What Does 2022 Have in Store for You?

The last two years have been unlike any other in our lifetimes. As we close out 2021 and enter 2022, it’s an excellent opportunity to reflect on the lessons we’ve learned, how life looks today, and what we want to accomplish in the next 12 months. Here are some things to consider.

Celebrate Your Successes

Give yourself time and permission to review what you have completed in 2021. When you zoom out to your 30,000-foot view, you’ve likely learned and accomplished more than you think. Compare your status on January 1, 2021 with today, and celebrate the changes you’ve made and projects you’ve finished.

Monetize These Trends

Several trends will continue from 2021 into 2022 and beyond. How can you monetize them in your business?

• The move to remote work is likely to continue in many industries, including financial services and technology, where the work is delivered digitally. Hiring virtual workers also benefits employers by giving them access to a larger talent pool and the ability to reduce overhead costs associated with a physical office.
• Expanding your online presence, including ecommerce if it’s relevant, is paramount. Most businesses allocated resources to improve the online interface between company and customers, as the shift toward online spending increased due to the pandemic. Some brick-and-mortar businesses adapted their business model to develop new digital services, enhancing their current product line.
• Climate changes affected many businesses this year in at least two different ways. Some were victims of extreme weather disasters. Some became more visibly supportive of climate initiatives, working them into their mission and offerings.
• Accelerated automation using artificial intelligence will continue to move through the technology adoption curve. If you haven’t considered adopting the technology yet, now is a good time to ask yourself: can your business benefit from AI-driven tech solutions?
• Diversity and Inclusion initiatives will continue to be a central focus in 2022 and beyond.
• Workforce demographics are finally changing. More young people are working in 2021 compared to pre-pandemic numbers, while workers over 50 are retiring at a faster-than-normal rate. Millennials are starting businesses in large numbers, and one statistic shows that 80 percent of those businesses are profitable.
• Staffing struggles are real in many industries. Many business owners who can no longer find employees have had to resort to outsourcing, contract, part-time, virtual, and many other capacity options to keep their businesses afloat.
• Social responsibility has been prioritized by the Millennial and Z generations, leading business owners to ask how they can do their part in their businesses.
• Life-goal realignment is something that has swept the world as people experience a collective wake-up call as a result of the pandemic. The search for purpose and meaning is one of many side effects of this trend. Be sure to consider how this shift in mindset is affecting your customers and employees.

Set 2022 Intentions

If a resolution feels like an empty promise to yourself, consider reframing your goals as intentions that you can always realign yourself to. The New Year is often one of the best times to reflect on how you can incorporate the trends above with the personal and business successes you’d like to complete by the end of 2022.

Make your list, then schedule milestones on your calendar so you can track your progress.

Above all, we want you to have a healthy, happy, and prosperous New Year in 2022.

Holiday Shopping: 2021 Trends and Opportunities

With 2020 came a significant migration from exclusively brick-and-mortar retail to a hybrid model with inventory available for purchase online. The 2021 holiday sales season will require businesses to continue their online migration from 2020 trends, with opportunities for more refinement and improvements. The key to a successful holiday sales season? Bring as much inventory as possible online and integrate all of your customer touch points into an omnichannel of positive experiences.

Let’s take a look at some trends in retail that can strengthen your business and position you well for the new year.

Strong E-Commerce Presence

As shoppers increased online purchasing and delivery last year, the trend is expected to continue beyond the pandemic. For this reason, all businesses should strengthen their online presence, especially their e-commerce presence.

Many retail establishments benefit from a complete ecommerce solution, including a storefront, shopping cart, online payment process, and automated fulfillment. They can expand their online effectiveness with these features:

• Enable chat features between customers and store clerks to simulate the conversations customers would experience by shopping in the physical store.
• For clothing, post detailed sizing charts, imitate the dressing room mirror with try-on automation, and use size-inclusive photography featuring models of different body types.
• Create how-to videos that show customers ways to effectively use the product.
• Expand photography so customers can see all angles of the product as well as how it can be used.
• Display and sort user reviews to help customers make the best purchase decision for them.
• Implement clear navigation and search options so customers can find what they want.
• Consider a ‘buy online, pick up in store’ policy. Today, many customers research online, then visit the physical location to finalize their transaction.

Expanding your business’s e-commerce presence doesn’t just apply to retail. For example, businesses in the services space have implemented appointment-setting and payment processing. Real estate agents have enhanced virtual home tours. Many businesses with physical goods and documents have beefed up delivery options and implemented curbside pickup.

Each business has a unique sales cycle that a customer goes through when purchasing goods and services. The question for business owners to ask is how they can bring most of that experience online.

Mobile

The vast majority of transactions are now occurring on mobile devices. If your business’s mobile presence is not optimal, then you’ll want to make that a priority this year to catch up with your competitors.

Social

More and more consumers are using social media channels – Instagram, YouTube, TikTok, Snapchat, LinkedIn, Pinterest, Twitter, Clubhouse, and Facebook — to discover and purchase items that delight them. Wise business owners will invest more budget into attracting customers from this channel.

Holiday Seasons

With the move to online shopping, the holiday season has been extended from just one day or one weekend to entire months. Consumers are shopping earlier and all year long. Retailers and other businesses can benefit by always having some kind of sale or attraction going on. 

How does your business fare when it comes to a fully online experience? Use these trends to boost sales growth in 2021 and beyond.

As the holiday season quickly approaches, now is the perfect time to begin considering how you and your business can express gratitude to your customer base, colleagues, and more during the season of gratitude and beyond. 

When to Say Thank You

There are many opportunities in business to say thank you:

• When a customer or associate sends you a referral that results in business
• When an employee goes out of their way to fix a problem or make a customer happy
• When a customer makes a large purchase, large from their point of view, as well as yours.
• When a vendor over-delivers
• When someone sends a gift
• After a speaking engagement or an event when someone has hosted you
• When someone provides advice that has been helpful, whether face to face or in a book or article
• When someone does a favor or something nice that you’d like to reward

Keeping thank-you notes top of mind will help you think of more opportunities to use them.

What to Say in Your Thank-You Note

You don’t have to be an excellent writer to pen a heartfelt thank you note. Be concise about what you’re thanking them for and share a meaningful detail about the item or activity involved. And then thank them again.

If you are unsure about what to say, type up a draft first that you can edit. Then rewrite your final draft on your stationery. It’s far more personal to hand-write your thank-you note than to use a computer-generated one.

Thoughtful Details

Personalized stationery for thank-you notes is a thoughtful detail. It adds a formal and professional touch to your thank-you note, enriching the experience for the recipient. If penmanship is a concern, or the sheer volume of thank-you notes you’d like to send has your hand cramping at the thought, Handywritten offers a a fast and affordable option to outsource the effort while still retaining your sentiment and the impact of a handwritten note.

Be mindful, however, to avoid turning your thank-you note into an advertising event for your company. If you want to send promotional items such as t-shirts, mugs, or other items, do NOT include them with your thank-you card, as it shifts the focus from the individual(s) you’re thanking back to yourself. A separate follow-up package with swag is a nice way to compound the impact of your note. 

Helping others feel gratitude is the fastest way to experience happiness. Sending thank-you notes is not only good business, it’s good for our health and wellness, too.

If your business model includes granting credit to customers or accepting payment via recurring credit card charges, you need to ensure that you’re prepared for the unexpected. Inevitably, a customer might fail to pay on time, provide you with their updated credit card information, or their check bounces. So, what can a business owner do to spend as little time chasing these items while still collecting the cash? We have four suggestions: re-examine your credit card policy, be proactive, manage payment failures and disputes quickly, and develop a foolproof collections policy.

Re-examine your credit policy

Are you collecting credit card payments for goods or services retroactively? If so, is there any way you can have credit customers pay upfront? For example, perhaps you can collect a deposit to minimize your risk. Alternatively, you could request final payment right before delivering the final product. Or, maybe you can convert credit terms to a layaway situation, similar to the standard retail practice.

The best way to speed up collections is to change your payment terms if at all possible.

Be proactive

To avoid a significant delay in payment, send your customers proactive email reminders before the payment is due. You may also want to consider calling anyone who hasn’t been timely with their payment in the past before their next due date. If a customer is late with a payment, respond quickly. 

If the customer pays by credit card, monitor credit card expiration dates, and send reminders to update the card before it expires.

Lastly, you’ll want to ensure that your business’s online support portal allows customers to easily update their credit card information at any time. Again, automating this process will save you a ton of time.

Payment failures and disputes

Inevitably, a customer’s payment will fail, whether it’s an automatic credit card payment, ACH withdrawal, or failed/bounced check. As a business owner, you need to have solid procedures for you or your employees to process these exceptions.

Before any of the above payment failures occurs, make sure your shopping cart, merchant account, or gateway processor is set up to notify you of the failure. When it happens, contact the customer right away to correct the situation. Assess any extra fees and flag the customer account if you want to place a hold on their account or restrict future payment or credit options available to them. 

You may also have customers that report disputes to their credit card company. There is always a tight deadline associated with these transactions, so be sure to respond timely and make sure you have all of the documentation you need at the time of sale if this comes up.

Develop solid collections processes

If the payment is late, start your collections routine. Send out friendly reminders at first, then get progressively aggressive as the payment grows later and later.

Follow-up steps are critical. Make sure your customer is getting your notifications, and give them a call before deciding to take legal steps with them.

Finally, if necessary, turn the payment over to a collections agency to impact the customer’s credit report and possibly collect your money.

We hope you do not have too much of this activity in your business. But if you do, being proactive is one of the best ways to reduce it. Check to see if you have all the processes described above in place to handle collections in your business so that your cash continues to flow.

If you’re continuously looking for ways to increase your profitability, then you’ll want to learn about direct and indirect costs. Breaking out your expenses into direct and indirect categories can help you arrive at the most profitable sales volume for your business.

Direct Expenses

Expenses that fall into the “direct cost” category relate directly to the items you sell. Below are a few examples: 

• If you owned a flower shop, the cost of the flowers would be a direct cost. So would the vases, ribbons, cards, and labor required to create your beautiful floral arrangements.
• If you’re a partner at a law firm, the labor, and any materials or supplies spent on serving a customer would be a direct cost.
• If you operated a pool construction company, the concrete, tiles, filter, pump, and labor costs to build the pool would be direct expenses.

Direct expenses will vary proportionally to the volume of items you sell. The more you sell, the higher your direct expenses. The less you sell, the lower your direct expenses.

In general, direct expenses should be recorded in Cost of Goods Sold. You can get your Gross Profit figure by calculating Sales less Cost of Goods Sold (or COGS). Gross Profit Margin is an essential percentage to know in your business. It is computed as follows: (Sales – COGS) / Sales.

Some small service companies might not bother to break out labor into direct or indirect on the Profit and Loss statement each month. Still, it can be helpful to periodically do so, especially when re-evaluating your pricing and profitability.

Direct expenses are important in making pricing decisions but so are indirect expenses.

Indirect Expenses

Indirect expenses are those you must incur to run your business but are not directly related to the items you sell. Here are some examples:

• Telephone
• Accounting software
• Rent & utilities for a brick-and-mortar store
• Insurance
• Administrative labor, such as a receptionist or supervisor
• Education and training
• Professional services, like your HR personnel or IT specialist
• Office supplies
• Business permits

Fixed and Variable Costs

Direct and indirect costs can each be further broken down into fixed and variable costs. For example, HR expenses, education, and training will increase as you sell more and hire more workers. That makes them variable costs.

Other indirect expenses (such as rent) will remain flat, or fixed, no matter your sales volume. 

Pricing Your Items

When calculating your sales prices, use your direct costs as a benchmark to ensure your profit margin is high enough to cover an allocation of your indirect expenses. In other words, sales price should always cover all direct costs plus a profit component, plus enough to cover indirect costs when considering your sales volume.

The lower your sales volume, the higher the price per item should be. Alternatively, higher sales volume gives you more room to spread out your indirect costs. That allows you to do one of two things: earn higher profits or lower your price to become more competitive.

If you have questions about direct and indirect costs or want help validating your pricing decisions, please feel free to reach out at any time.