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Types of Reputational Risk

Last Updated on April 20, 2022 By Methew Harbor Leave a Comment

Having a business is always associated with risk, including financial, strategic, compliance, and reputational risk. Reputational risk is different from other business risks like strategic risk as it is quite unpredictable.

With the increased social media usage to digitally market your business, the reputational risks have also increased. Social media platforms are accessible to everyone and you may have to face criticism. The impact is huge, and you may face reputational damage. Besides social media, there are plenty of other types of reputational risks that may cause harm to your company if not managed properly.

7 Types of Reputational Risk

According to Reputation Management, 25% of a company’s market value is directly attributable to its reputation.

Thus, it is highly important to consider all risks and study reputational risks properly. Here are the different types of reputational risks based on their causes and influence.

Increasing Competition

Contrary to the unpredictability of reputational risk, any foreseeing businessman understands that increasing competition is an indirect risk to the business. As more similar options are available, some may have better products and services than yours. When a customer buys a better product from another brand, your reputation subsides from their memory. They tend to buy more from your competitor, improving their reputation. While it may not directly harm your reputation, increasing competition means that you need to improve your services for the best.

Company Negligence

Company negligence reputational risks are related to increasing competition. Your reputation is at high risk if your employees do not understand the need for work to stay in the market. Whether the competition is high or not, your customers can always find a substitute. If your company does not deliver high-quality products or services as promised, the clientele does not hesitate to move to another brand. Some of the major reputational risks associated with company negligence include:

Low-quality products or inadequate service
Data breaches that enable others to look into your confidential information cause damage
Below-par customer service that does not validate the customer’s concerns

Improper Working Conditions

Reputational risks are attributed not only to the customers’ words but also to the employee. You may be surprised to know that a negative word from an employee about the company causes more harm than a bad review from the customer. So, if you want to avoid reputational damage, it is a must to take care of your employees and their needs. Internal scandals are also bad publicity that a company must try to avoid. The short-lived limelight can lead to a dark, long-term pothole that you may not be able to come out of.

Non-Compliance with Local/ International Regulations

Non-compliance to regulations is also a critical reputational risk that can harm your business seriously. If you do not comply with the local or international rules and regulations regarding your business, you can get into big trouble. Like internal scandals, this kind of reputational damage is also challenging to reverse. The regulatory bodies typically issue you notice. If not taken care of, the news can go online to stop people from buying your product or service.

Stakeholder’s Actions

A business’s reputation is also related to the stakeholders. Sometimes all stakeholders are not on one page, and one of them might not like any of your policies. And if they take it to the media and talk about the policies they do not agree with, it can backfire badly. While this is quite unlikely to happen, it is not impossible. It’s better to make sure all your stakeholders are happy with your decisions to avoid reputational damage.

Supplier’s Misconduct

When customers trust your product, they believe that you inquire properly about your suppliers and choose the best one. However, if they encounter any misconduct regarding the supplier, they doubt your previous products as well. One way to avoid this kind of damage is to keep up to date on the quality of your vendor’s material. A supplier’s misconduct or bad reputation can cause damage to your company’s reputation as well.

Negative Reviews

Negative reviews are the most common and most influential type of reputational risk. Typically, consumers present their concerns through social media posts, but newspapers or digital publishing agencies may also cover more serious matters. Digital media platforms have provided the customers with a safe space to voice their concerns about a brand.

FAQs

What is reputational risk in banks?

Reputational risk in banks is primarily related to the risk of not being able to meet the expectations of the stakeholders due to any action, event, or behavior. It may occur by the bank as an institution, the employees, or other associated entities.

What is reputational damage?

Reputational damage occurs when you do not manage the possible reputational risk in time. Reputational damage can lead to long-term issues or eventually losing a loyal customer base.

What is the cost of reputational damage?

The cost of reputational damage mainly depends on the extent of the damage. Yet, according to Kaspersky, the average cost of brand damage by one incident came around $8,000 for medium-sized businesses and up to $200,000 for large enterprises.

What are the types of risk operational reputational?

Operational risks are system risks, people risks, process risks, external event risks, and compliance risks. Conversely, reputational risks are related to acts by the company, employees, stakeholders, or customers that affect the business’s reputation.

What are the types of pure risk?

Pure risks are those you cannot control and may result in loss. Typically, pure risks are attributed to natural disasters and unforeseen incidents. They are of three types; personal, liability, and property.

The Bottom Line

Reputational risks are significant for a business, especially when you are trying to make a name in the market. If you do not consider the reputational risks, your competitors may use them against you. Common types of reputational risk include negative reviews on social media and publications, misconduct by the vendor, and public disagreement by the stakeholders. You can save your company from reputational damage by considering these types of reputational risks. Do not forget to mitigate and manage them adequately.

Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Disadvantages of Multinational Corporations

Last Updated on April 25, 2022 By Methew Harbor Leave a Comment

What are Multinational Corporations? Multinational corporations are those companies that set up their plants in different countries giving better job opportunities to the public. They typically have their headquarters in one country and are registered in numerous others. MNCs can manufacture, market, and sell their products in the host country. Everyone loves to be a part of multinational corporations considering the working environment and benefits offered. But, did you know that they also carry some disadvantages?

Yes, like everything has its pros and cons, multinational corporations also have disadvantages. Some of the disadvantages of multinational corporations are

Damage to the Environment

While multinationals come off as more informed and environmentally conscious, they contribute a lot to environmental waste. Waste control in developing countries is not well regulated, and the governments are not mindful of the consequences considering the benefits of multinational corporations. The companies manufacture products in bulk with low-quality material sometimes, increasing water and air pollution. Many MNCs reduce costs by ignoring the need to reduce pollution caused by them.

Affect Other Businesses

MNC usually produce their products on a large scale with a more efficient plant involved and skilled labor. Despite giving the best results, the cost of their products comes out to be less than local companies trying to compete with them in their capacity. By spending more money improving their production and marketing strategies, MNCs win the competition and gain a monopoly. It hurts the business of domestic industries, and some companies also die due to a lack of resources.

Exploitation of Government

Some MNCs are big names and bring a lot of money to a country when setting a plant there. Besides engaging people to work for them at low wages often, they also tend to make changes in the country that the government may agree on for short-term benefit. However, in the long run, these policies or changes do not benefit the people.

Economic Exploitation

Many multinational companies are good at exploiting people and the host countries to their benefit. From internal and external sources of recruiting employees and labor at low costs to exploiting that country’s natural resources, they do it all. Despite paying low wages and producing products at low costs, their branding allows them to sell their products at high prices. When these companies push others out of business and create a monopoly, consumers have to pay a high price to buy their star products.

Uncertainty

Most multinationals stay in a country for their monetary benefits only and do not care about the welfare of the people of that country. “Hire and fire” culture is quite common in multinational corporations, and many people lose their jobs for one reason or the other. One of the most common causes of job loss is the shifting or shutting down operations in a particular country. It usually happens when that region faces economic uncertainty. Working in a multinational is amazing, but you never know when they will stop operating in your country.

Unsuitable Technology

Most multinational corporations move to developing countries, and some expand their business in developed countries. A technology designed for working in the home country of the MNC might not be suitable for the host country. It could either be outdated, too advanced, or difficult for people to understand. This also contributes to the import of employees from countries who know about that technology and can work well on it.

Labor Import

Apart from the common perspective of MNCs employing local people and providing better job opportunities, multinationals also import skilled labor and personnel from other places. MNCs typically want to reach high efficiency quickly and make their name in the market, yet this is difficult if the operational area lacks skilled professionals. To cut down on time and training costs, they often import staff from other parts of the world. So, eventually, the jobs meant for the locals are taken by others, and only low-level jobs are available.

Export Profits

MNCs mostly work in multiple countries yet provide minimal benefit to the host country. They use raw materials, natural resources, and low-level labor from the host country but do not give back enough. The profits for the host country are nothing compared to what the MNCs make. The money made by the MNCs is exported to their home countries in the form of royalties, interest payments, profit dividends, and service charges. Thus they do not help improve the host’s economic condition much.

Sociocultural Issues

When multinational companies set up their business in other countries, they bring their cultural and social values. With passing time, the people working with MNCs begin adopting their culture, leading to cultural issues in the region. Other local people feel a distance from them because of the social and cultural changes they adapt to through the MNC.

Less Jobs For Home Country

Multinationals shift from their home country to other countries, offer jobs to the locals, and sometimes import labor from other areas. While it increases work opportunities for others, setting up MNCs in various countries results in fewer jobs in the home country. The people who could have been employed and improved their lives if the company expanded the business in the host country lack the chance.

The Bottom Line

Multinational corporations are registered and operate in many countries. Apart from the headquarters in the home country, they set up their plants in multiple countries to produce and sell their product. While MNCs have benefits, MNCs also have some disadvantages like fewer jobs for the job-seekers in the home country, unsuitable technology, and uncertainty of job.

Multinational corporations use resources from the host country yet take away the profits to the home country. Locals of developing countries experience sociocultural changes when working in MNCs. Multinationals also possess the power to pressure the government into altering policies and making changes that do not benefit the locals in the long run.

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Advantages And Disadvantages Of Online Marketing

Last Updated on March 24, 2022 By Methew Harbor Leave a Comment

Online marketing, commonly known as Digital marketing or e-marketing, has become the most rewarding marketing method as more and more people are making online purchases. According to Statista, 1.66 billion people shop online each year.

Considering the fast-paced life, a large number of people avoid going to stores to make purchases and instead like to buy online. To attract your online customers, you have to make the best use of online marketing. It not only increases online sales, but many people also walk to your stores to find more variety of the products.

Digital marketing has numerous benefits and helps boost lead generation, yet it also has some disadvantages. Let’s discuss the advantages and disadvantages of online marketing in today’s world.

What is Digital Marketing?

Digital marketing refers to promoting your business through online platforms to connect to potential customers. It includes various online channels like social media, web advertising, SEO, email marketing, etc. Digital marketing typically means text, audio, pictures, or videos generated digitally and surfaced on digital platforms to reach customers.

Advantages of Digital Marketing

Digital marketing is a swiftly growing form of marketing with innovative strategies being introduced now and then. It initially started with email but has now reached social media and websites to market businesses. But, do you wonder why companies choose digital marketing?

Global Reach

The most important benefit of digital marketing is reaching a global audience. Another report by Statista shows that 3.6 billion people use social media globally.

Let’s assume you install two billboards in the most populated city areas with one million residents. There are chances that around half a million people will see your board, and you will succeed in attracting a considerable number of customers. On the other hand, reaching people through digital media allows you to reach millions of people at once.

Using the right online marketing methods can help you familiarize millions with your brand.

Brand Development

Reaching more people and presenting a compelling image of your product makes you a credible brand. Online reviews by customers and blogs help other people recognize your brand, and you can develop a brand swiftly compared to traditional means of marketing.

Less Cost

All forms of marketing come with a cost (except word of mouth), yet the costs vary from one method to another. Installing billboards around the city costs a lot more than running an ad on Facebook and billboards are not considered safe in many parts of the world. You can connect to a large customer base by running Facebook advertisements for people with similar interests at less cost.

Easy to Setup

While you usually have to go to an advertiser’s office to get brochures printed or have vehicles run around the city with your brand’s representation, you can market your brand online without having to step out of the house. Set up accounts easily on social media or Google to start advertising your brand right away.

Measurable Progress

Online web analytics tools allow you to track your progress in terms of impressions, clicks and leads generated. Despite this, you cannot get exact numbers to estimate the progress of physical marketing methods.

Disadvantages of Online Marketing

Besides the numerous advantages of digital marketing, there are still some disadvantages.

High Competition

It is important to remember that online marketing is not only available for you, but people globally have access to digital marketing. They can use the same strategies and attract the same audience as yours. This leads to high competition in the market.

Time Consuming

Though digital marketing saves you the trouble of going out and meeting with advertisers, other aspects take more time than traditional marketing. Setting up advertisements and looking for strategies that stand out is not an easy task and requires effort. It requires extensive research to ensure that your online marketing works better than your competitors, which is time-consuming.

Reviews

Reviews can make or break a business. While positive reviews make you popular among the consumers, negative reviews have an opposite impact with a higher intensity. A potential customer might not trust a positive review completely, but a negative review on your social media page or website can make you lose a big client.

Skills Needed

If you are thinking of basic marketing for your brand to reach the audience and are not focused on making a big name, you can do it all by yourself. However, if you want to make your brand an eminent name in the market, you will need to acquire digital marketing skills or hire a digital marketing professional to boost sales fast.

Keeping up to Date

Technology is ever-changing, and you may wake up to a new trend every day. Online marketing relies highly on current trends as it allows you to make the best out of a hot topic and use it to your benefit. You might not be able to get significant results out of your marketing budget if you are not up to date with trends.

People shop online each year — Source: Statista

Why do people choose digital marketing?

You might wonder why people opt for digital marketing despite all these disadvantages and the need to be tech-savvy. Digital marketing has emerged as a quick solution to marketing needs when orthodox methods take more time. While it is time-consuming and you have to fight high competition, digital marketing enables you to reach more potential customers and is comparatively light on your pocket.

The Bottom Line

Like everything else, there are some advantages and disadvantages of online marketing. It enables you to take your product to a wider market but also restricts you if you do not have much knowledge of technology. Some people consider the advantages to dominate the disadvantages, while some feel otherwise. Depending on the nature of your business and the marketing techniques convenient for you, you can explore different digital marketing options and choose the one that suits you the best. Or, just stick to traditional marketing methods if you find them more beneficial.

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Functions of Merchant Banking

Last Updated on March 24, 2022 By Methew Harbor Leave a Comment

Merchant banks are different from retail and investment banks and target a customer base between the two. While retail banks cater to the needs of the general public and investment banks work with big sharks and the government sometimes, merchant banks facilitate medium to large-sized businesses. Now, if you wonder what a merchant bank is and what it does, here’s everything you need to know.

What are Merchant Banks?

Merchant banks are financial institutions that help big businesses with loans and funds along with giving financial advice. You may call them a combination of consultancy service and banking. They facilitate the growth of companies that do not receive loans or investments from other financial institutions. Merchant banks offer portfolio management, underwriting, loan syndication, and financial advice. Some such banks also provide financial assistance on an equity basis.

Merchant banking helps businesses in multiple ways:

They help modernize the business.
Merchant banks help boost businesses by raising funds.
You may take merchant banking services to revive your dead business through their strategies.
They facilitate buying and selling of stocks in the stock market.

Functions of Merchant Banking

Besides the few mentioned above, merchant banks perform numerous functions for their client organizations:

Portfolio Management

Merchant banks help their clients manage their portfolios and buy securities on their behalf. Merchant banks offer consultancy services and improve the value of underlying investments. They assist their clients in making deals and purchases and enable the sale of securities. By managing their portfolios, these banks facilitate businesses with making decisions for safe investment. Simply, they buy and sell shares alongside managing fund investment for companies. They also make fundraising possible for their clients.

Project Management

As merchant banks are counseling institutes besides offering financial assistance, they help their clients regarding different aspects of a project. From researching the project’s success possibility to assisting you in making a decision and managing the project, they are there throughout. Project counseling or management covers all aspects of the project, including idea generation, research, budgeting, designing plans for financing the project, and advising about possible increments and concessions.

If you ask your bank for further help, they also extend their expert advice on the location of the plant, feasibility reports, policy benefits, and sources of support. Having a merchant bank on board with you on a project means that you do not have to worry about anything and relax while taking care of investments and solutions to associated problems.

Credit Syndication

One of the major reasons businesses approach merchant banks is their credit syndication services. If you have not been able to get a loan from any of the big names that might help your business reach heights, a merchant bank can always help you.

Merchant bankers are qualified and experienced in the domain and know how to get money from a specific institution. They understand the matters in-depth, making it comparatively easy to get credit from another company or financial institution. They provide loan syndication services to their clients to smoothen and speed up project planning and loan applications to get short-term and long-term loans.

Merchant banks do so by estimating the costs and creating a professionally correct financial plan not to miss any important, relevant details. They also help select the right institution for you to request credit and comply with all the terms on the application with the investors.

Merchant banks provide multiple services collectively known as credit syndication. These include

Estimating the overall cost of the project
Designing a financial plan that covers all loans and investments you need while putting down all important information
Suggesting ideal financial institutions for short-term and long-term loans
Helping the clients with the loan application, complying with the financing company’s terms, and monitoring the progress
Taking care of legal documentation formalities of the investing companies

Apart from all this, the counseling feature of merchant banking helps you estimate the capital requirements and help negotiate.

Facilitate Small Businesses

While merchant banks are primarily considered good friends of medium-sized to big companies, they also offer entrepreneurs and small companies services. They usually counsel small businesses about bigger opportunities, incentives, concessions, and government policies to boost their business. By taking advantage of these policies and incentives, they can grow and become an eminent name in the market.

Revive Dead Units

Experts at merchant banks are not only adept at helping businesses get loans from companies or project management, but they are also good at reviving and restructuring units or dead businesses. Merchant bankers connect with long-term financial institutions and assure them about the potential in your business. It requires proper documentation, negotiation, and taking care of the legal needs of the investor.

Stock Market Brokerage

Merchant banks are also an excellent choice for stock market brokerage to buy and sell stocks on your behalf. To make sure that they make the right choice for you, merchant banks carry surveys and suggest to you about which shares to purchase, for how long, and at what rate. Having a merchant banker to do all this for you lets you know that your money is in safe hands with experienced people. Merchant bankers also counsel their clients about when to buy the shares and sell them for the best profits.

Manage Public Issue

For companies that are not aware of the public issue of their business, merchant banks help them with the timing of the issue, form, and enable them to be specific to customers.

Merchant banks manage the public issue by:

Advising the price and size of public issue
Counseling at the time of filling up
Acting as a manager in the whole process
Listing the shares purchased
Allotting securities and helping in accepting applications
Helping with the appointment of brokers

The Bottom Line

If you are a medium-sized business, you can let go of all your funding and stock-exchange-related worries by connecting to a merchant bank. They are genies that help you with all issues, from counseling to getting loans and credit for your company. Merchant banks also buy and sell stocks on your behalf and manage portfolios and the public issue.

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Importance of Business Ethics

Last Updated on March 22, 2022 By Methew Harbor Leave a Comment

Albert Einstein said, “Without ethical culture there is no salvation for humanity.”

Ethics are a vital aspect of civilized human behavior and businesses. Business ethics help companies have sustainable relationships and save themselves from legal issues. They are not only a personal need to be a respectable name in society but have become an industrial and business essential.

According to the 2018 Global Business Ethics Survey, employees are more likely to implement ethical reasoning when their company shows why business ethics are crucial.

If you do not know much about the need and importance of business ethics, read till the end.

What are Business Ethics?

Business ethics refers to the code of conduct a business must follow to maintain smooth relationships with the stakeholders and customers. When a company adheres to business ethics, the employees understand how their actions can harm the company’s reputation and destabilize relationships with the stakeholders. There are five types of ethics typically observed in a business that give the best outcomes when implemented together.

Personal responsibilities
Official responsibilities
Corporate responsibilities
Legal responsibilities
Economic responsibilities

Some businesses are quite strict with the business ethics that help them grow and gain trust among investors and customers. However, some companies do not care about business ethics, and it reflects in their employees’ thoughts about business ethics. Sometimes employees also believe that their workplace does not implement the ethics program effectively.

According to the 2018 Global Business Ethics Survey (GBES), less than one in four U.S. workers think their company has a “well-implemented” ethics program.

Importance of Business Ethics

There are numerous benefits of business ethics to the organization and the employees, including

Increased Acceptance

If you have not been implementing business ethics in your company previously, you will experience a significant increase in accepting your decisions. Decisions made considering the business ethics are socially more acceptable and liked by the stakeholders. It allows you to have more people agree to what you decide without hurting anyone’s sentiments or getting into legal complications.

Employee Retention

Business ethics affects your relationships with the stakeholders and the employees. People stay in places where their basic needs are satisfied and get their rights. By following business ethics, your customers receive job satisfaction, and they stay with you for a longer time.

Minimizes Cost

Recruitment is an extensive process and involves the use of resources along with energy. By increasing the retention rate, you can reduce employee recruitment and lessen the cost of bringing more people into the company and onboarding them.

Attracts employees and investors

Business ethics contribute to an impressive code of conduct that inclines investors to invest in your company. When they realize that they partner with an organization that values business ethics, it translates to fewer chances of fraud and better opportunities. Besides investors, they also help invite qualified employees to your company when looking for new people. More people work at places where they receive rights and benefits.

Less legal problems

When an organization is determined to provide quality service to their customers and stakeholders, they make sure to comply with ethics to avoid any complications. Incorporating business ethics saves you from legal problems and avoids fines.

Better productivity and teamwork

When business ethics are a part of an organization, every team member and employee works to achieve company goals through the right channel. As no one is dishonest about their work, they prefer working together to receive the best outcomes. Employees trust each other and work effectively.

The interest to work together to achieve bigger goals increases productivity. If you empower your employees to point out anything unethical going on in the company, they work diligently and save the organization from trouble.

Loyal customer base

While one may not think of it immediately when thinking about business ethics, they can help you gain a loyal customer base. A business’s reputation in the market plays a significant role in sales and how people perceive the brand. If your business is indulged in legally or corporately unethical practices, people may prefer another brand over yours. Besides engaging investors and employees, business ethics also play a major role in building a positive image among the customers.

Attracts suppliers

When suppliers know that your business follows business ethics, they find the added benefit of on-time payments and their rights. Having a vast range of suppliers willing to be associated with your business helps you in times of low supply.

Reduced business risks

Business ethics allow you to build a strong reputation in the market where suppliers and stakeholders are willing to partner with you. Complying with business ethics to run your organization acts as an excellent bridge to keep you connected to customers, employees, and suppliers, reducing the risk of loss.

Boosts sales

If you think that opting for unethical ways will bring your company to the top, it is incorrect. Though you may have seen some companies reach the top with selfishness and immorality, the success is short-lived. Going slowly but steadily is a better approach to company success and lets you enjoy it for a longer period.

Customer confidence

Besides customer loyalty, business ethics also build customer confidence. A company that works on ethical grounds is not reluctant to accept its mistake and rectify it. By developing a confident customer base, you become their go-to brand when in need.

Helps maintain quality

Business ethics ensure that no wrong means are used within the company in different departments. When every employee makes sure that everything is up to business ethics, including the quality of material and appropriate utilization of resources.

Helps community

Ethically aware companies understand the need for giving to the community and are involved in CSR programs. It emphasizes their belief in business ethics that include company and personal ethics. By becoming a part of projects that give back to the community, employees understand the need and application of business ethics beyond improving sales and retaining employees.

The Bottom Line

Business ethics are essential for a business to reach sustainable heights. By complying with business ethics and implementing them in your company, you can retain employees, invite investors and suppliers, boost sales, and build a confident and loyal customer base. Make sure to inject business ethics into the roots of your organization for every employee to consider them important.

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Difference Between Entrepreneurs And Solopreneurs

Last Updated on March 7, 2022 By Methew Harbor 1 Comment

In the past few years, the term entrepreneur has gained more popularity than ever, and some people are also aware of the term solopreneur. While both work hard to build a business and earn money through their company, they are not the same.

Entrepreneurs work on the company while solopreneurs work in the company. This concept is straightforward to understand once you know what entrepreneurs and solopreneurs actually do.

Comparison Table

Factor	Entrepreneur	Solopreneur
Founder	Co-founder	Alone
Role	Manager role	Manager + Labor role
Team	Yes	No
Workspace	Dedicated	Mostly works from home
Business	Multiple	Typically one
Growth	High income in a short time	Slow growth
Scalability	Highly scalable	Less scalable

What is an Entrepreneur?

The most common definition used for an entrepreneur is a person who starts on his own at small to middle scale. However, according to the Merriam-Webster dictionary, an entrepreneur is the “One who organizes, manages, and assumes the risks of a business or enterprise.”

While most entrepreneurs start as solopreneurs, with increasing demand in supply and management of the business, they eventually become entrepreneurs. In simple words, entrepreneurs are solopreneurs when they are solely responsible for the company’s overall function. But when they hire more people for the job, they become entrepreneurs.

Their main focus shifts from being in the logistics and operations to managing the functions and thinking of strategies to improve the business. An entrepreneur does not directly participate in the laborious tasks of the company and manages the processes while solopreneurs manage their business along with all other related work.

As they say, all solopreneurs are entrepreneurs, but all entrepreneurs are not solopreneurs.

Roles of an Entrepreneur

While entrepreneurs are not usually involved in functions like manufacturing and packaging, they work on other aspects to boost their business, like:

Entrepreneurs take the responsibility of devising new strategies to compete with other brands in the market. The needs of people change every day, and it is important to provide solutions to all related issues.
They make sure to evaluate and reduce risk in the business by conducting premarketing and postmarketing research. Risk reduction is also made by appointing competent employees who work honestly for the company’s benefit.
One of the major roles of an entrepreneur is choosing the right team for the business, allocating suitable jobs, and managing them vigilantly. There are not many options for hit and trial when you have a small team. It is important to ensure that the people you hire are good at what they do, and you wouldn’t have to supervise them all the time.

What is a Solopreneur?

As mentioned above, a solopreneur sets up and runs a business all by themself. Merriam- Webster defines a solopreneur as “one who organizes, manages, and assumes the risks of a business or enterprise without the help of a partner.” This definition suggests that while an entrepreneur might have a co-founder or operations officer dealing with business matters, solopreneurs do not have any such associates.

Solopreneurs are the supply chain officers, manufacturers, business development consultants, and managers, all themselves. Usually, solopreneurs are in the initial stage of the business when the company is not making enough money to have a dedicated team. With time solopreneurs also become entrepreneurs when they take in more people to work with them/ for them.

Solopreneurs are not only people who run a physical business alone but also those who give services without anyone else’s help. Examples include a freelance graphic designer or an architect who works independently to find clients and work alone to provide adequate consultancy to customers. Sometimes solopreneurs may hire contractors, but they do not have a full-time team to help with work.

Roles of a Solopreneur

A solopreneur does everything companies hire different employees for. Some of them include:

Solopreneurs act as salesperson for their company and work on B2C and D2C channels to sell their products or services to their clients.
They are also marketers and look for innovative ways to bring consumers to the product. It may include running social media ad campaigns or collaborating with other businesses to market the company.
They are the CFO (Chief Financing Officers) and manage accounts and finances for the business. It also includes deciding the amount of material or products to be bought at a particular rate that benefits the company.

Being a solopreneur is usually the first step to becoming an entrepreneur before your business becomes a big name in the market. It enables you to understand the working of each department in-depth and helps manage staff better when you build a team.

Differences Between Entrepreneur and Solopreneur

Running a business can be challenging if you do not have enough stock in hand.

Ensuring uninterrupted product supply to the customers can be made possible by vigilantly controlling and monitoring the inventory. Inventory control plays a major role in making your business a brand and reaching your customers through advertising or any other channel. Sometimes people confuse inventory control with inventory management, but both are not the same. So, what is inventory control?

Inventory Control

Inventory control refers to ensuring that you have enough stock of the product to cater to the consumer’s needs. Inventory control typically relates to the product stock in the warehouse before dispatch. On the other hand, inventory management means looking over all the processes associated with inventory control, including forecasting the number of products required and warehouse capacity, etc.

How can you Control your Inventory?

While you know that inventory control is one of the most crucial elements of supply, it is essential to know how you can control the inventory to get the benefits. Here are some of the approaches for inventory control:

First-In-First-Out (FIFO) & Last-in-First-Out (LIFO)
Track the inventory
Identify low selling products
Use cloud-based inventory control systems
Track product information and demand

Importance of Inventory Control

Besides making sure that your warehouse is not hoarded with products that are not selling, there are various benefits associated with inventory control. Controlling and managing your business inventory enables you to reduce losses and build a strong business. Some of the benefits of inventory control are:

Loss Prevention

One of the golden rules of running a steady business is considering the risk-to-benefit ratio. Neglecting the inventory indicates that you are adding to the risk without realizing it. Inventory control allows you to understand slow-moving and outdated items sitting in the warehouse for a long time. Having a firm control over the inventory ensures you follow FIFO and avoids losses by dispatching previous stock prior to the new one.

Saves from Theft

Having a huge inventory and not taking enough care lead to losses in the form of theft. If you are not vigilant about the material in the warehouse, your employees might feel tempted to try their luck as they are aware of the lack of check on the inventory. Keeping an eye on the stock through manual checks or cloud-based systems saves you from theft. Extra care must be taken care in the raw material area as it is more susceptible to such incidences than the final product warehouse.

Saves from Demand Fluctuation

Suppose you are a heater manufacturing company and sell a hundred units a month. You did not realize that winters are approaching and there is an increase in demand for the product in the market. If you have a hundred units to supply for the month while more customers are looking for the product, you are losing a chunk that you might have made in peak season.

To cater to high-demand seasons, it is wise to always keep extra goods in your warehouse that can compete with others and fulfill market demand. If you think that the product would keep sitting in the warehouse, LIFO and FIFO must not be forgotten; produce more but send out the previous stock earlier.

Uninterrupted Production

Inventory control is not only important for manufactured products but also raw materials to ensure continuous production in your facility. Controlling inventory of the raw material provides you with enough material to manage fluctuating demands in the market. Without a shortage of raw material, you get uninterrupted production, and sometimes it gives you an edge over other manufacturers.

Right use of Working Capital

Stocking more material than needed takes space in the warehouse and blocks capital. Evaluating the stock needs and incoming and outgoing products makes you buy enough material to cater to current production needs and manage fluctuating demands. If you keep adding more material without considering the previous stock, you restrict your capital that could be utilized in another way for the business.

Better Customer Service

By catering to customers’ needs, you create a loyal customer base. When you have enough raw material to produce products and release them into the market, your business reaches more people. When the consumers get the product they need with all required specifications, they are more likely to repurchase it. Ensuring the maintenance and control of inventory gives you control over your production and leads to better customer service and satisfaction.

The Bottom Line

Inventory control can help you create a loyal customer base by ensuring enough raw material and release of products at the required time. You can also reduce losses caused by the inability to reach consumer demands because of the restricted amount of raw material at hand. Inventory control allows you to keep a check and balance on the material and product to build a brand everyone relies on.

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Advantages of Primary Data

Last Updated on March 1, 2022 By Methew Harbor Leave a Comment

When you conduct research, gathering data through surveys and journals is essential to ensure that there are no flaws in the research. Primary data and secondary data are crucial elements of research. While some people rely on secondary data, many believe that primary data is more persuasive and helps get first-hand experience.

What is Primary Data?

Primary data is the data or responses collected by the researcher. Researchers usually design survey forms to collect required data from the responders directly. It is also known as raw data.

Primary Data Sources

There are multiple sources of primary data besides questionnaires. These include

Observations
Surveys
Experiments
Interviews
Focus groups

All these sources collect data according to the nature of your results and required information. Besides primary data, secondary data is also when collecting facts for publishing journals.

What is Secondary Data?

Before we discuss why primary data is beneficial, it is important to know about secondary data. Secondary data is the one that reaches you through someone else. It may be a research paper or a survey by another researcher. In simple words, data that another person collects is called secondary data.

Advantages of Primary Data

Specific

As primary data is obtained directly from the source, it is specific to the topic. You do not have to run through several papers to find that one topic you are looking for. The specificity of the data enables you to collect data relevant to the aims and objectives of the study.

Up-to-date

The data collected through surveys and questionnaires are in the present time and offer you complete information about the specific topic. It reflects on the thoughts of people keeping the current environmental and social factors in mind, depending on the type of research.

Better Control

Conducting research on your own gives you more control over the data. Researchers can decide the number of respondents, the questions designed, the environment in which the survey is conducted, how participants are selected for the survey, sampling size and strategies, etc.

Accurate

You can never be surer about anything than what you have done yourself. When you gather data first-hand with direct interviews and questionnaires, there is no ambiguity, and you can use it anywhere without thinking twice.

Acts as Secondary Data for Others

The data collected by you as primary data not only benefits you but also helps other researchers act as secondary data.

Rights

The best thing about primary data is that it is your personal property, and you have rights to them. You can either publish your data free of cost as secondary data or sell it to websites. Your work will be credited to you and referenced where used. It is a great way to have work published under your name that you may use sometime in the future again.

Is primary Data Better than Secondary Data?

Considering the differences between primary and secondary data, both have pros and cons. Both are important when conducting detailed research, and you may need to use both sources to design thorough research.

While primary data is first-hand and offers accurate information, it takes more time and effort to carry out surveys. Furthermore, primary data also costs more than taking information from secondary sources. However, it is more reliable and accurate than secondary data, and researchers believe it is worth the effort.

The Bottom Line

Primary and secondary data are both important sources of information when writing a research paper. Primary data is accurate, up-to-date, specific, and offers you better control over the survey. It also enables you to have rights over your collected data and acts as secondary data for other researchers.

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Functions of Retail Banking

Last Updated on March 1, 2022 By Methew Harbor Leave a Comment

If you believe that banks only work to provide a space to keep your money safe or offer loans to individuals, there’s a lot more to that. The banking sector is divided into two types; corporate and retail banking. While corporate banks work with companies to provide them with money management solutions on a mass scale like checking accounts, retail banks cater to the need of individual customers by providing savings accounts, credit cards, debit cards, certificates, mortgages, car loans, etc. Banks operate both ways, but if you visit a bank to deposit a check in an individual capacity, you interact with a retail banking service.

What is Retail Banking?

In simple words, retail banking is the face of banking for the general public. When someone visits a bank to deposit money or withdraw, they benefit from retail banking services. There are three main objectives of retail banking:

Objectives of Retail Banking

Deposit

Banks are most commonly used to deposit money and keep it safe. People prefer saving their money in bank accounts to keeping it safe at home because of the increment in that amount over time. While your money will not multiply in your home safe, most banks offer a good annual profit on the money you deposit. Deposits are made in accounts, by certificates, and other financial products.

Credit

Another typical utilization of retail banking is credit. Do you need to buy a new car but do not have enough money? Get a loan from the bank. If you are looking to get a house but are low on finances, your bank will get you one mortgage. Besides providing money solutions to items, you can also take money from the bank through credit cards and pay later. The card limit usually depends on your usual transactions and credit history.

Managing Transactions

With everything becoming digital, you wouldn’t want to carry coins and bills everywhere. Most transactions worldwide are made online nowadays, and banks facilitate them. You can also get cash by swiping your card at an ATM anywhere in the world. Retail banking offers you all merits of selling and buying at the comfort of your home through online transactions.

How is Retail Banking different from Commercial Banking?

Now you might be wondering that all banks give loans and deposit money, so what makes retail banks different from commercial banks?

Retail banking provides individual-level loans to their customers, usually to get a house or a car, but commercial banking gives loans to companies and allows them to grow and hire more people. They commonly cater to small to medium-sized businesses with revenue in millions. However, do not confuse commercial banking with investment banking as they are two different categories.

Functions of Retail Banking

Provide a safe Deposit Space

One of the core retail banking functions is keeping your money at home is susceptible to robberies and loss, and you can avoid this risk by depositing the money in the bank. Banks take your money, keep it safe, and offer you yearly profits. Many people choose savings accounts because of the high return value on the money.

Online Banking

Retail banking services allow you to make online transactions which are the core need in today’s time. You can send money to anyone across the globe if you have a bank account. Many banks do not charge their customers to use the online banking facility, making their lives easy without a cost. Most banks operate worldwide, providing the ease of buying from any part of the world and not worrying about the payment.

Reduces the Chances of Default Loans

Banks are financial institutions that keep enough money for the clients to provide them when they need a loan. These loans are in federally-mandated reserve ratios that ensure that the bank always has a minimum cash amount. This amount is calculated depending on the total deposits to make sure the customer does not suffer in any way.

Offering Competitive Interest Rates

It is common in retail banking to offer competitive interest rates to keep the economy in good health. During economic blooms, retail banks increase the profits by elevating the interest on loans. However, they are again adjusted if needed to accelerate spending by the customer and stimulate economic growth.

Provide more Credit

The loan offered by a bank to a consumer becomes a deposit in some other bank. It provides more loans and credit value to the customers and provides more credit to the shopper, and facilitates the cycle of cash. It also helps increase the number of cash providers in a community.

Better Customer Relationships

When banks interact with the customers directly, they can understand their problems and look for solutions. It builds better customer relationships and enables the banking sector to grow by offering modern solutions to existing issues. While it is not among the fundamental functions of retail banking, it helps banking grow indirectly.

The Bottom Line

Retail and corporate banking are both important sectors, yet retail banking is the most convenient for the commoner. If you make any transaction with a bank individually, you interact with retail banking. Retail banking helps improve money flow and increase customer spending by providing loans and credit considering their history. Retail banking in the face of banking for the public helps people enjoy the perks without having enough money to buy a car or mortgage a house. They allow you to keep your money safe, increase the return and get credit from the bank when needed.

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Types of Labels

Last Updated on March 1, 2022 By Methew Harbor Leave a Comment

Labels are one of the most prominent elements of branding and play a significant role in making potential customers familiar with your product. They provide information about the product, including the name, ingredients, and other features. Labeling enables the consumers to identify the product according to their needs and make a quick decision.

Let’s tell you everything about the different kinds of labels and their particular characteristics provide enough details to the customer and make your product a leading brand.

What is a Label?

Labeling displays brand name, logo, ingredients, and other pieces of information on a product. Labels can be in the form of paper pasted on the product or printed on cardboard or metal to act as a distinct identity. The sole purpose of the label is not to exhibit the name but to present facts about the product.

Types of Labels

Most commercial products carry one of the four types of labels considering the details about the product required on the packaging.

Brand Label

Brand labels are the most precise and only display the Brand Name without any characteristics of the product. A brand label may include the name, logo, and trademark number of the brand. Examples include Samsung, Huawei, or other brands’ labels on the back of mobile phones.

Grading Label

The grading label depicts the quality or specific features of the sub-categories of a product. It eases the customer’s quest of looking for particular qualities. For example, you can find various kinds of milk; whole milk, low-fat milk, reduced-fat milk, and skimmed milk. They are known as grading labels.

Descriptive Label

Descriptive labels give away more item attributes than branding and grading labels. They show manufacturing details like batch number, production date, expiry date, product weight, use, instructions, and precautions or warnings (if any).

Informational Label

Reading a nutrition label on food packaging

Informational labels are more elaborate than descriptive labels meaning that they include elements like storage details, instructions about cleaning the gadget, or additional uses or recipes to utilize the product. Pharmaceutical packaging industries typically use descriptive or informational labels.

While all labels are used for different items, they all serve some common purposes, as mentioned below.

Purpose of Labels

Product Recognition

Putting a label on your product gives it recognition, and you can distinguish one item from another. For example, you may see two shampoo bottles in the grocery store in the same color; the absence of a label will make it difficult for you to choose the one you bought last time. Labels help people recognize your product among many others.

Product Information

Labels give all kinds of information about the product, such as the production date, expiry date, batch numbers, ingredients, directions of usage, etc. It avoids ambiguity and saves the consumer from the added hassle of finding product usage methods by other means.

Product Assortment

Grading labels allow product assortment by enabling manufacturers to grade products in different categories for a particular set of consumers. A common example of grading is the availability of moisturizers for different skin types like dry skin, oily skin, or combination skin. Some brands also offer medicated moisturizers. The grading of these products makes it convenient for the consumer to select the product.

Product promotion

While the logos stay the same for long periods, labels may change frequently. The change of label is usually subjected to a new campaign launched by the company, alterations in the color scheme of the brand, or discounts offered. Product labels convey the discounts and offer smoothly to the customer and boost sales.

Regulatory compliance

Varying product categories have specific label requirements that the company must consider when selling in a country or region. The analytical reports must prove the information provided on the label to ensure providing safe, quality products to the consumer.

The Bottom Line

With so many different types of labeling to choose from, it is important to make the right choice among the different types of labels. Opt for a brand label, grading label, or descriptive or informational label in consideration of the regulatory requirements and needs of the product.

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