Archives for September 2022

Mid-size companies already say the labor shortage is their biggest issue, facing mounting pressure to raise wages, alleviate cost of living pain, provide flexibility, increase benefits and add training as options.

Now, rising gas prices and inflation add additional stress on wages. If you have growth plans, you can’t afford not to have the strongest possible team.

Let’s look at the latest statistics:

Unemployment remains at historic lows. The unemployment rate is  3.6% in May 2022. This is the lowest rate in the past 20 years — with the exception of February 2020’s 3.5%, which was the month prior to the pandemic starting.

Higher labor costs. Compensation costs rose 1.4% from December 2021 to March 2022, and 4.5% year over year ending March 2022.

Energy driving inflation. The inflation rate was 8.6% in May 2022, the highest 12-month increase in prices since December 1981. The 2021 rate was 7%, compared to 1.4% in 2020. The primary drivers of inflation are energy costs and transportation costs. These include electricity, gasoline, fuel oil and vehicles.

Looking forward, the Congressional Budget Office estimates a 3.1% real GDP growth in 2022; 2.2% in 2023, and 1.5% in 2024. Inflation is expected to be tamed to about 4.7% coming out of 2022, 3.6% in 2023 and 3.8% in 2024 — a little ahead of recent years, but not horrific. Unemployment is expected to remain in the 20-year-low category of around 3.7% through 2024.

Bottom line for your business:

• The economy is expected to grow
• Businesses will need labor to meet demand
• Unemployment will remain low, meaning businesses will need to compete for talent
• Labor costs are already rising slowly
• Inflation is driving up costs, primarily in energy and energy-related options

Workers will endure higher livings costs in the next year. Building your team will require you to find ways to alleviate that strain while rewarding top talent.

Here are three suggestions to compete in this market:

1. Flexibility is your first option. High fuel and transportation costs means work-at-home and flexible working arrangements are at a premium. If that’s not an option, you can encourage traditional solutions such as carpooling, mass transportation (possibly offering vouchers), and flexible in-office work hours to encourage commute times that do not hit the heart of rush hour. Key: If you can offer some relief from travel costs, you’ll reduce pressure on your team.
2. Compensation packages need to reward top talent. There’s going to be pressure to retain top talent. You’ll need line-of-sight to justify how competitive you can be — and clearly state to your team your expectations for performance. Also, clearly communicate the full value of the benefits package they receive to indicate total compensation.
3. Training is always a strong option. Companies that invest in their people will build stronger, more loyal teams. There are tremendous online training opportunities for staff to build and expand their skill sets — while giving your company additional deductions for business expenses.

A rule of thumb is compensation is determined by three equally important factors: individual performance, company performance and labor market itself.

The key for keeping costs down is to find ways to work directly with your team, building their skills and offering compensation that fits your budget and company performance.

With our forward-looking Business Advisory services, Magone & Co can help you identify the levers that will most impact your growth and success. Call us at 973-301-2300 now or request a consult.

 

We’ve all heard the stats — nearly a fifth of private businesses fail within their first year. After five years, 50% crash and burn.

But when you have a vision, a keen understanding of your environment and effective marketing strategies to draw in clients and prospects, you can set your business up for success in the long-term.

As a business owner of 30+ years, I’d like to share six secrets that stand the test of time:

1. Having a pulse on your industry. How well do you really know the environment in which you compete? What are the fundamentals, challenges, trends and threats? Are you keeping up or relying on dated knowledge? Information is at the core of every successful business — from accurately assessing customers’ needs to having the confidence to set and achieve audacious business goals.
2. Embracing your leadership role. Humility, honesty, integrity — these are just a few qualities of a strong business leader. Leaders know their people. They’re thought leadership experts. They can communicate their mission and inspire and motivate others to see the big picture. They can handle constructive criticism and feedback, taking action to build a greater organization. Or they’re wise enough to step back and hire more capable leaders. Which leads us to… 
3. Hiring wisely. Your organization is only as great as the people who embody it. And each function at every level requires a unique set of skills and competencies that must be met to run efficiently and successfully.Fulfilling your organizational goals starts with the right recruiting and hiring process. It continues with a deliberate, strategic plan for developing and retaining talented people.
4. Prioritizing process improvements. If your company hasn’t embraced SOPs and technology advances like automation and integration, you’ll never come out on top. Speaking from experience, these investments can be significant — but that doesn’t make them any less necessary. Without the research, tools and process improvements we’ve made over the last several years, it would’ve been impossible for Magone & Company to scale at speed and maintain a significant growth trajectory.
5. Making strategic marketing investments. “If you build it, they will come” is not a viable plan for growth. Many service industries have become increasingly commoditized, CPAs included. As the Magone & Company business model has morphed to stay ahead of the industry, we’ve invested in consistent, ongoing multichannel marketing efforts to showcase our thought leadership and effectively differentiate our services.
6. Overcoming fear of failure. Did you know that 33% of Americans have let fear hold them back from launching a business? Instead of stressing over all the scenarios that could play out, let them motivate you to work harder and work smarter. Anticipate challenges and how to mitigate them. Devise contingency plans if you don’t get the results you’re hoping for. If you make mistakes, learn from them and then move on to the next issue.

30 years and going strong

It’s hard to believe 30 years have passed since I’ve embarked on this venture. The next 30 years will likely be filled with new challenges and changes that will impact the way we do business. But what will not change is our unwavering commitment to help our clients achieve their goals and solve their challenges.

Don’t already have a trusted business strategist working on behalf of your organization? Let’s chat.