The customer says the pizza tastes bad, but the customer ate half of it.
The shopper asks for a refund for a shirt that has clearly been worn and worn out.
The caller says the gadget he bought was broken on arrival. It has been six months!
In small business, when you’re running close to the margin, customers who want your product for free are not only annoying but also expensive.
How should you treat this situation?
Give them the benefit of the doubt, says CXService360. Small business has a huge investment of time and money in each customer. You generally want to keep the customer, if there is any chance the customer is telling the truth. Customers return to a company where they’re treated with respect. Not only do these customers come back but they also tell their friends, comment on social media, and discuss positive experiences with family and friends.
That means treating even the unlikely complaint with respect and professionalism. Agents can thank the customer for calling or showing up and then point out the shirt looks well-worn and make an offer that is somewhat less than a refund. To make this work, the agent or sales person has to be trained.
Some customer service situations occur because the customer is angry, not about their current complaint, but about something else. Customer service representatives can make polite chat about how often they shop or use the service and whether they have had other complaints. It could be a learning situation.
If the business does make an exchange or refund on an item in which the credibility of the customer is suspect, a record should be made. You don’t have to keep a dishonest customer. All you have to do is keep your temper because losing it usually goes badly.
While some companies are terrified of bad talk on social media, remember that while happy customers talk you up, and unhappy customers can talk you down, dishonest customers pass the word around. If you are too easy, there is a slice of humanity out there who will exploit it. Some larger retailers make 100 percent lifetime quality guarantees and they have accepted routinely dishonest customers as a cost of business. But talk to the customer service reps and they’ll tell you: the word gets around. If you aren’t a giant retailer, that’s a word you may not want out there.
Author: Victor Varma
How to fund your small business
To start a small business, most entrepreneurs tap into their funds first, even when they also plan to procure debt financing in the form of a small business loan, equity financing from angel investors, or a venture capitalist.
Otherwise, virtually every lender expects the person seeking a business loan or equity investment to make a personal financial contribution.
If you don’t have ready cash, look to your personal assets as potential sources of startup money. These sources include real estate, vehicles, retirement accounts, stocks and bonds, or any other asset that can be mortgaged, sold for cash, or used for collateral.
According to the small business website, home equity loans are among the most cost-effective methods for borrowing. Compared to other types of financing, their interest rates are meager, and financial institutions are prepared to lend up to 80 percent of the value of a home.
At the same time, credit cards are a familiar source of startup money for asset-poor entrepreneurs despite the soaring rates of interest.
The next most prevalent source of small business startup funds is family, friends, or a combination of both. This sort of small business financing often takes the form of a personal loan.
Statistics indicate that about half of the investors in businesses are family members, 30% are friends and neighbors, and the remaining 20% are colleagues or strangers.
Of course, one of the main advantages of family and/or friend financing is flexibility. Family and friends are much more likely to seek a lower rate of return on their investment and wait longer to get their money back. They are less likely to require collateral and scrutinize a business plan as would a financial institution.
Even so, borrowing money from family and friends is not without its potential pitfalls. Loans from one or more family members to another can produce jealousy or resentment. Family or friends who’ve invested in the business venture may feel they have a right to make or participate in the owner’s business decisions. Even worse, if the business fails and the owner is unable to repay the money owed, his or her relationship with the family members and/or friends may be forever impaired.
Caution lights for the 2018 tax filer
The Tax Cuts and Jobs Act of 2017 (TCJA) may not mean reduced taxes for every taxpayer, but it figures prominently for the American population as a whole.
According to TaxAct.com and other sources, the tax rates of past years are gone. Almost every tax rate and bracket for each filing status have been changed. Except for the 10% and 35% tax rates, tax changes modified most bracket rates from 1 to 4 percentage points.
The standard deduction has been increased for every filing status. Now it’s $12,000 for a single person, $24,000 for married couples filing jointly and the surviving spouse, $12,000 for married couples filing separately, and $18,000 for the head of a household.
However, the higher standard deductions mean that fewer people can itemize deductions. This change has its pros and cons, as new limits on certain itemized deductions indicate some taxpayers will lose substantial amounts they could have deducted in the past.
Depending on how many people live in the household, the increase of the standard deduction may or may not be sufficient to offset the loss of the personal exemption. Also, under the new reforms, no longer can the taxpayer claim the $4,050 personal exemption for each dependent.
Gone too are miscellaneous itemized deductions that exceed 2% of adjusted gross income (AGI). Among these deductions are unreimbursed employee expenses, safe deposit fees, investment management fees, and union dues.
Also, when previously there was no cap on state and local income taxes, now those expenses are limited to $10,000.
Meanwhile, the Child Tax Credit increases from $1,000 to $2,000, plus a new $500 credit applies for non-child dependents.
With the repeal of the Affordable Care Act’s mandate, no longer does a person choosing to forego health care coverage in 2019 pay tax penalties.
As for the mortgage interest deduction, filers who purchased a home in 2018 can deduct interest up to $750,000 in mortgage debt instead of the previous $1 million.
Also, no longer is the interest on a home-equity loan deductible.
For Americans, it’s still saving versus spending
American economic growth is high and appears to be reliable, but a warning light is flashing: Personal savings are falling.
Consumers comprise roughly 70 percent of the economy — a crucial force in economic growth.
Overall, economic growth climbed by 2.6 percent on a quarterly basis at the end of 2018. Personal consumption increased substantially in the fourth quarter of 2018 just as the savings rate slumped to 2.6 percent as a share of disposable income, its third-lowest on record.
A new study finds the median American household has $4,830 in a savings account, and almost 30 percent have less than $1,000 saved.
As of June 2018, millennials had saved less than baby boomers. Of course, older Americans have had more than three decades longer and larger salaries from which to save.
By age, these figures show millennials (born 1981-1998) saving $2,430; Gen X (1965-1980), $15,780; and baby boomers and older (born before 1964), $24,280.
MagnifyMoney, a company that provides consumers with comparison-shopping information for financial products, uses data from the Federal Reserve and the Federal Deposit Insurance Corporation.
According to the company, its results indicate that while half of all U.S. households have more than $4,830 in savings, half have less. Among households having at least some money set aside, the median savings is about $73,000.
But, Americans may still owe more in debt than they save.
According to Northwestern Mutual’s 2018 Planning & Progress Study, Americans now have an average of $38,000 in personal debt excluding home mortgages — a $1,000 increase from a year ago.
Meanwhile, the study reported fewer people said they carry no debt this year compared to 2017–23 percent versus 27 percent.
According to Emily Holbrook, Northwestern Mutual’s director of planning, the typical American’s purse strings are in “a mini tug” between enjoying the present while saving for the future.
Legal issues crucial when forming small business
Entrepreneurs are busy people. They’ve got a ton of things on their mind from marketing and advertising to customer service and phones forever ringing to business appointments — and more.
Unfortunately, legal and technical issues have to be attended to at the same time.
According to Entrepreneur magazine, small businesses need to take some basic steps as they grow.
- Set up the proper business structure. There are sole proprietorships, LLCs, S corporations, C corps, and partnerships. Choosing the correct one means learning the advantages and disadvantages of each. For example, as a sole proprietor, the business owner and the business are considered as one in the legal system. If your company is sued, all your personal assets are at risk. Corporate structures and LLCs offer protection of personal assets, although this protection isn’t a guarantee. Talk to a lawyer and accountant about the structure you need.
- Set up and follow customer service policies. When you access company websites, especially those that provide services of some sort, you’ll usually see a Terms and Conditions agreement. Included in this agreement are all the specifics for the use of your products or services and the customer’s obligations in that use. If you do not have this policy in writing and a box for a customer to check before a purchase, you are wide open to inclusion in a lawsuit should that customer become a defendant.
- Set up accounting and tax systems. Is your business subject to sales/VAT taxes? When must you file your business income tax returns? Do you need to make quarterly payments? Business tax laws are complex. You need a good business accountant–or at the very least, proven accounting software–to keep accurate records and file your taxes on time.
- Obtain appropriate and complete contracts with outside vendors. When you use the services of or purchase raw materials from someone outside of your business, demand iron-clad contracts. Never agree to anything with a contractor without a legally-binding agreement with the terms and language set out clearly and properly.
- Get the proper documentation on employees. At minimum, before hiring, document and verify past employment. After hiring, document work hours, complaints, responsibilities and attendance issues such as sick days, personal days off, and vacation.
Be sure to specify, in writing, work expectations – including whether work can be done remotely.
The no-spend challenge
A financial writer set out to spend no extra money for a year.
Michelle McGagh and her husband vowed to pay bills, but not to buy coffee, clothes, or a beer at a pub. They didn’t eat out or even buy gas. Instead she rode her bike everywhere all the time. She spent only $35 on food every week, so she had to plan cheap meals.
What happened? At the end of one year she saved $23,000.
She admits the effort was not easy. She missed having face cream and fresh flowers. She missed socializing with friends at a pub. And they missed her.
On the other hand, she also found new ways to have fun for free and she realized how much money she frittered away. McGagh wrote about her extreme challenge in her book, “The No Spend Year: How you can spend less and live more.”
McGagh’s challenge was extreme–but what if you could spend nothing extra for just one month. Could you save money? Definitely.
According to Bankrate.com, the first thing to do is decide why. It could be to pay off a big bill that is coming or pad your savings account, but the goal should mean something to you.
Next steps:
- Eliminate any optional expense that comes out of your checking account such as subscriptions. They will take your money next month.
- Eliminate luxuries and start thinking of some things as luxuries. For example, cable TV. You could get rid of Netflix for $10 a month or cable for $120, or both.
- Make a barebones food plan and stick to it. No prepared foods. Make your own cookies. This is nearly its own challenge. Can you spend $100 a week or less on food?
- Cellphone: No extra overages or get rid of the plan, if you can.
- No restaurants or pubs. Plan some things to do that are free.
Then count your cash at the end of the month!
Is debt consolidation wise?
According to ConsumerCredit.com, people thinking about consolidating debts often have one question: Is debt consolidation wise or not?
The answer is maybe. As one might expect, the wisdom of debt consolidation depends on several factors:
- The interest rate on the new loan.
- The consumer’s goal in taking out the new loan.
- The consumer’s resolve not to take on any more debt.
With a debt consolidation, you move your debt to a new loan serviced by one lender instead of many.
In theory, with a new loan at a lower interest rate, the money saved on interest each month may enable you to pay off your debts faster. Or, if the new loan has a longer term, you may be able to lower your monthly payment. Either way, debt consolidation might be useful in some situations.
But debt consolidation isn’t always effective.
Debt consolidation is useful for people who are disciplined enough to make the payments without taking on new debt. That’s the key. If you consolidate, but don’t change spending habits, you’ll be in deeper debt in a few years.
With debt consolidation, good credit can make a big difference.
Trying to consolidate debt with bad credit is usually not wise. With a bad credit rating, it is unlikely that you can get a loan with low enough interest to make a difference in paying down debt. While having only one monthly payment may be a temporary source of comfort, consolidating debt to a high-interest loan hurts finances rather than improving them.
Starting a family business has unique problems
Starting a business with a spouse, parents, siblings, children or other family members is not like the typical startup.
According to the Family Firm Institute, family-owned businesses comprise two-thirds of the companies worldwide. However, only 30 percent endure into a second generation, 12 percent to a third, and 3 percent to a fourth.
The typical snare of a family business is putting too much weight on family and not enough on business. Rarely are the qualities of a healthy business entirely compatible with family harmony. When the business is going well, there will be jealousy. When it is going badly, there will be blame.
The earliest stages of a family business are the most ominous. Family members can join the promise of a new venture without clear definitions of their roles, duties, compensation–and, should they become problematic, exit arrangements.
To avoid miscommunication and hard feelings in the future, advises StartupNation.com, always put family business relationships in writing.
While various family members may qualify for similar duties, they must be divided up to avoid conflicts. Significant decisions can be reached together, but disputes over minor procedures impede the overall progress of the business.
The dominant structure of a thriving family business is having one person serve as the ultimate leader of the endeavor. When this leader is resilient and competent, he or she can persevere, stay focused, and proceed with their responsibilities and intentions despite the obstacles and challenges.
These capabilities are especially essential in a family business where professional and personal issues frequently become intertwined.
Leaders of strong family-owned businesses know that setting boundaries among participating family members is critical to continuing success. Precise methods of communication must be installed.
Since business quandaries and differences of opinion are inevitable, consider weekly meetings to assess current progress and plans, air differences, and resolve disputes. Moreover, keep family issues out of the boardroom and office.
Keeping pace with the times is vital to any business, more certainly those with multigenerational roots. Regardless of age, family members must continuously evolve and deliver or risk alienating both employees and customers.
Furthermore, so-called sympathy jobs should not be open as a last resort to children, cousins, or other family members for any reason. Employment must be based on the experience, knowledge, or skills a family business demands.
For leadership and staff positions the business demands, look outside for the qualities family members do not possess.
Cube versus open work space debated
Since the introduction of cubicles to the workplace a half-century ago, the pros and cons of their existence have been well-debated.
But today cubicles are being compared, often favorably and sometimes fondly, to open work spaces.
Open work concepts save floor space and encourage camaraderie, they also convey a false sense of productivity, in which movement and sound translate to only intermittent concentrated quiet, according to the International Facility Management Association.
On the other hand, open work spaces are often most suitable for telecommuting employees who only visit offices occasionally.
But those who work in the open office tell IFMA surveys that privacy is at an all-time low and 74 percent of workers are concerned about it.
The question is whether gains in office communication, brainstorming and camaraderie justify the open space. According to Business News Daily, a cubicle environment can also foster a sense of community, motivation and accountability. Open offices and cubicles also are easier to manage.
Separate office space ranks highest in terms of concentration, privacy, and personalization. But ranks lower in community.
Considering a vacation home? It might even pay for itself
A vacation home may be just the ticket if you love to visit sunny climes, the forest, beach, or mountainside.
These days, thanks in part to the sharing economy, more people than ever can afford a second home.
Today you can buy a home at relatively low interest rates, then rent that home out when you are not there.
Homeowners have successfully covered their mortgages and leases by renting out as little as one room thanks to sites like AirBnB.
According to John Banczak, executive chairman of TurnKey Vacation Rentals, for every $100,000 you spend to purchase a vacation home, you should expect yearly rental income of $12,000 to $14,000.
Vacation homes are appealing to owner and vacationer alike. The rate is often less than or equivalent to a hotel, but with the option to spread out more and eat meals in. For locations with popular attractions, owners can visit when they like and rent when they aren’t there.
In 2017, about 12 percent of home buyers purchased vacation homes. According to Economist Outlook, buyers wanted a second home for vacations (42 percent), for future retirement (18 percent), or because real estate prices offered good deals (12 percent). The median household income in 2016 for vacation home buyers was $89,900.
If you’re considering a vacation property, make sure to find a trusted local real estate agent to help you navigate the purchase. The agent will know the area and any local and state contract laws.
It’s also important to find a local person to keep an eye on the property, whether it’s your housekeeper, the agent, or a contractor. If you rent the property regularly, your housekeeper can be your second set of eyes, letting you know how the latest guests treated the property as well as how everything looks overall.
As part of your due diligence, factor in a higher insurance rate for a second home.
Consider installing a home security system for yet another set of eyes as well as a way to make sure the heat has stayed on.
Managing cellular service options while traveling abroad
Both frequent travelers and the occasional vacationer will need to prepare in advance to secure mobile data and phone service abroad.
There are many options available depending on the person’s current situation, according to Engadget.
The easiest route to take is to just do nothing, and that is possible for those using T-Mobile, Sprint, or Google’s Fi service because each of these offer some unlimited data coverage in most foreign countries.
T-Mobile and Sprint will cap the user at slower 2G speeds, but Google Fi will let you use up to high-speed 4G data if it is available. Check with a provider to be sure, but usually, this option requires enabling ‘roaming data’ in the phone’s settings to work.
Customers signed up with AT&T or Verizon, unfortunately, won’t have the luxury of free roaming data and will instead have to purchase roaming passes that are often expensive for what they offer. With monthly packs, for instance, AT&T will sell 1 gigabyte of data for $60 while Verizon has half a gigabyte for $70, but some plans might offer a few free passes each month.
To avoid this extra expense, local SIM cards can be an excellent option for saving money as long as the provider has unlocked the phone. For this option, head into a local telecom upon arrival, such as Vodafone in the UK, and purchase a temporary, ‘pay-as-you-go’ SIM or whatever variant they say is best for your situation. Unfortunately, a new SIM means a new phone number and anyone calling the usual one will be sent straight to voicemail as if the phone had been turned off. To make matters worse, certain new phones or devices that are still on an installment plan through the provider likely cannot be unlocked to use a local SIM, but those that hang on to older devices might be able to find something new enough to use for a short trip.
