionally, she teased that Facebook is testing paid events for Messenger Rooms. This feature aims to enable “more personal and interactive gatherings.”
Related: Instagramâs New Commerce Rules For Businesses Are Now Live
Fees Waived For At Least One Year
In an effort to rejuvenate small businesses during the pandemic, Facebook won’t collect any fees through the paid events feature “for at least the next year.” To this end, businesses will receive 100% of the revenue for transactions made on the web and on Android in Facebook Pay-supported countries.
However, businesses won’t receive a 100% cut for transactions made on iOS, Simo noted in a cheeky call-out of Apple.
Simo wrote that Facebook asked Apple to reduce the 30% fee that exists for money made through apps released on the iOS App Store. According to Simo, slicing the fee would allow Facebook to “absorb all costs for businesses struggling during COVID-19.” Apple reportedly denied the request.
In a screenshot of the payment flow, Facebook highlighted how its iOS app includes a disclaimer below the payment button that says “Apple takes 30% of this purchase.” Facebook also showed off a screenshot of the payment flow for its Android app, which instead notes that “Facebook doesn’t take a fee from this purchase.”
Facebook’s little jab comes at a time when Apple is currently embattled in a bloodbath with Epic Games over the 30% App Store cut. The social network has also been running its own feud with Apple. Just last month, Facebook claimed the profitably of its targeted ads could be damaged by new user-set tracking features in Apple’s upcoming iOS 14 operating system.
Other Ways To Expand Your Business During COVID-19
Besides Facebook’s new paid online events, there are plenty of other ways for small businesses to come up with new cash streams during the pandemic.
For more inspiration, check out Merchant Maverick’s five marketing tactics small business can use during COVID-19. We’ve also highlighted how small businesses can survive social distancing requirements.
If you’re looking for more general advice regarding COVID-19, check out our coronavirus hub.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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Buying something now but paying for it later has always been a tantalizing concept. But the idea is gaining even more steam now thanks to current events; in a world economy virtually crippled by the COVID-19 pandemic, shoppers need to stretch their dollar further than ever before.
Traditionally, people turned to credit cards when they didn’t have the cash on hand to afford a purchase. Today’s consumer is increasingly wary of credit card debt, however, and interest in other avenues has grown. Not surprisingly, a bevy of buy now, pay later (BNPL) services have sprung into action to meet the need.
These financial tools, such as Affirm, Afterpay, Klarna, and Splitit, allow customers to buy something and then pay it off over the course of a few months. Though the economy has been hit hard, BNPL service providers have seen massive growth spurts over the past few months. Customers still need to make purchases, after all. They just don’t always have the available funds in their bank accounts.
This has turned into quite a boon for many small businesses, which are now able to entice customers into making purchases they might not otherwise have contemplated. In fact, many small businesses that have tapped into BNPL services are seeing exciting pockets of new revenue streams in what is otherwise an economy headed towards almost unprecedented recession.
So how do BNPL services fit into a COVID-stricken economy? Could your small business benefit from offering your customers such a service? Let’s take a look at a few key numbers that revolve around this upstart financial sector:
Buy Now, Pay Later Is A Booming Industry
⤠BNPL services are seeing 200%-plus increases during COVID-19
With cash-strapped customers turning to payment deferment methods in order to make purchases during the pandemic, the BNPL sector has achieved record growth throughout 2020.
Per fashion trade journal WWD, Splitit saw record growth during Q2 of 2020. The company processed more than $65 million in merchant sales during that quarter, a number that represents a 176% growth quarter-over-quarter and 260% year-over-year.
Afterpay’s numbers from its latest investor report reflect a similar story. In June of last year, the company had 1.9 million active US customers. By June of this year, the Australian-based firm had boosted its US user base to 5.6 million, an increase of 219%.
Younger Consumers Are Keen On BNPL Services
⤠87% of consumers between the ages of 22 and 44 have expressed interest in BNPL
Because BNPL is such a new concept (for instance, Affirm — one of other older kids on the BNPL block — was only founded in 2012), it’s no surprise that it suits a younger crowd. What is surprising, however, is just how many younger people are open to tapping into payment plans in order to make purchases.
It’s almost ubiquitous: Data compiled by PYMNTS.com in a report on the BNPL industry showed that a whopping 87% of consumers between the ages of 22 and 44 have expressed interest in BNPL.
One potential reason for the acceptance for BNPL is because young people just don’t have credit cards — according to a 2016 survey by Bankrate, only 33% of those between the ages of 18 and 29 are toting plastic. With an increasing distaste toward credit cards shaping the current generation, your small business may be able to appeal to a new and younger audience by tapping into BNPL — potentially even creating loyal customers for life.
Related: Everything Merchants Need To Know About Using Affirm: What It Is, How It Works, Pricing, & More
BNPL Is All-Around Popular
⤠37.6% of consumers have used a BNPL service
As BNPL is becoming more well-known with consumers, it’s becoming a more popular choice at checkout. In fact, a recent survey conducted by The Ascent (a financial analysis branch of the investment advice site Motley Fool) found that over one-in-three respondents have already used a BNPL service to make a purchase.
That number is only going to keep growing. According to the same survey, 20.8% of consumers first used a BNPL service in 2020 compared to just 7.4% that had used one before 2015. Plus, COVID-19 may increase the demand for BNPL. Per a different poll run by The Ascent, 46% of Americans have had to take out a personal loan to make ends meet during the pandemic.
Big Purchases Are A Hit With BNPL
⤠The average purchase through BNPL is $104
It’s not outrageous to speculate that customers use BNPL services for big purchases. After all, the purpose of BNPL is so that customers can buy items or services they might otherwise not be able to afford at the time of purchase. As such, it makes sense to assume that customers will dip into BNPL on purchases that put big numbers on the till.
This reasoning falls right in line with the data. In an interview with Al Jazeera, Afterpay co-founder Nick Molnar said that customers use his service for primarily high-money buys — the average purchase through Afterpay is over $100. With this in mind, your business may be able to flourish via BNPL services because moving big-ticket items will be easier.
BNPL can also potentially increase average sale amounts. For instance, a 2019 case study released by Klarna highlighted how fitness clothing retailer Gymshark noticed a 33% increase in customer basket size after it added a BNPL option at checkout.
Related: The Complete Guide To Customer Financing For Small Businesses
People Want To Avoid Credit Card Interest
⤠39.3% of consumers use BNPL because they don’t want to incur credit card interest
With credit card issuers charging exorbitant interest rates on card balances, it’s not surprising that people are looking at different options when they need to spread purchases over multiple months. For example, credit cards routinely feature interest rates at an average 24.4%Â for those with bad credit (according to the latest rates report by CreditCards.com). Meanwhile, many BNPL services, such as Afterpay or Splitit, feature no interest.
Dipping back into the above-mentioned survey by The Ascent, we find that the number one reason people use BNPL services is to avoid paying interest on credit cards. Using BNPL services to make big purchases is a close second — 38.3% of respondents said they opted into a BNPL service because the purchase wouldn’t otherwise fit their budget.
These numbers echo findings from Afterpay. According to survey results released by the BNPL service, 54% of Americans are scared about taking on too much credit card debt — something BNPL can help avoid.
BNPL Services Create Repeat Customers
⤠65% of BNPL users have made two purchases within six months of each other
Any business needs repeat customers. Customers who come back mean a more consistent revenue, and confirm that you offer products or services customers trust. BNPL services certainly cater to their own repeat customers.
In its latest biannual global fashion and trend report, Afterpay revealed that 65% of its user base made at least two purchases in the past six months. By implementing a BNPL option at checkout, your business may be able to draw from customers comfortable using such services.
Buy Now, Pay Later: The Bottom Line
BNPL is a side of the eCommerce space that’s only going to keep growing. For small businesses that sell online, there’s little downside to offering a BNPL option at checkout. Besides giving your customers a chance to protect their budgets, you may also be able to increase your revenue — something that is all-important in a COVID-19 world.
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Shashonna Knect, tattoo artist and owner of the NE Portland tattoo studio La Petite Tattoo, says her tendency to say exactly what’s on her mind has caused some pearl-clutching during interviews in the past. Her morning news segment about creating zombie makeup for a large event stands out.
“As a bit for this reporter, I put him in zombie makeup. He’s interviewing me and he asks, in an upbeat way, why I think people are so fascinated with zombies. I said it was because it fed into people’s bloodlust and killing fantasies. They cut the interview short.”
The memory makes Knect laugh. As a former manufacturer for an Indiana-based prop construction company that worked for movie studios and Halloween companies, Knect’s eventual path to a career in tattooing may not have been obvious, but her sensibilities for the dark and the macabre haven’t changed.
“I started my [tattooing] apprenticeship in Indiana partly out of boredom,” she admits. The effects makeup specialist was tired of waking up at 3am for outdoor shoots, constantly at the whim of both mosquitoes and directors. When Knect moved back to Oregon, she found that the state had different licensing requirements for tattoo artists than in Indiana; while she went to school for tattooing, she launched a career for herself as the number-one body artist in the Pacific Northwest.
Her stories about working for raves, strip clubs, haunted houses, and movie sets up and down the I-5 corridor are not for the faint of heart. “Being in the business of makeup means you become intimately familiar with the human body in a clinical manner.” The same thing goes for tattooing.
Open For Business…Again
The intimacy created between a tattoo artist and their client was a big factor in Knect’s decision to open a studio in the first place. Now, after shuttering her business during Portland’s Shelter-In-Place orders, she’s open for business again — albeit with some detailed legal requirements — and respecting bodily intimacy has become more important than ever.
“I have to trust people and people have to trust me,” Knect says. “It would be awful to expose [the coronavirus] and spread it to clients.” Knect is strictly following the re-opening guidelines, and she won’t be shy to decline a client if she becomes aware they are engaging in unsafe behavior — a step she feels is necessary for her own personal liability. Her business clientele has never been about walk-ins (her entire setup is intentionally designed to discourage the random midday tattoo request), so Knect is grateful that as the owner, she can be choosy about who walks through her doors.
“I have control of my client base,” she says. And that, more than ever, is the key to staying safe and staying open.
A Studio That Knows Its Niche
Knect tattoos everyone and anyone, but the La Petite Tattoo is a studio that knows its niche: The small storefront space is designed with a woman’s comfort in mind. And that is a smart business choice since women are rapidly making up the majority of tattoo clients. A 2017 study showed that 23% of women and 19% of men now sport a tattoo. (Unremarkably, Millennials lead this tattoo revolution.) And those women are seeking artists that provide an alternative to the Old Boys Clubs.
“I’ve never been excited to see a male doctor at the gynecologist, you know?” Knect says, explaining her mission behind creating a private and comfortable space that caters to a better tattooing experience, specifically for women. “I mean, I’m sure he’s a fine doctor and he’ll do a good job, but it wouldn’t be my preference, because the whole time I’m hoping he’s not weird. And for tattoos, it’s the same.”
Knect admits that the stereotype of a dingy, cluttered parlor with a mangy proprietor is born from certain very real truths about the tattooing world. She’s worked in those types of studios — literally dark and openly misogynistic. For many decades, tattoos and tattooing operated on the fringe; if tattooing was even legal, shops were often banned from receiving licenses in bustling city centers. Cities pushed tattooing to the outside and refused to legitimize it as a business, but the past twenty years have seen those businesses fighting back.
Dealing With Real People
Knect’s studio is designed to reflect her own aesthetic. “It’s important to work in spaces you like,” she says. When she first leased the space, her landlord promised to paint the army green walls but failed to deliver. She traded a tattoo session for a quick paint job before she opened. Her walls are now muted pink; the space light and airy.
“Trades. That is a fundamental part of a business. Knowing my clients and working with them to set up a system for business bartering is a piece of advice I have for new business owners,” Knect says. Small business owners should consider what they can use to create a B2B bartering system because bartering can shore up cash, put your services to use, and help gain access to goods and services potentially out of reach otherwise. In a service-oriented industry, trades and barters can become a healthy business system and lifeline.
The system also works well in businesses, like La Petite Tattoo, that deal mostly with cash. The decision to be a mostly cash-based business was born more from comfort than requirement, but Knect admits that for her niche business the business software options haven’t been as helpful.
“It’s not that I distrust the software and card readers and programs, but they don’t necessarily work as advertised for me.” She mentions specifically her frustrations with TurboTax. “I’m operating as an independent contractor and I’ve tried to used TurboTax, but it gave me this amount owed that was unreal. I took all my business finances to an accountant and they were able to figure out my taxes where I owed significantly less even after I factored in the amount I paid for the accountant’s time,” she says. “With machines and third-party systems, that is just another issue I need to deal with when things go wrong. I don’t need another issue.” Managing things herself eliminates a middle-man.
She wants to deal with real people as often as possible, and her business model makes the most sense when she can make daily bank deposits with cash-in-hand. “I come from a family of contractors, so that is what I’m inclined to do,” she says. While she does accept Venmo and PayPal, cash is still king in the tattoo world.
Another tip Knect hopes small business owners would take to heart? Have dedicated finances before opening a business.
“Prepare to do things on your own and have a solid savings,” she says. “You don’t know what will pop up or what your building requires.”
And if there is one thing that guarantees a feeling of angst, its the prohibitively expensive liability insurance requirements needed to tattoo. “I work with blood. There are so many insurance companies unwilling to work with me because of that and getting a cheap rate is off the table,” Knect says. The hoop-jumping can be the most tiring part of owning a business.
The Feast Before The Famine
A survey by Statista states that people who get inked are, by nature, “Experience Seekers.” And right now, people are thirsty for experiences.
“I’m busier than I’ve ever been,” Knect says. She understands — or expects — that this boost is temporary. “We have a situation where people were cooped up, everything is closed, and if they have fun money, they aren’t spending it in the ways they might have in the past.” Without options for parties, vacations, nice restaurants, people are sitting at home and dreaming about tattoos. “I’ve had a few people upset that they can’t get in to see me right away,” she says.
While she is appreciating the business and thankful to make ends meet in a time when many artists are on unemployment, Knect isn’t optimistic that the boon will last. The virus isn’t going away and the economy is unstable. “Reality will hit, she says. She doesn’t know what that reality might look like in the next few months, but in the meantime, Knect will dream of a better time to expand her business (eventually, she’d love a larger space with more room to rent out time to other artists and contractors looking for a bright and welcoming place to meet clients). She also looks forward to a future where a reputation for colorful, large, fantasy-type pieces born from her own imagination can become her specialty and she can slowly weed out clients who are looking for her to simply recreate something they saw on Pinterest.
“No offense,” Knect adds with a smile behind her N95 mask. Prior to our interview, my tattoo consultation with her had involved that exact thing.
Visit La Petite Tattoo for more examples of Knect’s art or to explore her artists in residence.
Do you have a story idea, tip, or small business spotlight idea for the Merchant Maverick news team? Shoot us an email:Â [email protected]
The post (Re)Open To The New Normal: La Petite Tattoo Experiences Business Surge Amid COVID Economy appeared first on Merchant Maverick.
It’s been a rocky ride for small businesses since the start of the coronavirus pandemic. But a recent survey suggests that a rebound is on the horizon.
The survey in question, released Monday by CNBC and SurveyMonkey, found that 64% of small business owners are confident their business can last more than a year in current conditions. That number is exactly double the 32% of business owners who felt that way three months ago.
Also key: Nearly a quarter of businesses that had to lay off or furlough employees have already rehired all their staff. Another 34% said they’ve rehired at least “some” employees back. Only 15% don’t expect to rehire any laid-off employees.
Additionally, 35% reported seeing more demand for their core products during Q3 of this year. That’s up 17% from when CNBC/SurveyMonkey last surveyed small business owners in April.
“These latest results offer a glimmer of optimism from the small business world,” SurveyMonkey’s chief research office Jon Cohen said in a statement. “For many on Main Street, the strong sense is theyâve made it through a paradigmatic shift.”
The CNBC/SurveyMonkey poll surveyed 2,040 US small business owners between July 20 and 27 to arrive at their findings. The poll has been released quarterly since 2017.
Still Much Work To Do
Despite the positive numbers, there remains a general caution to promising full economic recovery.
Most notably, the confidence index CNBC and SurveyMonkey derive from their poll is at 53 points (out of 100) which — while up four points from April — is eight points below where it stood at the beginning of the year.
“This is not the V-shaped recovery we were hoping for,” Laura Wronski, a research scientist at SurveyMonkey, told CNBC. “Things are certainly better than they were last quarter, but far off their marks from what we had seen earlier this year and last year. These small businesses are going to have long-lasting effects from this pandemic.”
Even with those “long-lasting effects” in play, many small businesses have managed to stay afloat by following proper CDC guidelines — and thanks to more states opting into mask mandates.
“As a country, we donât have the virus under control, but we have more information on what we can all do as individuals — wearing a mask, keeping six feet apart — to keep everyone safe,” Wronski said. “Taking those precautions is whatâs allowing businesses to reopen.”
Related: Survey: 92% Of Small Business Have Pivoted Due To COVID-19
CNBC and SurveyMonkey’s poll also displayed a gender gap. For instance, 51% of women who replied to the survey said their business has remained open during the pandemic compared to 63% of men.
These numbers echo last month’s state of business report by Facebook. In that report, Facebook found that just 71% of female-led businesses were generating income versus 83% of male-led firms.
Other timely data points also indicate a pause for caution may be necessary.
Just last week, Biz2Credit released data showing that small business revenues decreased 52% during the start of COVID-19’s impact. Elsewhere, the New York Fed reported that Black-owned businesses have been twice as likely to close in recent months compared to small businesses overall.
Business Resources For Surviving COVID-19
While the president signed several economic orders over the weekend aimed at stimulating the economy, none of them directly affect small businesses. This means that the Paycheck Protection Program — which the Small Business Administration (SBA) stopped receiving applications for on Saturday — is no longer an option for businesses in need of financial support.
Related: Over Half Of US Businesses Claim PPP Wasnât Enough, Survey Says
The SBA is still operating an emergency relief program for small businesses affected by the pandemic, which could help some receive a much-needed financial boost. Other businesses may be able to tap into clever marketing tactics in order to increase revenue.
For more COVID-19 resources, check out Merchant Maverick’s hub.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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Ever wondered what the difference is between a 1099 contractor and a W2 employee? Believe it or not, the answer is both easier — and more complicated — than you might expect. It all boils down to this: If you tell your workers both what to do and how to do it, then they are probably W2 employees. On the other hand, if you only control the results and not the process, then they are probably 1099 contractors. The distinction may seem simple, but the implications are wide-ranging and can be fairly complex.
Read on for more information on why it is so important to know the difference between 1099 workers and W2 employees, how to tell which is best for you, and why a misclassification may cost you a lot of money.
1099 VS W2 Employees
Here’s the most important thing to remember: 1099 workers are contractors, and W2 personnel are employees.
Employees are full-time staff members who make up your team on a day to day basis. W2 employees are salaried workers, with benefits, insurance, and vacation days.
1099 workers, on the other hand, are freelancers, contractors, or independents who work with you on a contractual basis. Independent contractors are common in many industries. Food delivery companies for example, generally use independent contractors to do their deliveries.
While a W2 employee considers themselves a part of your organization, a 1099 worker is the owner (and employee) of their own business. They must pay both employer and employee taxes on their income.
For tax purposes, if you classify a worker as an independent employee, you must have a sound reason for that decision. Further, you cannot classify a worker as a 1099 contractor if you have previously classified similar workers as W2 employees. Such inconsistencies could open you up to heavy fines or lawsuits.
Let’s get into more detail.
What Is A 1099 Worker?
1099 workers are independent contractors or freelancers. They are contracted to work for you for a period of time, and work more or less independently. Itâs the employerâs responsibility to properly classify a worker as an independent contractor for tax purposes. Many business entities opt to hire freelancers to reduce the payroll workload.
1099 workers are paid according to their contract terms. They donât earn overtime or minimum wage. Employers have limited control over independent contractors, who follow their own schedules and work patterns. As long as a 1099 contractor is meeting their deadlines and obligations, an employer has no business saying how and when the work should be done. 1099 employees can work remotely as long as they meet their contractual obligations. They often donât have permanent work stations.
At the same time, 1099 workers donât enjoy certain protections as retirement plans, disability, and medical insurance from their employers Contractors are responsible for their own taxes. They may incur more tax obligations, like lump-sum prepayments and additional tax payments on top of the normal filing.
Employers are not obligated to withhold taxes from a freelancerâs paycheck. It’s the 1099 worker’s responsibility to remit the tax to the IRS. The employer’s only role is to provide the 1099 form, and the freelancers or independent contractors must file their own taxes.
That said, if the 1099 worker complies, the employer may deduct certain expenses, like meals and travel, mileage, supplies, licenses, and legal services.
Generally, employers hire 1099 workers to help cut costs. With a contractor, you’re off the hook for payroll administration, workerâs compensation, minimum wage, most overhead costs, overtime, HR tasks, and management of employee relationships. Freelancers are not covered by workersâ compensation and this means that they do not expose the company to certain legal risks. The employer does not risk claims of wrongful terminations.
Independent contractors also bring in specialized expertise. They have skills that may be a little unique, hard to get, or that you may only need on a seasonal basis. Independent contractors provide specific skills or expertise that you might need for a particular project. They focus on one thing and will probably deliver a superior quality of work.
And because they come in to do a specific job, 1099 workers are more flexible in terms of hours and budget. In fact, the kind of people who are independent contractors by choice are typically the kind of people who value freedom and independence.
What Is A W2 Employee?
A W2 employee is a long-term employee that receives the benefits and wages of a regular employee. It is your responsibility as an employer to withhold income taxes from W2 employee paystubs and remit them on their behalf.
Employers have more control over W2 employees than they do over contractors, and they also have more responsibility for them. W2 employees receive more benefits, like tools, training, insurance, a reliable salary, and working materials.
In return, they must comply with all their employerâs rules and regulations since they work there full time.
W2 employees are important for growing businesses with increasing human resource requirements. Organizations that experience constant demand for their services are also ideal for W2 Employees. They give founders an opportunity to form closer working relationships and to mentor employees to fulfill their own unique requirements.
Employers great responsibility toward their W2 employees. They must pay a minimum hourly wage, at the very least. They must also provide benefits. They have to take care of withholding and filing taxes on behalf of employees, and they have to provide W4 forms.
(Even though it is the employerâs responsibility to withhold taxes, employees must file their own W2 taxes during tax season.)
The Key Differences Between 1099 & W2 Employees
Are you working with an independent contractor or an employee? The answer to this question depends on a few factors.
Wrongly classifying a worker exposes you to the risk of paying extra taxes and fines to the IRS. For example, if you wrongly classify a W2 employee as a 1099 worker, you may have to pay the IRS the taxes that you failed to withhold from them.
The difference between independent contractors and employees depends on the nature of your relationship with them, exactly how much control you have over them, and how much responsibility you have over the individual.
Here are the three factors that determine a worker’s status according to the IRS:
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1) Behavioral: How much control does your company have over the workerâs actions and the way they do their job? W2 employees are more under your control, while 1099 independent contractors have more control over the way they do their work.
2) Financial: Does your company control the way the individual gets paid? Do you arrange for them to have the right tools, training, or equipment?
3) Type Of Relationship: Are you working with a short-term contract? Are you providing pension plans, paid vacation time, or insurance? Is your working relationship perpetual and is the person a core team member? Are they providing you with a vital service that you cannot do without?
When examining any written contracts you have with your worker, you will probably find information that details your relationship and helps you to classify that person correctly for tax purposes. Employees have pension plans, vacations, insurance, and a long term working contract with you.
It is important to know whether your worker is one or the other so that you can choose between withholding their taxes directly or letting them take care of their own taxes. A mistake can be costly.
The IRS advises looking at these factors from all three categories to choose the correct classification. It’s vital to then document not only how you classified your worker, but what factors informed your decision. Employers who cannot make the determination even after reviewing these factors will have to fill a Form SS-8 and the IRS will determine the status of the employee officially. The process will take six months or more.
How To Choose Whether To Hire 1099 Or W2 Employees
1099 and W-2 workers both provide vital services to businesses. Which type of worker is better for your business? Consider the following things before hiring:
Ultimate Cost: To avoid the extra labor of managing human resources and save time and money for other responsibilities, a 1099 employee is the better option. W2 employees are entitled to minimum wage, benefits and the employer pays their payroll taxes.
Oversight: Independent contractors use their own methods, tools, and define their work to complete the task they were hired to do. W2 employees wholly rely on the business schedule to do their work.
Expenses: All the expenses incurred by a W2 employee in the course of their work are reimbursed by the business. Unless it is indicated so in the contract, the expenses of a 1099 employee in the course of work are not reimbursed by the employer.
Commitment: A W2 employee involves a long-term commitment on your part. If you need additional help in your business, but you want to give the person a test drive first before committing yourself fully, it’s safer to go with a 1099 hire.
If you’re still not sure, answer the following questions for your business:
What type of work do I want done?
What is my budget?
What kind of expertise am I looking for?
How much control do I need over the process and product?
Am I trying to meet a long term role or a temporary need?
1099 VS W2: Which Is Better For Your Business?
Employers often prefer working with 1099 workers or independent contractors because they can be cheaper. With a 1099 worker, you donât have to pay benefits like health insurance, bonuses, over time, and other benefits like 401(K).
Nevertheless, many employers still prefer to hire W2 employees. With a full-time employee, you benefit from a longer-term commitment. The employee feels secure and will be more focused on doing their jobs than finding the next one.
The Benefits Of Hiring Independent Contractors
Guaranteed Expertise: Sometimes employers have a need or project that requires some unique skills and expertise. You can save money by hiring a specialized contractor for a short time, rather than paying a specialist’s salary.
Cheaper: Independent contractors are cheaper. Even when they earn more per hour, you still save money because they donât get reimbursements and benefits. You donât pay for things like vacations or unemployment tax.
Freedom: Both the employer and the contractor enjoy greater freedom from working with this kind of arrangement. As an employer, you donât have to manage the performance of an independent contractor, and you have much less paperwork to deal with.
The Benefits Of Hiring W2 Employees
Security: For W2 employees, job security and closer work relationships are the major benefits for the employer and employee.
Greater Control: Employers enjoy a lot more control when they hire a W2 employee than when they work with an independent contractor. An employee is someone that you will have the opportunity to train. You can guide their daily schedule to ensure that they carry out their tasks in a particular way.
Commitment: When you work with a W-2 employee, you have someone who is with you for the long haul instead of just one project. This gives you the opportunity to train and mentor people to fit in with your company culture and your unique way of doing things. You can also get them to carry out a wider variety of roles than is possible with an independent contractor. This means that you can delegate more.
There is a lot to think about, but at the end of the day, you want a solution that works for your specific needs. Both worker classifications have their own pros and cons, and while more and more people are becoming independent contractors, many companies are still finding value in W2 employees.
The post Everything Your Business Needs To Know About 1099 VS W2 Employees appeared first on Merchant Maverick.
Dr. Jill Ginsberg and Pastor Mary Overstreet Smith stand outside their clinic on opening day 2006. Photo courtesy NxNE.
The start-up energy is alive and well in the world of nonprofits and it makes sense. In the past decade, registered nonprofits increased by 10% and contributed 5% of the United State’s gross domestic product. Let’s put it his way: If nonprofits were a country, they’d have the fifth largest economy in the world.
And who starts nonprofits? The same type of people who have the drive and commitment to push any big idea into the light and see it through.
“You have to come with an entrepreneurial spirit to start a nonprofit,” said Suzy Jeffreys, Executive Director of North by Northeast Community Health Center, a nonprofit dedicated to Black health in Portland, Oregon. “Wanting to be an entrepreneur has to come first, but then it’s knowing how to balance being the big idea person and seeing the next steps for your organization. We see entrepreneurs as having determination and grit — and you need that for nonprofits, too.”
North by Northeast was born from that determination and grit, but it also answered a specific need. In the aftermath of Hurricane Katrina, Pastor Mary Overstreet Smith, founder of the Power House Temple Church, sold her own property to bring 40 displaced families without food, shelter, or access to health care to Portland. When Pastor Overstreet Smith discovered there wasn’t a free clinic in her community, she knew there was only one answer: To start one herself. According to the clinic’s co-founder Dr. Jill Ginsberg, as captured by a local news crew, Pastor Mary “went over there and she said, ‘This is where we’re gonna do the clinic. When can you get started?’”Â
Since opening its doors in 2006, North by Northeast has remained the only free health clinic in Oregon dedicated to African American/Black health. According to their mission:
 “We exist to improve health outcomes and advance health equity by offering primary care services and health education and promotion focused on the African American/Black community.”
The nonprofit has grown, evolved, and matured — what started as a spark of that entrepreneurial energy is now a thriving and necessary part of the community.
What Nonprofits Can Teach Small Businesses
The question, “What can the small business world learn from nonprofits?” was met with an amused laugh.
Jeffreys, the clinic’s Executive Director acknowledged that hearing the question framed in that manner was unusual. “The trajectory usually goes the other way,” she said. “The think-pieces about nonprofits are built around what can nonprofits learn from the business world. There is this troubling idea that all nonprofits are run out of the goodness of people’s hearts and are operating with these low margins and from scarcity. When the image is that nonprofits aren’t as savvy or understand how to make a return on investment, people think businesses don’t have anything to learn from us. My experience is that’s not true.”
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Nonprofits have plenty to teach small business owners about managing money and people, communicating a mission, carving out a needed niche, writing a business plan, and using social media to tell their story.
To start, as tax-exempt organizations, nonprofits must be openly accountable with their finances. They are skilled in understanding what money is coming in, where it’s coming from, where it’s going next, and how to reallocate that money into the organization. “We have money coming in from individual donors, corporate donors, grants, payment for services, and government contracts,” Jeffreys explained. Each type of revenue is met with restrictions or stipulations; grant money is occasionally allocated by precise percentages. “We need full transparency with directing funds, and so we have both a bookkeeper and accountant who are beyond skilled in managing our accounts,” Jeffreys added. Robust donor tracking software and financial software equipped to handle grant tracking are key, and starting with money-tracking in place is essential.
Next, nonprofits are well-equipped to manage their different stakeholders. Led by their mission and vision, beholden to the government and a board of directors, and driven by a commitment to its services, nonprofits are capable jugglers. Having a clearcut service to the community and knowing how to communicate that service is key — also, essential: Hiring great people.
“It’s the same fallacy as before at work. There is an idea that nonprofit staff will be fine with less pay because they are choosing to work for a nonprofit. Their work becomes a service, so they should accept and be comfortable earning below their worth. It is problematic to operate in a manner that undervalues your people. Hiring higher quality staff across the board is directly related to your service,” Jeffreys said. “Nonprofits and small businesses, both, benefit when employees have a good salary and benefits, and when they can support themselves. If you underpay, that leads to burnout and a high turnover rate. If you can’t retain employees, you can’t grow.”
Growing and scaling to a point where everyone in the company is paid their worth is crucial, but many small businesses cut pay first when trying to manage their funds.
Financing issues account for the number one problem facing small business owners, according to the National Federation of Independent Business (NFIB). That is a concern both nonprofits and small businesses share. However, for nonprofits, traditional loans are not available and not recommended, and it can take up to a year (or more) for the 501(c)(3) paperwork to process a tax ID for charitable giving. During that time, most nonprofits will apply for grants and start-up funds using a fiscal sponsor (a fiscal sponsor is a nonprofit organization aligned with the new nonprofit’s vision and mission and will accept and distribute funds on the nonprofit’s behalf). Jeffreys encourages all organizations to start with a commitment to pay people their worth — with qualified and happy people leading the way, the good work follows.
In addition to paying staff, Jeffreys emphasizes the need to compensate the community for their stories. “When someone reaches out and wants to talk to a patient of ours for a story, we let them know we expect compensation for that community member’s story and expertise. We need to normalize paying people for sharing their lived experiences. Experiences are labor and that should absolutely be compensated,” she said.
North by Northeast’s Executive Director also says it’s also important for employees to have cultural buy-in. “It’s important to have a mission to guide you. It’s foundational, especially if you are setting out to do any type of racial equity work,” she said. Businesses, like nonprofits, should have a commitment to their own mission and to racial equity work; that mission/vision should be a stated part of company culture.
What’s Your Mission?
Nonprofits are accustomed to answering the question, “What’s your mission?” and Jeffreys says that small businesses and start-ups should get accustomed to answering it, too.
“With a nonprofit, we are there to protect and advance the mission. We provide services and some small businesses provide a product. If someone runs a small business, someone else might ask, ‘What do you sell? What’s your product?’ But really it should be about the mission. Have a mission statement ready, and when you start to form it, start with your stakeholders. What is valuable about your service?”
Jeffreys advises hiring a consultant. It helps to have someone skilled at mission building to look at your business or nonprofit with an outside perspective. “Don’t skimp over your staff’s opinions. They know the heart of the business better than anyone and they can tell you a lot about what works and what needs work. Ask your stakeholders what their needs are and seek information from your communities.”
Once a company can articulate its mission, Jeffreys encourages future nonprofits or mission-minded small businesses to stop and “observe the space.” All too often, a well-intentioned big idea person can stomp forward without regard for who is already doing that work in the community. Sometimes the need is already being met and a person could do greater good by joining forces or volunteering with, rather than operate in competition to the organizations that already exist in that space. “Is your nonprofit needed? Can you accomplish your goals by working on policy changes within the government? People need to come into their ideas with humility and ensure they are meeting a need.”
Reimagining Competition & Community
Like the business world, the nonprofit world can be ruthless when it comes to securing financing. There are a limited number of donors like there are a limited number of buyers, and competitions for grant money can be fierce. Jeffreys said, “Sometimes a foundation will say, we will issue $2 million for housing and health, and people apply with $7 million worth of projects. Thatâs the nature of it. And you can’t build collaboration with the competition.” And when it comes to building the health of a community, relying on propping up the health center at the expense of other amazing organizations is exhausting. She hopes there will be systemic change in how foundations give money and view community needs in the nonprofit world.
Perhaps there is a future for business that is built more on collaboration and community and less on competition, too: after all, there are many things the business world can learn from nonprofits like North by Northeast Health Center — they can show you how to apply for grants with your story front and center, your mission and services easily identifiable; they can demonstrate how to manage finances with careful attention; they will remind you to pay your staff well and if you take someone’s time in the community, pay them, too. Value the people and what they bring, and the rest will follow.
North by Northeast — thriving for the past 14 years — is a great example of what can happen when big vision meets driven and actionable steps for success. And they will continue to grow and broadcast their mission to educate the community about the needs they meet in their corner of Portland and amplify their message that Black Health Matters. Â
The post What Nonprofits Can Teach Small Businesses: Spotlight On NxNE Community Health Center appeared first on Merchant Maverick.
88% of companies mess up their employee onboarding process, according to Gallup’s State of the American Workplace report.
Chances are, yours is one of them. It turns out that most employers start onboarding too late and stop too early. Poor onboarding practices not only lower morale in new employees, they hinder productivity and will eventually cost you money.
How can you leverage your onboarding process to improve employee retention, save money, improve your recruiting, and foster better working relationships within your team?
Learn how to create a clear employee onboarding process that meets your specific needs, promotes employee collaboration, and outlines performance expectations with this simple checklist.
What Is Employee Onboarding?
It can take a while for a new hire to become part of your organization, integrate into the culture, and ultimately become a fully contributing member of the team.
The various procedures for making this transition as smooth as possible make up what we call employee onboarding.
Employee onboarding is not to be confused with employee orientation. While employee orientation can be a one-day affair, employee onboarding is the entire process of assimilation which can take months, even a year.
What Is A New Employee Onboarding Process?
The onboarding process begins even before the employee starts working officially, in a step known as âpre-boarding.â
You donât just prepare your new hire to work with your team. You also prepare your team for the arrival of their new employee. This ensures that when the new hire arrives, they are better prepared to extend a warm welcome.
New employees can feel awkward not knowing where to sit, where to put their documents, what machines to use, etc. Prepare for every logistical detail ahead of time.
Introduce your new team member to everyone that they are going to be working with. They might not remember everyoneâs name immediately, but it does break the ice, making future interactions that much easier.
Even when you are dealing with an experienced individual, you need to invest time in training them. Assign current employees to oversee new hires. It helps to have a mentor who can teach them all the ins and outs of your organization, show them how things work, and alert them to any unwritten rules or expectations of your office culture.
Remember that onboarding does not end on day one, week one, or even at the end of the first month. Check-in with your new employee on a monthly basis until the year ends to see what progress they have made, what challenges they are facing, what lessons they are learning, and their successes and failures. These monthly check-ins will hopefully address any potential issues before they seriously impact the performance of the individual and the team.
If the process is successful, in a year, that new employee should be in a position to onboard the next new employee.
Why Onboarding Is So Important
Onboarding doesnât get as much attention as it deserves. A full 30% of employees donât feel like their employers were very helpful on their first day at work.
This inattention could be costing companies a lot. An alarming number of employees start job hunting again within months of securing a new job. It is no surprise that 28% of people leave their jobs within the first six months. If your new employees are fully engaged from the get-go, employee turnover may reduce drastically.
According to statistics, the greatest obstacle to managers who want to improve their onboarding process is too many other priorities. This is tragic, particularly considering how expensive high employee turnover can be. The cost of replacing an employee runs up to 1-3 times their salary. This is the cumulative cost of training, development, poor performance, and rehiring (among other costs).
Onboarding is important for so many other reasons as well:
Productivity: Onboarding helps new employees achieve productivity much faster than they would have without it. New employees need up to eight months to become as productive as the other employees. Onboarding makes the learning curve much shorter. In Britain and the US, unproductive employees hurt companies by costing them $37 billion in losses. Unproductive employees are just plain expensive, and employee onboarding helps to reduce this cost. New employees are 54% more productive when there is a proper onboarding process in place.
Reduced Stress: Onboarding also reduces the stress of being a new employee on the job. New hires often experience a lot of anxiety in their first year at a new station. Employers can help their new hires to be better equipped for their new jobs and thereby greatly reduce this stress.
Better Working Relationships: Positive relationships with coworkers are an important part of what makes work a happy and fulfilling experience. So onboarding doesn’t just make new employees happier, it makes everyone else happier by helping to build better working relationships and aligning personal life goals to company goals. From Day One, new employees need to be mentored and feel welcomed and accepted.
Shorter Learning Curve: It takes a while for new employees to learn everything that they need to learn in order to do their jobs effectively. Onboarding greatly shortens this learning curve.
Preserved Culture: Onboarding cements organizational culture. When new employees join your organization and fit in well, the organizational culture of your company is preserved. Such traditions help to cement a common understanding of what it means to work in your company.
Opportunities For Leadership: Onboarding helps to create and establish comradeship, mentorship, and leadership among your employees. Mentorship relationships can be established and nurtured through new employee onboarding. New employees feel closer to their colleagues and they feel equal when they can keep up with their more experienced colleaguesâ performance. These positive relationships will play a role in keeping employees engaged and motivated to remain.
Increased Accountability For Managers & New Hires: One of the main causes of high employee turnover is poor handling by immediate supervisors. Comprehensive employee onboarding programs force managers to be more accountable for how they handle those under them. By regularly checking in with managers on the progress of their new team members, you are keeping track of the well-being and good relationships that will make you retain staff. Employees also have the opportunity to provide valuable feedback. Good managers check in with their employees daily to see how they are doing and whether there are any issues affecting their performance This daily check-ins help to address issues as they arise. With the digital tools available to us today, managers donât need to be there physically to conduct these check-ins.
How To Create An Employee Onboarding Process
The process of creating an employee onboarding program that works for you should be constantly improving from one hire to the next. Effective employee onboarding starts before your employee reports to work, during the recruitment and selection process. This is what some refer to as âpre-boarding.â
1) Start With A Strong Hiring Process
As part of employee onboarding, you want to make sure that your hiring process draws in people who are most likely to fit in well.
Hiring begins with identifying your need before you can set out to find someone who will meet that need. Be careful not to follow a generic formula but customize it to fit the unique needs of your business.
You may be hiring because someone has quit. On the other hand, you may be simply trying to compensate for increased workload, or a new business opportunity that you want to exploit. You may be filling a position that was vacated, or creating a new position that was not there before.
Whatever the situation, work closely with your HR department to create a recruitment plan that involves a detailed description of the new position, clear criteria for selection, a well-designed interview process, and a plan for the right person or people to conduct the interviews.
Your job description should include a list of job requirements in order of priority, specifying any desired qualifications, and envisioning the kind of characteristics and experience that you want. You also want to know exactly what kind of salary and benefits you are prepared to offer.
You’ll also need to create awareness about your new position both internally and externally. This means that people within your organization should be made aware of the new position so that they have a fair chance to apply for it.
Overall, your strategy to advertise the job should be designed to attract the kind of person you have envisioned. If you are strongly interested in filling the position internally and you have a sufficient pool of candidates internally, then you may be satisfied with publicizing it in-house. Recruit people in a way that works for you, and that helps you to get the kind of people you want.
Once the applications have come in, you can begin the selection process by reviewing applications.
The initial screening process may begin with phone calls before the actual interviews. HR officials can call the applicants in an effort to cut down the list of candidates and save on resources. Some companies may use personality tests, like the Predictive Index, or other tools to help them determine how candidates stack up when it comes to reasoning, reading comprehension, problem-solving skills, practical job skills, personality traits, IQ, or emotional intelligence.
Conduct interviews one-on-one or with a panel. Again, brainstorm with the entire team on ways to design an interview process that works uniquely for your needs.
A background check on each employee should be the next step. This includes verification of employment history, references, credit score, criminal records, or digital footprints where necessary. Some jobs may even require drug tests.
Choose the best option among the selected candidates. The time between recruitment and making a final decision needs to be reasonable. If you jump the gun, you may not make a well-considered decision. If you take too long, some candidates may have already moved on. (If no one meets the selection criteria, it is time to revisit the entire recruitment process with a view of yielding a better pool of candidates.)
Prepare an offer for the selected individual. The offer needs to include salary, benefits, time off, expected starting date, and any other benefits of working with you. Work with HR to decide which terms are negotiable and to what extent.
After this, you can begin the onboarding process for the successful candidate.
2) Get Your Ducks In A Row Before Day One
You want your onboarding process to work for you and your unique needs, so stay on brand as you create your employee onboarding guidelines. Start by designing a hiring process that attracts people who fit in better with the organizational culture, vision, mission, and goals of your company.
A prospective employee will probably visit your website at some point before or during the recruitment process. Make sure that your websiteâs career section gives accurate and relevant information about your company, its culture, and its goals. Anyone who walks into an interview should already have an idea of what they are signing up for. (Remember, people whose culture and values are compatible with yours will probably become more engaged and productive employees.)
Prepare the paperwork ahead of time: a formal offer letter, employee handbook, contracts, and everything you will need to process payroll. Some of these documents can be shared with the employee before they report to work, to avoid overloading them with new information. If they are going to be fitted with uniforms, have their measurements taken before they report. Before the new hire arrives, they should have a checklist of how to dress and what documents to bring.
Make sure to let all your current employees know ahead of time about the new hire so that they are mentally prepared to welcome them.
Everyone needs to be on the same page when onboarding the new employee: HR, Finance, IT, Team Managers, and everyone relevant should prepare together. It helps if you have the right tools to automate these systems.
3) Make A Schedule For The First Day
By Day One, you should have created a solid plan for what that day will look like on your end and from the perspective of the new hire.
New employees are not likely to ask questions whose answers they feel they âshouldâ know. Are there things they should know but might feel shy about asking? You donât want them struggling to figure out where the copy machine is, or where to find the kitchen or toilet. Think through the typical day of that employee at work and list the most basic and essential information that they will need. Answer those questions first, before they have been verbalized.
Overloading your new hire with information is just as bad as giving them too little information. So Day One should be reserved for the most essential bits. Who will the new hire be directly reporting to? Make sure that this person is present on Day One.
4) Prepare A Welcome Pack
Prepare the physical items your employee is going to need. This could include a badge, uniform, nameplate, work station, email account, software, phone, business cards, etc.
Some of these resources, like phones and work stations, might be shared with other employees, so you’ll want to prepare everyone involved.
5) Designate A Welcome Person
Assign someone on the team to answer your new employeeâs questions. This person will show them where to park, the location of the restrooms, the location of the copy machines, the cafeteria, and how to use the equipment they have been assigned.
They will answer any questions the new employee might feel too shy to ask you.
Find ways to personalize the process. If you are dealing with someone who is self-aware (which you should be, if your hiring process was right), it might be a good idea to ask them how they prefer to be managed. This will help their new supervisor to learn how best to manage their performance going forward.
(Please note that this might not work well for an entry-level individual who may not understand themselves that well, yet. For someone who is reporting for their first job, a personality test might be a better idea.)
To make the process even more personalized, you might want to do a one-on-one discussion about the new hire’s personal goals vis-a-vis the company vision, mission, and goals. If the two can align, then you are more likely to end up with an employee who stays with you for the long run. In some large companies, the CEO periodically joins in to orient new employees; the idea is for them to understand the company vision directly from the vision bearer. However you choose to handle it, the new staff member should come away with an appreciation of the big picture and the ultimate vision of the company.
Your employee should also have a clear roadmap to their own personal success at your company. How does your performance appraisal scheme work? If they understand it well, they will probably focus on what matters instead of wasting time on unimportant things.
Someone who can see a clear path ahead of them will stick around for the long run.
6) Cultivate Relationships
Your onboarding process should take into account creating positive relationships with co-workers because these are an important component of job satisfaction.
Social ties in the form of healthy relationships with co-workers can facilitate a positive work experience. Assigning an accountability partner will help you to get the most out of your new hire.
7) Focus On Company Culture
Create an onboarding process that is aligned to your company culture, and design it to last over the next year or so. After the first day, work with the employeeâs direct manager to check in with them on a monthly basis to keep track of their performance and to deal with any challenges that may have come up.
Check-ins should occur at the end of day one, week one, and then on a monthly basis for 8-12 months. These check-ins will help you to manage the employee better, and the feedback you get from them will help you to do better with future hires. Get feedback on the recruiting process, their experience working with technology and the tools at the workplace, and their own strategic goals. This will help you to see how well-engaged they are.
See the employee onboarding process as a work in progress that you perfect with every employee that comes in. Work with managers to achieve better results from each employee.
Best Employee Onboarding Tips
Follow these tips when creating your onboarding process to get the best results possible:
1) Anticipate
The process of successfully onboarding employees needs to be well thought out. Think ahead at every stage and prepare for the next step. Putting yourself in the shoes of the new employee and envisioning every stage will help you to create an effective employee onboarding process. To anticipate successfully, you have to start onboarding early.
2) Listen
Collecting feedback from your employees both old and new will help HR to create a better employee onboarding process every time. With constant iteration and willingness to learn from previous experiences, you will have an onboarding process that works better and better for you.
3) Start Early
By the time your new hire walks in, it’s too late to begin onboarding. Start early.
4) Make your Expectations Clear
New employees need to be given a fair chance to succeed. This begins with setting clear expectations from the beginning. Donât make misleading promises, and let them know exactly what they need to do to succeed with you.
Get Started With This Employee Onboarding Checklist
Employee onboarding may seem like a lot of trouble, and there are many other competing priorities for your time, but it is certainly worth every effort you put into it. An effective onboarding process will save you money, help retain employees, increase morale, improve communication, and prepare new hires for success.
For a simplified roadmap to creating an effective employee onboarding plan, just follow our employee onboarding checklist.
The post How To Create A Great Employee Onboarding Process For Your Business appeared first on Merchant Maverick.