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Time to Update Your Productivity Playbook

Latest research from McKinsey outlines where you should invest to become part of the Titanium Economy

You’ve undoubtedly had those weeks, maybe even those months. Those periods of time where your company’s productivity seems to be stuck in mud deeper than what’s left after a thaw from a late-March snowstorm here in Chicagoland. Ready to dig out and get moving again? Global consulting firm McKinsey released new research in February outlining what some of the most productive firms have in common. Here are the four components they say need to be in your productivity playbook.

DIGITILIZATION

If you don’t feel like you’re at least partially running a tech firm, you may be falling behind. But implementing digital strategies without simultaneously revamping your business strategy and even your model will keep you from achieving all the productivity that modernization can provide. According to McKinsey, “Frontier firms set bold business goals enabled by technology. They reconfigure their organizations to digitize their operations and capture the benefits of technology, rather than augment existing ways of working.”

INTANGIBLES

McKinsey calls the most productive firms they studied “frontier firms” and found those organizations invest 2.6x more in intangibles like R&D and intellectual property. They caution results from these intangibles often manifest as a J-curve with small early advances that compound quickly to create, “outsized long-term value.” Taking the long view as opposed to fixating on quarterly numbers is one area, we entrepreneurs and family businesses can gain the upper hand on large competitors.

FUTURE-READY WORKFORCE

It isn’t enough to invest in technology to gain the productivity benefits. To be frontier firms, we must also invest in tech-savvy humans, including leaders who aren’t intimidated by technology. And once you find these often-elusive team members, the work really begins as we fight to retain them. Again, according to McKinsey, “Leaders are winning the talent war by recognizing the value of employee experience, investing in on-the-job training programs, and expanding policies that make it easier for parents and aging workers alike to stay in the labor force.”

SYSTEMS APPROACH

We’d rephrase this as, “Rising tides raise all boats.” McKinsey talks of the productivity benefits of global value chains which most organizations our size don’t have at the ready. But they also saw the value of collaborating creatively with stakeholders including suppliers and customers. That is where EFBC firms excel, including many business ventures we know that were born from Forum mates and like-minded EFBC members.

THE TITANIUM ECONOMY

So who are these frontier firms McKinsey identified? You might think they are the largest and most well-known in any given sector. But there is a group the researchers dubbed the “Titanium Economy” that are leading the way in productivity. These small, often privately held industrial technology companies that are among the fastest growing and most profitable enterprises in the country. They are often based in smaller cities, sometimes even in rural areas, and present across a variety of sectors.

In speaking of these firms, McKinsey concludes, “Recent data indicates that small and medium-size companies are less productive on average than large firms. But in some sectors where niche products or services can be offered at higher price points, small companies can be as productive as their bigger rivals. These data should give plenty of encouragement to business leaders looking to drive improvements in their business.”

That sounds like a winning playbook to us!

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Meet Stella Gaytan, President of Bell Fuels

Get to know Stella, a new member of the EFBC, who joined us in January 2023.

Bell Fuels
Founded: 2021

Location: Morris, IL

Tell us about your career leading up to where you are now:

I spent 20 years as part of the leadership team in a service industry start up. I spent the early years working in the business while developing processes, systems, and quality control mechanisms in order to prepare for growth. I hired, trained, and developed all department heads for all locations. The company had grown to become a service provider for many national professional sports teams and was continuing to prosper. I was in a place in my life where I believed that I had invested all that I could in that organization and was ready for a change. I was presented with an opportunity to work with my friend in his start up in the construction industry. After a year helping him develop processes and systems, I was presented with an opportunity at BELL FUELS to lead the organization as their President. I joined the organization in April of 2022.

What do you like most about what you do?

My most fulfilling experience at Bell is being able to facilitate opportunities for growth for my team as individuals while also developing growth opportunities for Bell. The team feels like they are impacting that growth which makes this journey that much more enjoyable.

How did you hear about the EFBC?

I heard about EFBC from my board. They encouraged me to seek a group of peers that I could work with as I became more comfortable in my role as President at Bell Fuels.

Why did you join, and what do you hope to gain from your membership?

After having had a few discussions with the EFBC team and attending a couple of events, I could see the benefits of the forum and the resources it had to offer me as I develop as a President. I am looking forward to sharing with professionals that are willing to see me succeed and I look forward to contributing to the team as well.

Join us in welcoming Stella to the EFBC community.

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President’s Message – March 2023

The power and importance of taking care of yourself and trying things outside of your comfort zone.

Monday, March 20th, marked the first day of spring, also known as the spring or vernal equinox. To me, this day doesn’t have much meaning. Growing up in Chicago, I’ve experienced that spring could be blistering cold with snow and sleet or it could be hot and balmy. At the very least, we’re one step further from winter and closer to summer. To others, such as my girlfriend Tina, there is a spiritual meaning to the Spring Equinox. It symbolizes new beginnings, fresh starts, rebirth, renewal, spiritual awakening and personal growth. A new beginning for me is trying out a pizza joint for the first time!

I wouldn’t consider myself to be religious or spiritual. My mind is a bit too logical. To a fault. At the same time, my heart believes in a greater being or spirit of some sorts. I won’t go much more into that at this moment. I just wanted to set the stage for what I experienced yesterday.

In honor of the Spring Equinox, Tina asked if I would join her for a healing sound journey at a yoga studio in the city. Knowing my reluctance to try new things such as this, she quickly explained to me that we’d be in a room with others and we would take a blanket and pillow to lay on while we listen to sound bowls, gongs, symbols and other soothing instruments. She said I could fall asleep if I wanted to as the event is 2 hours long. It sounded crazy to be honest but considering it falls a few days after her birthday I felt like I should give it a try and join her. So I said yes.

So we drove to the city and arrived at 5:45pm to the Lacuna Lofts building which was built in 1897 and once the world’s largest macaroni factory. The building info is irrelevant. I just thought it was interesting. We took the elevator to the third floor and as soon as the doors opened, we were in a room with 200 adults sprawled throughout on blankets, pillows, etc. with a spattering of various instruments, candles, string lights, etc. This was definitely out of my comfort zone. We proceeded to find our spot on the floor, laid our blankets and pillows and made ourselves comfortable. I scanned the room a bit nervous as to what was going to happen next.

The next 2 hours were pretty awesome. I laid there with my eyes closed in and out of sleep to the sounds of the various instruments, melting away the stress on my mind and shoulders that has been there for months. I don’t know what a “healing sound journey” is supposed to feel like, but this experience could not have come at a better time. With half of our account management team resigning over the past 2 months, onboarding 6 new offshore employees, and in the middle of our busiest period in company history I’ve been spread thin as has the rest of my team.

This experience reminded me of so much. I have to push myself outside of my comfort zone, that is where growth comes. My mental and physical health cannot be neglected. Trust others, such as Tina, and not take the logical approach for everything that I do. Finally, even though it doesn’t feel this way, I have to separate myself from work and allow my mind and body to feel something new. Even if it is only for a few hours. And now….back to work!

Andy Sanghani
EFBC President 2022-2023

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Meet Alisha Rajani, Vice President of Sales and Operations of Frame Chicago

Get to know Alisha, a new member of the EFBC, who joined us in 2022.

Frame Chicago
Founded: 1981

Location: Chicago, IL

Tell us about your career leading up to where you are now:

After graduating from Loyola University Chicago in 2013 with a double major and obtaining a Bachelor’s of Science in Nursing and Psychology, I worked as a licensed professional registered nurse specializing in labor and delivery. As a nurse I had the opportunity to work for medical establishments such as Howard University, Northwestern University, and Rush University hospitals.

In 2018, I started my second career by joining my family’s company, which is an art gallery and custom framing and engraving store located in Lincoln Park, Chicago. My current role is VP of Sales and Operations, where I am responsible for meeting revenue projections and managing production and logistics for all departments.

What do you like most about what you do?

I enjoy working with local artists and being involved in Chicago’s art community. I love educating clients about the connection between art and diversity. It is also great to see our client’s ecstatic reaction to their framed art pieces, which will always be a part of their home.

How did you hear about the EFBC?

I heard about EFBC through my friend and mentor [EFBC President] Andy Sanghani.

Why did you join, and what do you hope to gain from your membership?

I joined EFBC to learn more about entrepreneurship particularly within the category of small family business. I hope to learn how to build a strong and successful brand for the next generations. Most importantly I look forward to making life long friendships with like minded individuals.

Join us in welcoming Alisha to the EFBC community.

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Business Lessons From the Flight Deck

How leaders benefit from thinking a bit more like pilots. This month we are proud to feature a guest blog written by EFBC member BJ Slater of Plant Marvel Laboratories.

On a December evening in 1978 a DC-8 flight crew had a problem.  They were getting ready to land in Portland, OR but couldn’t tell if the landing gear was down.  One of the three green lights that told the pilots if the landing gear was down and locked would not illuminate.  Was it a problem with the landing gear or just the light bulb?  That question preoccupied the flight crew for over an hour as the airplane and its 181 passengers circled over Portland.

While fixated on the landing gear issue, another problem quietly grew serious.  The airplane’s fuel was dwindling.  On several occasions the first officer and flight engineer each noted the shrinking fuel quantity, but the captain, preoccupied with the landing gear, didn’t seem to register the increasing urgency in his crew members’ voices.  The captain did notice the sickening feeling in his gut as the first engine flamed out.  As the fuel tanks ran dry and the engines shut down one-by-one, the crew quickly re-focused on getting back to the Portland airport – or to any airport, anywhere at all.  But it was too late. United Airlines Flight 173 silently drifted to the ground and plowed into a wooded area in the southeastern part of the city.  Miraculously, all but 10 survived.

While airline accidents were not entirely uncommon in the 1970s, this accident changed the industry forever.  Concerned by how a well-trained, highly experienced, well-respected flight crew ran out of gas, Chicago’s own United Airlines led a decades-long industry-wide effort to change the way pilots were trained, how they communicated with each other, and even how they thought and handled emergencies.  The result of these efforts is known as Crew Resource Management (CRM) and is credited with producing much of the incredible airline safety record we enjoy today.

In CRM, the old command-and-control style of leadership common in veteran military pilots was replaced with more collaborative problem solving and risk management techniques. Crews were taught new ways to communicate and work together.  This great aviation safety revolution wasn’t about  engineering and aerodynamics.  It was about psychology and human factors – soft skills.  Today CRM is fundamental to pilot training at all levels world-wide.  Similar concepts are taking hold in fire departments, operating rooms, and other high-risk settings.  In these fields “soft skills” save lives.  As business leaders, we can learn a lot from them.

Before joining Plant Marvel, my family’s century-old fertilizer manufacturing business based in Chicago Heights, I enjoyed a fifteen-year career as a commercial pilot, flight instructor, and safety program manager in the aviation industry.  I never cease to be amazed by the myriad ways my training as a pilot comes in handy as I navigate leadership and business.  The aviation industry has many hard won lessons to offer.  Below I describe my four favorite lessons from my own experience that have made me both a better pilot, and a better leader.

Make Excellence Personal

Having taught over 2,000 hours as a flight instructor and graduated 76 pilots at every certificate level, I can assure you of one fact: There’s no such thing as a natural-born pilot.  The most successful pilots don’t possess some innate ability; they are the ones who work hard to hone their craft in a systematic and disciplined way.  I strongly believe the best leaders are similarly built, not born.  Leadership, management, and entrepreneurship are all skills that can be honed and sharpened with disciplined effort.  Here are some ideas for how to do that:

Read, Listen, Watch, and Learn

These days the amount of sources for professional development knowledge is staggering.  From books and trade publications to podcasts and Ted Talks, there are resources for every taste, style, and kind of entrepreneur and leader.  For every skill you would like to learn and problem you would like to solve, there is ample media available to help you in your quest.  The key is to be selective with what sources you consume, and to approach your learning in an organized and disciplined way.  Start out by defining your learning objectives and researching to identify the best sources on that topic.  Then as you read or listen, take notes, paraphrase ideas, and find ways to put what you learn to use.  These actions help solidify your new knowledge and skills in ways that passively consuming media won’t.

Development Opportunities

A level beyond books and podcasts are in-person and virtual conferences and workshops.  These interactive programs compel more active participation than a book and can take you a step closer to applying what you learn and getting feedback from instructors along the way.  EFBC offers numerous options in a variety of formats and topics.  One example are the EFBC Roundtables which offer a great way to share experiences with other professionals in a particular field over just a few hours.  Meanwhile the Leadership Applications Course presented by EFBC strategic partner Geroge Karavattuveetil gives a deep dive into practical leadership skills over multiple weeks.

One on One

It is often said that you cannot learn to fly a plane by reading a book or watching someone else do it.  The only way we’ve found to safely learn to fly is by working one-on-one with a knowledgeable and experienced instructor to guide you through the process of developing the myriad skills needed to be a competent qualified pilot.  This one-on-one approach is both expensive and time-intensive, but it is also one of the most powerful ways to learn and improve.  In the aviation world pilots learn both from instructors that teach them specific skills and more senior pilots that help guide their development as professionals.  In the business world we would call these people coaches and mentors.  A coach is someone we work with to hone a particular skill or improve at some aspect of our work.  A mentor might be a less formal relationship with someone more knowledgeable and experienced than we are who can offer broader insights and feedback.  Both are extremely valuable and well worth the time and effort we invest.

Obsessively Learn from Failure

Pilots, as a general rule, have a morbid fascination with airplane accidents.  It goes far beyond the curiosity of others’ misfortunes.  Pilots tend to study accidents the way professional athletes review game tapes.  This serves pilots in three ways:  First it allows us to refine our technical and decision making skills. Second, it helps keep our egos in check by reminding us that tragedies can happen to anyone.  Third, and most importantly, it calibrates the hairs on the back of our necks.  What I mean is that when pilots study enough accidents they learn to see them as a chain of events ending in tragedy.  Many of the links in these chains of events, poor decisions or missed red flags, are similar from one accident to another.  By studying accidents, pilots become familiar with these patterns of events.  If they recognize an “accident chain” beginning to form in their own flight, a wise pilot will elect to “break the chain” by canceling the flight, diverting to an alternate airport, or otherwise retreating to safety.  The business world offers plenty of opportunities to learn from others’ failures.  Books covering Enron, the 2008 financial crisis, the BP oil spill in the gulf, the Boeing 737 Max fiasco, are among countless offerings available.  As they say, learn from the mistakes of others; you’ll never live long enough to make them all yourself.

Debrief Events

In addition to learning from others, you can learn alot from studying yourself and your own business.  Pilots and flight crews, especially in training or military settings, will end every mission with a review of the flight.  The flight crew will review their objectives, discuss what went well and what can be improved.  Those lessons are then carried to the next flight.  Get in the habit of debriefing any meaningful event: employee reviews, team meetings, client presentations, board meetings, quarterly results, or anything else important.  Ask yourself and your team what worked and what can be improved.  It is a habit that is crucial to continuous growth and improvement.

Seek to Understand Failure

the term will inevitably surface at some point.  Within the industry, safety took a giant leap forward when the discovery of human error came to be seen as the beginning of the investigation rather than the end. Understanding why an error occurred is so much more useful than simply admonishing the person who made it.  A simple tool for getting to the root cause behind error can be the “5Y” method which is to ask “why” five times. Each time, you dig a little deeper toward a meaningful and useful answer.  When things don’t go well, seek to understand why.  Focus on what went wrong, not who.  Seek to understand, not to blame.

Eliminate Ambiguous Communication

The worst airline accident in history happened largely from poor communication.  In 1977 in the Canary Islands, two Boeing 747s collided on a runway in dense fog.  The tragedy helps highlight five rules of clear communication.

Confirm What You Believe You Heard

A KLM Boeing 747 waited at the end of the runway while another airplane, a Pan Am flight obscured by the fog, taxied on the same runway.  Once Pan Am taxied off of the runway, KLM would be cleared for takeoff.  The control tower transmitted some route instructions to the KLM plane. The KLM captain mistook this as their takeoff clearance.  The captain believed he had been cleared for takeoff but didn’t know the other airplane was still on the runway hidden in the fog. Without confirming the instructions, the Captain began to advance the throttles of the massive jet.

Speak in Clear Terms

As the KLM captain began accelerating toward the other jumbo jet hidden in the fog, his first officer was having second thoughts. The first officer knew they hadn’t been cleared for takeoff, but the captain snapped at him when he raised a question.  Did the captain know something he didn’t? How could he clarify without risking the ire of his superior?  Unsure of what to do, the first officer told the tower “We are at Takeoff,” an imprecise phrase that only added to the confusion.  KLM was beginning to accelerate head-on toward Pan Am.

Confirm What You Said Was Understood

Though vague, the KLM first officer’s transmission got the attention of the control tower.  The tower radioed to KLM to hold their position.  Having heard KLM’s transmission, the PanAm crew also transmitted a message.  The two messages were transmitted at the exact same time rendering both of them unintelligible to their intended recipient.  The KLM crew only heard an annoying squeal.  The tower’s critical instruction was transmitted, but not received. Yet, the control tower failed to verify the KLM crew was staying put as instructed.  Instead, the controller asked Pan Am to report when clear of the runway and they replied they would. Meanwhile the KLM flight was building speed and rapidly closing the distance in the fog.

Expect Miscommunication

The KLM Flight Engineer overheard the last radio exchange and knew something didn’t seem right.  He asked the captain, “Is he not clear then; that Pan American?”  Still confident in his grasp of the situation, the captain replied emphatically, “Oh, yes!”  The captain failed to consider he could have misunderstood.  He failed to consider his crew member’s objections as red flags that he was wrong.  Rather than expect that someone could have miscommunicated, the captain remained convinced that he was correct until the Pan Am airplane materialized out of the fog about ten seconds before impact.  KLM was moving too fast to avoid the collision.

Say What is Most Important

While the KLM first officer and flight engineer both attempted to express concerns to the captain or clear up ambiguity, they were hindered by professional courtesy and a desire for their captain to save face. Their decorum proved to be fatal.  Human nature can make it hard for us to speak up even when our lives are in danger.  Rather than ask questions or hint at the problem the crew might have averted disaster if they had simply ordered the captain to stop.  Unfortunately the culture of a 1970s flight deck made this improbable.  In the collision 583 people, including everyone on the KLM flight, perished.

While the stakes in our businesses may rarely, if ever, be this high, the lessons of this tragedy are applicable to all of us.  How much stress and disappointment could be avoided if we make sure we clearly state the most important information, ensure we are heard and understood, and make sure we hear and understand others?

Effectively Balance Risk

The flight crew we met at the beginning of this article was so busy handling a known issue that they were blindsided by an emergency they didn’t see coming.  In business, while caught up in the day-to-day operations of meeting customer needs, I have been similarly blindsided by financial or personnel problems that, in hindsight, I felt like I should have seen coming.  In flying we learn to balance completing the mission with safety.  Psychologist and organizational safety expert James Reason referred to it as balancing production with protection.  Stephen R. Covey meanwhile talked about the balance between production and production capability.  The idea of striking a balance between a goal and the associated risk is echoed throughout textbooks and memoirs alike.

Risky Business?

Entrepreneurs and small business owners are traditionally thought of as risk takers.  Personally I don’t identify myself that way.  A colleague once questioned that assertion. “You fly airplanes,” he pointed out, “isn’t that risky?”  I thought about it and explained that one of the things I liked about flying is that, when you do it right, the risks involved are really well-controlled.  Indeed, that is the same thing I enjoy about business.  We have the opportunity to do things that many people will never get to experience, but we also have a choice about the kinds and amount of risk we are willing to take on.  In determining their risk tolerance in any given situation, entrepreneurs might do well to heed a classic aviation maxim, “There are old pilots, and there are bold pilots, but there are no old, bold pilots.”

Always Have an Out

In aviation and industrial safety alike, “safety” is not defined as merely the lack of accidents.  Safety is better defined as the presence of adequate defenses.  If you assume that things will go wrong – and they will – what is the backup plan?  When you are sitting in the back of an airliner as it is taking off, the entire experience is orchestrated around things going wrong at the worst possible moment.  Everything about the design of the airplane and training of the pilots assumes that moments before the airplane leaves the ground, one of the engines will fail.  This is incredibly rare of course, but if it were to happen, the plane and the passengers will be just fine.  The airplane, pilots, and the procedures they follow ensure that they always have an out – a way to recover safely if things go wrong.

How do you know if someone is a pilot?  Don’t worry, they’ll tell you.  Pilots in general, and myself in particular, never tire of talking about flying.  I’ve had a lot of great experiences at the controls of an airplane.  As I continue my adventures in business and leadership, I find many of those experiences and the lessons I’ve learned continue to serve me well.  I appreciate the opportunity to share some of them with you and I hope you find them useful as well.

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Meet Anthony Pope, President of Waukegan Gurnee Glass, Inc

Get to know Anthony, a new member of the EFBC, who joined us in 2022.

Waukegan Gurnee Glass Inc
Founded: 1921

Location: Gurnee, IL

Tell us about your career leading up to where you are now:
I started in the family business at the age of 12 and worked during my summer breaks from school. Over the course of my teenage years I grew to like the business and wanted to contribute to it in a more meaningful way through management. I earned my Bachelors In Marketing and Commerce at DePaul University and shortly after moved into a management position at the company. My father retired in 2018 and I was appointed to take his place as President of the company.

I have two siblings in the company. We are the third generation in the business and we are working to grow our business to continue to provide our customers with Residential and Commercial Glazing Solutions for now and into the future.

What do you like most about what you do?
I really enjoy the sales end of the business. It is where everything starts. It is rewarding to see projects go from concept to reality and to travel the path with our customers. My role today limits the amount of direct sales I get to do but the work I do supports all roles and it is great to see everything intertwine and come together for the success of our company.

How did you hear about the EFBC?
I first heard of EFBC years ago when it was a part of UIC. When we were first introduced to the organization the timing was not right for us. Several years had passed and while I attended a recent Goldman Sachs program one of my mentors recommended I reach out to an organization like the EFBC to continue my leadership and management growth. I did my research and reached out. Everything I learned about the EFBC seemed to be what I was looking for.

Why did you join, and what do you hope to gain from your membership?
I joined the EFBC so I can network and build relationships with other Business Owners and Entrepreneurs. The family business has been a wonderful career but it is lonely at the top! There are things I burden and shoulder that I just can’t discuss with many other people. They would either not understand or it may not be appropriate.

I feel that I have a lot to share and hope some of my past experiences may help others in some way. I hope to gain new leadership and management skills while also getting out of my silo and comfort zone.

Join us in welcoming Anthony to the EFBC community.

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Meet James McHenry of Widgeteer Inc

Get to know James, a new member of the EFBC, who joined us in 2022.

Widgeteer Inc
Founded: 2008

Location: Crystal Lake, IL
Forum: Flex Forum

Tell us about your career leading up to where you are now:
I am a 2014 Michigan State graduate of The School of Hospitality Business. Upon graduation, I followed my stepmother’s footsteps into the hotel business, joining Marriott’s convention/meeting sales force as a business development manager for the San Antonio hotel cluster. From there I was promoted to the Houston cluster to open a new flagship convention hotel and lead a pilot program selling Marriott business services (sales/development) to a cluster of franchise hotel properties. After success with my Houston assignment, I was awarded another promotion, this time to Sr Sales Manager for large convention/meeting business supporting a 15 state regional territory for the Sawgrass Marriott Resort. From Sawgrass my goal was to get back to the Midwest to start building my personal life with my now-Wife, then girlfriend, settling in the Chicagoland area and with a company change to Fairmont Hotels as a Sr Sales Manager supporting a 20 state regional territory. I was fortunate to retain my role throughout Covid, which decimated the convention business, and eventually was my springboard for joining the family business which I started with in May 2021. My primary responsibility is business development/account management for a 100+ portfolio of retail, eCommerce, foodservice customers for which we supply Dining, Entertainingware, Home Décor and more.

What do you like most about what you do?
I’ve always enjoyed the hunting side of sales, learning about new customers, new businesses, etc excites me and satiates my curious nature. I am highly competitive and like to win! Joining my family’s business has been an absolute dream and is forcing me to re-shape my individual contribution mindset, focusing instead on helping our Widgeteers collectively win!

How did you hear about the EFBC?
I was researching for family business support networks. I’ve quickly realized the unique challenges of working daily with family are not something to take lightly and needed an outlet of shared experiences. It’s a complete change of mindset from just being here for a paycheck to being responsible for your success and others well being, too!

Why did you join, and what do you hope to gain from your membership?
I’m eager to hear of peoples experiences as they built their business, and how they managed their family relationships. Managing my relationship with my Dad/boss is a lot more complex than I ever imagined, but working with my family is also more rewarding than I ever thought possible!

Join us in welcoming James to the EFBC community.

STRATEGIC PARTNER WHITEPAPER

6 Cost Cutting Tips for Small Businesses

Employers of all sizes are currently searching for ways to reduce expenses and save money in response to the current economic downturn and ongoing labor challenges. Instead of cutting costs randomly or conducting unnecessary layoffs, successful organizations tend to optimize their resources by identifying areas where they can reduce expenses without compromising productivity or future growth. While cutting costs is essential for any organization, it’s especially important for small businesses since they tend to have fewer resources than larger employers.

This article outlines six tips to help small businesses effectively cut costs.

1.      Invest in New Technology

Adopting new technology can bolster efficiency and create savings for small businesses. Investing in technology can help reduce costs by streamlining operations and allowing small businesses to operate more efficiently. Technology enables employers to improve or even automate manual and error-prone tasks. Examples of cost-saving technology include the following:

  • Customer relationship management software
  • HR management or information systems
  • Digital communication
  • Virtual recruiting services
  • Low-code solutions
  • Artificial intelligence
  • People analytics technology
  • Learning and development software

Additionally, many small businesses are turning to open-source software alternatives as a cost-effective alternative to brand-name software applications.

2.      Strengthen Employee Retention

Prioritizing employee retention can be one of the most effective cost-cutting strategies for small businesses. Replacing workers is often extremely expensive. Employee turnover not only increases an organzation’s recruiting and training costs but also usually results in decreased productivity, lost proficiency and reduced profits.

Small businesses can strengthen employee retention with the following strategies:

  • Provide opportunities for career development and advancement.
  • Offer benefits to meet workers’ evolving needs.
  • Improve employee engagement by encouraging employee feedback, providing flexibility and strengthening workplace efficiency.
  • Bolster workplace culture through public recognition and reward programs.
  • Be transparent when communicating with employees to help them understand important decisions and establish opportunities for two-way feedback.

3.      Manage Health Care Costs

It’s not a secret that employer health care costs are rising. Finding cost-effective solutions is vital for small businesses to maintain affordable benefits and reduce costs. Solutions may include reevaluating plan designs and offerings, directing employees to cost-effective services and improving employee health care literacy. Employers can leverage their relationship with their insurance brokers to explore cost-saving solutions, like obtaining details on organizational health care spending and educating employees on shopping for health care services. By adopting several cost-cutting strategies, small businesses can better manage health care costs without sacrificing employees’ needs.

4.      Embrace Outsourcing

While performing tasks in-house can often be cost-effective, there are instances when outsourcing nonessential tasks can be more economical. Manual, time-consuming tasks—such as payroll and benefits administration—may be better suited for outsourcing for some organizations. Outsourcing these kinds of tasks can enable employees to focus on more important responsibilities that have a greater and more direct impact on a small business’s bottom line and future growth.

5.      Adopt Flexible Work Arrangements

The expense of having a physical workspace can add up. Each month, employers must pay rent, utilities, cleaning costs and other expenses. While these expenses are often unavoidable, some small businesses are transitioning to home-based businesses or remote and hybrid work arrangements to cut costs. These solutions may not be suitable for all industries or job positions, but small businesses of all kinds can explore ways to offer flexible scheduling and improve benefits, like enhanced leave and paid time off, to lower overhead expenses. If converting to a home-based business or going remote isn’t possible, employers can consider downsizing their facilities to reduce their rent and utility bills. Small businesses can also explore other alternatives, such as co-working arrangements and renegotiating their leases, to reduce rent.

6.      Review Expenses

Poor cash flow can strain and even jeopardize an organization’s longevity. Reviewing expenses regularly can be an effective way to reduce and eliminate unnecessary costs. As part of the review process, employers can negotiate with providers, suppliers and vendors, such as banks and landlords, to potentially defer payments, reduce fees, improve rates and receive additional services to help during difficult times. By establishing and fostering relationships with these individuals and entities, organizations can cultivate allies and acquire strategic partners, which can pay dividends by creating cost-savings solutions and opportunities.

Summary

Effective strategies for cutting costs will likely vary for each small business. However, by planning properly and understanding effective cost-cutting approaches, small businesses can identify and reduce the costs that will have the most impact on their organizations. This can help small businesses bolster their financial stability, optimize their resources and position themselves for future growth.

For more workplace resources, contact Alera Group Mid West today.

-ALERA Group, EFBC Strategic Partner

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Meet Ryan Seitz of Kolbi Pipe Marker Co.

Get to know Ryan, a new member of the EFBC, who joined us in 2022.

Kolbi Pipe Marker Co.
Founded: 1970

Location: Schaumburg, IL
Forum: Flex Forum

Tell us about your career leading up to where you are now:
I have degrees in construction management and architecture, which led me to working for a large general contractor specializing in high rise residential construction in Chicago. After working six years at that company, the most recent project burned me out. I was working every day during business hours, getting calls every night, and working most weekends for around six months, with little support from upper management. I decided I was leaving the company and was between find a role still within architecture working on an ownership / developer role and joining the family business, Kolbi Pipe Marker Co. I joined Kolbi three and a half years ago and have never looked back.

What do you like most about what you do?
I love being able to implement suggestions my team comes to me with to move the business forward, whether it be new equipment, software, or physical processes.

How did you hear about the EFBC?
I heard about EFBC from my father, who suggested I join. He has been attending events and engaging with the community for years now, without having been an official member.

Why did you join, and what do you hope to gain from your membership?
I joined after hearing about the Flex Forum. I was reluctant to join full forum due to the time commitments and have loved being a part of Flex Forum since August. Being part of this sincere group of professionals open to sharing their experiences has been very impactful from both a personal and business related standpoint.

Join us in welcoming Ryan to the EFBC community.

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President’s Message – January 2023

Happy New Year, EFBC. See a special message from EFBC President, Andy Sanghani!

January is a special month for many reasons. As the beginning of the new year, we have an opportunity to hit the reset button and start with a clean slate. The gyms are packed with those focused on improving their physical health. Businesses are implementing new plans to boost performance. The excitement of NFL playoffs is upon us. Last but not least, I am fortunate to call it my birthday month :). January 29th to be exact. That makes me an Aquarius. I don’t know what that means but my girlfriend Tina reminds me of it all the time.

I’m not sure how you all are in those days leading up to your birthday, but my mind gets filled with so many thoughts, mostly of reflection. At 42 years old, I’ve made more than my fair share of mistakes and poor choices. What has gotten me through each of those has been my family. My strongest feelings these days are those of unconditional love for my family. I’m happily in love with my partner in life (and lifetimes prior), Tina. Blessed father of two children, Ava and Ayaan. Spoiled baby brother of two sisters, Nisha and Grishma. Son of the most generous parents, Govind and Nalini.

With each of these relationships I’ve learned countless lessons. My children teach me everyday the importance of patience. Tina has taught me the growth that comes through feeling uncomfortable. My sisters have always provided mentorship – even when I didn’t care for it. Finally, my parents have shown me what it means to truly sacrifice and persevere.

As an owner of a 2nd generation family business, it all starts with family. I’m excited to celebrate my 42nd birthday with them and my other passion, pizza.


Andy Sanghani
EFBC President 2022-2023