Anne Curzan, English professor at the University of Michigan, studies the evolution of language. While many of us roll our eyes at bizspeak — from synergy to value-add to operationalize — Curzan defends business jargon. She says the words we say around the office speak volumes about our organizations and our working relationships. She shares how to use jargon more deliberately, explains the origin of some annoying or amusing buzzwords, and discusses how English became the global business language and how that could change.
Most small businesses – more than 70 percent, according to the SBA – are sole proprietorships, the simplest legal structure for businesses. Not only is it easy and inexpensive to set up this type of business, but tax prep isn't as complex as it is with other business structures and you keep full control over your business – and its profits. With this type of entity, there isn't any legal distinction between you and your business; all business earnings, losses and liabilities are yours.
This structure works well for many businesses. As your business grows and your profits increase, however, it may be worthwhile to sit down with your CPA to talk about when, or if, you should consider upgrading your business structure. Get their advice on whether forming a limited liability company or incorporating could save you money, limit your liability, or help your business grow.
Before you decide to upgrade your business structure from a sole proprietorship to an LLC or corporation, there are drawbacks to consider. They're more expensive to set up and maintain, as there are compliance regulations and fees, and they vary depending on the structure you choose and your state.
LegalZoom's Jane Haskins, Esq., writes that "it costs money to set up and dissolve a corporation, and corporations have additional recordkeeping and annual reporting requirements that sole proprietorships and partnerships don't have. If your business is small and just starting out, those extra obligations can outweigh the advantages of incorporating."
Here are some points to think about and discuss with your CPA.Liability
One of the most common reasons business owners upgrade their business structure is to reduce personal liability by legally separating personal and business assets. If you have a sole proprietorship or partnership and your business experiences financial troubles or is sued, your home, vehicles, personal bank and retirement accounts are at risk, as they may be collected on to pay down your business debts.
In the same vein, a top concern with a business partnership is that you share responsibility for all business losses or debts. Even if these losses are sustained due to an action or decision made by the other partner and you had nothing to do with it, you're still liable, and your personal assets may be vulnerable.
If you set up your business as an LLC or corporation, your business is its own entity with its own assets; your personal assets aren't tied to the business and can't be used to collect on business debts. Writing for the small business mentoring organization SCORE, CorpNet CEO Nellie Akalp says, "These structures protect your personal assets (and those of any other shareholders) from debts, losses, and court rulings against your business. With a C corp, that liability protection usually extends to directors, officers, and employees as well."
If your business is just you – for example, if you're a professional service provider such as a consultant, contractor or doctor – you may still be able to set up your company as a separate legal entity, such as through a single-member LLC.Taxes
Each business structure handles taxes differently, and some may help you save money. For example, with a sole proprietorship, your taxes are simpler than with other structures, but you're taxed on all your business's profits – not just the amount you pay yourself or withdraw for your own use – and you must pay self-employment taxes (Social Security and Medicare taxes) on all your earnings.
With a C corp, the business pays a corporate income tax on all profits. These profits are then taxed again at the individual's tax rate when they're paid to shareholders as distributions, or dividends. Even though profits are double-taxed, the ability to split the profits between the business and yourself as a shareholder may lower your tax rate.
With an S corp, the business pays you a reasonable salary and takes care of the Social Security and Medicare taxes. The remaining profit is distributed to shareholders, and you pay your individual income taxes on your portion. This option may save you some money on your Social Security and Medicare taxes, but only if your business is making enough of a profit above your salary (which experts caution against setting artificially low, as the IRS looks closely at these amounts).
If you have an LLC, you can decide whether you want to be taxed as a sole proprietor, C corp or S corp.
To determine which structure is best for your specific tax situation, you'll need to consult your CPA.Changes in ownership
If the ownership of your business changes, you may need to upgrade your business structure as well. For instance, if you start out as a sole proprietor and take on a business partner, you'd need to convert to a partnership or another structure. If you start out as a partnership and decide to buy out a partner so you have full control of the business, you'd need to change the structure to a sole proprietorship or single-member LLC. If you have a family business and want to add multiple people as shareholders, you'd need to switch the business structure to an LLC or corporation.Financing
In addition to minimizing your tax burden, the right business structure will allow you to decide how you want to accept financing, if this is something you need to help your business grow.
With a sole proprietorship, your financing options are limited to those you can personally guarantee. You'll need a healthy personal credit score to qualify for a business credit card, loan and line of credit, and you'll be personally responsible for them if your business can't meet its obligations. You may also be required to put up collateral, such as your house, against the debt. If your business is an LLC, you can avoid personal liability for the financing you receive, unless you sign a personal guarantee or put up personal assets as collateral against the loan.
If you're willing to share ownership of your company, you can form a partnership and accept investments in exchange for shares of the business. However, keep in mind that this may affect how you run your business. Small business lender Bond Street advises, "When taking on new partners, it's important to decide whether they'll play an active role in the management of the business or operate as silent partners. If it's the former, weigh the impact on business operations against the opportunities created by the access to new capital."
If you're interested in bringing in outside investors, such as an angel investor or venture capital firm, to help you turn your startup into a big business, you'll need to set up your business as a C corp. This allows you to issue different classes of stock that you can exchange for investment capital.Share your experience!
If you've changed your business structure, leave us a comment. What prompted the change? What results did you see from the upgrade? What advice would you give other business owners thinking about switching from a sole proprietorship to another structure?
We humans are used to the idea that we’ll probably outlive our parents and that our life expectancies will keep rising as medicine and technology advance. As business leaders, we tend to carry the same assumptions about our companies.
The truth, however, is that the average lifespan of a company is actually decreasing. Some experts even predict that by 2027, the average S&P 500 corporation will only make it to its 12th birthday.
Why the dire forecast? Well, the modern era we live in makes it hard to sustain a company past a decade or so. Companies used to experience a natural regeneration as family-run businesses, but the pressure to scale rapidly in today’s technology-fueled market has forced companies into a sink-or-swim environment.
At the advent of the Industrial Revolution, the concept of scalability was born. Technological advances meant family businesses could expand and compete with other enterprises for market share by keeping up with demand. Now, the pressure to scale and compete is so overwhelming that leaders can overlook the natural ingredients of sustainability — such as simplicity or purpose — as they grow.
How can business leaders avoid this trend, scale gracefully, and build a company that will last for generations? Here are the top three principles to keep in mind to ensure your company’s journey is much, much longer than its life expectancy.1. Think ‘compact’ even as you grow.
If you look at the world’s oldest companies, you might notice that they don’t try to scale quickly. In fact, many of the most successful businesses have compact, close-knit teams. In this small zone of influence, business drivers such as purpose and vision are strong, and they’re passed down from leader to leader.
At 1,400 years old, Kongo Gumi is often cited as the world’s oldest company. The temple-building company survived civil and world wars, natural disasters, and economic downturns that would floor many of today’s biggest corporations. How? Well, keeping business in the family wasn’t just tradition in Japan, where Kongo Gumi was founded — it was law. Companies were handed over from eldest son to eldest son, and the margin for misunderstanding and dilution of purpose was very narrow.
You don’t have to be an ancient legacy business to stay nimble, though. Your family name is your brand name, and if you keep your leadership team as tight-knit as possible while you’re growing, you can sustain it with the same intensity as Kongo Gumi.
A compact, closely aligned team creates a clearer sense of purpose and company values. This means fewer hang-ups in the long-run.2. Keep your organizational structure simple.
The company I work for was founded and built with Kongo Gumi in mind. So when I started in my role, the narrative passed down to me. I researched the history of this business-world dinosaur and found that Kongo Gumi was basically a family tree: 50 CEOs linked by blood, each carrying on the company’s vision. This simple, streamlined process of inheritance meant that each leader had the responsibility of keeping values and reputation strong and sustaining the family name.
You can also increase your company’s lifespan by streamlining organizational structure. That means creating and communicating clear connections between people across all levels of the organization. Clear processes of promotion and succession can also minimize chaos as old leaders retire and new ones take the helm.
In addition, creating efficient, manageable networks can improve relationship quality: According to the University of Oxford, humans have a “magic number” of approximately 150 people they can sustain meaningful contact with. When you go beyond that number, effectiveness at communication and knowledge sharing decreases. Try to keep this guideline in mind — even as you scale up and plan out your teams.3. Build from a foundation of purpose.
Purpose is the most important of these tips. What unites the long-lasting companies of the world, no matter where they operate? A sense of purpose, a mission, a calling.
The most important thing about having a purpose isn’t the difference it makes to consumers or brand power, but the binding effect it has on employees. Companies with a clear, evergreen purpose motivate employee loyalty. This builds the foundation for a supportive environment where employees rally and bond with each other, even when the going gets tough.
When this purpose is missing or faulty, companies can begin to lose control of their legacy. Take Facebook as an example. When you view Facebook as a consumer, it does seem to have a clear purpose. It lists its mission as: “Give people the power to build community and bring the world closer together.”
That sounds great, but how does this translate for Facebook’s employees? Although many of its recruits probably signed up with the same mission in mind — to make a difference by connecting the world — Facebook’s high-profile status and role in daily life introduced complicated political and legal battles. This takes the emphasis off individuals. As a consequence, Facebook’s employees have a notoriously short tenure of only around two years.
Every company has a purpose, but it’s how that purpose is shared and upheld by the individuals in the team that matters. First, be sure your purpose reflects your organization’s purest values. You can then test each decision your company makes against this purpose. If your decision is aligned with this mission (instead of diluting it), you’ve made the right choice.
Besides this, focus on connecting employees to both their personal and collective sense of purpose. They’ll be excited to come to work every day.
Tight connections, organizational simplicity and a shared sense of purpose can ensure that a company strengthens from generation to generation, even if those “generations” are colleagues and partners rather than parents and offspring. Cultivate a family-style environment and you might just beat the odds — doing business for well beyond your company’s life expectancy.
Improving customer engagement is all about knowing your customer. You need to understand who you’re trying to reach and what they truly need.
But which systems or approaches are more effective than others? Adding a live chat function may be a good start for some, while others may want to consider shifting how their follow-up procedures work. There are a million different strategies out there on improving customer engagement, so it is difficult to know which method is time-tested and worth trying yourself.
To help, we asked 15 entrepreneurs from Young Entrepreneur Council to share the customer engagement approaches they favor and why they work so well. Here's what they advise:1. Personalize your communication
A personal touch can be a great way to make your customers feel welcome. If you are able to deliver them the content that meets that need without raising red flags about privacy, you have ensured customer engagement. A short quiz or a live chat on your website is great for ensuring personalized communication. Use the information obtained to curate relevant content and you have user satisfaction. - Rahul Varshneya, Arkenea2. Understand where they're coming from
Putting yourself in your customer's shoes and allowing yourself to see things from their perspective, often allows you to engage and empathize in ways your competitors might not. Being human relates back to understanding where your customers are coming from. Knowing what they want and need from you, will allow you to engage with them effectively. - Matthew Podolsky, Florida Law Advisers, P.A.3. Create useful content
Creating useful content like how-tos, tutorials, etc. either in written form on your blog or in video form is a great way to increase customer engagement. Creating content that will help your customers get more out of your product or service will keep them coming back to your website or social media platform for more tips and tricks again and again. - Chris Christoff, MonsterInsights4. Have fun on social media
Don't spend all your time on social media trying to sell and being too serious: Have a little fun on social media and you're sure to get more customer engagement. Share a funny meme once and awhile that's relatable to your audience. And don't forget to engage with your customers in the comment section too. If you engage with them, you'll get more engagement in return. - John Turner, SeedProd LLC5. Add a live chat on your website
Adding a live chat feature to your website is a great way to get your customers to engage more on your website. It provides each of your customers with more personal experience and any time customers have a question, they can get it answered right away, which will result in happier customers all around. - Blair Williams, MemberPress6. Send handwritten notes
I like to send my best customers handwritten notes thanking them for their business. I do this at the end of every year to express my gratitude. - Kristin Kimberly Marquet, Creative Development Agency7. Hold contests and giveaways
Contests and giveaways are a great way to boost customer engagement on social media and beyond. One tip is to have your customers tag a couple of friends in order to qualify for the contest to make it go viral and boost engagement. - Jared Atchison, WPForms8. Pick up the phone
Getting on the phone may be old-fashioned and out of vogue for most people in most contexts, but when it comes to improving customer engagement, there is nothing better than picking up the phone and giving your customer a call. In an age in which most communication transpires digitally, telephone calls work so well because they demonstrate added effort and provide a higher and more personal touch. - Adam Mendler, Beverly Hills Chairs9. Send out quick, easy surveys
I’ve found that mini-surveys just asking for a net promoter score have been very effective. We make it clear that we just want a ranking on a scale of 1-10 and that’s it. People seem to be much more likely to give feedback if we make it very short and easy. And while this might leave a little to be desired, overall we get way more data. - Ryan D Matzner, Fueled10. Implement remarketing strategies
One of the best ways to continually engage with new visitors and existing customers is through the use of remarketing. This can be done on platforms like Google Adwords or even on social media with Facebook and Instagram. By targeting users that have already been to your site and know your brand, you can lower costs and increase engagement rates, while also getting creative with your ad campaigns. - Zac Johnson, Blogger11. Use the right tools for quick customer service
For us investing in tools has uplifted the quality of our customer service and engagement. We use Intercom for live chat and email. The automation helps in communicating with customers in a faster and efficient way. The results are amazing — the highest number of customer problems solved within the SLA. Our customers are loving it and we are observing increased satisfaction and better engagement. - Liam Martin, TimeDoctor.com12. Keep them engaged through a newsletter
We found, through testing multiple campaigns, that email marketing is still the channel that generates the most engagement. We, therefore, encourage all of our clients to start with a monthly newsletter where they share important company updates and industry insights. One of our clients experiences a 300 to 500 percent increase in calls and email inquiries every time they launch their newsletter. - Amine Rahal, Little Dragon Media13. Understand your CSAT score
Understanding your customer satisfaction score can help you increase customer engagement and create more loyal fans for your brand. The first step is to survey your customers to find out how happy they are with your product and how you can improve. The happier your customers are, the more engaged they will be with your brand. - Syed Balkhi, WPBeginner14. Monitor your comment sections
Comment sections for videos and written articles get a bad rap. Since my business is largely based on publishing written content, I make it a habit and a point of pride to offer insightful engagement and thoughtful moderation in all of our comment sections. We carefully monitor these sections so we can issue corrections, answer questions and engage with our audience. - Bryce Welker, CPA Exam Guy15. Offer post-purchase support
Nothing reassures a customer (or a potential customer) more than hearing that you can be trusted to provide great support after a purchase has been completed. Many people avoid large purchases because of the potential of "buyer's remorse." One of the only things that reliably mitigate that fear is the trust that a product will be supported even if something randomly goes wrong. - Matt Doyle, Excel Builders
We just sent you an email. Please click the link in the email to confirm your subscription!
OKSubscriptions powered by Strikingly