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Sales Forcasts Guide Thumb.jpgWhen you run a small business, even a small divergence from sales forecasts to actual performance can create huge management challenges. But experts advise that by approaching sales forecasting more strategically, owners of small companies can achieve more predictable, reliable results that foster their capacity for well-managed growth..

Click here to download our guide "Sales Forecasts That Paint a Real Picture of Your Business"

Paying bonuses based on a company’s overall financial success can be an effective strategy to get employees pulling in the same direction, and smaller organizations may actually have an advantage over larger ones in this area. “I believe it’s easier for a smaller business to tie individual incentives such as bonuses to corporate performance,” says Priya Kapila, manager of compensation consulting at CBIZ Human Capital Services. “That is because there are often fewer employees performing varied functions with the goal of advancing the business. As a result, there is often greater transparency with respect to financial performance, and most employees are vested in seeing the company succeed.”


David Lewis, president and CEO of OperationsInc., a human resources outsourcing and consulting firm, agrees. He says tying compensation to company revenue goals is easy: “Just put a revenue goal on it, but make sure you account for unforeseen expenses and initiatives that could alter profitability. I think the bigger the business, the more distractions and factors enter into the equation, with larger firms tending to tie compensation of this nature to individual goals and objectives, in concert with the company’s success.”


The vast majority of organizations—more than 90 percent—provide some kind of incentive/bonus compensation plan to their employees, notes Tom McMullen, U.S. reward practice leader at global human resources consulting firm Hay Group. “It is an attractive tool because variable pay aligns with the business’s success—and risk—much more than fixed pay such as base salary and benefits do,” he says. McMullen suggests six practical steps businesses of any size can adopt to make their review process for determining compensation more effective:

  1. Help employees to view their pay as more than base salary and bonuses. “Total rewards” also include recognition, meaningful work, and career opportunities. Raising employee awareness in this area can boost morale and increase motivation.
  2. Clearly communicate the link between performance and rewards. Clearly explain the reasons for any reward and the amount. Employees who understand how specific actions and outcomes lead to specific rewards are more motivated to pursue them.
  3. Ensure that performance assessments and total rewards appropriately differentiate the best, solid, and weak performers. It’s a fact of business life that not all employees are created equal, at least as far as performance potential is concerned. Employees with the ability to perform at a superior level will be more motivated to do so if they know their resulting compensation will be significantly better than that of lesser performers.
  4. Understand what truly engages and motivates employees. “Often, it is much more than money,” McMullen points out. “Be mindful that different people value different rewards.” Then use that understanding to match performance-boosting incentives to individual employees.
  5. Assess and improve the organization’s work climate by training managers in how to motivate their employees.
  6. Use feedback as a gift. Make it meaningful, and give it often. In the process, be sure to emphasize how changes in an employee’s performance will be rewarded.


Owners can and should use the review process and bonuses to effectively set clear expectations with employees, to shift any priorities as needed, and to encourage desired behaviors, says James A. Mutz, director of benefits & 401(k) at CoAdvantage, a provider of human resource outsourcing solutions. “In the design of employee compensation plans, business owners need to have transparency and visibility. They need to be open with their employees, and the organization’s goals should be understood. Communicating where the business stands and how the company is doing is a must,” he emphasizes. “One thing some business owners forget is to write it down. Make sure the plan is clearly documented and communicated so there’s no misunderstanding.”



Article provided by Inc. © Inc.

Content created exclusively for Bank of America.

Gender GapThumb.jpgDespite gains in earning equality, women’s salaries are still, on average, just 82 percent of what men earn—and their life expectancy exceeds men’s by five years, according to the U.S. Bureau of Labor Statistics. That places many women in the position of potentially having a smaller retirement nest egg and having to make their financial resources last longer.


As a small business owner, the last thing you need or deserve is to struggle through retirement. And as a caring employer, you want to protect your employees from retirement-related stress and anxiety. The good news is that the same qualities that drove you to launch a successful company also empower you to take a leading role in promoting women’s long-term financial security.


To learn more, click here to download the guide from Merrill Edge®  Small Business titled. "Closing the retirement gender gap".

232.jpgLines of credit (LOCs) and credit cards are two financing options that are popular with many business owners, especially for short-term or unexpected projects and expenses. Technically, a credit card is a type of LOC, but there can be important differences between the two regarding terms of use, interest rates, repayment schedules, and other factors. Understanding those differences can help you make the right choice when deciding which form of credit to use for a particular purpose.


A credit card is a revolving line of credit where there are no fixed payments, explains Joel Ohman, a financial planner and founder of the website Many LOCs are installment lines of credit and may have fixed payments. “Practically speaking, credit cards and lines of credit serve different yet related needs. When a business needs access to larger amounts of credit, a line of credit is often the more appropriate choice,” he says. “But a credit card is unmatched when it comes to convenience and ease of use.”


A business credit card account utilizes a plastic card at the point of sale, the same as with a consumer credit card, while a line of credit is typically accessed by writing a check, says Ben Woolsey, director of marketing and consumer research at However, some LOCs also come with a debit card that can be used just like a credit card in many situations.


Convenience makes business credit cards the best choice for day-to-day buying, and they offer other advantages as well, says Greg Hammermaster, president of Sage Payment Solutions. Business owners can set credit limits on each card, and electronic transaction data related to cards usage can be integrated with business accounting and expense management programs to provide significant business process efficiencies. Many business credit cards also offer corporate benefits or rewards, such as points/miles that can be used for travel expenses or cash rebates.


If a business knows it’s going to need to borrow for longer periods of time, has larger borrowing needs, and has a verifiable financial track record of at least two years, a line of credit is usually the better option, suggests Erik Larson, president and founder of Often, the most important factor to consider when choosing whether to use a credit card or an LOC for a particular purchase is how soon you will be able to pay it off. “If you have the cash to pay the balance due in the current billing cycle, it can be easier and cheaper to use a credit card,” he says. “If it’s going to take a lot longer to pay off, and this is a recurring situation for your business, it probably makes sense to use the LOC. A line of credit generally has a lower interest rate than a credit card, and the interest savings usually more than make up for any fees associated with it.”


In the end, the right choice is the one that best fits your specific needs and situation, Ohman stresses. “Different businesses in different industries often have quite different financial needs. Be careful that you don’t begin using a particular financial product just because a business owner in a totally different industry recommended it,” he says. “Ask around, and see what kinds of things are working best for others who own businesses similar to yours.”

Credit Lives vs. Credit Cards

Line of Credit*

  • Generally installment line
  • May have fixed payments
  • Usually lower interest rate
  • No interest-free period
  • Best for longer-term/larger borrowing needs


*May or may not have fees

Credit Card*

  • Revolving line of credit
  • No fixed payments
  • Usually higher interest rate
  • Interest-free grace period
  • Best for convenience/shorter-term/lower-dollar purchases


*May or may not have fees




Article provided by Inc. © Inc.

Content created exclusively for Bank of America.

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