During this Crisis, Don’t Expect Business as Usual from the Family Enterprise

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StrategyDriven Entrepreneurship Article | During this Crisis, Don’t Expect Business as Usual from the Family Enterprise | family businessIn the last half-century, the pace of change and the many innovations that have reorganized our behavior in no way compare with the unanticipated situation we now face from the coronavirus pandemic. We simply have no precedent for how to plan for what may come next, or for managing the pace of the upheaval. And yet every day we must act – even making tough choices – without much information about the best direction to take.

Family businesses and wealth are under threat like never before. With family members unable to go to work, it’s hard to imagine how to go back to some sense of normal once we get the “all clear.” That uncertainty and inability to be in command of business operations makes us anxious. And when we’re anxious, we do impulsive and short-sighted things.

In times of crisis, feelings of anxiety and loss cause people to draw inward and focus only on how circumstances directly affect them. That explains the lines at grocery stores and gun shops. Similarly, the individualist model of most businesses ownership is a lone wolf. Rather than seek help, owners make the tough decisions on their own.

But a crisis can also present the opportunity to lead more openly and plan together how to respond. By sharing the specifics of their dilemma, they are more likely to receive help and to also be available to each other.

The owner of a small family business has no idea of what will happen next. He or she must deal with anxiety in family members, employees, customers and suppliers, and the community. What was built over time is suddenly threatened. Rather than deal with these issues alone, the legacy owner is better off using this opportunity to bring others in and develop a shared response.

For example, within resilient family businesses, owners are not just together to make money, but to share values, responsibilities and a commitment to future success. These family businesses are able to act collaboratively.

Family business owners will want to act on these principles when responding to this crisis:

1. Shared family responsibility.

Family members have grown used to the security of the business. Even with its ups and downs, they’ve learned to depend on you. Rather than give false reassurances, it’s time for transparency and open discussion. This is a time to share the challenges regarding fixed costs, debt, obligations and the cost of doing business. A family discussion of what’s actually happening and the difficult choices that need to be made can actually provide more assurance and confidence than empty promises.

Use this opportunity to talk to younger generations in the family about business operations and the trials ahead. Describe what you are doing, and ask for help and ideas. For example, the family might decide to create an austerity plan and talk about how to cut expenses. The family can also discuss its underlying values and how, especially in this time of social hardship, how to look beyond their own self-interest and use their wealth to help others.

2. Transparency with employees.

Local businesses are trying to stay afloat while doing their best to virtually carry out essential services and responsibilities. Many have had to reduce operations, and some have been forced to let staff go. Family business owners need to be open with their employees, transparently communicating information and concerns. They must ensure that everyone across the company, not just employees, shares in the burden. The response must recognize financial reality, but also sustain social capital by respecting all stakeholders.

Collaboration, defining and maintaining underlying values, and ensuring open communication are qualities that will allow family businesses to bounce back after a crisis.

About the Author

StrategyDriven Expert Contributor | Dennis T. Jaffe, Ph.D.Dennis T. Jaffe, Ph.D., a leading architect of the field of family enterprise consulting, is an acclaimed speaker in programs for business families and financial service firms. Dennis leads the 100-Year Family Enterprise Research Program at Wise Counsel Research. He is also Family Business Scholar at the Smith Family Business Program at Cornell University, a faculty advisor at the Ultra High Net Worth Institute, and a regular contributor to Forbes Leadership channel. He was awarded a special commendation for Outstanding Contributor to Wealth Management Thought Leadership by the Family Wealth Report. His new book is Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises (Wiley, 2020). Learn more at dennisjaffe.com.

Taking a Look at the Future of Oil and Gas Industry

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StrategyDriven Editorial Perspective Article |future of oil and gas industry | Taking a Look at the Future of Oil and Gas IndustryWhat is to come in the future of oil and gas industry? It appears gloomy, as it faces stiff competition and opposition.

Environmental concerns amass and foretell the demise of the fossil giant. Activists and politicians demand the modernization of energy production, supply, and consumption.

Sustainability is the new business benchmark. The clear focus is on reducing greenhouse gas (GHG) emissions and tackling climate change.

In the meantime, alternative sources of energy, such as solar and wind, are surging. In the US, they grew at a rate of 100 percent from 2000 to 2018. Figures there and elsewhere suggest they are the fastest-growing energy option on the globe.

But, the oil and gas sector has a few aces up its sleeve. Digital transformation is one of those trends giving the veteran a new lease of life.

The Green Revolution

Renewable technology is gaining ground left and right.

Public support and private funding are on the path of steady rise. Sustainable technology is getting cheaper as time rolls by. In a few years’ time, it may be on equal footing with gas in terms of competitiveness.

Thus, it’s safe to say disruption is real. In fact, it has already started to reshape the energy landscape.

Optimists argue the trajectory is set: a greener world.

There’s no going back.

However, the road to there will be thorny and there are two main reasons behind this. Renewable energy still isn’t readily available in abundance. It’s also not as scalable as fossil fuels.

This is to say it can’t supplement the energy needs of the world in the near future. For instance, it’s hard to imagine a viable alternative to fossil-fuel-based transportation right now. They will continue to propel global travel and commerce.

Notice that many world nations are heavily dependent on oil revenue as well.

Still Keeping the Lights On

The industry will harness the power of growth catalysts to stay ahead of the curve.

First of all, there are still untapped and undiscovered reserves out there. Developing economies are yet to reach their full appetite for fossil fuels. Rapidly-growing Asian economies need them to support their population and production boom.

Taking this into account, the energy consumption patterns will shift slowly and demand will fall gradually. We’re probably talking about a decline of several percentages in a matter of two decades.

What is more, the adoption of new technologies will facilitate oil and gas operations. They will make exploration, drilling, and other processes quicker and way more efficient. Even offshore drilling hasn’t delivered on its potential yet.

Technology also gives the oil and gas industry a chance to wash its face. It could contribute to climate change goals or at least stop acting as a green boogeyman. For this to happen, we’ll have to see more decisive emission-reduction plans.

The goal is to reduce the emissions by at least 3.4 gigatons of carbon dioxide equivalent and to it by 2050. This is a vital aspiration, but it doesn’t change one fact. The more distant future probably belongs to clean forms of energy.

The New Fossil Order Rises

As we’ve indicated, fossil fuel demand is showing no signs of slowing down.

The real problem is on the other side of the spectrum— supply. Experts predict there will be a severe supply gap in the future. It will be the result of the depletion of existing (known) fields and production.

Of course, it should be said the countries of the world won’t just sit idle. Despite major turbulences (like the one of 2014), OPEC has successfully managed the supply/demand in the past. The organization kept the prices from fluctuating too wildly.

The US is poised to chip away at the influence of these old fossil fuel goliaths. This is largely thanks to its tech-driven “Shale Revolution”, which brought forth a production burst. The geopolitics of fossil oil will look much different.

In other words, fossil fuel-funded countries will lose much of their leverage.

The US also established itself as a major exporter and a leader in liquefied natural gas (LNG). This form of gas is 600 times smaller than the natural gas in its original (gaseous) form. Hence, LNG is bound to revolutionize fuel shipping and storage.

These exciting changes bring us to the next key point.

The Bleeding Edge

We should never underestimate the potential for technological innovation.

Industry leaders will make sure to champion digital transformation and increase upstream capital investments. They will embrace cutting-edge digital platforms and cloud-connected tools. Adoption will take operational efficiency to the next level and across the entire lifecycle.

Companies will have to become more agile, automated, and data-driven in order to survive. Machines will take over many repetitive, tedious, and dangerous tasks. They will render manual processes a relic of the past.

Big data, for example, should work wonders for risk monitoring and prediction. Internet of Things (IoT) sensors and drones will enable remote monitoring of operations. Control of work will optimize management systems and help organizations overcome operational hiccups.

To find out more about this practice promoting safety and mitigating hazards, read on here.

All in all, expect to see software platforms and industrial robots to proliferate. These are the harbingers of the new dawn for the fossil fuel sector. Hopefully, they will make production safer and environmentally-friendly too.
Investors will certainly look to this frontier of innovation to find companies with profit potential. “Business as usual” can’t continue, not with the risks and uncertainties lurking around.

The Future of Oil and Gas Industry is Now

Fossil industries aren’t going to go down, at least not without a fight.

They span the globe and power the modern infrastructure of travel and commerce. The growing popularity of renewable sources is going to take a while to yield radical change.

Besides, there are ways to make oil and gas businesses future-proof. Namely, the word of tomorrow will be digital-first and automated. Countries like the US will spearhead the new wave of technological advancement.

Changes will revamp everything from exploration to filed abandonment Brands will have to become more operationally intelligent or risk going under. They will have to learn to swim in restless water of shifting supply and demand patterns.

So, we can conclude that the near future of oil and gas industry is fairly bright. It’s the long-term horizon that looks a bit bleak.

Check out our treasury of insights to educate yourself some more. Stay in-the-know!

Bootstrap your online business – Top tips to stretch your start up budget

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StrategyDriven Starting Your Business Article |Bootstrap your Business| Bootstrap your online business - Top tips to stretch your start up budgetStarting up an online business in today’s economy is no easy feat, as you’ve already got hundreds of thousands – if not millions – of other businesses already established and have the upper hand on you. However, this doesn’t mean it’s impossible by any sense of the word. You just have to be clever with your process so that you don’t blow your budget, you stand out from the crowd and most importantly, you hit the ground running. Check out these top tips to stretch your start up budget.

First thing’s first, you’ll need to build your website and the first question you’ll need to ask yourself is what kind of hosting to go for. There are pros and cons with each, so here’s a handy piece on VPS hosting vs dedicated hosting. From there you can choose which will suit your needs and your budget best.

Do the marketing yourself – it will save you tonnes of money

Marketing is a huge part in raising a business from the ground. After all, how else would people know you exist?! A dedicated marketing team can really help boost the online presence of a business but unfortunately, that’s also a rather expensive option. Doing the marketing yourself will help keep back a lot of your budget.

There are a few things that you may want to consider spending a small amount of your budget on:
Marketing books to improve your knowledge and skills. Amazon is loaded with books for each platform and yes – all of them are important!

Remember to spend a little of your budget on Google Ads campaigns – Google can really help boost your reach!
Pay the monthly fee for programs such as Adobe to create graphics and mailers for your marketing – it will make a huge difference to the quality!

Outsource rather than hire

You will undoubtedly need a team of people to help lift your business from the ground, but when you don’t have a large budget it can be difficult to employ people for long periods of time. That’s where outsourcing comes in, and it can be a very effective way of having work completed without the dedication of an employee you need to pay every week/month.

You can list the jobs you need fulfilling on websites like Upwork and Fiverr, and let applicants come to you with their skills, history and also their price demand. You can then choose the right price and skillset for your budget. The beauty of outsourcing is that once the work is done, you can go your separate ways. However, that’s not to say that in the future you won’t collaborate again!

Use influencers

Influencers play a huge role in purchase decisions on the internet, and that’s why they’re so effective for new businesses like yourself to use. Think of your favourite influencer. If they were to say, talk about the latest gadget that’s well within your interests, you’d at least check it out with a possibility of buying, right?

Browse Instagram for influencers within your business niche and contact them for their price list. Sometimes, a simple quid pro quo situation is all that’s required for an influencer to promote your business. For example, if you’re selling a particular product online, why not send them a sample pack to test, review and keep? It’s an extremely effective way of getting your name out there for a minimal cost.

Work from home rather than rent an office space

Another expense that you could eliminate is the rent you’d spend on an office space. The beauty of an online business is that you have the option to work from anywhere in the world. Load up yours and your colleagues (if any) computers or laptops with all of the necessary programs you’ll need and save your business’s budget by working from home!

Working from home can be difficult as it’s easy to become distracted and neglect your working duties. Creating a space in your home dedicated to working will help eliminate this issue. Why not check out these fantastic ways of making your home office the perfect place to work.

Starting an online business with a very minimal budget is hard work but very doable! Follow these tips and you’ll be well on your way to becoming an online business that everyone thinks of!

Creating Your Own Factory Space

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StrategyDriven Managing Your Business Article |Factory Space|Creating Your Own Factory SpaceThere comes a time in which your production or industrial business outgrows its current surroundings and develops a need for increased capacity and facilities, yet searching for the ideal space can seem like an almost impossible task. You may believe that there are a wealth of different commercial buildings on the market for you to choose between, but this couldn’t be further from the truth – you can spend years searching for a good property to rent or purchase, as they are few and far between. This is exactly why so many organisations choose to create their own factory space to fit every single one of their individual needs, and have full reign over the decision making process to keep costs down and form the ideal production location. Building your own commercial property needn’t be as difficult as you might initially think, as there are few simple ideas and concepts that you can utilise to ensure you can cover all bases and succeed in your quests to expand and grow. So, if you want to find out more, then read on to uncover some of the best top tips and tricks that you can make the most of today!

Picking The Ideal Spot

The first step that you must take when building your own commercial property is to locate the ideal spot to start your production. The place that you choose for your warehouse or factory facility has to fit a few different specifications which may vary depending on the type of your business, so it’s important that you seek out the right location rather than opting for the cheapest land possible. If you regularly send and receive goods or materials, it’s vital that you choose a place that’s got great transport links with main roads nearby, as though remote land may be cheaper it is far tougher to access. Most factory workplaces create a lot of noise pollution that can easily distrust any residential neighbours, so seek out a location that doesn’t back on to a suburban area.

Making The Floorplan

Once you have identified the perfect place to build your commercial property, the next step that you have to complete involves creating the initial floor plan for your new factory space. You must consider all of the workspace and features that you require to encourage your business to continue progressing, so assess your current situation to gather the basics and think about the improvements you require that pushed you to build your own property in the first place. Factor in future growth and accommodate space for more employees than you have right now, otherwise you will soon find yourself in the same situation again. If you need to seek out the support of a professional then do not hesitate to contact a commercial architect that can aid you in making the most of the space you have.

Sourcing Affordable Materials

When your floor plan is finalised it’s now time to start deciding on the last few details, most of which involve choosing the perfect materials for your build. This can be the most expensive step if you are not smart in your search, so it’s important that you can take some time to do some digging to secure an affordable price. Start off with the basics such as bricks and cement, and try to strike a better deal with your supplier if you’re going to buy in bulk. Next, find the best commercial roofing supplier to finish off the basic shell of your new factory space, and invest in some high quality double glazing to let in some natural light. The internal layout and therefore the materials that you require will depend mainly on your own individual floor plan and business needs, so just make sure that you shop around when purchasing the remaining items to secure the best quality for the best price.

Seeking Reputable Contractors

If you do not have qualified staff already, then you must seek out some reputable contractors that can begin your building work in a safe and efficient way. There are many risks associated with your actual build, from staff related injury to financial loss, so you must make an effort to find contractors who have many previous happy customers that can guarantee the best service. Going out on a whim and picking the first search engine result will no doubt cause you many problems later down the line, so don’t make the mistake of wasting your time, money and effort on builders who don’t have the right qualifications or experience for the job. Always ask to see previous examples of contractors work, and get all receipts and agreements in writing as you simply cannot just rely on their word.

Finding Machinery & Equipment

When the shell of your building is built and the relevant services such as electricity and running water have been rigged up and turned on, it’s time to start investing in some machinery and equipment to get your business up and running. It’s likely you’ll want to bring some items from your old premises with you, but it’s vital that you can increase the amount of machinery you have to accommodate your growing organisation. Purchasing new models of vital equipment can help you to modernise your business and create a more advanced and productive workplace, so then you can upgrade your business in more terms than just space. If you don’t have the cash to start buying huge machinery after building your factory then do not stress, as you can easily rent out or hire the machinery you need for a much more affordable price.

Creating your own factory space has never been so simple when you are able to make the most of the ideas and concepts detailed above! It’s so important that you can make a detailed plan and follow each step carefully so that you can fulfill your business needs, keep costs down and make sure that your staff are out of harm’s way too, but with these tips and tricks in mind it couldn’t be easier to get started today.

8 Steps to Building Your Business Credit

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StrategyDriven Managing Your Finances ArticleOne of the biggest issues facing small and medium businesses is financing. And the ability to secure finance is often directly related to the business’s credit score. But it’s often a challenge for small businesses to establish their credit when they have nothing to show for it. However, there are some things any new small business owner can do to boost their credit and get access to more financing options. Here are the exact steps you should follow to boost your business’s credit score.

Know the Basics

If you want to build your business’s credit, you first have to understand how it works. While consumer credit scores are usually rated on a scale of 300 to 850, business credit scores are usually rated from 0 to 100. A variety of other indicators are also used to calculate business credit scores, like Fico’s rating service for small businesses (SBSS), which rates business credit on a different scale.

You should also know that each of the main credit bureaus for businesses, Dun & Bradstreet, Experian and Equifax, all have their own set of criteria when scoring a business’s credit. However, for the most part, they will all look at things like credit obligation data, how much outstanding debt you have with lenders and supplier, your total credit utilization, background info on your company, such as what sector you operate in and how long you’ve been in business, and various other factors.

While having no history can make getting credit more difficult, it’s also the perfect place to start since you have no blemishes on your record yet, which allows you to start building your credit on solid grounds.

In 2019, it becomes very hard to understand the credit score world, if you want to read more about credit score and basics, check out this guide from the experts of Finimpact.

Make Sure That Your Finances are Separated

If your business happens to be incorporated, keeping finances separate will be easy. But if you’re a sole proprietor, you have to make sure that you completely separate your finances and that you keep your personal transactions and business transactions separate at all times. This means opening a bank account and getting a business credit card as well.

When choosing a business credit card, make sure that you pick one with perks that will benefit you in your line of business. For instance, if you spend a lot on wireless phone service, there are business credit cards that will give you bonus cash back on wireless spending. It would also be wise to check reviews of business credit cards Canada so you can compare things like APR and rewards as well.

Keeping your finances separate will ensure that bad personal spending habits and debt do not end up affecting your business credit score and vice versa.

Get a DUNS Number

Dun & Bradstreet is a major credit bureau recognized worldwide and can play a vital role in helping you establish your business’s credit. You can also use your DUNS number to bid on a variety of government contracts.

Once you get your DUNS number, they will open your business’s credit profile using that number. It will help them track your vendor and lender relationships to get a clearer picture of your business’s financial stability and assess your creditworthiness.

Open Multiple Credit Accounts

Getting a business credit card and bank account is only the first step. Now, you should try opening more credit lines to help you establish your credit. These accounts will allow you to show that you are a trustworthy borrower. But you have to have discipline and use them correctly, however. Making one-time payments will help credit bureaus keep a track record of your financial activity and stability and adjust your score accordingly.

Some examples of accounts you could open include gas cards, store accounts, and lines of credit. Not enough small businesses open a line of credit, but it’s an important step for any business trying to establish their credit.

Choose Vocal Vendors

While you want to flex and use that credit, it’s essential that you spend money with vendors that will actually be reporting your activity to credit bureaus. You have to make sure that you spend your money with vendors who have an actual reporting strategy in place. If you aren’t sure, just ask them. If they don’t have one, then you should consider spending your money somewhere else.

Be Responsible

This should be common sense but make sure that you pay your bills on time is essential if you want to establish a strong credit score. And while paying on time is good, paying early is even better. Some indicators will only give you a perfect score if you consistently pay early, so do everything in your power to pay your bills as soon as possible if you can.

Make Sure You Check Your Reports Often

You’d be surprised at how many people got credit rejected because of false information on their credit reports. Maybe it’s an outstanding bill that they paid but didn’t show. Or an account that was closed that still shows as active. These are all things that could affect your credit negatively and that you must address immediately. All you need to do is request a copy of your credit report and look for any inconsistencies. If you see any, credit bureaus will have a clear and easy to set of procedures you can take to correct errors.

Use Your Credit

Credit utilization is an important factor when credit bureaus assess your credit score. So, it’s important that you actually use your credit and don’t leave your credit lines sitting there without using them. This is why you should start using them as soon as possible, but make sure that you don’t max them out. As a rule of thumb, you should aim for about a 20 to 30 percent utilization rate.

Conclusion

Building your credit as a small business is possible if you take the proper steps and maintain good habits. Make sure that you follow the tips in this article if you want to start building your business credit the right way.