Core Competencies for Optimized Cash Flow

The ability to optimize cash flow is a priceless asset to any business, especially for those looking to grow. But optimization depends on building a cash management culture where every team member can contribute.

Cash flow optimization is a relatively simple concept. To be successful, a business must generate more cash than it expends. However, the details of optimization are more complicated than that, and any small business owner knows that it’s much easier said than done. Expenses continue to build, and cash-consuming day-to-day tasks take up valuable resources that could be spent on growing the business.

It’s not just the responsibility of the person in charge. To implement an effective cash-flow system, the entire team needs to be aware of the best strategies to increase available resources and profits. This is especially challenging when not all team members are particularly financially savvy, so systems must be put in place to keep the culture focused on optimization.

Below are some core competencies for optimized cash flow, and they apply to each level of the business—not just its leaders.

Setting up quality reporting and analysis

When fostering a cash management culture within your business, your team needs a reporting tool that’s both accessible to everyone and can generate useful reports on cash-flow data. This information is crucial for allowing you to forecast the future in any reliable way.

As a report from Deloitte suggests, your cash flow reporting system should involve connecting your income and cash-flow statements to metrics on your balance sheet, including things like days inventory on-hand or days payables outstanding. Also, evaluate payments for debts and other expenses and include everything in your reporting method so that you have a full picture.

One model to implement is known as financial planning and analysis (FP&A), which is used by businesses to provide visibility into where the company has been, where it is currently, and where things are headed. FP&A asks: What patterns exist with both incoming and outgoing assets and receivables? How can these factors become aligned with working capital? What trouble spots currently exist, including things like late payments?

Once all of these factors have been identified, it’s crucial to continue to monitor these baseline metrics to see what changes. The data analysis will then lead to more successful actions and decision-making to optimize cash flow.

Making sure your payment terms are aligned

One big problem that many entrepreneurs face is allowing vendors or creditors to receive payments within different periods than the customers who are paying the business. For example, vendors receive payment within 30 days, while clients are paying you within 45. This can create problems with cash flow because you can run out of funds to pay your bills on time.

Create a company policy that all payables and receivables are aligned in their payment terms. It will save a lot of headaches for your team and the effort of tracking down funds.

Checking around for the lowest prices

A great way to engage team members in cash-flow planning and problem-solving is to assign someone with expertise about vendors and suppliers in a given industry to find lower-cost suppliers. While the quality of services should be a top priority, it’s possible and likely that you’re not getting the best deal out there, and changing suppliers may not impact quality.

Lowering expenses is an effective strategy to improve cash flow, so start by brainstorming areas where you could save money, however small.

Not relying on snail mail

Another way to optimize cash flow is to stop using snail mail to send your invoices. Many electronic tools allow you to send and receive funds, speeding up the entire billing process substantially. There are also vendor management platforms you and your team could use that offer vendor portals, where invoices are uploaded, and electronic transactions are managed. Sometimes these systems are automated, meaning transactions can happen much faster, if not instantly.

Aligning your funding and expenses

Every business has both short-term and long-term expenses. But each of these need to be aligned with actual sources of funding (both short- and long-term), so that the two match and you can ensure that the cash needed to handle obligations is accessible.

Part of managing a small business is making sure that cash flow is optimized, leading to sustainability and long-term growth. These core competencies will help you and the entire team stay aligned on how to improve cash flow now and long into the future.

When you need assistance implementing procedures and systems to grow your business, the team at Provident CPA & Business Advisors can help. We also assist with tax minimization strategies and deploy the Entrepreneurial Operating System (EOS) for any industry or business model. The EOS helps align teams under a straightforward, achievable vision. Contact us today to get started.

The Fine Art of Constructive Criticism in the Workplace

When you’re expanding your business, there will be lots of growing pains along the way. Diplomacy is a key factor in a successful team-management strategy.

It’s never fun delivering criticism to your employees. But there are many times when it’s a necessary part of running a business. Entrepreneurs and business owners must harness the art of constructive criticism to manage a successful team. This means you’re not being aggressive, condescending, or controlling when offering guidance and feedback to employees.

These strategies will help you approach the team with diplomacy and a level head while getting the right points across.

Be straightforward

All too often, managers beat around the bush with passive-aggressive communication tactics. It’s much more useful to everyone involved when you can communicate a constructive criticism in a detailed, straightforward fashion. This way, the employee doesn’t leave the conversation confused about what they’re supposed to change or what you think of their performance. It also means you should talk about the specific ways the behavior can be reversed, making your expectations for the next steps clear.

Try asking questions to make sure they fully understand the review, especially if the issue is something that they weren’t aware of before you talked.

Be conversational

Being straightforward and honest doesn’t mean you have to be belittling or even stern. Show employees that you’re going to hold them accountable while approaching the conversation with a positive attitude. Depending on the issue at hand, try being more conversational instead of setting up a very serious discussion (unless the problem is, of course, very serious).

Relay positives first

It’s always a good idea to start a feedback conversation with the positives. This lets the employee know that you appreciate their work and that they are bringing a lot of value to the workplace and company. Then, get into the things that could have been done better.

Even if the meeting is solely to address the criticism, it’s still a good idea to start out positive. Otherwise, the employee may feel attacked and less motivated to improve.

Give feedback in private

Never embarrass employees when providing constructive criticism. Avoid giving any negative feedback in front of other team members, unless the comment is meant for the team as a whole. Your point will be missed when you embarrass someone, leaving them feeling resentful, angry, and ashamed.

Constructive criticism means you’re delivering your message in a positive way that will actually help the team member improve and do things differently next time. Meet privately, so you both feel more comfortable sharing how you really feel.

Focus on the facts and the issue at hand

Make your constructive criticism applicable to the individual, without it being about the individual personally. Why is this task or behavior important for this employee’s specific job duties or even career goals? What role does this person play at the company that you can relate to the criticism? Stick to the facts about the problem.

Focus on the issue at hand, and not the employee’s personality traits or habits. Make it about the business and the person’s professional performance, instead of calling out someone’s personal shortcomings.

Avoid punishments

We’re all adults. Unless something majorly inappropriate has happened, avoid punishing employees when they make a mistake. Often, constructive criticism will address a problem that the worker doesn’t even know exists, so it’s unlikely to be a recurring problem. Unless an employee has overstepped again and again or clearly had questionable motives, treat your team members like capable adults.

Be willing to keep the discussion going

Some employees won’t take criticism well. It’s just part of having a team of diverse individuals with different professional priorities. If you sense that a conversation is going down a negative or hostile path, or you can tell that the person is becoming upset or uncomfortable, table the discussion—for now. Check back in when the dust has settled to assess questions or concerns or finish the conversation you started.

Don’t continue to push employees until they become angry or frustrated with the conversation. Doing so will make the criticism much less effective.

When you need help aligning your team with your vision or creating a successful business model, get in contact with our team at Provident CPA & Business Advisors. We use the Entrepreneurial Operating System (EOS) model to help you work through the six key components of any business: vision, people, data, issues, processes, and traction. We also help with growth and profit-improvement strategies designed to enable long-term business success.

Why Map the Client Journey?

Consumers aren’t required to know what it’s like to run your company. But your company needs to know what it’s like to be your customer.

As a business owner, you’re tasked with not only creating a profitable model and ensuring efficiency, but also creating a meaningful and satisfying experience for your customers. Your business wouldn’t exist without them, so these considerations should be top priorities when planning and strategizing.

Mapping the client journey (aka customer journey) is a must for any business. Doing so helps you understand their perspective and how they may view your business, each step of the way. Without understanding what it’s like to be your customers, you’ll never be able to reach them effectively and in meaningful ways.

Why map the client journey?

The ability to walk in your customers’ shoes gives you visibility into their motivations, decision-making tactics, and behaviors. You already know why you started your business and the value your products and services offer. But customers won’t know right away—it’s your job to show them.

Even if your product is the best on the market, there are many factors along the customer journey that will impact whether or not they engage with you or make a purchase. According to a report from PWC, one in three consumers will walk away from a brand they love after having just one bad experience. And 73 percent of consumers say that the customer experience is an important factor when deciding whether to make a purchase.

This is why it’s crucial to view your business from the client’s perspective. What kind of experiences, thoughts, and feelings do they have when engaging with your brand? What surprises them or frustrates them?

You need to understand the full experience of being a customer to make more meaningful connections, which will ultimately strengthen your business.

Client journey map: Where to begin

Your client journey map starts by clearly defining each point of interaction between you and the customer. This helps you shift the focus from your products and services to how customers will actually be engaged, and what they will experience along the way. These phases of interactions can then be paired with what the customer feels, thinks, and experiences during each stage.

The client journey map will look different for every business. Factors that impact your map include things like whether you’re online or have a storefront, and your industry, target audience, location, and more. But the customer journey map must start tracking from the initial point of contact through engagement and action, and into nurturing the long-term relationship. Each point of contact with the client must be evaluated.

An example of a client journey map could be the following:

  1. Introduction to the brand (walking by the store, seeing an ad). How did they hear about you?
  2. Initial communication and connection (visits the store or website, calls you). How did the first point of contact take place?
  3. Bringing in the new client (onboarding to your company, teaching the process). Is it clear to the client how the process will work?
  4. Planning and checking in (coming up with the strategy and executing it). Are you catering planning to each specific customer? Are you following up and checking in regularly to ensure satisfaction?
  5. Ongoing communication and support (continued outreach, availability, feedback requests). Are you thanking customers and continuing to give them offers and information? Are you supporting them after their purchase?

Create a similar map that’s specific to your business, and each touchpoint that your clients are likely to go through.

While creating your map, customer experience points to consider include:

  • Motivation. What’s driving the customer’s choices at each stage?
  • Preferences. How do they prefer to interact with the brand?
  • Engagement. What are they most interested in throughout the journey? What questions do they have?
  • Emotion and behavior. How does a message make a customer feel, causing them to act one way or another? How do feelings and emotions drive customers to behave?
  • Roadblocks. What’s getting in the way of a customer’s ability to get what they want?

Gathering and analyzing information

Your customer journey map could take the form of an actual map, a graph, or a chart. For instance, you could have a row for each stage at the top of a table, and the client-experience considerations listed above on the left-hand side. You can then track each experience consideration during each phase.

You’ll need to harness a range of tools and techniques to gather this information, including online analytics that track trends and behavior on social media platforms, email campaigns, and your website. You’ll also need to ask your customers about their experience at each stage. This requires using a feedback tool, like a survey or a popup question, to gauge their satisfaction at different stages of the journey.

Take the customer journey yourself. Approach each stage as if you know nothing about the brand or product. What strikes you as welcoming or frustrating? What changes could you make to be more engaging? How do the messages make you feel?

Creating a customer journey map is an excellent step toward better engaging clients and improving the customer experience. But this is just one part of strategizing for growth. At Provident CPA & Business Advisors, our professionals are ready to help you create a growth and profit improvement plan that aligns all aspects of your business. Get in touch with our team to learn more.

How to Define Your Company’s Core Values

Today’s businesses must be clear about who they are, what they believe in, and how their business model proves it. This starts with defining core values.

For long-term growth and sustainability, your business needs to have a clearly defined vision that’s shared across the company. And it should be accessible and consistent to the outside world. This is only possible when teams are aligned on the business’s core values and integrate them into every aspect of operations.

Your business model should also prove that your core values drive actions and decision-making. Learn what core values look like, how to discover and define them, and how to put them into action.

What are core values?

Your company’s core values should be derived from the reasons you started the business in the first place. What drives the passion and purpose behind your products or services?

Core values define the way your employees approach their work, the way teams interact, and overall company culture. Core values back up your company’s vision and mission, showing individuals within the organization as well as the outside world, what matters most to the business. For example, the quality of products and services is usually related to core values, so that if something isn’t reaching the set standard, it shouldn’t be offered or should be reworked.

Company values should include the philosophies and principles that—at their essence—govern every decision. And they should align with all messages that are sent out to the public, whether on your website, on social media platforms, or in advertising campaigns. Perhaps more important is the ability of a business to interact with its customers in ways that only reflect its core values.

Steps to defining your business’s core values

So, where do you start? It’s a process to discover your core values, and they shouldn’t just be arbitrarily set in one brainstorming session. Instead of coming up with core values and then trying to fit the company into them, it’s better to do it the other way around. This ensures that your values are authentic and are centered around why the company exists.

To begin this process, ask yourself why you started the company. What was most important to you about your products and services? What’s your story? What need were you aiming to fill in the market? What do customers get from you that they can’t get elsewhere? These questions will help you nail down the fundamental purpose, which leads to well-defined values.

Then, start asking team members who have been around the longest, or show the strongest commitment to the company. What do they feel are the core values of the business? What drives them to support the mission of the business? What are they passionate about at work?

Common company values are often related to the company’s integrity and responsibility, its specific services, relations with the community, commitment and dedication, diversity, and similar considerations.

These questions and business soul-searching tactics will help you create a solid identity for the organization—one that can be clearly defined and followed in decision-making, customer interactions, marketing, and company culture.

How to put them into action

It’s important to ensure that core values drive action and decision-making. Remember that these values are both internal and external and, unlike business strategy, are fixed and typically don’t change over time. This helps ensure that all aspects of the business are aligned and working toward the same goals.

Core values should be apparent in hiring and retention strategies, benefits offerings, client communication, advertising, and brand awareness. On your business’s website, clearly define what your core values are. This is not something you want to be mysterious about. Put it all out there, and come back to these values throughout your content and communications.

Incorporate them into the onboarding of new team members, interviews, emails, meetings, development, training, employee and customer feedback, and more. With new projects, discuss the company’s values—how does this project align with what you’re all about?

Defining core values and incorporating them into your every business practice keeps teams aligned and the brand message consistent. When you work with Provident CPA & Business Advisors, our professionals use the Entrepreneurial Operating System (EOS) model to help you define and clarify your core values, as well as a range of other elements to help you grow.

Contact us to learn more about our growth and profit improvement services.

Cultivating a Winning Work Culture

The modern workplace is more than just a wage generator. The best companies define, build, and nurture a unique employment culture that benefits employees and customers.

Workplace culture is a crucial component of fostering a satisfying environment for employees while engaging customers.

A strong company culture provides many benefits for businesses, including higher employee retention rates, attracting top talent, more engagement from employees and customers, and increased productivity, to name a few. According to a Global Culture Report from O.C. Tanner, when companies put effort into building a robust culture, engagement increases by 6 percent.

Cultivating a positive work culture takes time. But it starts with defining company values, focusing on people, and leaders setting the example.

What comprises work culture?

Workplace culture has many elements and moving parts. It is often defined by how employees interact with one another, how they feel about the work they’re doing, how they feel about the company, and how effective they are. Workplace culture is generally centered around the mission and vision of the organization, which should be clearly communicated to the team, and often.

Essential aspects of the company’s values should be repeatedly touched upon in meetings and company-wide communications. For a positive work culture to become a reality, everyone has to be on the same page.

Company culture also impacts the business’s clients and customers. If negative attitudes are widespread and apparent in the office, it’s not the type of environment where people want to work.

As the Society of Human Resource Management indicates, factors that shape company culture include:

  • The company’s values
  • The hierarchical structure
  • The degree of urgency with which the organization approaches decision-making and innovation
  • Being people- or task-oriented
  • Functional orientation
  • Subcultures within the company

The benefits offered to employees, including health, wellness, and work-life balance benefits, also can shape company culture and underlying attitudes about work.

It starts with leadership

Unfortunately, many company leaders may forget that it’s the responsibility of executives to create and nurture a good company culture. They may become frustrated when employees aren’t motivated, not recognizing their role in the process.

As the Entrepreneurial Operating System (EOS) emphasizes, leaders must own company culture, communicate it regularly, expect it from everyone in the company, and live the message by example. Actions and decisions must be deliberate, and leaders need to remember that what they do and say sets the tone for the entire workplace.

The importance of accountability

Staff members need to know what their roles and responsibilities are to be able to do their job well. One tool that helps clear things up is an accountability chart, which provides clear expectations and functions for everyone on the team. While you may think that employees should know where they stand in the hierarchy, it may not be as apparent as you think.

Being clear and holding employees accountable are musts when building and nurturing a productive, effective environment at work. Accountability shows employees that their roles and responsibilities matter to the company, and it’s never uncertain where they fit into the bigger picture.

Focus on your people

Finally, you’ll never truly know how your employees and customers view the company’s culture unless you ask them. Surveys are useful tools to gauge how satisfied employees are with their work responsibilities, executive leadership, or the company culture as a whole. Asking for feedback can help you find inconsistencies or gaps in the workplace culture to work on.

Additionally, involve employees in decision-making and ask for their opinions in meetings. People who are given a voice are generally more satisfied at work. They feel like they matter to the company, and they’re aware of their role in the organization’s mission. A survey from the American Psychological Association showed that workers who feel valued by their employers were more likely to be satisfied with their jobs and motivated to do their best at work.

Once a positive, productive workplace culture is in place, it can always change. That’s why it’s an aspect of your business that must be continuously revisited and cultivated. New technologies and work arrangements can change workplace culture, so be adaptable to what employees want and what customers expect.

At Provident CPA & Business Advisors, we help businesses clarify and achieve their vision. We use the Entrepreneurial Operating System model, which focuses on the six key components of business: vision, people, data, issues, processes, and traction. Contact Provident today to learn more about our growth and profit management services.

Ethical Entrepreneurship: The Impact and Strategies of Ethics

A growing number of global consumers want companies to have an ethically responsible vision and values, or they’ll spend elsewhere. How can small business owners start focusing on their “ethical footprint?”

As an entrepreneur, you have plenty to worry about as you try to bring in profits and get your name out there. But growing your business now also depends on meeting the expectations of more value-aligned workers and consumers. These values are largely driven by the younger generations—Millennials and Gen Z.

A RetailMeNot survey from 2019 revealed that 66 percent of respondents—made up of US internet users over age 18—feel that more brands should take a public stand on social values, and 74 percent of respondents ages 22 to 37 think this way.

These younger generations care greatly about whether or not the brands they’re supporting have put ethical policies in place or are taking steps to become more sustainable with their business practices, products, and services.

Gone are the days when you can ignore your business’s impact on the world around you. Your ethical responsibilities should be at the forefront of business strategy.

So, where to begin?

Ethical issues faced by entrepreneurs

New businesses are often faced with many ethical dilemmas. When money is tight, and products or services are new, it’s easy to try to cut corners or go the cheapest route, rather than the most ethical one.

Common ethical dilemmas faced by entrepreneurs include things like:

  • Whether to put out a product or service offering before it’s ready, risking quality
  • How to follow through on what you say you’ll do when lack of funding or other roadblocks get in the way
  • Whether to provide employees fundamental benefits that are hard to afford right away
  • Whether to focus on what’s cost-effective versus environmentally friendly options

Going the less-than-ethical route can be especially tempting when the business is still small, and there aren’t many people to keep each other accountable.

Environmental considerations

Creating an environmentally responsible company is one way entrepreneurs focus on fostering an ethical business. Our impact on the environment has been a pressing topic for years now, but it continues to stay top of mind for businesses, consumers, and workers, especially as younger generations are taking over workplaces.

A recent survey commissioned by Swytch, a clean energy blockchain platform, shows that more than 70 percent of millennial employees would be willing to accept a smaller salary in exchange for working for a company that’s environmentally responsible—10 percent said they’d even take a $10,000 pay cut.

But these concerns aren’t just held by workers. A Nielsen report indicated that 66 percent of consumers would pay more for brands that are sustainable, and 73 percent will pay more for sustainable products and services.

Environmental considerations include anything from using natural energy resources to offering cruelty-free products. If you’re just starting out, it can be a challenge to factor in the environment when you have a lot more on your plate. But making this a priority will help you start things off with ethics in mind, setting the stage for years to come.

Creating a clear purpose

To keep yourself and your business accountable, make sure that your actions and products are in alignment with your mission and vision. This first requires, of course, that you develop these concepts thoughtfully for your business and share them with the team. Your mission and vision will help you to maintain consistency and keep the end goal in mind while making decisions.

Defining and establishing your values early will help you and the team stay aware of the business’s commitment to transparency, and it will motivate everyone to stay within the ethical boundaries of the business. Your purpose will also be clear, which is a good reminder of why you’re doing what you’re doing.

Focusing on people

You wouldn’t have started your business without the people you want to help with your products or services. Instead of simply focusing like a laser on your bottom line, always remember that—at the end of the day—people are driving your business growth. This focus applies to both your customers and your employees.

Treating your customers well and prioritizing their needs is an ethical way to run your business. But without putting them at the top of the list, it can be easy to forget this simple truth. Your audience needs to believe in your brand and your services—and that starts with being an ethical leader.

Ethics are a broad concept, covering everything from whether to fudge financial reports or skirt waste disposal regulations to how you treat your employees, customers, and the environment. But in every aspect, having an ethical business begins with defining your purpose and vision. It extends to your operations, customer service practices, online engagements, the organizations you support, and how you treat people.

And in the end, ethics help generate success.

Provident CPA & Business Advisors serves successful professionals, entrepreneurs, and investors who want to get more out of their business and work less, so they can make a positive impact in their lives and communities. Typically, our clients reduce their taxes by 20 percent or more and create tax-free wealth for life. Contact us for expert advice on tax planning and business strategy, and to find out how we can help your business exceed your expectations.

Investing in Your Business or Paying off Debt: Which Comes First?

Both options can be wise and move your enterprise forward. But business owners need to know which step to take, right now, before parting with precious cash.

The dilemma is ongoing for entrepreneurs: Should you invest in your business or pay off debt? Which is more important, and which should come first?

Investing in your business means you’re putting time and money toward things that will pay off later, like a new marketing strategy, new supplies, hiring an employee, taking a professional development course, or many more options.

While many of these investments sound appealing—and they may grow your organization and create significant ROI—it’s worth taking a look at your debt before spending on your business.

How do you decide where to start? Unfortunately, there’s no black-and-white answer. But when you weigh these pros and cons and assess the kinds of debt you have, you should be able to come up with the right answer for you, right now.

The benefits of investing in the business first

We’ve all heard the old adage: You have to spend money to make money. This line of thinking means that you have to give yourself the resources you need before your business will take off. Success doesn’t happen overnight, and you need to invest in the tools, technologies, equipment, and people.

Even if you’re short on cash and saddled by debt, the benefits of investing in your business first are:

  • You can start earning more money now (for example, with a new business offering or by attracting leads through a new marketing vehicle)
  • Freeing up time by hiring a new employee—allowing you to focus on strategy and growth
  • Speeding up processes and operations by investing in a new tool or platform

Sometimes, entrepreneurs will initially forgo a salary and put that money toward business needs. While this isn’t possible for everyone, it’s one way that owners can invest in their business to give it the boost it really needs.

Just make sure that you’re not spending money you don’t have (e.g., using credit cards or dipping into earmarked funds) to grow. Undisciplined spending and resource management will make it far more challenging to balance cash flow properly.

The benefits of paying off debt first

Paying off debt is one of the best feelings in the world, whether you’re paying off business or personal loans. A weight is lifted, and you can start planning what to do with the money you’ve been paying to your debtor each month.

As an entrepreneur, you know how taxing it can be to continue to pay off the debts you’ve accrued. You may reach the point where you have enough money saved up to pay it off—but you’re unsure if it’s wise to give up the cash on hand, should an emergency or another unforeseen expense arise.

The key benefits of prioritizing debt pay-off:

  • You’ll avoid paying interest that would continue accruing; depending on the terms of the loan, this recurring cost may be significant.
  • Your credit score will improve, enabling you to acquire more capital for unforeseen expenses or expansion.
  • You get rid of the huge liability that debt can be for a small business—a burden that ends many enterprises.

While all of these benefits may sound great, you still need to make sure this is the right way forward. For some businesses, cash is king—depending on where you are in the growth cycle.

Making the call: Invest or pay off debt?

First, consider the types of debt you have when deciding whether you should invest or pay off debt. Questions to ask yourself include:

  • What kinds of debt do you have, such as revolving credit or long-term loans?
  • How high are the interest rates?
  • How much interest could you save by paying the debt off now?
  • How manageable are your monthly payments?

For example, if you have a long-term equity loan leveraging a piece of property—the monthly payment is small, and the interest rate isn’t too high—it could be a smarter idea to invest in your business now and continue making the debt payments.

Also worth noting is that sometimes, you can defer or mitigate interest on your debt by acquiring a new loan, or simply lower it by renegotiating terms with a current lender.

If, however, you’re looking at short-term debt that has a very high interest rate, it’s probably smart to tackle that debt as soon as you can.

A good rule of thumb: compare the potential return of investing that money in a relatively conservative investment vehicle. If you have no hope of achieving better returns than your current interest, tackle the debt, and free up future capital. This same rule applies to the business: carefully analyze the potential ROI of a new investment, such as the tangible benefits of making a new hire. The closer you can nail down these numbers, the clearer a decision will be.

Finally, there is one rule that precedes making a new business investment or paying off any debt: always make sure that you have an emergency savings fund on hand in case you need it.

Provident CPA & Business Advisors specializes in helping small business owners minimize taxes, plan for the future, and take tangible steps that lead to growth. Contact us today to learn more.

The Vital Role of Customer ROI and Customer Experience

The customer is always right, and in the age of social media, their feedback has a big impact on your business—good or bad. That’s why every business strategy should focus on customer ROI

The proliferation of and dependence on the internet has brought many pros and cons for businesses large and small. You can more easily connect with your client base and benefit from positive reviews, recommendations, and discussions. Yet when a customer has a negative experience, a bad review can mean that a lead will opt for a competitor after researching your brand.

A report from Forrester indicates that customer experience drives revenue growth, and customer-experience leaders outperform laggards by 24 to 26 percentage points within the cable and retail sectors.

Because customer impressions have a lot of control over your business’s performance, customer ROI is one of the most important strategic considerations. The value of your offerings to the customer needs to align with cost—otherwise, customers certainly won’t be satisfied with their experience.

Learn why the customer experience and customer ROI should be top priorities for your business:

Customer ROI: An overview

Customer ROI is what your customers get out of your products or services; the value of what they paid for compared with what they actually paid for it.

You’re likely all too familiar with assessing ROI for your business, including marketing costs and how much impact they’re making. But how often do you take a step back to assess the ROI for your customers?

Focusing on the customer experience means that you’re assessing and updating your products and practices based on what the customer wants and what will satisfy them. It’s not just about making money—any successful business owner knows how important quality is to keep the lights on. But going farther than quality is providing a unique service that a customer can’t get anywhere else, even if it’s taking one extra step to show that you care.

Asking your customers for feedback is a good first step to assessing whether or not they’re happy with your business’s offerings. Send out a survey. Or implement a feedback pop-up on your website so that consumers can interact immediately when interacting with your brand—or when they’ve just purchased something.

It’s then wise to follow up after the fact to make sure they’re still satisfied. This gives you valuable data while making your customers feel valued. When this is the case, they’re more likely to make repeat purchases and recommend you to their friends and family.

Feedback and customer ROI

When you have happy customers, it strengthens your relationships with your audience while providing you important opportunities to improve aspects of the business. Satisfied customers may leave positive reviews and start good discussions about your business online, which will impact referral and recommendation rates.

In Nielsen’s Global Trust in Advertising Report, 83 percent of respondents said they trust recommendations from friends and family. One happy customer could lead to a domino effect and win you a lot more business.

In the same report, 66 percent of respondents said they trust consumer opinions that are posted online. While that’s great news for your business when you get a stellar review, it also means that negative reviews can have a major impact.

So where does customer ROI come into play? The fact is, your customers will only be satisfied if they feel that they’ve made a valuable purchase. If they feel like they paid too much for a product or service that didn’t meet their needs, they’re likely to talk about it. But if they felt they paid a reasonable price for outstanding service, then they’ll feel satisfied with their investment: the ideal customer ROI.

Customer experience and business performance

Focusing on the customer experience is directly related to performance. According to the State of CX Management report from Temkin Group, 73 percent of companies that have above-average customer experience maturity show better financial performance than their competitors.

Another report from Temkin Group showed that if customers have a “very good” experience, they’re 3.5 times more likely to make additional purchases than if they have a “very poor” experience. They’re also 5 times more likely to recommend a business if they have a very good experience.

If customers aren’t satisfied with their ROI, they’ll simply stop spending with the same brand or product. Qualtrics report entitled “What Happens After a Good or Bad Experience” showed that 22 percent of customers decrease their spending and 19 percent stop doing business with the company they had a bad experience with.

Not only do you have to worry about a blow to your reputation after bad feedback is posted and shared, but you also have to worry about the negative effects on your business performance. As a small or medium-sized business owner, you just can’t afford to ignore how important customer ROI is to your business strategy.

The team at Provident CPA & Business Advisors is here to help you with growth and profit improvement. We help entrepreneurs achieve financial freedom by putting together the business’s building blocks along the way. Contact us today to learn more about our services.

How Can Competitive Analysis Help You Grow Your Business?

Scrutinizing the competition is a valuable tool. Learn the importance of competitive analysis and what it can add to your business strategy.

No matter what your customer base looks like, chances are they are moving more and more toward doing everything digitally, including how they find companies, products, and services. Your customers now have instant access to a host of brands to compare, so it’s more important than ever to stay ahead of the game and keep your competitive edge.

When attempting to grow or sustain your business, one of your main concerns should be finding out what the competition is up to. Almost all Fortune 500 companies (90 percent) have some kind of competitive intelligence strategy, according to research published by Emerald Publishing. And if the big companies are doing it, there’s likely a very good reason.

Studying what competitors are doing right is helpful to any growing business. But it’s equally worthwhile to analyze what these other organizations are doing wrong. This opens up a world of opportunities for entrepreneurs who are trying to stand out.

Here’s a look at how competitive analysis works and the key benefits of the practice.

Identifying key competitors

Before you can perform a competitive analysis, you have to know which companies and brands you should be analyzing. This involves identifying both direct and indirect competitors:

  • Direct competition: These are the companies that provide the same or very similar services to your business. You’re essentially targeting the same audience, and clients will compare you with these organizations when making a final decision.
  • Indirect competition: Indirect competitors are businesses that provide different products or services from you, but who are still vying for the attention of the same audience. They may be in the same industry as you, for example, even though exactly what they provide is different.

While direct competitors are the most important entities in competitive analysis, your indirect competition is still worthy of an evaluation.

Finding your closest competitors takes research. It’s smart to get feedback from your clients or potential customers when possible, asking them who else they are (or were) considering for certain goods or services. You can also ask them questions about how they were unhappy with another company, giving you more insight into how to stay competitive.

Another way to identify competitors is to engage with your customer base on social media and track the conversations they’re having. This also helps you figure out which competitors are using which social media platforms.

Measuring online metrics

Keyword research is one of the easiest ways to find competitors and evaluate the strategies they’re employing for marketing and outreach. What kinds of keywords are they using, and what are they not using? This can open you up to opportunities to bring in new keywords and outperform your competition, or to show you what part of their strategy is working.

Once you have this information, doing a simple Google search with these keywords will give you new insights and will also reveal competitors that you may not yet be aware of.

Another strategy for evaluating competition is using pay-per-click ad monitoring. Using a tool like Spyfu allows you to see what kind of advertisements your competitors are purchasing. This tool also shows you which keywords companies buy on Google AdWords.

Other metrics to track and analyze include your competitors’ backlinks, the questions their customers are asking online, social media mentions, and their online reputation overall.

The benefits of a competitive analysis

Now that you know the basics of how to get started, let’s go over the benefits of competitive analysis.

  1. Identify and take advantage of industry gaps. When you know what your competitors are doing, you can think through what they’re not doing, too. These gaps in the market give your company more opportunities to stay competitive by taking a different angle or offering something that’s missing.
  2. Keep up with industry trends. One of the most important parts of running is business is making sure you’re keenly aware of what’s going on in the industry. Competitive analysis keeps you on top of current trends and what’s no longer popular. This keeps you closer to your customer base and its needs.
  3. Market more effectively and grow your business. When you can reach more of your ideal audience and sell more of your products or services, this keeps your business on the path for continued growth.

Using the Entrepreneurial Operating System

Any entrepreneur knows how challenging it is to manage every part of your business while trying to focus on growth and outreach. The Entrepreneurial Operating System (EOS) has all the tools you need to stay competitive, improve the skills of your leadership team, obtain focus on what matters, and continue growing. Part of the EOS is ensuring you have the data you need for better decision-making, both within the business and about how to challenge your main competition.

At Provident CPA & Business Advisors, we are committed to helping you keep your business on track. We help you implement the EOS so you can define and achieve your vision. Contact the Provident team today to learn more about how we can help.

The 2 Faces of KPIs: People and Organizational Performance

KPI can refer to key performance indicator or key person identification. Both of them are important for business growth and performance

The success of a business depends on a multitude of factors, from marketing to growth strategy to operational efficiency. But people really drive performance, and learning how to identify and measure weak links is a crucial step in the path to growth.

The term KPI is largely used in two different business contexts. Key performance indicator is a well-known term in the marketing world, as well as within operations management and analytical decision-making. And key person identification is also vital for many business strategies.

Though these definitions of KPI represent different concepts, they’re related. Knowing how to capitalize on both of them can make all the difference to performance.

Key performance indicator

Key performance indicators (KPIs) help a business track its progress toward specific goals and growth. A KPI is some kind of measure that tracks performance, allowing businesses to understand whether or not goals are being reached. KPIs help team members focus on a specific part of the business to measure success and help them create and evolve strategies and tactics based on data.

These kinds of KPIs require target setting and progress tracking, as well as indicator improvements and updates throughout the process. KPIs that improve business performance must show evidence of progress, must accurately measure the targets that have been set, and must be able to track important factors of operations including quality, timeliness, and efficiency.

KPIs can be related to varying aspects of the business including:

  • Financials
  • Customer metrics
  • People or employee metrics
  • Process and operations
  • Strategic measures
  • Project tracking

Key person identification

Now let’s look at the other definition of KPI: key person identification. This concept involves identifying who should be considered key personnel within the organization—those who perform essential functions for the business. Because the most important business operations and decisions are made by individuals, this knowledge is a crucial part of establishing a high-performing organization.

In the event of a disaster, for instance, you must know what tasks must be completed and by whom. This version of KPI asks: Who is performing vital functions?

Identifying these individuals first requires businesses to create a list of vital functions, and then recognize the personnel who perform them. It’s an important part of any company’s emergency preparedness plan. The contact information of these people should be saved with the plan, as well as a second list of individuals who could perform these functions if the key personnel aren’t available for some reason.

This is not limited to having redundant skills or retaining individuals to deal with emergencies, however. Placing the right key individuals in the proper roles—and, ideally, duplicating their skills in others—is vital to both consistent operation and scalable growth. Many businesses are limited by the centralized talents of certain employees or the fact that they put the wrong individuals in the wrong positions.

Key personnel have usually been with the organization for a long period, they have performed well in their role, they are trustworthy, they know where important business information resides, and they have a lot of knowledge about their given department and the business as a whole.

KPI helps businesses avoid the risks of key-person dependency (KPD), which include losing valuable knowledge and even revenue if a key person is lost. KPD risk occurs when a business could see losses in productivity, profits, or even reputation if a key person leaves.

These risks can be combated with back-up plans, having multiple key people learn and do the same tasks, and instituting a succession plan. Another strategy is purchasing key person insurance, which helps a business pay its bills and function while it finds a replacement after the loss of a vital employee.

The 2 faces of KPI are related

Business performance depends on both types of KPI. If measures can be identified and used for decision making, and if a plan for key personnel is put into place, your business can see big impacts on performance and steady growth. Tracking key performance indicators helps you to identify key personnel, so one informs the other.

The EOS (Entrepreneurial Operating System) is a solution that helps your business identify key people and key performance indicators.

You can create and share your vision so that everyone is aligned across teams, ensure that the vision is being executed, and help leaders become and stay effective. Quarterly rocks, annual goals, and three-year goals, as well as many other benchmarks, are assessed, in part, by defining key performance indicators.

The People Component of the EOS focuses on the individuals who drive performance. It provides an accountability chart that delineates the structure, roles, and responsibilities of employees to help keep you on track to growth. Also included is the People Analyzer, which helps you identify whether or not your people are right for the business, a specific role, and your vision. It evaluates an employee’s GWC: whether a person Gets it, Wants it, and has the Capacity to do the job.

Provident CPA & Business Advisors helps entrepreneurs utilize the EOS to get the most out of their business, helping them evaluate their people and performance components to ensure they have the tools for success. Contact us today to learn more.