Author: Min Tang

Categories
Operations

Outsourcing Shipping 

As your e-commerce business grows, you may want to consider outsourcing your shipping needs to a third party. Here’s how it works.

  • Outsourced shipping is when your product distribution is fulfilled by another company. 
  • There are many different solutions for outsourced shipping.
  • When choosing a shipping provider, you should consider the size of your product and your projected shipping volume.
  • This article is for small business owners who want to streamline their logistics process and move their current processes out of their garage.

When you run an e-commerce business, one of the most important details is how you ship your products to your customers. While shipping out of your garage works well when you first start a business, that model becomes unsustainable as your business grows.

There comes a point in every business owner’s life when they realize they need to streamline their logistics process, said Krishna Iyer, director of strategic alliances for ShipStation. If you’ve reached that point, you may wonder how to affordably outsource your shipping needs to third-party providers with the least disruption to your customers and business.

We spoke with industry experts to help small online retailers determine when it’s time to outsource shipping – and how to do it. 

How does outsourced shipping work?

The outsourced shipping process starts when your company purchases products from your supplier. Your product will then be shipped to your third-party logistics center for storage.

When you make a sale, you’ll forward the order to the center, and they will fulfill the order by sending your product directly to the customer. The third-party logistics center will pack up and ship your products directly, so you’ll never need to handle items before they reach customers. 

Once you have your process established, customers will be able to seamlessly buy a product, and your outsourced shipping provider will fulfill the order.

Should you outsource your shipping?

If you’ve been shipping products out of your home, trusting a third party can be difficult. Iyer said business owners need to look at their finances to decide if it’s time to use shipping software or hire another company to handle shipping.

“When looking to outsource shipping, business owners should consider where they are shipping products to most often, how intricate their fulfillment procedures are, what the returns experience looks like for their customers, and what markets they would like to expand to,” Iyer said.

Iyer listed some of the major pros of outsourcing your shipping. 

  • A shift in focus: Outsourcing allows you to focus on your core competencies, such as product development, marketing and long-term growth strategy.
  • More professional shipping: Third-party shippers are often better suited to handle shipping, packing and fulfillment.
  • Time and money savings: You can decrease your business’s order-fulfillment time and potentially save your customers money.

Of course, there are also some cons of outsourced shipping.

  • Costs: If you sell large products, outsourcing your shipping may cost more in the long run, because of the extra warehouse space needed to store your products.
  • Complex pricing: Some shipping companies have complicated pricing structures that make it difficult to understand how much you’ll ultimately pay.
  • Issues with returns: Your returns process may suffer when you use a third-party shipping company, as some customer service functions are out of your hands.

How to outsource shipping

Online retailers have a few different options when outsourcing, including renting warehouses, dropshipping and using third-party logistics (3PL) companies.

“It really depends on your business and what you’re selling, and the materials you need to do business,” said Sam Ely, director of LTL operations at uShip.

Warehouse rentals

Renting warehouses is common among growing online retailers. Merchants rent warehouse space near high-population areas so goods can be delivered to consumers faster and cheaper than they could from the business owner’s or manufacturer’s location.

Dropshipping

If you don’t want the hassles that come with renting warehouse space, dropshipping bypasses warehousing and allows you to ship orders and track inventory directly from the dropshipper. 

With dropshipping, when a customer buys a product, you (the merchant) buy the inventory from the dropshipping company, which then ships the products to the customer directly.

Third-party logistics

Third-party logistics, or 3PL, encompasses many different services. Essentially, it means hiring another business to optimize your supply chain. This company could handle shipping and warehousing, manage the inventory process, provide in-depth reports, and more.

A 3PL comes with a hefty price tag, which might be difficult for some small businesses to handle. As a business owner, you need to weigh the pros – not having to deal with the nightmarish web of shipping duties – with the cons, like the significant upfront investment these services require

How to choose a shipping provider

As you weigh your options, here are some tips from Iyer for finding an outsourcing partner:

  • Understand your business’s shipping needs. Envision the fulfillment and delivery experience you want your customers to have, and then communicate your business’s needs to the providers you’re considering. Involve your company’s various departments early on, mitigating potential issues later.
  • Shop around for shipping providers. “Understand the line-item costs for each item fulfilled,” Iyer said. “Don’t be afraid to ask for a sample invoice breakdown and a projection of what a bill will look like.” He noted that most 3PLs are locally owned and operated, so they can be flexible with invoicing structures. If you go the 3PL route, find one that really fits your needs, and ask for references with companies in similar industries if possible. [Learn more about invoices and price quotes in our guide.] 
  • Ask questions. As cliche as “open communication” and “asking lots of questions” may seem, these factors are crucial to finding the right provider, saving you a lot of headaches further down the road. “[Third-party shippers] should … have a lot of transparency in what they are doing, how they are doing it, and why they are doing it,” Iyer said. “After all, it is your product and why a customer is buying from you.”
  • Consider how a provider handles returns. An important area to consider is how a third-party vendor might handle customer returns. “How much do they put on the customer versus utilizing tools – i.e., printing a return label on the front end for a product, or having the capability to print and email a return label?” Iyer said. “How does the third party process the return when it comes in? Can they utilize low-cost return methods? These are critical questions [to ask] in keeping costs down and ensuring a better customer experience.”

Top outsourced shipping options for small businesses

There are many excellent shipping options for small businesses, some of which are household names. Each major carrier has its own small business solution with benefits and drawbacks.

USPS

The United States Postal Service is ideal for small businesses sending out a low volume of smaller items. It offers programs that make it easy to fulfill orders in-house, including allowing users to pay postage and print shipping labels online with an at-home pickup option.

USPS runs local routes daily, so it won’t have to go out of its way to deliver to your customers. However, USPS delays can affect small business operations and customer satisfaction. 

FedEx

If you ship large items that need fast delivery, FedEx is a sound option. Its small business options include a rewards program and packaging dashboard that allows you to calculate the weight and size of your packages to determine your shipping needs. 

UPS

UPS, or the United Parcel Service, can deliver large shipments in one to five business days. It also has many resources for small business owners, including the ability to schedule pickups and manage customer support, and a program that offers shipping discounts and consultations to small businesses.

How to Outsource Your Shipping [Biznewsdaily]

Categories
People & Relationships

Paperless Payroll

Most businesses stand to benefit substantially from paperless payroll platforms, though electronic payroll might not perfectly fit all companies.

As evermore business needs go digital, payroll follows suit: Paper checks and manual payroll tabulation are largely on the way out in favor of paperless payroll. Below, learn everything you should know as you consider making the switch.

What is paperless payroll?

Paperless payroll is any entirely electronic payroll system. It typically includes fully electronic tools for delivering pay stubs and tax forms, tracking employee time, creating payroll reports, and paying employees. Typically, one payroll software platform is all you need to implement all these functions. That said, no two paperless payroll platforms look quite the same, but the best payroll software has all these features.

How does paperless payroll typically work?

Paperless payroll typically works through the following steps:

1. Install paperless payroll software.

Paperless payroll begins with the installation of payroll software or HR software that includes payroll. Initially installing these platforms is typically easy, but implementing them and training your team in them can present some challenges. (We’ll address these obstacles and their solutions later.)

2. Have your employees sign up for the payroll software.

Once you install your paperless payroll solution, your employees must create accounts within the program. From their accounts, they can receive pay stubs, tax forms and, most importantly, paychecks. For the latter purpose, your employees will need to add certain information.

3. Have your employees input banking information.

To enable direct deposit, your employees must add their banking information to your payroll software. Once employees add their bank account and routing numbers, all should be in place for direct deposit.

4. Integrate payroll software with your time-tracking system.

A key function of payroll software is to link your employees’ time worked with the amount of pay they should receive for that period. Many payroll platforms achieve this task more deftly when integrated with a scheduling or time-tracking tool. This integration means you and your employees don’t have to manually enter hours worked into two platforms. It also minimizes errors that could lead to overpayment or underpayment.

TipTip: Consider these top time and attendance software solutions to integrate with your online payroll system.

5. Train your employees on the system and seek consent.

Some training will likely be necessary to get your employees up to speed on the new payroll platform, and it’s on you to provide this training. Sometimes, your payroll provider will include guided training and onboarding, relieving you of this burden. If not, you should gather your team for a debrief on how to get started.

In some states, you may need employees’ consent to pay them electronically. Learn and follow your state’s laws on the matter before onboarding employees to your paperless payroll system. In all states, you must obtain your employees’ consent to provide their W-2 forms electronically. Employees who decline must receive paper forms.

6. Generate tax forms and payroll reports.

When it comes time to pay your yearly or quarterly taxes, you’ll need tax forms to do so compliantly. Paperless payroll software generates these forms for you and can send copies to your employees as needed. It can also generate payroll reports that further detail your tax liabilities. These reports also come in handy for other needs, such as verifying employee vacation time.

Types of paperless payroll solutions

Most paperless payroll platforms fall into one of three categories: electronic payroll records, employee self-service or electronic funds transfer.

  • Electronic payroll records: This is the most basic type of paperless payroll platform. It has only rudimentary electronic payroll tracking and calculation functions, which is all that some businesses need.
  • Employee self-service: Through ESS software, you can couple your electronic payroll records with tools for other HR needs, such as benefits and employee handbooks. ESS platforms also automate employee clock-in and clock-out and thus your calculations of hours worked.
  • Electronic funds transfer: This category encompasses electronic payroll records with direct deposit tools. EFT platforms both eliminate the paper clutter associated with payroll and set up rapid payments. However, as mentioned earlier, you may need employees’ consent to set up EFT in certain states.

Benefits of Paperless Payroll [Business.com]

Categories
Branding

What Is Corporate Social Responsibility 

Businesses that practice corporate social responsibility aim to improve their communities, the economy or the environment.

  • Corporate social responsibility, or CSR, is a form of self-regulation that reflects a business’s accountability and commitment to contributing to the well-being of communities and society through various environmental and social measures. 
  • CSR plays a crucial role in a company’s brand perception; attractiveness to customers, employees, and investors; talent retention; and overall business success. 
  • A company can implement four types of CSR efforts: environmental initiatives, charity work, ethical labor practices and volunteer projects. 
  • This article is for business owners who are looking to implement or improve CSR initiatives and want to learn more about the benefits, best practices, and potential pitfalls.

The definition of business success goes beyond profitability, growth rate and brand recognition. In today’s world, customers, employees and other stakeholders judge a company by how its activity impacts the community, economy, environment and society at large. In other words, by whether it cares about the greater good and not only greater profit. Corporate social responsibility practices are a way to demonstrate your business’s stance on the matter. 

What is corporate social responsibility?

Corporate social responsibility is a type of business self-regulation with the aim of social accountability and making a positive impact on society. Some ways that a company can embrace CSR include being environmentally friendly and eco-conscious; promoting equality, diversity, and inclusion in the workplace; treating employees with respect; giving back to the community; and ensuring business decisions are ethical. 

CSR evolved from the voluntary choices of individual companies to mandatory regulations at regional, national and international levels. However, many companies choose to go beyond the legal requirements and embed the idea of “doing good” into their business models. 

There is no one way a company can embrace CSR, but one thing is certain – to be perceived as genuine, the company’s practices need to be integrated into its culture and business operations. In today’s socially conscious environment, employees and customers place a premium on working for and spending their money on businesses that prioritize CSR. They can detect corporate hypocrisy. 

To ensure CSR authenticity, a company should look at its values, business mission and core issues and determine which initiatives best align with the business’s goals and culture. The business can do this internally or hire a third party to conduct an assessment. 

Reviewing the United Nations 17 Sustainable Development Goals is a good place to start. While goals like Good Health and Well-Being or Gender Equality can apply to most businesses, specific goals like Life Below Water or Affordable and Clean Energy may be relevant to select industries like water technology or energy providers.

Why CSR is important

There are many reasons for a company to embrace CSR practices. 

1. It improves customers’ perception of your brand.

It’s increasingly important for companies to have a socially conscious image. Consumers, employees, and stakeholders prioritize CSR when choosing a brand or company, and they hold corporations accountable for effecting social change with their beliefs, practices, and profits. 

“What the public thinks of your company is critical to its success,” said Katie Schmidt, founder and lead designer of Passion Lilie. “By building a positive image that you believe in, you can make a name for your company as being socially conscious.”

To stand out among the competition, your company needs to prove to the public that it is a force for good. Advocating and raising awareness for socially important causes is an excellent way for your business to stay top-of-mind and increase brand value. 

The Kantar Purpose 2020 study demonstrated a direct correlation between perceived positive impact and brand value growth. Companies that the public considers highly impactful demonstrated a brand value growth of 175% over 12 years, while businesses with a low positive impact showed only 70% growth.

Schmidt also said that sustainable development could help a business financially. For example, using less packaging and less energy can reduce production costs.

2. It attracts and retains employees.

Consumers aren’t the only ones drawn to businesses that give back. Susan Cooney, head of global diversity and inclusion at Symantec, said that sustainability strategy is a big factor in where today’s top talent chooses to work. 

“The next generation of employees is seeking out employers that are focused on the triple bottom line: people, planet and revenue,” she said. “Coming out of the recession, corporate revenue has been getting stronger. Companies are encouraged to put that increased profit into programs that give back.” 

According to Deloitte’s 2021 Millennial and Gen Z Survey, the modern workforce prioritizes culture, diversity, and high impact over financial benefits. An estimated 44% of millennials and 49% of Gen Zers rely on their personal ethics in determining the type of work and companies they’d join. The respondents of the Porter Novelli Purpose Tracker 2021 report go even further, with 70% saying they wouldn’t work for a company without a strong purpose. 

What’s more, employees that share the company’s values and can relate to its CSR initiatives are much more likely to stay. Deloitte’s 2020 Global Marketing Trends Report shows that purpose-driven companies retain talent up to 40% more than their competitors. Considering that the estimated cost of losing an employee averages 40% of their annual salary, according to a report by the Washington Center for Equitable Growth, offering your team a sense of purpose and meaning in their work is worth the effort.

3. It increases your appeal to investors.

By demonstrating a developed CSR program and initiatives, your company is bound to become more appealing to both current and future investors. CECP’s influential 2021 Giving in Numbers report shows that investors play a growing role as key stakeholders in corporate social responsibility. Almost 80% of surveyed businesses were open to providing them with data and considering their perspectives on sustainability. Just like customers, investors are holding businesses accountable when it comes to social responsibility. 

At the same time, a company that takes CSR seriously signals to both investors and partners that it’s interested in long-term as well as short-term gain. CSR goes hand in hand with environmental, social, and governance (ESG) metrics that help external analysts quantify the company’s social efforts, and becomes a key factor for investors’ consideration and continued interest.

4 types of corporate responsibility your business can practice

In recognition of how important socially responsible efforts are to their customers, employees and stakeholders, many companies focus on four broad CSR categories. 

  1. Environmental efforts: One primary focus of CSR is the environment. Businesses have large carbon footprints, regardless of size. Any steps a company can take to reduce its footprint is considered good for both the company and society.
  2. Philanthropy: Businesses can practice social responsibility by donating money, products or services to social causes and nonprofits. Larger companies tend to have plentiful resources that can benefit charities and local community programs; however, even as a small business, your efforts can make a difference. If you have a specific charity or program in mind, reach out to the organization. Ask them about their specific needs and whether a donation of money, time or your company’s products would best help them.
  3. Ethical labor practices: Companies can demonstrate CSR by treating employees fairly and ethically. This is especially true of businesses that operate in international locations with labor laws that differ from those in the U. S.
  4. Volunteering: Participating in local causes or volunteering your time (and your staff’s time) to community events says a lot about your company’s sincerity. When your company does good deeds without expecting anything in return, you express concern (and support) for specific issues and social causes.

Building a socially responsible business

While startups and small companies don’t have the deep financial pockets that enterprises have, their efforts can have a significant impact, especially in their local communities. 

“Even 5%, though it might not sound like a lot, can add up to make a difference,” Schmidt said. “When thinking of ways to donate and give back, start local, and then move from there.” 

When identifying and launching a CSR initiative, involve your employees in the decision-making process. Create an internal team to spearhead the efforts and identify organizations or causes related to your business or that employees feel strongly about. You’ll increase engagement and success when you contribute to something that matters to your employees. Involving your employees in the decision-making process can also bring clarity and assurance to your team. 

“If decisions [about CSR] are made behind closed doors, people will wonder if there are strings attached and if the donations are really going where they say,” Cooney said. “Engage your employees [and consumers] in giving back. Let them feel like they have a voice.” 

Whichever strategies you use for sustainable development, be vocal. Let your consumers know what you are doing to be socially conscious. [Related read: PayPal’s Mission for Corporate Social Responsibility]

“Consumers deserve to share in the good feelings associated with doing the right thing, and many surveys have found that consumers are inclined to purchase a sustainable product over a conventional alternative,” Cooney said. “Announcing these benefits is a win-win from both a commercial and sustainability perspective.”

What Is Corporate Social Responsibility? [Biznewsdaily]

Categories
Finance & Capital

Stagflation

Stagflation is like an imperfect storm, a weather happening with lots of contributing factors. Stagflation is an economic condition caused by a combination of increasing inflation and high unemployment rates, which cause a decrease in consumer demand for goods and services.

In a good economy, there’s a balance, where slow steady economic growth is in step with consumer demand. With Stagflation, the economy is out of balance in a bad way.

What Does Stagflation Mean?

Stagflation occurs when high inflation happens at the same time as high unemployment. Despite recent growth in the unemployment rates, the country is still about 2 million jobs shy of employment numbers in pre-pandemic days.

The pandemic also caused problems that are contributing factors to Stagflation, such as supply chain issues. Lack of product contributes to inflation because rising prices are the result as consumers vie to purchase from an insufficient supply.

To understand Stagflation, economists look at the whole picture.

Is Stagflation a Recession?

What is stagflation, compared to recession? Sadly, and alarmingly, there are levels of Stagnation. At its worst, it’s an economic cycle that can lead to recession. Economic policy actions are taken to combat stagflation, such as raising the interest rates, as the federal reserve did in May and again in mid-June 2022.

Yet when the federal reserve raises interest rates in an effort to combat inflation, that can worsen unemployment rates – as employers fight to run their businesses while facing higher costs. When inflation jumps and the federal reserve approves interest rate hikes, a period of stagflation occurs. Stagflation at its worst is a Recession.

Stagnation Vs. Inflation

High inflation and unemployment rates affect each other. Higher inflation means consumer purchasing power lessens. They have less money to spend. When the money supply is tight for consumers – in other words, when their dollars don’t go as far – they pull back on spending.

That puts a crunch on businesses. During periods of inflation, leading to stagflation, no real economic growth can happen. Economic research has proven that businesses put growth plans on hold during such times. The businesses are also facing price pressures, as their costs for supplies, utilities and borrowing capital increase.

Stagflation Vs. Economic Stagnation

Economic stagnation is a period of no economic growth. It is a stage of stagflation, marked by higher prices for goods, including raw materials that businesses need, and services. Many economists would agree that as economic stagnation periods lengthen, the possibility of recession looms larger.

What Causes Stagflation?

Most economists define stagflation as being caused by these five factors:

Negative GDP Growth

GDP is the Gross Domestic Product, which is a measure of the country’s domestic output. Supply-side economists factor in the rate of inflation when calculating the true GDP. For the past 2 years, the GDP has been in decline due to slow economic growth. Higher growth in the GDP indicates a healthy economy.

High Unemployment

Unemployment rates have been decreasing since pandemic restrictions eased, but the economy hasn’t returned to pre-pandemic employment numbers. At the same time, small businesses were largely unable to compete for workers compared to the higher wages that medium and large businesses could offer. The unemployment rate is low, but the US is still 2 million jobs less than pre-pandemic levels.

Supply Chain

The pandemic caused supply shocks all through the chain, from production to delivery. As the economy faced a lack of supplies, the higher demand for items threw price controls out the window. Supply chain issues contributed to the rise of inflation.

Interest Rates

The federal reserve raised interest rates in hopes of keeping inflation from reaching the double digits and settle the economy. Inflation is a contributing factor to stagnation, as consumers and businesses have less money to spend. Discretionary spending decreases as money is set aside for necessities, such as financial obligations and utilities. When the Fed raises interest rates, central banks soon respond by also raising rates.

Inflation

High prices are part of inflation. Inflation affects businesses, who pay more for supplies and utilities. Their customers are facing the same challenges and reduces spending.

Stagflation and Economic Growth in the US

It’s not as if Stagflation is something new. It can be part of the economic cycle in every government. The US had a period of stagflation in the 1970s. Then-President Richard Nixon initiated a monetary policy that put a 90-day freeze on wages and prices, and levied a 10% tax on imports. Stagflation still hit its lowest point with a national recession.

What is Stagflation? [Smallbiztrends]

Categories
Finance & Capital

Inflation Affecting Business

In order for a business to succeed, it’s important for its owners to understand the factors that can impact their bottom line. One of these key factors is inflation. The Federal Reserve targets an annual inflation rate of 2%. However, the rate is currently at 8.6%. Inflation is a result of the broader economic trends at play in the market. In this article, we’ll explore how inflation affects businesses and what owners can do to mitigate its impact. Let’s dive in!

How Does Inflation Affect a Business?

Inflation affects businesses in many ways. Especially when it comes to cash flow and purchasing power. This puts pressure on small businesses and can lead to a decline in profitability. Inflation is, therefore, a major concern for business owners and needs to be carefully managed.

While inflation can have negative effects on businesses, it’s important to note that not all businesses are equally affected. Those that are able to pass on higher costs to consumers through raising prices are less likely to be adversely affected by inflation than those that cannot.

10 Ways Inflation Affects Businesses

Inflation affects businesses in a number of ways both positively and negatively. Let’s take a look at 10 of the most common ways below:

1. Supply Chain Disruptions

Inflation can lead to supply chain issues as gas prices continually rise and business owners strive to source materials at the lowest possible cost. These supply chain shortages can lead to delays in production and ultimately, a decline in revenue.

2. Consumer Price Index Increases

If consumers are paying higher prices for goods and services, the Consumer Price Index (CPI) will also increase. This, in turn, can lead to rising costs, and a decrease in buying power for consumers and businesses alike.

3. Shortage of Raw Materials

As businesses seek to source materials at the lowest possible cost, they may inadvertently create shortages of raw materials. This can possibly lead to production delays and a decline in revenue.

4. Increasing Interest Rates

Inflationary pressure often leads to the Federal Reserve increasing interest rates. The Federal Reserve raising interest rates leads to higher borrowing costs for businesses and a decrease in profitability.

5. Decreased Consumer Spending

As the purchasing power of consumers decreases, they are likely to cut back on spending. This can lead to a decline in revenue for businesses that are reliant on consumer spending.

6. Increased Overhead and Inventory Costs

The increased cost of materials can lead to higher overhead and inventory costs for businesses. This can eat into profits and reduce the company’s bottom line.

7. Harder to Invest

When inflation is high, it can be harder for businesses to invest. This is because the return on investment (ROI) is often lower than the rate of inflation. This can lead to a decline in profitability and growth.

8. Higher Employee Wages

Inflation can lead to increased wages for employees as they seek to maintain their buying power as prices rise. This puts pressure on businesses and leads to a decline in profitability.

9. Old Debt Becomes Cheaper

As inflation goes higher, the value of debt decreases. This can be beneficial for businesses as it makes it easier to repay old debts. While old debt becomes cheaper, new debt becomes more expensive, leading to higher borrowing costs for businesses and a decrease in profitability.

10. Increased Competition

Inflation can lead to increased competition as businesses strive to maintain market share. This can put pressure on margins and lead to a decline in profitability, but it can also lead to innovation and growth.

How Small Business Owners Can Prepare for Rising Inflation

While inflation can have a number of benefits, such as stimulating economic growth, it can also lead to price increases for goods and services. As a result, it’s important to have a pricing strategy in place that can help you absorb some of the impacts as inflation rises.

One option is to raise your prices in line with the rate of inflation. This will help you maintain your profit margins and prevent your business from being priced out of the market. Another option is to offer discounts or promotions that help offset the increased cost of goods and services. Whatever strategy you choose, it’s important to be proactive about inflation and take steps to protect your profits.

How Inflation Impacts Businesses [Smallbiztrends]