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Five Customer Loyalty Tricks for Fitness Franchisees

Editor’s Note: This post was originally published in October 2017 and has been updated for accuracy and comprehensiveness.

As a fitness franchise owner, you know very well the challenges of getting new members through the door, even in the best of times. It’s never been easy, but the fitness industry has been one of the hardest hit by COVID-19, with value brands representing the largest share of losses in the industry. Major gym franchises like Gold’s Gym have filed for bankruptcy protection, and others may soon follow. Polling has shown that as many as 60% of Americans either have canceled or are planning to cancel their gym membership due to financial hardship or concerns about safety. Simultaneously, the growth of digital and at-home fitness products has added to the pressure on gyms, with Peloton doubling its sales in 2020. 

So, in that environment, how do you get new customers through the door and convince your existing customers to remain loyal? We can start by taking a cue from one outlier in the value gym segment that has shown more resiliency than its competitors through the pandemic. The Anytime Fitness franchise has rolled out a comprehensive COVID-19 policy to protect their members’ and staff’s safety and begun offering advance reservations to secure a spot when capacity is limited. When customers have confidence that you are genuinely looking out for their best interests, they are more likely to remain loyal.

But beyond just building trust among your members, there are some other things you can do to encourage customer loyalty in this most challenging of times.

Loyalty Rewards Program

Have you ever noticed that it seems like every store you go into wants you to join their rewards program? Well, there’s a reason for that – it works. Create a rewards program for your loyal customers with some nice little freebies to help keep them engaged. This might take the form of a free t-shirt after ten visits, or maybe a free post-workout smoothie with every 10 purchased. You can get very creative with this, so don’t be afraid to experiment. Never underestimate the power of free swag for customer loyalty. Everyone wants to feel special.

Frequent Customer Discounts

Many gym members, particularly in the value segment, care just as much about the size of their wallets as the size of their jeans, so giving them a discount on a product or service is a great way to boost customer engagement. This might be a discount on a personal training session within the next month, or possibly a coupon for deals on gym apparel. Gym apparel is a particularly desirable thing to encourage because, in addition to the revenue from the sale, you get the added benefit of free advertising for your fitness franchise every time the customer wears it.

Three women stand besides each other at a gym

Referral Rewards

Let’s face it – we all have that one annoying friend who can’t stop going on about how great his or her fitness studio or workout program is. Well, that’s exactly who you want to be your customer, so you need to create a compelling reason for that person to be your customer. Create a referral rewards program and offer a membership discount for each new customer brought in on a referral. You’ll soon find your membership roster – and your bottom line – growing steadily.

Premium Memberships

Take a cue from companies with the most loyal followings and offer VIP or premium membership packages. Do a little up-selling. The key here is to create a value proposition that’s compelling enough to entice your customers to pay a little more without eating into your bottom line. If a member is already paying $30 per month for a basic membership, he or she would probably be willing to pay $35 or $40 to add free tanning or a free monthly workout with a personal trainer. It can be tricky to find the right balance for your package, but this is a great way to reward your most loyal customers if done right.

A man holding onto rings tries to beat a record for a gym contest

Run Contests

Contests can be a great way to keep your members engaged with the club and create valuable rewards for members who participate. You might run a contest with a free gym t-shirt or duffel bag to the member with the most visits during the month, or possibly a “Biggest Loser” type contest with a free month of membership as the prize. You can also incorporate social media into your content strategy by encouraging people to share, like, and comment on your content. Give members who complete one workout and check in on Facebook during the next month a raffle ticket to a drawing for a free duffel bag or another prize.

Focus on Your Core Business

Business owners are notoriously bad at time management, spending too much time on things that others can do and not enough on what an owner should be doing – growing the business. Offload time-consuming administrative tasks to employees or an outside firm. Consider outsourcing your bookkeeping and accounting, which is one of the biggest time vampires in an owner’s day. By getting those off your plate, you can have time to spend on thinking up creative ways to engage with your members and drive loyalty at a time when you need it most. 

 

So what’s the best way to boost customer loyalty at your gym franchise? Start by taking your own gym’s advice and just do it. Set a goal and commit to seeing it through. Start with these tips, but don’t just stop there. Be creative and come up with other ideas, and then let us show you how Xendoo can help your fitness franchises become more profitable with a free trial. Let’s start building that customer loyalty muscle together!

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

A Prettier Profit and Loss Statement: Up- and Cross-Selling Techniques for Salon Owners

Editor’s Note: This post was originally published in October 2017 and has been updated for accuracy and comprehensiveness.

If you’re like most salon owners, the chances are good that you decided to start a hair salon because you love meeting new people and helping them feel more beautiful than when they walked in your front door. It’s only natural because everyone loves a rewarding job. Focusing on sales techniques, like up-and cross-selling for salons probably wasn’t high on your list of “pros” when you got into the salon industry.

But for better or for worse, persuading clients to purchase products or services that they didn’t initially come in for is an essential part of your marketing strategy and can boost your profit and loss statement. That doesn’t mean selling them products they don’t need. Cross-selling and up-selling are selling them products they need but didn’t know about. It’s part of your job to educate the client, so let’s take a look at how up-selling and cross-selling for the salon business can be less faux-pas and more moo-lah, and why salon owners already have a head start. 

Two women in pola dotted dresses work at a hair salon

The Difference Between Up-Selling and Cross-Selling

Up-selling is the practice of encouraging customers to purchase a more expensive item than they had initially intended. We do this by creating value for the customer in the more expensive product. Often, the customer just needs someone to point out the extra value. Depending on the type of salon, if a client is scheduled for a regular mani/pedi at retail price, check-in staff can create value for the customer by offering a deluxe spa treatment for just a slightly higher price. You might even be able to have your salon software automatically remind staff to offer the upgrade at check-in. If the customer is already spending $50, it’s easy to justify upgrading for just $10 more because it represents a good value.

Cross-selling for salons is the practice of encouraging customers to purchase other products or services that complement the original sale in some way. Sometimes customers don’t know what they need, and it’s your job as the expert to educate them about it. Effective cross-selling for salons might look like this: If a dark-haired client has decided to go blonde, you as the stylist know that those harsh chemicals can damage and dry out the hair, but the customer may not know that. You can explain this and encourage your client to buy a conditioning treatment to help offset that damage.

Why Cross-Selling and Up-Selling Are Important

 The bottom line is that up-selling and cross-selling for salons are critical to your bottom line in several ways. If you’re not doing it, you’re leaving money on the table. If you have a low-margin product that’s selling great and a high-margin product that’s not selling so well, an excellent cross-selling technique might be to bundle the two together and get that extra profit. But even more importantly, it allows you to create additional value for your customers, which is crucial to maintaining customer loyalty and trust. After all, value is why your customers come to you to begin with and what makes a successful salon. When deciding whether a sales opportunity is right, ask yourself, “Will this improve my customer’s life? Will it help them feel more beautiful?” If the answer is yes, you know what to do.

A woman hair stylist chats with a client.

So What’s This Head Start?

Salon business owners have a special trust relationship with their clients, which gives them an edge in ideas to increase profits. Stylists don’t just know their customers’ names; they know everything going on in their lives —their children, jobs, and health. They open up their entire lives to you, which puts you in a unique position of influence with your customer. To put it more bluntly, if they trust you enough to let you bring sharp blades around their heads and irreversibly alter their appearance (for a few months, anyway), they will trust your recommendation on special products and services. Remind your team that they have this superpower because it’s critical to your business, but don’t abuse it by selling customers things they don’t need. That will almost always backfire and damage your relationship.

OK, I’m Convinced. Now What?

Now that you know the importance of upselling and cross-selling for salons, here are a few things you can do right away to get the ball rolling.

  • Get effective inventory management and accounting system for your salon if you don’t already have one to know exactly which products are moving and which aren’t, and what the margin on each one is. Good accounting for hair salons is a must, and if you don’t have that information at your fingertips, you’re flying blind.
  • Create an attractive display with high visibility where customers can browse it easily. Never put it behind the counter because curious customers will feel like it’s inaccessible. Keep it organized, and well-stocked with the products that you believe are strong candidates for this strategy. Remember: eye-level is buy-level. Research has shown that products placed at eye level get 35% more attention than products placed at lower levels.
  • Ensure your staff is using the products you sell and posting them on social media. The best advertisement for a product is being able to see the results in real-time on a person’s natural hair or skin. Remember the trust relationship; if the stylist uses the product, it gives the customer confidence that it must be good. It’s almost like giving away a little trade secret. Purchasing salon-quality products that stylists actually use makes your customers feel like they have a leg up in their beauty routine.
  • Give your staff the tools to make cross-selling for salons easier. At a minimum, everyone in your salon should be familiar with every item you sell and be able to describe it to customers. But knowledge of the products is only a start. Your team needs to be trained in effective cross-selling and up-selling techniques and incentivized to use them. Be creative in coming up with ways to encourage selling, like contests with prizes, bonuses, or other incentives.

Remember, you may not see the benefits of cross-selling for your salon business right away. Sometimes the customer may be in a hurry or on a tight budget, and you have to respect that. Just remember that by maintaining the customer’s trust, there will always be another opportunity down the road. Do that consistently, and you’ll begin to grow your business and watch your bottom line trend up.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

9 Ways for Franchisees to Outrun the Competition

Editor’s Note: This post was originally published in October 2017 and has been updated for accuracy and comprehensiveness.

As we’ve seen, there are a ton of fantastic, low-cost franchise opportunities out there that will give you a lot of advantages in starting up your new business. As a franchisee, you’ll still have the independence of owning your own business and being your own boss, but you’ll gain the name recognition, volume pricing agreements, and support services of an established brand. It’s the best of both worlds, and over 795,000 business owners in the United States have chosen this path. But as much as a good franchise can boost your chances of success, there is one threat to your new franchise which will always be present—your business competition.

 No matter the type or location of your business, whether restaurant, child care center, gym, or staffing agency, you will always have to know how to overcome competitors. Even if you start out in a niche that you have all to yourself in the beginning, you will soon get some competitors because success always breeds imitators. For every McDonald’s franchise out there, there is almost always a Burger King franchise across the street. If there isn’t, there soon will be.  

So how do you stay ahead of your peers in this horse race? Here are a few things you can do to outperform your business’s competition.

Know your business competition

If you don’t know all about your competitors, you can’t know how to overcome your competitors in business. The reality is that a lot of business owners don’t know as much about their competitors as they should. Make a list and call it “My Local Competitors Are….” Write down who you think your strongest competitors are, and then mystery shop them. If you sell widgets, buy a widget from your competitor and compare it to yours. Were the prices comparable? Is the quality as good as yours? Maybe even a little better? Does it have any features that yours doesn’t?

If your business is a restaurant, go and eat at the restaurant across the street. Pay attention to the cleanliness, the service, the food quality, etc. If your competitor is a hotel, spend the night and take a walk through their parking lot at night to look for fleet vehicles that can tell you which companies to make sales calls on. Now you know where you stand in comparison and what you need to do to win customers away from the competition.

Perform a SWOT analysis

If you’ve never heard of a SWOT analysis, it stands for Strengths, Weaknesses, Opportunities, and Threats. In it, you draw a map with four quadrants using those labels and compile a list in each quadrant. First, define clearly and honestly what you believe the biggest strengths and weaknesses of your business are in relation to your competitors. What do they have that you don’t? What gives you an edge over them? Knowing that, you next identify the top opportunities you have to steal business away from your competitors, and which of your competitor’s strengths pose the biggest threat to your business. A SWOT analysis is essentially a high-level business plan because now you know which holes to patch in your ship and which to exploit in your competitors.

A customer interacts with a cashier at a small business

Solicit feedback from your customers

The most successful companies ask their customers to give them feedback about their experience. Have you ever eaten at a restaurant and received a code printed on your receipt for a free drink if you take a survey? Stayed in a hotel and received a survey? Visited a business and seen a sign that says “Tell Us What you Think!” with a QR code that you can scan? The ways to solicit feedback are endless, and you’re only limited by your creativity. You need to know what your customers like and don’t like about your business, and the only way to know is to ask.

Listen to your customers

Soliciting feedback is only half the job. The other half is what you do with it. When receiving negative feedback, many business owners instinctively become defensive and dismiss it as untrue, unreasonable, or uninformed. Sure, there are professional complainers out there and we’ve all run into them at one point or another, but they’re few in number and easy to spot. The vast majority of your customers are being sincere. If you don’t already, be sure to take the time to review and respond to your social media accounts for your business. These may be the first channels that your customers use to voice a complaint or offer a compliment. 

A complaint is a gift and should be treated as such because the customer is giving you an opportunity to fix a problem before going to a competitor. The worst complaint is the one you never hear because that customer just starts going to your competition and you’ll never know why.

Create a service culture around your customers

Do you know who your customers are? Be a “lobby lizard” and spend some time in the front meeting and shaking hands with your customers and getting to know them. It’s important to create a service culture around your customers because they are generally not as loyal to brands or products, as they are intensely loyal to people and relationships where they feel valued. Even in the face of fierce competition, customers are attracted to and will be loyal to companies that put them first.

Customers line up at a small business coffee stand

Sell the product, not the price

Try to avoid price wars with your business competition whenever possible, because that’s just a race to the bottom. Somebody else will always be able to absorb more loss than you until one of you is forced out of business. Instead, focus on creating value for your customer by providing a good product at a fair price combined with great customer service. Cheap isn’t always a bargain, and customers are often willing to pay a slightly higher price if they see a strong value proposition for their money. You don’t necessarily need to be the cheapest, you just need to create the most value.

Know your numbers

We’ve already established the benefits of outsourcing your bookkeeping and accounting to a professional accounting firm, and one of the most important is that you will receive professionally prepared financial statements that will give you an accurate and complete picture of what’s going on with your business. 

Do you know exactly what your margin is? Do you know your year-over-year performance in each category? If you don’t have that information at your fingertips, you’re flying blind. This is where Xendoo can help because we offer a complete suite of affordable bookkeeping and consulting services that can keep you on top of your business competition and help you make the right choices.

Prioritize your time

There are dozens of ways time gets away from us because it seems like there’s always a fire that needs to be put out. Being a business owner means everyone wants a piece of you, and you have to figure out how to balance everything and keep the wheels on the wagon. Start each day by taking five minutes to write down all the tasks that need to be done that day, and then prioritize them. In fact, studies have shown that just writing a to-do list can help reduce your anxiety.

Go down your list by priority and scratch them off as they get done. Additionally, by using technology, cloud software, and business automation, you can eliminate some time-consuming tasks, allowing you to focus on the big picture and beat the competition. 

Only do what only you can do

In addition to prioritizing your time so that the most important things get done first, you need to spend it as efficiently as possible so that you can complete the maximum number of tasks on your list. If you feel like you have to do everything in your business yourself, that means you’re a great employee but a terrible manager. Effective management is about delegation. There are some things that only the owner can tend to, but a lot of things – like accounting – can be either outsourced or delegated to someone else to allow the owner to focus on staying ahead of the competition instead of cleaning windows.

Business competition is a guarantee, but it doesn’t have to be a problem. Did you notice how many of these tips revolve around customers? That’s because, without them, you’re out of business. You may be the business owner, but you work for them because they can fire you at a moment’s notice and go to your competitor. Just remember that as a franchise business owner, you can choose your own destiny by focusing on your customers, creating value for them, and building relationships with them. 

 

Do that, and you will always stay one step ahead of the competition.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Cash Flow Management for eCommerce: 4 Tips for Smooth Sailing

Editor’s Note: This post was originally published in February 2017 and has been revamped and updated for accuracy and comprehensiveness. 

Cash flow is a measure of your business’s liquidity and ability to pay its debts from sales revenue. Cash flow management can be one of the most challenging aspects of being an online business owner. Your business can be profitable but still have a negative cash flow because profit calculation takes into account assets like inventory that you can’t use to pay bills. 

E-commerce businesses have an edge in cash flow management by virtue of the immediacy of the transaction, but that doesn’t mean online retailers are immune to cash flow problems. The customer has to pay you before you ship the item, so that means you don’t have to deal with an accounts receivables ledger full of aging accounts. But you still have operating expenses that can deplete your bank account, and you might end up having a lot of cash tied up in inventory before being sold. Fortunately, there are some things you can do to smooth out the turbulence and keep your cash flow – and your business – on an even keel. Read on to see our cash flow management tips to keep your eCommerce business sailing smoothly. 

Minimize Inventory

If your inventory is sitting on the shelf for more than 30 days, you have too much. You can’t afford to have that much cash tied up doing nothing. Use stock-keeping units (SKUs) to track the sell-through rate for each item in your inventory. The sell-through rate is the ratio of inventory sold during the month to new inventory added. If you see that an item’s sell-through rate is too low, you need to dig deeper and find out why. Are you producing too much of it? Is demand for it falling? Maybe some of the cash tied up in that product can be shifted to a more popular item that’s selling better, or it might even need to be discontinued. Don’t be lured in by bulk discount offers from suppliers unless you know for sure the item will move quickly. The right inventory management software can help you make sense of what is going, out, coming in, and just sitting there. 

Shot of two boxes on a table about to be shipped to customers

Get Creative with Sales

At the risk of stating the obvious, one of the best ways to keep a positively manage cash flow is to get more sales from your eCommerce business. The big question, though, is how to do that. What’s the best way to drive traffic to your site and increase the conversion rate of your visitors, and maybe even do a little upselling in the process? Here are a few ideas you can try for driving website sales.

  • Offer free shipping on larger orders to encourage bigger quantities
  • Create a loyalty program for repeat customers
  • Offer Buy One, Get One (BOGO) on items with a high margin
  • Bundle high-margin products with best-selling products
  • Cross-sell by offering related add-ons at check-out
  • Offer a recurring purchase option for consumable products
  • Offer incentives to “abandoned cart” visitors
  • Use a human or automated chatbot to engage with visitors
  • Implement a Search Engine Optimization (SEO) strategy to improve your site’s rank in search results.

If each of these strategies can increase your site’s average order by just 1 or 2%, that can quickly add up to 10% or more extra revenue coming into your bank account to help ease the cash flow. If you do go the free shipping route, make sure to read our tips on how to reduce shipping costs

Manage Your Payables

The other side of cash flow management is what’s going out to your accounts payable. You need to maximize the amount of time the cash stays in your bank account instead of going to your suppliers. When you set up contracts with suppliers, try to negotiate the terms. Standard terms will typically be 30 days, but some suppliers may be willing to go as far out as 60 or 90 days if you ask. Whatever the terms are, you should generally wait until the end of the term to make the payment so you can hang onto the cash as long as possible. Watch out for late fees, though. However, if your supplier offers discounts for early payment, they may be worth taking advantage of.

Consider an Inventory Loan

If you’ve done your best but still find yourself in a cash crunch and need to restock inventory, an inventory loan may be an easier option than a traditional bank loan. Lenders will look at more than just your credit history and will take into account your sales history and the stability of your business. Inventory loans can be either lump-sum loans or lines of credit with the bank that you can use over time. You won’t be able to finance the entire cost of your inventory, but you can expect to be able to cover around 50% of the cost through a loan.

Managing your cash flow wisely can be the difference between success and failure for your eCommerce business, even if you’re showing a profit on the books. Xendoo’s suite of products and bookkeeping services for small businesses can help you know exactly where your money is going so that you can manage it more effectively. Contact Xendoo today to start your free trial and see how we can help your small business grow.

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

eCommerce Trend Report: 2020 Recap & 2021 Forecasts

Editor’s Note: This post was originally published in March 2020 and has been updated for accuracy and comprehensiveness.

For all the challenges the economy faced in 2020, it may come as something of a surprise that overall domestic retail sales saw their highest rate of growth in over two decades during 2020. What probably isn’t much of a surprise to anyone who has been paying attention is that that strong growth was driven entirely by eCommerce trends in 2020, with online sales accounting for 101% of that growth. 

The COVID-19 pandemic drove more and more shoppers to online retailers in lieu of brick-and-mortar stores, and the good news is that that movement shows no sign of slowing down in the eCommerce trends for 2021. The bad news is that sales tax compliance continues to be a thorny issue for online retailers as they struggle to keep up with state regulations. Figures represent US domestic sales unless specifically noted as global figures.

Consumer Migration to E-commerce

Overall retail sales in 2020 topped $4.04 trillion, representing a 6.9% increase over 2019 sales of $3.78 trillion. That was driven by a massive 44% increase in online shopping, nearly three times the previous record eCommerce year-over-year growth in 2019 of 15.1%. A significant portion of that increase was due to first-time online shoppers, as well. E-commerce market penetration leaped from 15.8% in 2019 to 21.3%, representing a sharp increase from its previous trend of 1-2% growth per year. In 2020, eCommerce transformed from being a convenient alternative to brick-and-mortar stores for some consumers to an essential part of daily life in an age of pandemic.

A person checks his phone for sales during Black Friday

Holiday Shopping

Following along with the overall trend toward online shopping, domestic holiday shopping showed similar rates of year-over-year growth. Out of $861 billion spent online in 2020, over $200 billion of sales occurred during the holiday shopping months of November and December. 

  • Thanksgiving Day online sales rose 21.5% to $5.1 billion 
  • Black Friday online sales rose 21.5% to $9 billion
  • Cyber Monday online sales rose 15% to $10.8 billion
  • Total Cyber-week domestic online sales reached $60 billion 

Hottest E-commerce Segments in 2021

Fashion and online apparel remained the largest segment of online shopping globally in 2020, followed by toys and electronics. 

  • Online apparel sales rose 15% to $760 billion globally, projected to reach $1 trillion by 2025
  • Toys rose 12% to $590 billion in global online sales, projected to reach $766 billion by 2025
  • Consumer electronics saw $542 billion in global online sales, a 28% increase over 2019.
  • Food and personal care items came in fourth at $468 billion
  • Furniture and household appliances totaled $362 billion globally.

Largest Retailers

Unsurprisingly, Amazon retained its throne as the undisputed king of online retailers, with a whopping 38% of all domestic sales, down slightly from its 2019 share of 43.8% share in 2019. Other online retailers like Walmart and Target managed to chip away at Amazon’s lead, but are still behind by a wide margin. 

  • Amazon – 38%
  • Walmart – 5.3%
  • eBay – 4.7% 
  • Apple – 3.7%
  • Home Depot – 1.7%

Smartphone Sales

Smartphones continued to increase in popularity as a platform for online shopping, representing 54% of online sales in 2020 and projected to reach 73% in 2021. 79% of smartphone owners have made at least one online purchase with the device, and 80% of smartphone owners have used a smartphone to look up product information or reviews while shopping in a traditional brick-and-mortar store. It’s clear that the prevalence of smartphones will continue to be a driving force in eCommerce for the foreseeable future. 

A man pays for an item using his digital wallet on his phone

Trends to Watch

Whether you have something like a Shopify store or sell through your own website, it’s imperative to stay on top of technology and predict online consumer product trends so that you can stay one step ahead of the competition. To that end, we’ve identified some eCommerce future trends that are definitely worth keeping an eye on in 2021.

BOPIS (Buy Online, Pick-Up In-Store) and Curbside Pickup

This was the trend that dominated much of 2020 because it combined the convenience of online shopping with the immediacy of in-store shopping. While some shoppers will revert to in-store shopping, this trend is here to stay.

Augmented Reality (AR)

Augmented reality emerged as a player in eCommerce in 2020, with, for example, some furniture retailers allowing consumers to upload a photo of their living room and see how a particular piece would look in it.

Digital Wallets & One-Touch Purchase

Many consumers have been hesitant to make the move to online shopping due to concerns about fraud, while others were put off by the inconvenience of having to enter a credit card number. Digital wallets like ApplePay and GooglePay have alleviated many of those concerns by making secure one-touch purchases from smartphones. However, most security concerns are pushed to the wayside for convenience, and this eCommerce trend is probably here to stay. 

Cryptocurrencies

Although controversial and not widely adopted currently, cryptocurrencies are poised to become a force in eCommerce in the not-too-distant future. Because Bitcoin is both a currency and a payment processor, it can facilitate secure transactions across borders at transaction fees of 1%, as opposed to the typical 2-3% merchant fees charged by credit card processors. Some large online retailers like Overstock.com already accept Bitcoin.

More Sales Tax Headaches

In response to declining state sales tax revenues from the move to online shopping, the US Supreme Court ruled in South Dakota v. Wayfair (2018) that each state had the power to individually tax online retailers to create a replacement revenue stream. Online retailers must now monitor and comply with 50 different sets of sales tax laws, creating an enormous amount of accounting overhead. 

This is yet one more reason to outsource your bookkeeping service and accounting to a professional firm like Xendoo as a cost-effective solution to this regulatory nightmare. Sales tax processing is just one of the many affordable services available in Xendoo’s suite of small business offerings. Xendoo can also make sure that you are getting all the eCommerce tax deductions that you are entitled to as an online retailer.

It’s clear that eCommerce will only continue to grow by leaps and bounds in the years to come. Consumers were already growing accustomed to the convenience of online shopping, and the COVID-19 pandemic was the impetus that pushed many holdouts to take the plunge. Many retailers struggle to understand emerging technologies and keep pace. The retailers that don’t will be left behind in the wake of those who do. Staying on top of technology and eCommerce trends is critical to success in retail in 2021. 

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This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

7 Don’t-Miss Tax Deductions for eCommerce Businesses

Why settle for standard business deductions, when there are more opportunities to lower your tax bill, some of them seemingly tailor-made for eCommerce businesses? Before you prepare your return this year, check out this list of possible deductions.

1. Home office.

In order to qualify for this one, you must use at least one room in your home exclusively for business; working on your laptop in the living room doesn’t count. If you meet that requirement, you can deduct a percentage of nearly every house-related expense you can think of, including rent/mortgage, utilities, repairs/maintenance, and insurance premiums. (The percentage deducted is based on the percentage of the house’s total square footage that your office occupies.)

2. Office supplies, equipment, and software.

Furniture, computer, printer, camera gear (if used for photographing your merchandise), postage meter, inventory management software, paper clips — if it’s used in your office it’s usually 100% deductible.

3. Phone/internet.

You can deduct a portion of your phone and internet charges based on the percentage of time that you use them for business.

4. Transportation and travel.

Any car used for business purposes is eligible for deductions; even if it’s also your personal vehicle you can still deduct a percentage. There are 2 deduction options: a flat amount per mile or a total of actual costs such as gas and parking fees.

Other travel-related deductions include airfare, cab fare, tips, meals, and conference tickets.

5. Fulfillment costs.

You can deduct the costs of packaging materials and shipping to customers.

6. Subcontractors.

Whenever you use independent web developers, graphic designers, photographers, content writers, bookkeepers, temporary office staff — anyone not on your payroll — their fees are 100% deductible.

7. Merchant processing fees.

You probably use one or more credit card processors such as PayPal, Stripe, or Square. But did you know you can deduct their fees?

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Inventory Control for eCommerce: Getting the Balance Right

As an eCommerce retailer, you may not have a brick-and-mortar store, or even your own warehouse and fulfillment facility. But that doesn’t mean inventory control has to be more difficult. With the right mix of tools and strategies, you can manage your merchandise supplies and turnover efficiently and cost-effectively.

Decide how much stock to keep on hand.

Your goal is to strike a balance between too little and too much. In most cases, a one-month supply will be enough to meet any unexpected increases in customer demand, without tying up unnecessary working capital or warehouse space.

To calculate your one-month supply, analyze sales and fulfillment information from previous years. If you’re a new startup, research the performance of your product category as a whole.

Allow for variables in your stock-on-hand plan.

Depending on your business, you may need to adjust inventory levels for:

  • Seasonal fluctuations, such as the Q4 holiday shopping season
  • Shipping time from the manufacturer to your warehouse, import delays, etc.
  • Store promotions such as an annual sale

Apply the same variables to fulfillment planning.

During periods of higher sales volumes, you will also need more packaging materials as well as additional employees to do the order processing, packing, and shipping.

Keep a close eye on your inventory — digitally.

Real-time inventory software can save a ton of time and effort. By using bar code identification, it automatically updates your stock levels whenever an item is sold, alerts you, and website visitors when an item is out of stock and tracks delivery to customers.

Keep a close eye on your inventory — manually.

It may seem old-fashioned, but a physical stock count is the only sure way to know what’s in your warehouse. Do it weekly, monthly, quarterly, or annually, whatever makes sense for your business.

Have a plan for out-of-stock incidents.

Your software should notify you in time to replenish stock before it runs out. But in case there are snafus at the manufacturer or in transit, be prepared to respond and keep customers happy:

  • Remove the product page from your website, or add an “out of stock” message letting customers know when it will be available again
  • Take backorders
  • Pay extra attention to stock levels of fast-moving products and reorder them farther in advance

Choose the right business management system.

A system that’s specifically designed for eCommerce is an invaluable asset. For example, it can show order processing and shipping costs in relation to revenues. Even better, it can link inventory management to other operating systems within your business, such as accounting and payroll, greatly reducing administration time and duplication of effort.

Organize your warehouse for a fast response.

Keep your best-selling items on the shelves that are easiest to reach. Slower moving merchandise can go in less accessible areas.

Consider off-site warehousing options.

The advantages of storing some or all of your inventory in other locations include reduced shipping time to your customers and saving on overhead. Check out:

  • Adding regional warehouse locations
  • Renting warehouse space from a national retail chain or postal service
  • Using Amazon FBA (Fulfillment by Amazon) — you advertise your product on Amazon and they handle merchandise storage, order processing, shipping, and customer service

Stay on top of record keeping.

For both current decision-making and long-term planning, “knowing your numbers” is essential. So checking them at the same time every day or week is a great habit to get into. (It only takes a couple of seconds with the right software, just press a button to see inventory status, turnover, and associated costs.) You’ll always have a clear picture of your inventory … and your business.

For successful inventory management, every eCommerce business must find the right balance between too much or too little stock, online and hands-on tools, and on-site or off-site locations. Most important of all, accurate records will reveal what’s working and what isn’t, so that the future will be even more rewarding than the past.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Taking Stock and Shaping Up For 2019

One of the most popular New Year’s resolutions is to get fit. We say your business should be as buff as your body — and making it happen will be a lot easier on the muscles! Here are 4 areas of your business that should get a fresh look every year, along with tips on how to get them into their best shape ever.

1. Vision & Strategy

When you originally launched your business, you had a vision of what you wanted it to be one day. How does that vision relate to your current reality — is it your future, present, or past? Your answer will guide your strategy for the year ahead.

Your future: You’re still on track towards your goal, you’re still satisfied that it’s the right goal for you, and you believe it is achievable in current conditions. If this is your situation, your main concern is to keep an eye on your market, including new competitors, emerging trends, and the economic situation.

Your present: You’ve reached your goal and your business is now everything you envisioned back on day one. Congratulations! However, you now face the risk of becoming stagnant and falling behind instead of continuing to grow. It might be time for a revised goal and an updated strategy for how to attain it.

Your past: For one reason or another, your original vision no longer applies so well to your business. Your industry, your customers, or your own interests may have taken you in a different direction, maybe without much preparation. Wait no longer to do your groundwork, with a completely new vision statement and business strategy.

If you’re not sure which of these categories is — or should be — yours, it’s time for an outside view. Ask your best customers, expert consultants, or industry colleagues. Research industry trends and insights. This fresh, objective perspective can open your eyes to unrecognized opportunities for success.

2. Marketing & Sales

Once you’ve nailed down your vision and strategy, use them to create your brand identity. The more unique, accurate, and specific your brand and selling points are, the more effective your marketing efforts will be at acquiring new customers and retaining (or upselling) current ones. For example, any fitness studio can say they help people get fit; but only you can say you’re the town’s best authority on HIIT workouts.

Next, analyze how well your marketing channels are driving sales. If a channel (such as direct mail) is performing poorly, figure out why. Is it the wrong channel for reaching your prospects (who are looking online, not reading snail mail)? Is it the wrong channel for your message (such as a postcard crammed with too many words and images)? Fix or eliminate the losers and put your marketing budget into the winners.

3. Operations

Your business and your industry have evolved since you first opened your doors. Have your workflow processes, equipment, and employees evolved along with you? Or are they now struggling to meet demands they weren’t designed for?

This is the biggest opportunity for significantly improving efficiency and performance — and your bottom line. It also quite often requires an initial investment, whether in new tools, new software, new hires or additional staff training. A bit of cost-benefit analysis should show you whether it will be a smart move in the long run.

4. Finance

We know, it’s not your favorite thing to think or talk about. But it really is essential for business owners to know the state of their financial health, so they can make the right decisions at the right time. Questions to ask yourself include:

  • How often do I receive financial reports, and how current are they?
  • How long does it take my accountant to respond to my call?
  • Does my accountant provide me with insights for planning and growth?
  • Does my accountant spot ways that my business could run more cost-effectively?
  • How much of a hassle is it for me to do payroll and file taxes?

At Xendoo, we understand small businesses and the need for lightning-fast responses to ever-changing environments. Your dedicated team of accounting experts can help get your business into shape for the new year — and keep it that way, day after day,

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

5 Simple Business Tax Steps to Take Before December 31

In just a couple of weeks, the tax year will come to an end. So this is your last chance to make the moves that will maximize your 2017 return’s accuracy and minimize the taxes you owe.

1. Consider new equipment purchases.

You might be thinking you’ll wait until the first quarter of 2018 because cash flow will be better then. Think again: buying before year-end lets you use Section 179 or other tax benefits and take some of the purchase prices from the money that would otherwise have gone to the IRS.

2. Determine your tax bracket.

Review your 2017 profits with your CPA to figure out exactly what percentage rate you will be taxed at. Once you know that amount, you can more easily manage cash flow, plan for the first quarter of 2018, and make informed decisions about such expenditures as employee holiday bonuses or leasehold improvements.

3. Check personal credit cards for business expenses.

Situations where you can’t pay with the company card happen to every business owner. So you give the supplier your personal card. And in the fast pace of daily operations, it’s easy to forget to reimburse yourself for those expenditures. Now is the time to move that money where it belongs.

4. Pay state tax now.

If you pay your state tax in 2017, you can take it as a deduction on your 2017 return.

5. Do a year-end inventory reconciliation.

Why pay tax on merchandise that’s unsellable, or just plain not there? Your reconciliation should account for spoilage, shrinkage, returns, and out-of-date products.

Bonus tip: Utilize Xendoo’s catch up services.

Xendoo understands that, as a small business owner, you wear many hats and have next to no time to keep on top of accounting and bookkeeping. You may have been behind for years, yet we can usually bring your financials up to date in a week. It’s that easy to start the new year with peace of mind about the state of your business … not to mention the tax savings we just might find!

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Rolling in the Dough: 5 ways to make your restaurant or food truck more profitable

The restaurant business can be growl- I mean, grueling. An astounding 60% of restaurants close or change ownership in the first three years. If you plan to beat the odds, you must focus on making your restaurant profitable as soon as possible. Here are five ways to make sure you’re not leaving any profit on the table.

1. Know your numbers

Do you know the exact percentage of your food cost during any given time of year? Do you forecast sales and use those figures to schedule staff and control inventory? If not, it’s time to get a handle on your restaurant’s numbers so you can make decisions based on more than your gut. Here’s even more on controlling your food/labor costs and how to prevent food waste.

2. Determine your role and hire the best

When it comes to operating a restaurant, it may not be a bad thing to have too many cooks in the kitchen. Beginning with a great front-of-house that warmly greets customers and manages crowds, to servers who are on their a-game, all the way back to solid cooks, bartenders, and bussers – hiring experienced, teachable staff, helps guarantee a great customer experience every time. But don’t rely on what they already know: making sure your team is trained and updated with weekly meetings help them help you run a better restaurant.

3. Offer a take out menu

Take out orders do two great things: keep your kitchen busy and leave the dining room open for more customers. Offering a modified version of your menu for hungry diners so they can take your food home will help you bring more bacon home (see what I did there?).

4. Put customers first

A disappointing dining experience may not just stay at your restaurant. With the ability to “check-in” online, leave reviews, or even just rant to their personal followers, diners now have a megaphone to share their experiences and they won’t be afraid to use it. That’s why it’s more important than ever to make good on a bad meal before the guest gets their check. If you need to, comp a dish (or the whole meal) or offer a free dessert. And don’t forget to give a coupon good for a future visit so they give you a second chance. The loss you’ll take on these items is far less than the loss of customers resulting from a poor online review.

5. Don’t wait till it’s too late to market

Even if the business is booming, restaurant owners should never rest on their laurels. The scene is always changing and new competition looking to steal your lunch could pop up at any time. Always have a solid marketing plan in place that, at the very least, includes an attractive, easy-to-use website and updated social media pages. When you’re ready to take things to the next level, get creative with digital marketing, local print advertising, or mass marketing tools like radio and TV.

Follow these five tips and you’ll be on your way to a more profitable restaurant or food truck. If you’re looking for even more ways to save during tax time, check out Seven Tax Tips for Restaurant Owners.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.