The Small Business of Training: An Ongoing Challenge

Training your employees is critical to growing your business. It’s as simple as that. Consider your own personal situation. If you want to grow, personally, you need to develop your skills and your knowledge. The same is true of your business. If you want your business to grow, then the members of your organization, who represent your business, also need to develop their skills and knowledge. The challenge, for most small business owners, is how to provide the tools and environment conducive to improving the skills of their employees, given the investment required. Treating employee training as a business process and integrating it into the daily business will reduce periodic, and oftentimes, large one-time costs associated with improving employee proficiency and competency.

In your daily business, you utilize a number of different business processes, whether formally developed for your business, or informally occurred. What about the customer service or sales processes you use? What about all the financial and operating processes you have in place and rely on to help you manage your business? What about the inventory or supply management processes you utilize on a daily basis to meet customer needs and ensure distribution activities are efficient and profitable? What makes them so different from training? Well, training is generally considered to be something one does for employees and for some reason is considered optional rather than necessary, so a variable expense. Training has become a cost of doing business rather than an investment in business growth.

Why should you invest in training?

If you want your business to grow, your people have to grow. During recessionary or tough economic times, when revenues are down, it is natural to reduce costs, and usually all costs directly associated with labour are affected. But this is the time when it is even more important to ensure your employees are skilled because their skills will help them to take on additional work, be more creative in their work, and motivate them to be even more productive. Morale and productivity are linked. When morale is down, productivity decreases. When morale is up, productivity improves. One of the best ways to keep employees productive and engaged is to continue to offer them the opportunity to develop their skills.

During good economic times, when sales and revenues are up, the same scenario applies. Just because you are happy with your business results does not mean your employees are engaged and productive. Providing an environment where employees can develop their skills is important for productivity during every type of economic scenario.

What types of training should you provide to your employees?

Training requirements generally surface in three different ways;

  • legislated or regulatory;
  • technical skills for functional performance and proficiency; and,
  • professional development.

As a minimum, you should be meeting legislated or regulatory requirements. These requirements are in place to ensure health and safety of employees, address inequities in treatment of employees, and protect the general community. Good business requires business owners to comply with these requirements.

Technical skills are specific to the needs of the business and provide employees with what they need to work effectively in their function. Improvements in technical and functional proficiency will reduce errors, lost time, and customer complaints.

Professional development covers a wide range of training needs, from management skills to certification competency for specific disciplines (i.e.: CHRP, CA, etc.). Certification programs abound in areas such as Human Resources, Training and Development, Process Improvement, Quality Control, to name just a few.

What are the options available to provide training on a continuous basis?

Dependent upon the type of skills required by your employees, solutions may be different. And there are many solutions available. The key is to assess which solution best meets the training requirement for the individual employee.

If you already have training programs available, you may be able to convert them into online products. This provides for easier access and broader application. Products such as Mindflash are available to do this for developed programs. Webinar providers also offer online vehicles for delivery of your training products. These two applications are relatively inexpensive forms of training delivery. However, these providers make their money by charging monthly fees for their service. Fees are billed according to the size of the training group. This will provide you with continuous access to training vehicles but you still need to build the actual programs or create the actual products.

If you do not have training programs or products already developed, then there are training providers who sell off-the-shelf programs. This option can be quite cost effective if the training requirements can be met with off-the-shelf solutions. Since the products have been already developed, they speak to a very broad training audience and are priced according to the volume the providers are able to sell. Again, there are online options available for these types of products. This is usually the least expensive method for delivery of legislated and regulatory requirements. Check with your government websites for possible products and providers.

Custom programs are the most expensive. If you require training to be company or line of business specific, you will need to either have a program built from scratch or have an off-the-shelf program modified. Whichever method you select, it will require intervention by a trainer or training consultant, so now the labour cost of the program development increases. In these cases, you might be advised to have them build and implement a Train-the-Trainer program so that subsequent training delivery of this particular skill becomes an in-house activity so you are not paying for external trainers every time you have to offer this specific training.

Other options include work exchanges and training cost sharing with other similar sized businesses. This works well with legislated and regulatory training requirements and also some types of certification and functional skills training. Get involved with your local chamber of commerce, board of trade, or other business organizations and seek out other business owners with the same training requirements. You may be able to offer more training at less cost.

What is the first step?

The first step is to invest time in research. Determine what skills training is required to meet legislative and regulatory requirements, functional proficiency and performance. Then evaluate the skills required to service your customers effectively. Then conduct a review of all possible training solutions. This research will help to determine the best solution for your employees and your business as you prioritize solutions. Now build the training budget.

If you view employee training as a business process, rather than a variable expense, you will see it as an investment in business growth rather than a cost to be avoided, and your solutions will be creative and palatable.

Income Diversity Is Essential to Financial (and Moral) Success

At one time or another most children are asked what it is they want to do when they grow up. Consensus is building that the answer to that question is not a single answer anymore.

Financial planners consistently tell us that we should have diversity in our investment portfolios. Diversity, they say, provides a hedge against the risk of a single investment failing. I am a strong supporter of diversity in income sources. Multiple streams of income can provide a hedge against an interruption of a one income stream. It is a reality of the global economy that almost everyone is vulnerable to a layoff. If your current job is your only source of income, a layoff is potentially devastating to your family’s financial health. If you are a business owner and one sales market suffers a setback, your business can quickly fall apart. Multiple income sources protect you and your family from financial catastrophe.

But there are other advantages to having multiple income streams. First, not all income sources require significant active management. Many of them are passive or semi-active, meaning that you can create them and they enrich you without significant effort. Among all the types of income, earning from working a job is the most time consuming and often the lowest paid. Passive income sources, such as investing in dividend producing stocks, or semi active sources, such as rental real estate or options trading, can be very lucrative with only a few hours of your time a month. Even the most motivated person cannot work more than 2 or 3 jobs, but one can manage dozens of passive and semi-active income sources with proper care and investment. Over time, by the mathematic force of multiplication, it is possible to eclipse your active income sources with the passive and semi-active sources. This is the dream of the investor–becoming one who can safely afford to retire from work life with no sacrifice in lifestyle. Indeed, with the increase in free time, you will be free to realize ever larger increases in income because you will be able to devote yourself entirely to building new income sources.

More importantly, there is a huge difference in the type of person you can be when you have multiple sources of income. In times of financial stress or insecurity, people often find themselves in ethical dilemmas. Your employer may ask you to cut corners to increase the company bottom line. You may find yourself having to choose between eating and falsifying your tax return. You may even be tempted to steal from those closest to you. Financial stress may drive you to do things that you would never have considered doing if you didn’t feel the stress. Actions that you resort to in times of great stress may haunt you for the rest of your life, either physically in the case of imprisonment or psychologically with regret and shame.

Multiple income streams, therefore, help you build a firewall to protect your moral and ethical self. They allow you to always do things on your terms and empower you to say “No!” when your conscience tells you to do so.

Starting Your Own Tax Business – 5 Things to Consider Before Buying a Tax Franchise

Buy in Pricing – Tax Franchises such as H&R Block, Jackson Hewitt, Instant Tax Service and Liberty all have substantial up front “franchise fees”. These fees make it nearly impossible to enter the industry let alone the challenges they put on attaining profitability any time soon. These up front capital investments range anywhere from $20,000 to $80,000+. If you are in talks with several franchises be sure to ask when they project your new venture to be profitable. If they state in 5+ years, my suggestion is to run in the other direction. I am not sure what your financial situation is, but I find it hard to envision investing in anything that does not have the potential to have any return on investment until the 5th year of operation.

Rules and Procedures – Franchises dictate hours of operation, office location, dress code, pricing, promotion, signage, etc. Franchise dealers will all tout these as positive aspects of choosing a franchise business model. I say the opposite. Tax preparation is a personal service business and these type of personal relationship services vary drastically in operation and appearance depending on the area, demographic and economic norms for your location. For instance nearly all franchise tax offices have territories that they will sell to you. It is hard to imagine that in the 20+ years that H&R Block has been in business that they have not already cherry picked the prime locations for the offices that are owned by corporate, or that other owners have not already had first pick over them. If you choose to go with a non-franchise tax office set up, you have the ability to pick and choose your own location. Many of the demographic information can even be obtained without their assistance, and I will provide that to you later in this article. Signage should be tailored to meet the need of each individual office and to target their customers. This is not possible when you marketing campaign is dictated from across the country by someone who has never seen your office, your neighborhood, your customers, or your competition!

Royalty Payments and Fee Splits – If you are looking for assistance in starting your new tax preparation business you should know that there are going to be some variable costs associated with bringing in some help. Franchises typically charge a 20% royalty on your office’s gross earnings, and potentially up to another 5%-10% for marketing royalties. Partnerships and other tax business set up options can provide a less painful fee structure that is not tied to gross revenue and can free up more income for profitability.

Marketing – Tax franchises provide a “brand name” that is recognizable, or at least should be recognizable. The problem is that their companies and strategies are boiler plate and dictated by the corporate office for their general acceptability and effectiveness toward a generic segment of the market. You are a small business owner. Who better to know who and what your target market is than you? Franchised marketing efforts are not customizable to your office, area or target market. Independent solutions for starting your tax prep business provide you with the freedom to spend your marketing dollars the way you want, not the way dictated to you.

Length of Commitment – Franchise contracts require typically a 5 year or longer commitment from their new offices, and many of them have a “non-compete” clause in their contracts that forbid you from doing anything in the tax preparation business for many years following that contract period. This “locking in” is one of the most limiting factors, along with the large initial investment necessary, to starting a tax prep business by buying a tax franchise. Keep yourself free; If you decide that the business is not for you, you should be able to get out!