Category Archives: Business

Estimating the Average Interest Rate for a Small Business

The question what is the average interest rate for a small business loan is debatable because of varying determining factors such as different types of product, different business and different levels and kinds of risk involved. Each of the above factors demands a different rate of interest, and they all merge to alter those rates in a manner that makes a definite  “average”  that’s false.

First American merchant feels merchants should be guided on how to determine their small business loan interest rates depending on their type of businesses and many other factors.

Type of Small Business Loans- which one do you prefer?

There are two types of Small business loans: lines of credit and installment loans

A line of credit is more or less like a credit card. Once the lender sets a maximum amount of funds, you can borrow at any instance. If you like, you can borrow against the set credit limit to raise some working capital for your business. Every month, you repay an amount you are comfortable with (often with a set minimum). When you clear the balance your account remains active, and you can use the funds anytime you need them.

Just like with a car loan, an installment loan allows you to have a loan of a set amount of cash. The lender expects you to make monthly payments on your loan until you have repaid a total of the interest, the fees, and the sum you borrowed. When you clear the balance, the loan is fully paid, and your business rapport with your lender is over.

Which is the better option?

As you can see, the financial relations are very different. An installment loan is cheaper to maintain, and a safer investment for the lender since it provides stable monthly income, and according to statistics, they are more likely to be repaid in full. This, therefore, means a financial provider like First American Merchant can offer you an installment loan at a relatively lower rate of interest than a business line of credit.

On a weighing scale, an installment loan’s rate of interest and that of a line of credit does not give a comprehensive assessment of which option is better. Although with a line of credit you can enjoy convenience and flexibility which is not the case with an installment loan, these features cost more due to the expenses and risks that they come with.

Newspapers will no longer

Only a few years ago, a “web log” was a little-known way of keeping an online diary.  At that time, it seemed like “blogs” (as they quickly became known) were only for serious computer geeks or obsessives.

This didn’t last long, though, and within a very short period of time, blogs exploded – blogs were everywhere, and it seemed that almost everyone read blogs, or was a blogger.

The blogging craze of a couple of years ago (when it was estimated that ten new blogs were started somewhere in the world every minute) now seems to have died down a bit – yet thousands of blogs (probably the better ones) remain.  Blogs are no now longer seen as the exclusive possession of geeks and obsessives, and are now seen as important and influential sources of news and opinion.  So many people read blogs now, that it has even been suggested that some blogs may have been powerful enough to influence the result of the recent US election.

Blogs are very easy to set up – all you need is a computer, an internet connection and the desire to write something.  The difference between a blog and a traditional internet site is that a blog is one page consisting mostly of text (with perhaps a few pictures), and – importantly – space for people to respond to what you write.  The best blogs are similar to online discussions, where people write in responses to what the blogger has written.  Blogs are regularly updated – busy blogs are updated every day, or even every few hours.

Not all blogs are about politics, however.  There are blogs about music, film, sport, books – any subject you can imagine has its enthusiasts typing away and giving their opinions to fellow enthusiasts or anyone else who cares to read their opinions.

So many people read blogs now that the world of blog writers and blog readers has its own name – the “blogosphere”.

But how influential, or important, is this blogosphere really?  One problem with blogs is that many people who read and write them seem only to communicate with each other.  When people talk about the influence of the blogosphere, they do not take into account the millions of people around the world who are not bloggers, never read blogs, and don’t even have access to a computer, let alone a good internet connection.

Coaching That Need to Know

1
Coaching is a useful tool in today’s challenging world of business and commerce. Companies are downsizing, merging and restructuring and there is far more job transition than before. Sometimes managers are no longer equipped to do their work because their jobs have changed so much. They were originally trained to do one job but that training cannot be applied to the job they are doing today. Coaching is also one of the most powerful tools that a leader has in order to improve the performance of his team.

2
Coaching is a partnership between an individual or a team and a coach. For the purpose of this article we will refer to an individual but the concepts are exactly the same for a team. First of all the individual identifies his objectives. Then, through the process of being coached, he focuses on the skills he needs to develop to achieve those objectives. In professional coaching the individual begins by leading the conversation and the coach listens and observes. Gradually, as the coach begins to understand the individual’s goals, he will make observations and ask appropriate questions. His task is to guide the individual towards making more effective decisions and eventually achieving his objectives. Coaching looks at where the individual is now and where he wants to get to.

3
Between the initial interview and an individual achieving the goals he identified, there is a process in which the two parties meet for regular coaching sessions. The length of time each session lasts will be established at the start of the partnership. Between sessions an individual might be expected to complete specific tasks. A coach might also provide literature for the individual to study in preparation for the following session. Most coaches employ an “appreciative approach” whereby the individual identifies what is right, what is working, what is wanted and what is needed to get there. An appreciative approach focuses more on the positive rather than problems.

4
An individual who enters into a coaching partnership will usually adopt new perspectives and be able to better appreciate opportunities for self-development. Confidence will usually grow and the individual will think more clearly and be more confident in his roles. In terms of business, coaching often leads to an increase in productivity and more personal satisfaction. All of this leads to a growth in self-esteem.

Competencies used in Human Resources

  1. Some years ago when executives and managers talked about the type of employees they wanted to contract for their businesses they spoke of skills and qualifications. These words are still used but have been overshadowed by the term competencies. Competencies are a concept taken on board by Human Resource departments to measure a person’s appropriateness for a particular job.
  2. In simple terms a competency is a tool that an individual can use in order to demonstrate a high standard of performance. Competencies are characteristics that we use to achieve success. These characteristics or traits can include things like knowledge, aspects of leadership, self-esteem, skills or relationship building. There are a lot of competencies but they are usually divided into groups. Most organisations recognise two main groups and then have numerous sub groups which competencies can be further divided into.There has been a lot written about competencies. It is easy to see how people can become easily confused by what a competency actually is. It is also essential that people in the world of business have a clear understanding of what different competencies are and, in particular, which competencies are of interest to them – either as an individual interested in self-development – or as an employer looking for the best candidate for a job.
  3. Competencies can be divided into two distinct types; technical competencies (sometimes referred to as functional) and personal competencies. As the name suggests, technical competencies are those which are related to the skills and knowledge that are essential in order for a person to do a particular job appropriately. An example of a technical competency for a secretary might be: “Word processing: able to word process a text at the rate of 80 words per minute with no mistakes.”  Personal competencies are not linked to any particular function. They include characteristics that we use together with our technical competencies in order to do our work well. An example of a personal competency is: “Interpersonal Sensitivity: Demonstrates respect for the opinions of others, even when not in agreement.”

Triggers That Pull Companies

Since Cesare Mainardi and I published Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap (Harvard Business Press, 2016), a lot of businesspeople have told us that they feel too far removed from the companies we heralded in the book. After all, our examples of highly distinctive and successful companies focused on iconic brands like Apple, Amazon, Frito-Lay, IKEA, Lego, Natura, and Starbucks. Each of the companies we profiled had succeeded in building capabilities that gave them a winning edge. And they were coherent: They applied those capabilities to every product and service and to the overall way they created value. This gave the companies powerful identities that no one else could copy.

While it may feel daunting to follow their example, we believe that any company can do the same. The five acts highlighted in the book — commit to an identity, translate the strategic into the everyday, put your culture to work, cut costs to grow stronger, and shape your future — add up to a path of development that a growing number of businesses have followed, and that leads to a compelling, consistent level of growth and performance.

When we discuss these ideas with business leaders across regions and industries, one question often comes up: How can we get started? We know it’s not easy to begin. In fact, with every one of the highly capable companies we studied, the leaders of the company pulled a “trigger” — a signal, loud and clear, of the need for change. The leaders thus pushed their companies to abandon conventional wisdom and build the long-lasting, capabilities-based advantage they needed. These triggers are available to you as well; you can use them to generate the confidence (and sometimes the desperation) needed to invest everything in developing a strategy that works.

Different ways of complaining

  • Face to face
  • By phone
  • By email
  • By letter

Let’s first take a look at the advantages and disadvantages of each before concluding which is the most effective.

Picture this scenario: you have bought a faulty item from a shop and you take it back to complain. You go directly to the shop assistant and tell them your problem. They say they cannot help you, which makes you angrier, to the point perhaps where you start insulting the poor shop assistant. RESULT: This will do you no favours, like getting any compensation, or even a refund. If you go directly to the first person you see within the organisation you are complaining about, you may be wasting your time as they may be powerless to take any action or provide you with a solution. So the important lesson to be learnt is to make sure firstly that you are speaking to the relevant person, the one who has the authority to make decisions.

Perhaps you don’t have time to actually go and see the relevant authority in person so you decide to make a phone call. The problem with complaining by phone is that you may be passed around from department to department, making you more and more angry until you finally give up. Either that or the phone is hung up on you, which leaves you fuming even more. Furthermore, any contact can be denied.

The same applies to emails too, which can additionally be deleted, or even manipulated.

This leaves us with the traditional letter. When we first make a complaint the usual response is a request to write a letter:  “Can you put that down in writing please?”

The advantages of writing a letter of complaint are that:

  • Written records are still very important, e.g. in legal matters as opposed to a fax or email.
  • You have complete control over what is being said, and you can present evidence.
  • You can be prepared, and plan your letter carefully.
  • You are able to keep copies of anything sent in writing.
  • You have time to reflect and/or consult as opposed to complaining on the spot.

So here are some useful points to consider when writing your letter:

  • State what went wrong exactly. You need to provide concrete evidence, with documentation, for example a receipt, where possible. Make sure you keep copies of all correspondence, including relevant documentation. You also need to state where, when, who was involved, what was said or done. Photographic or video evidence boosts your case.
  • What do you expect from your complaint?  If you are complaining about a situation at work, focus on taking action to improve situations rather than spending your time complaining.
  • State a time limit for when you expect a reply.
  • Be assertive, and stay calm.
  • Make sure you address the complaint to the relevant person.

This will be more likely to ensure that you will achieve a satisfactory outcome from your complaint. Good luck!

Described the workplace immediately

Restructuring initiatives can have a debilitating effect on the hearts and minds of employees, affecting those who stay as well as those who are let go. In our work with dozens of organizations implementing sweeping cost-cutting programs, we have observed firsthand the turmoil that employees experience — and how frequently their needs are forgotten during the crucial work of planning for the transformation.

But what if the restructuring were more than a slash and burn? What if it appealed to hope instead of fear? What if it not only promised, but actually delivered, a stronger company and a better place to work? Cost management is effective only when it leads to a less sclerotic, more aspirational enterprise — one without suffocating bureaucracy or micromanagement, in which initiative and entrepreneurship are encouraged and rewarded, internal processes serve the customers and employees instead of “the process” itself, and the company outperforms the competition consistently. If the restructuring doesn’t help the company get stronger — if it doesn’t lead to a better way of working for everyone in it — then it probably wasn’t worth conducting the exercise in the first place, because the effects won’t last.

Company leaders embarking on a cost management effort therefore face two challenges. First, they have to make the right sort of promise to employees: that cost reductions will be not only fair, but also productive. This transformation is not intended simply to permit the company to survive a few more years — it is intended to set the company on a path to greater prosperity and thus better jobs for those who remain.

Second, leaders have to deliver. They can’t just embark on a project out of desperation. They have to have a credible way to move the company forward, and to make cuts that will serve that goal. The only way to accomplish this is to start with strategy — to have a clear idea of which activities are truly critical to the company’s success, and which are distractions or merely nice to have — and to follow through by cutting costs to grow stronger.

To be sure, many in your company — not just employees, but some senior executives as well — will remain skeptical throughout the early stages of the process. They know that cost cutting means layoffs, and that these are devastating to both individuals and teams. You can’t convince them in advance that you will handle the process differently in the future than your company has handled it in the past, and few companies have a good track record in this domain.

The feelings stirred up by an announcement of a cost-cutting action are powerful, and to help people see beyond them, you’ll need to enlist the help of your middle and frontline managers. It’s easy to overlook the important role these individuals play as the restructuring unfolds. It falls to them to communicate the rationale for the restructuring, to keep morale as high as possible during the transition, and eventually to lead their part of the organization to working in a different way. They need your support. Empower them to communicate and lead, not to just passively watch their departments be trimmed without a rationale. They can help their people understand the reasons for the particular choices that were made, and realize that the company, and by extension most employees, will ultimately be better off as a result. In so doing, these managers can earn their people’s trust by helping them see that becoming more efficient and effective is both a path for survival and a better way to operate.

One shoulder and a devil

The angel works to guide Starbucks toward its better instincts: to retain the vision that impresario Howard Schultz had of re-creating a European café for an American (and now a worldwide) clientele, a “third place” that’s neither work nor home, where you can take your time, and where you pay more for coffee than you would at the deli down the street.

On the other shoulder, a devil whispers of the temptations of growth. The desire to grow pulls Starbucks, and all companies, toward the logic of scale — repeatability, robust processes, efficiency, speed. Growth in and of itself is a good thing; but it can go wrong if growth and scale come at the expense of vision, identity, or customer experience.

Few companies have resolved the tension between identity and growth as successfully as Starbucks. So as Schultz prepares to leaves the CEO post to head up the company’s new, ultra-upscale Starbucks Reserve venture, it’s worth reflecting on what he has accomplished — not just for coffee drinkers but for business thinkers — and why his vision can endure beyond his tenure.

 

Beyond Beans

Schultz was a master of what is now called service design long before the phrase came to be. Like the cafés Schultz sought to emulate, service design — what a business does to set and meet the expectations of the customers it wants — has its roots is Europe.

Everything about Starbucks — from the Italian names for small, medium, and large-size drinks to a carefully considered counter height that lets you see the baristas work to hundreds of combinations like half-caf-latte-with-two-shots that let you personalize your beverage to the nth degree — was designed to make the customer slow down and smell the coffee, in a distinctly European way.

First to rebound after the financial

The conventional wisdom within the banking industry about its troubles since the recent global financial crisis goes something like this: Rightly or wrongly, regulators imposed new rules that forced banks, particularly in the U.S. and Europe, to adopt new, less risky (and less rewarding) business strategies. The challenges of enforced constraint were exacerbated by macroeconomic developments, lack of customer trust, new digital technologies, and upstart financial technology–oriented competition — in other words, by external factors the banks had little ability to influence.

But the most critical factor constraining banks after the financial crisis was not external at all. It was the banks’ own strategy. When they took steps to become coherent, they began to recover and thrive.

A study conducted by Strategy&, PwC’s strategy consulting group, analyzed banking performance during and after the financial crisis. We found a strong correlation between strategic coherence, performance, and recovery. (Coherence, in this context, means the degree of alignment among a company’s strategy, its capabilities, and the portfolio of products and services it offers.) Among the 17 large banks that we studied, all based in Europe or North America with operations around the world, the most coherent in 2007 were the most stable performers throughout the seven years that followed. As for the rest, those that moved decisively after the crisis to become more coherent saw the greatest performance improvement. Other banks — those that took either tentative steps or none at all — took longer to recover.

In studies of coherence in business — such as Strategy That Works, by Paul Leinwand and Cesare Mainardi (Harvard Business Review Press, 2016) — it’s rare to hear financial-services companies mentioned. So we set out to explore whether coherence could make a difference in banking. The answer appears to be a resounding yes.

The competency of relationship building

When we talk about the competency of relationship-building in the world of business, we are referring to building strong relationships with partners and clients – about using interpersonal skills to network in an effective way.

 

What does a competent relationship-builder do?

Somebody who is competent at relationship-building focuses on understanding the needs of the client and getting the best possible results. This competency promotes an ethic of client service and so an understanding and anticipation of a client’s changing needs is essential. Stress and conflict are other issues that a competent relationship-builder will manage – keeping composed and acting as mediator when conflicts arise.

 

How can I start to develop the competency of relationship-building?

First identify the business plan goals of your department and decide what your role is going to be in helping to achieve those goals. You will need to study the business plan and learn as much as possible about your clients’ activities, interests and needs. This information might be available in their own annual reports or in client surveys conducted by your company. Talking to your clients about how you can best meet their needs is also a sensible first step to take.

 

Seven steps to becoming an effective relationship-builder:

  1. Draw up a plan of what you need to do in order to give your clients what they want. Discuss your ideas with your line manager and then do what is necessary to implement the plan.
  2. When the plan has been set in motion, schedule regular meetings with your line manager to review the progress that you are making and make any necessary adjustments.
  3. When you are working as part of a team or group within a department or a company it is important to assess your contribution to the group’s work. Think about how your efforts help or hinder progress.
  4. Make a weekly analysis of your commitments. Set yourself a goal for each week so that you follow them through. Make an effort to do what you say you are going to do – and also, to do it by the time that you say it will be done. If you get into the habit of doing this it will become like second nature.
  5. Build up a file of contacts and classify them in a way that is meaningful for your particular work context. Then you will know exactly who to call with any queries or when you need information.