This overnight lending rate is the borrowing rate banks must pay the Fed if they borrow money. However, it’s key to note that the public lending rate adds a profit margin for the bank or lender. This means businesses get an even higher interest percentage than the base Fed rate.

For business owners, this can equate to a more challenging financial situation. Favorable loan terms are harder to get and businesses face a high-cost capital.

With debt at a 22-year high, how can your startup thrive? Here are seven steps to optimize your business when navigating choppy financial times.

1. Solidify your forecasts. If you need a high-interest debt for your business, your sales forecast must be solid and reliable. You’ll need to make regular monthly payments or at different terms, and if your revenues fall short of your goals, you may need to default. A reliable sales forecast gives a realistic picture of your expected financial performance. This then helps you strategize payment schemes, and sales and marketing efforts.
2. Don’t skimp on safety and quality. Never sacrifice safety and quality because of poor economic conditions. Once a customer notices that you have taken an expedient shortcut that affects safety and quality, you may lose this customer forever. Customers often have long memories that extend past a recession. Remember: a whopping 91 percent of the time, one bad experience can stop customers from doing business with your company again.
3. Have a loan period that your company can safely commit to. It’s ideal to base your payment period on an assured amount you can commit to without the risk of a default. A good sales and marketing strategy and a realistic forecast are your allies on this front. These factors will help you structure your loan so it’s payable even on the low end of those forecasts.
4. Cut down on unnecessary expenses. Are you still serving high-end food in your cafeteria? Do you have perks that are not required by law for your employees? It’s easy to miss accessory line items just because you’re used to spending on them. But these expenses could now be bleeding your balance sheet dry. Remember: water could be inconsequential, but too much of it has sunk even the mightiest ships. Be ruthless when cutting non-core expenses that don’t serve the bottom line.
5. Negotiate favorable terms with suppliers and customers. Communicating with your supplier and customers will also be crucial. The goal is to settle on mutually favorable terms which mitigate the financial impacts for all parties involved. While some terms are non-negotiable, an open dialog will still go a long way in saving money without impacting quality and safety.
6. Talk to your employees about the reality. Transparent communication is also key within your organization. For example, if you are forced to implement a temporary pay cut, your team has to know the whys and hows of it. Comprises might be inevitable, but they should be fair and transparent. Obviously, if a benefit is guaranteed by law, then it is a non-negotiable. But if a perk is specific to your business, consider the cost-benefit value of that expense. If the benefit is much greater than the cost, then you may want to keep it to prevent employee departures. But if there is a common agreement that you can do away with certain expenses, then do so.
7. Be the voice of encouragement for your business and staff. Your top responsibility as a leader is taking care of your team. Maintaining morale will be crucial to keep the business running during uncertain times. You shouldn’t lie to your employees, but you shouldn’t discourage them by focusing on cold hard facts either. During challenging times, an effective leader is realistic but also staunch in rallying a team together. Be grounded on the present circumstance. But at the same time, stand by your employees and show that you are all in this together.

It’s not going to be easy, but if you run a tight ship and forge ahead, your business will make it safely across the storm.

The post Running a Business with a High Cost of Capital: 7 Key Steps to Optimize Operations appeared first on SiteProNews.

It is truly disheartening to learn of the somewhat lax attitude towards safety from the company’s leadership. Several news reports have quoted its late CEO as saying:

“You know, there’s a limit. At some point safety just is pure waste. I mean if you just want to be safe, don’t get out of bed. Don’t get in your car. Don’t do anything. At some point, you’re going to take some risk, and it really is a risk/reward question. I think I can do this just as safely by breaking the rules.” – (Nahmias, L. & Molero, G. (2023, June 21). Titanic Tour Leader Loved Risk and Called Safety a ‘Pure Waste’ Bloomberg.)

These words are even more alarming to read given the nature of their business.

While these kinds of events tend only to capture public attention when they are highlighted in the news cycle, this unprecedented and devastating accident highlights the crucial role of safety in all phases of business operations. It is also a telling example of how a culture of safety must be built and enforced from the top down. Below are foundational principles in business safety that I believe are worth revisiting and underscoring, with the hopes of preventing tragic history from repeating itself.

Safety Starts at the Very Start

While there is no such thing as zero risk unless we do nothing, and although exploring the world may entail danger, we should always endeavor to anticipate and prevent any possible safety issue that may affect us and our clients and customers.

Beyond value propositions and business models, leaders should also put safety guidelines and procedures at the top of the list of must-haves even from the early stages of any business venture. When we put safety among our prime priorities, even before launching a business, we are effectively putting ourselves a step ahead of possible errors and accidents.

This attention to detail and safety policy should be articulated in the Company mission, vision and objectives to ensure that they are practiced and enforced. But most importantly, everyone from the leader to the most junior employees should understand and live these safety values.

A Culture of Safety Is Only Truly Lived If It Comes from the Top

Another important facet of an effective safety culture is in the principles set by the leadership. As I mentioned above, everyone has to live the company’s safety values — the head of the company, most of all. It is the job of a Company leader to set the tone for safety. You see all these “Safety is Job 1” in factories and in other places. Companies may have safety operating manuals, safety officers, and other appearances of practicing safety, but unless a Company leader actually lives and breathes safety, both in practice and in pronouncements, that company is actually unsafe.

As the head of a business, your employees will look to you to set the culture. And whether your VMO statements reflect the reality of your company is up to you.

Safety First, No Matter What Industry You Work In

While you may not be in the underwater submersible business, you could be in the food, airline, restaurant, construction, hospital, equipment manufacturing, pharmaceutical, and other industries. There are actually many industries and businesses that if we manage too loosely could end up causing harm or at least a major inconvenience to customers and clients.

Proper design involves anticipating all sorts of possible misuse and conditions that may cause harm. Testing validates whether the product actually works the way it was meant to work. Legal constraints and fine print may seem as unreasonable constraints on freedom, but sometimes it is important to tell our clients and customers not to misuse or utilize our products in ways that these were not designed for.

Quality control is also something you should never skimp on. Across industries, protocols to ensure quality — from the smallest details to the final product — prevent disaster from happening. For example, complex equipment such as commercial or military aircraft or submarines often have people whose job involves looking at the quality of all the materials that go into these machines, including the source and quality of each minor bolt and screw. Similarly the food and pharmaceutical industries also monitor each material that goes into their products. An overabundance of caution and safety never hurt anyone.

Success Is a Byproduct of Safety, Not the Other Way Around

In the business world, one root cause of catastrophic safety failure is a desire to maximize the bottom line by removing costly features that might prevent some deadly incidents that may not occur that frequently. It may also involve using cheaper materials that may work for household entertainment products, but not for products intended to be used for harsh environments.

It goes without saying that safety should never be sacrificed for the good of business finances. And no matter what, businesses should never cut corners when it comes to protecting lives and property. Because even if we might not be bringing customers several thousand feet below the ocean, our products and services could be equally as dangerous to people if we have a lax attitude towards safety just to meet the bottom line.

At the end of the day, business should not just be about making a profit. It should also be about serving the public good, and that entails ensuring the safety of employees and customers alike, every step of the way.

The post Building a Safety Culture from the Top Down: 4 Foundational Principles Leaders Must Take to Heart appeared first on SiteProNews.

The best founders are visionary founders; the ones with a different and improved conception of the future are the ones that become household names. As investors, we look at those founders to bring something better into the world. As consumers, we love the idea of finding products and services that solve our problems—small, large, and those we didn’t yet know we had. As a society at large, some of our greatest strokes of human progress, like the ability to ventilate air, expand our medical care, and fly to Mars in the case that we exhaust all other options, are all strides for which we owe our thanks to the great minds of entrepreneurs.

So what makes a mind great? There’s no saying why an idea comes when it comes. But there are observable habits, characteristics, and practices demonstrated by people that bring those ideas to life.

The Best Entrepreneurs Have a Think-Do Connection

Progress is progress regardless of pace. But there’s a negative effect that begins to set in if, too often, an intention born in the mind isn’t carried out in a dependable way. Every time the brain produces an idea, and the rest of the mind fails to fulfill that idea, a kind of promise is broken. The think-do connection isn’t built overnight, but it also doesn’t stay still. That means entrepreneurs need to prove to themselves over and over again that when they set out to do something, they do it.

This habit is best built with small behaviors that are well under control, and there’s no need to build it alone. Ample research shows that goals that are shared with someone, especially someone of a higher perceived status, are far more often achieved than aims that are kept to oneself. Great entrepreneurs understand that they’re no exception. Sharing a goal or aim, of any size, with a trusted and high-profile network is a great way to build that personal trust and get used to doing whatever needs to be done.

The Best Entrepreneurs Have a Self-Awareness Practice

People who have incredible strengths often have weaknesses of near or equal magnitude. And while no one wants to take a constant stock of the things they’re not able to do well, the best entrepreneurs have a forward-thinking self awareness that keeps those areas of lesser capacity visible. To expect not to have any shortcomings would be to expect a form of unattainable perfection. Instead, leaning into humility, asking for feedback, and practicing radical transparency around those areas will help to foster better, more authentic relationships within the founding team.

The best teams are built to have complementary strengths; most founders surround themselves with people who are gifted in the areas they themselves find challenging. The combination of self-assessments and peer-to-peer feedback can help By keeping a strong sense of self-awareness, entrepreneurs will have an easier time filling those gaps and establishing open conversation as they do. And when it comes to building a company, there’s no room for holes in the foundation—entrepreneurs can’t waste any time pretending they’re the first real jack-of-all-trades.

There isn’t anyone who’s found success that will report on a straight and stress-free path from start to end. But often, the ones who find their way to the top succeeded in establishing more positive relationships with the turns in the road. Bad quarters are a part of the entrepreneurship game. And watershed events like COVID-19 teach us time and again not to underestimate how quickly things can change.

The Best Entrepreneurs Find a Way to Love Each Part

Like an athlete preparing for a hard workout, great entrepreneurs find a way to love even the worst parts of the job. The best of the best know not to deny their own experiences, but instead to keep the end goal in mind. That way, every set back, small or large, is understood as a toll that needs to be paid to get to that final destination. Modeling that kind of long-term vision goes a long way for team morale, and soon, every part of the founding team is ready to deliver that reminder when needed.

The best thing an entrepreneur can be is open to the next big idea. By establishing trust in their ability to turn thoughts into actions, ensuring they’re engaged in self and peer assessments, and finding a positive relationship to the more grueling parts of the job, entrepreneurs—established or aspiring—can coach themselves into keeping an open mind and bringing the next game-changing, post-COVID breakthrough to market.

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