Zenefits Scandal Highlights the Perils of Rapid Growth

18state-illo1-master675Stuart Goldenberg

Zenefits can serve as a cautionary tale of a startup that grows too quickly and results in as much of a tremendous failure as growing too slowly. Zenefits is a health-insurance brokerage firm and offers small businesses HR benefits without the middleman. The HR software was highly favored and brought high expectations for serious growth. These promises led investors to pour $500 million dollars last year at a $4 billion valuation, one of the largest recent financing rounds.

Unfortunately, just last week, Zenefits announced that Parker Conrad, its co-founder and chief executive had resigned and that the company had become irrespon
sible in its culture and ethics.  In return for the massive fundraising valution, Zenefits over promised and undelivered. Mr. Conrad had promised the moon, but instead he was unable to grow a tiny start up to unattainable goals and the company spiraled out of control.

Zenefits began hiring people who had little experience in the software sales in highly regulated industry that led to a growth from 15 to 1,600 employees in just one year.  With all the speed bumps and things that can get in the way of such incredible rapid growth, Zenefits inevitably fell short of its revenue goals. Changes in management, and changes in their business ethics only made things worse.

What can we learn from this? Growth is important for any business but it should not be a race. As a small business owner for many years, I know short cuts are not worth it in the long run. Rapid growth is not for everyone, and certainly not for the faint of heart. And most of all, integrity counts, especially if you want to be in business for the long run.

Read the full article here.

How much are you worth to Facebook?

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I recently read an interesting article in The Washington Post about how much money you – yes, you – are worth to Facebook. In the United States in 2016, the average Facebook user is worth $13.54.

You read that right – Facebook is making $13.54 off each and every one of us who uses their social network. The value per user is based off of impressions on mobile and video ads and content.

Of course, if you use Facebook to market your business through organic content and ads, you are probably worth a bit more, as you are spending advertising dollars with them. Other interesting takeaways from the article were that Facebook’s active user base was up 14% over 2014, to 1.59 billion total monthly active users. There was also a 52% increase in revenue from the same period in 2014. Facebook had truly stellar performance in the past year.

The next time you log on to Facebook, think about how you are contributing to the bottom-line of one of the hottest-performing technology companies.

Click here to read the full article.

2015 Reflections: Make 2016 Better!

As the new year begins, I encourage everyone to reflect back on 2015; determine what worked and did not work, and use those lessons learned to make 2016 an even better year. Here’s a useful download to help you do that.

Here is a simple one page template that I believe can be extremely helpful for starting the new year off on the right foot, which is something my mother always used to say to me in days gone by. Of course, if you are left handed, I’m sure using the left foot to start the new year will be good too!

Here’s to a successful 2016!

Download (PDF, Unknown)

Social Media Trends for 2016 – Part 2

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Last week, I shared a few social media trends I see taking hold in 2016. It has remained clear that social media will impact small businesses in ways they couldn’t imagine even five years ago. This week, I continue sharing these trends with my readers. Below are some social media trends I see playing a huge role in 2016.

Social media will be happening in the moment, right now

In 2015, we saw the advent of platforms such as Periscope and the recent addition of live video on Facebook. Now, everyone can be a broadcaster on social media at the flick of a switch.

Throughout the coming year, live video and live events will continue to explode on social media, as companies realize their newfound ability to broadcast on the fly to capture customers’ attention. This will mean that companies will have to become more innovative in order to provide the sensory experience that customers will demand on social media.

Google+ may very likely disappear – for good

In 2015, Google continued to promote its own social media platform, Google+. That is, it did until it didn’t. Late in 2015, Google made some sweeping changes to the way Google+ works, and also removed Google authorship permanently earlier this year. What does this mean for 2016?

I believe Google may finally decide to throw in the towel, for good this time, and shut down Google+. The social media platform never took off the way Google intended, and if recent Google behavior is any indicator, it will further streamline its services by removing Google+. Who knows what will happen then?

We’re going to hear about virtual reality a lot

If 2015 was the year that virtual reality graduated to the next level (see Google Cardboard and the NY Times rollout of that product,) 2016 will be the year that virtual reality truly goes mainstream. In 2016, many consumers will be able to get their hands on a low-cost virtual reality viewer, such as Google Cardboard. The result will be companies scrambling to figure out how to take advantage of this new platform.

An interesting question that remains is how social media will be affected by virtual reality. There’s no doubt that live video will play a huge role in this, as 360-video will allow viewers to access new virtual environments previously out of reach (think the jungles of Central America or the plains of Africa.) Will virtual reality experiences be streamed over social media? We will soon find out.

 

Social Media Trends for 2016 – Part 1

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As we wrap up 2015 and look to 2016, it’s clear that social media continues to have a greater impact on small businesses than ever before. In 2016, the ways that businesses use social media will evolve along with the different social platforms themselves. Businesses need to be ready. Below are some of the social media trends I see taking a foothold for 2016.

Influencer marketing will continue to become more important to businesses

2015 was definitely the year that public – and business owners – got familiarized with the term influencer marketing. After all, social media influencers have helped countless businesses promote products and services to large audiences that they previously could not access.

Marketing maven Gerard Boucher, CEO of New York digital agency Boucher + Co., believes that personal branding will become more important, as businesses realize every employee has the ability to become an influencer promoting a company’s products or services. “Influencer marketing within small and medium-sized businesses will be one of the most pronounced trends in the social media business landscape in 2016,” Mr. Boucher was quoted as saying for this blog post.

Video will be even more ubiquitous across social media channels

Video continued to take off in 2015, with more brands taking advantage of the fact that costs of producing high-quality videos have decreased greatly, making great video easily accessible to many businesses. In 2016, that trend will continue, especially with the introduction of new video formats such as 360-degree video.

The ability of businesses to broadcast live video streams on the fly, using a social platform such as Periscope, is a game-changer and will continue to be utilized by more companies in 2016. Recently, Facebook started rolling out live video to a number of businesses, and will continue to do so in 2016, inevitably increasing the utilization of these videos by brands.

Businesses will start to utilize paid social media a lot more

In an ideal world, businesses could post on social media for free, and see their organic content driving tons of engagement and lots of sales. One problem – this is not an ideal world. Almost two years ago, Facebook announced it was shifting its algorithm to focus more on non-sales related content for businesses. This decision greatly reduced the effectiveness of organic social media content promoting a brand’s sales, offers, and revenue-generating products on Facebook.

Since then, paid social media has taken off – forcing businesses to advertise on Facebook in order to reach more customers, drive engagement, and ultimately, drive revenue. This trend will continue to take hold in 2016, as businesses realize the need to make this investment in order to generate revenue and brand equity from social media.

Look for “boosting posts” to become a more widely-understood verb, and Facebook’s revenue to increase as more businesses advertise on that platform.

Please join me next week for Part 2 of this series on Social Media Trends for 2016. 

Is it time for you to sell your business?

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Recently, I came across an article that was published in the New York Times titled, “Baby Boomers Ready to Sell Businesses to the Next Generation.” Naturally, I took notice as I am always looking to evaluate the state of small business acquisitions and mergers, and am always looking for exciting opportunities.

The article discusses how small business owners that were in their late 30s and early 40s in the 1990s, are now reaching retirement age and looking for an exit. I thought this article was relevant, as many of my clients and colleagues are always exploring ways to exit their business and evaluate their options.

Selling your business is a well-known, but often intimidating exit strategy.

Many small business owners dream of selling their business and retiring on a beach somewhere. However, they are intimidated at what selling their business entails. Other small business owners believe selling their small business is going to be an easy cakewalk – in and out with cash in their pocket after a few weeks.

The reality is that selling your business can be an excellent exit strategy, allowing you to reap the rewards of your hard work over many years. However, it is also a time-consuming, cautious process that promises lots of ups-and-downs.

Think it’s as easy as 1-2-3? Think again.

Selling your small business will require lots of effort, focus, and determination to see the sale close effectively. It may mean that you have to invest some money into the business – possibly cutting into your personal income or profit margin. It will definitely mean cleaning up your books and organizing all financial info. The good news is that all of this hard work will be worth it.

Today’s entrepreneurs have plenty of potential buyers in this market.

It truly is a seller’s market – and entrepreneurs and business owners have a lot to look forward to. There are plenty of prospective buyers waiting for the right business opportunity. If you are looking to exit your business – and potentially sell it, you could always visit a business brokerage website such as BizBuySell.com.

To read about the personal stories of some business owners who recently purchased a business, read the full article.

Creative Methods for Keeping Top Employees are Essential to Startups

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I read a fantastic New York Times article today titled “Small-Business Owners Devise Creative Ways to Keep Workers.” It was a insightful read, and I related it to quickly. As a serial entrepreneur and the founder of a number of startups, I have first-hand experience in the dangers of losing employees to other companies.

The article discusses the ways that business owners discover that key employees are leaving their business. For me, I always found out suddenly. Many times, employees would reach out to me and give me their notice seemingly out of the blue. It was painful and endangered my businesses by negatively affecting a key factor of their success – employing top talent. It would often take many days and weeks to re-fill a given position with replacement talent.

Want to know a secret to surviving employee turnover? Don’t panic.

Here’s my advice to every business owner, startup founder, or manager faced with the problem of employee turnover and sudden employee departure: don’t panic. It may sound easier said than done, but it’s truly the key to keeping your sanity – and your business – intact. The easiest way to stay calm in a stressful situation like this is to constantly develop new talent. Always be on the lookout for top talent and potential new hires. When an employee surprises you, move quickly to reach out to the network of prospective talent. You will develop certainty in your business and get the talent your business needs.

Today’s entrepreneurs have a lot of creative options on the table.

Reading the article also gave me a lot of hope. Today, business owners can look forward to the ability to create their own, original incentives to retain talent. The article mentions how one business treated all of its employees, and their families, to an all-expenses paid cruise after they hit some customer acquisition goals. Another mentions gifting an employee a trip to Paris. Incentives like that will help you counter the fast-moving, ever-changing labor market and bring certainty to your business.

To learn more about other creative incentives created by business owners for their employees, read the full article.

Your Must-Read Business Book List

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When we were children, our parents told us to never stop reading. They were onto something big. As adult business owners, an easy and fun way to develop a competitive advantage and get ahead in today’s fast-paced business world is to read. Reading helps you continue to build your knowledge of business, finance, commerce, and just about any other topic.

Fortunately, there is plenty of reading material for those looking to read the most progressive and insightful business books, and get ahead, in the next several months. Here are four of my favorite business book picks for 2015 and beyond:

The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, by Michael Gerber

This book is one of my must-reads. I highly recommend it to all of my small business clients, and anyone who is thinking of starting, or has, a small business. The book discusses the importance of placing components of your small business on auto-pilot, allowing employees to assist you in the day-to-day execution of tasks, and giving you the peace of mind to strategize the business.

The Intelligent Entrepreneur, by Bill Murphy

Focusing on the experiences of several Harvard University alumni, this book takes a look at those who turned down high-paying, fancy jobs for entrepreneurship. I especially love it because it relates to the many people I meet each week here in New York City. It inspires me to be a better entrepreneur, and has inspired many to take on entrepreneurship.

The Lean Startup, by Eric Ries

I’ve always loved The Lean Startup since the first time I read it, because it truly makes you go through the (sometimes) painful process of elimination that comes with developing a great and viable business idea and product. By facing the hard reality of starting a business early on, first-time entrepreneurs will be more likely to succeed and develop a sustainable, long-term business.

Think and Grow Rich, by Napoleon Hill

This classic is a must-read for any entrepreneur, small business owner, or anyone looking to better understand why certain people have been extremely successful and made a lot of money. Think and Grow Rich is also a very entertaining and insightful read as it dives into the lives of those who have already experienced huge success.

Read the full list of must-read business books here.

Social Skills: Valued Over Technical Ability?

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As technology and automation replace workers, new jobs are created in order to support the machines and adapt to the shift in the economy. But as robots begin to perform surgeries, do your accounting, and manufacture your goods, there will be a shift in skills demanded of workers. Here are a few key changes that can be expected in the coming years:

  • Education: While social skills are not emphasized in today’s curriculum, emphasizing team work can help improve the social skills necessary to survive in today’s job economy.
  • The Current State of Jobs: “Despite the emphasis on teaching computer science, learning math and science is not enough. Jobs that involve those skills but not social skills, like those held by bookkeepers, bank tellers and certain types of engineers, have performed worst in employment growth in recent years for all but the highest-paying jobs.”
  • Women Thriving in the Workplace: “Women seem to have taken particular advantage of the demand for social skills. The decline in routine jobs has hit women harder than men. Yet women have more successfully transitioned into collaborative jobs like managers, doctors and professors.”

At your own workplace, ensure that cooperation and teamwork is emphasized and nurtured. Though your job isn’t likely to be immediately threatened by incoming technology in the immediate future, it may be important to have a backup plan in case it is. This excerpt from the article best summarizes what jobs are under pressure, and which will come to thrive in the coming years: “Jobs that require both socializing and thinking, especially mathematically, have fared best in employment and pay, Mr. Deming found. They include those held by doctors and engineers. The jobs that require social skills but not math skills have also grown; lawyers and child-care workers are an example. The jobs that have been rapidly disappearing are those that require neither social nor math skills, like manual labor.”

Click here to read the full article in The New York Times.

Over-Demanding Employers Spurring “Gig Economy”

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Corporate life in New York City is infamous for being grueling, demanding, fast paced, and intense. Still, the bustle of the city that never sleeps attracts the brightest minds. Yet despite the recent upturn in the economy, workers are unhappier than ever with the increasing demand that seems to have gotten out of hand as of late. People are working more hours for less money, and frustrated with the results. Additionally, the cost of living in New York has rapidly outgrown average salary growth. Here are a few key ways that employees are adapting to what is increasingly shifting towards what experts are calling “the gig economy:”

  • Freelancing Becomes Norm: With employees feeling like they’re working around the clock anyways, many are figuring: why not work for myself? Many employees are supplementing their income (or replacing it entirely) with freelance work where they often make more money than they otherwise would have.
  • Layoffs Burdening Star Employees: Managers seeing big returns from layoffs of low performing employees are continuing to do so at the expense of over-burdened high efficiency employees, resulting in only 19% of employees in industries like the tech industry being “very happy” with their job.
  • Growth is Misleading: Most of the job growth has been in the healthcare, fast food and retail industries where salaries average below $25,000 a year.

So what does this trend mean for your business? Expect your competition to be not only rival agencies and businesses, but you must also be weary of freelancers who are looking to take your clients and can do so at a lower price. Graphic design and PR will get cheaper as supply becomes more accessible as freelancers flood the market, while those still at agencies will likely feel a similar strain. However, top talent will still be attracted to top firms, and the compensation and perks will be there to compensate them for premium work.

Read the full article in Crain’s New York Business