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Methew Harbor

Types of Independent Retailers

Last Updated on February 10, 2023 By Methew Harbor Leave a Comment

Whether it’s a small street-corner shop selling hot dogs or that huge departmental store in your neighborhood, both are independent retailers. You will find numerous independent retailers around you in everyday life.

Independent retailers usually begin small, but that is not compulsory. You may also see such retailers opening exquisite jewelry stores in the town. Independent retailers are widespread and cater to different needs of people. Let us tell you about the types of independent retailers in detail.

What are Independent Retailers?

Independent retailers refer to business owners who own the business solely. There are various advantages of being sole trader.

Independent retailers do not buy franchises or become partners in other businesses. They set up their own business according to their capital. Most business tycoons begin as independent retailers and work their way up to selling franchises. Independent stores vary from one store to up to three stores in different locations. Typically, the business needs partners or franchisers to manage the business further.

According to the National Grocers Association, independent retailers account for a quarter of the total retail industry sales.

Types of Independent Retailers

If you are looking forward to being an independent retailer, you can choose from different types of retailing businesses. Let’s tell you about them:

Convenience Store

The most common and popular form of independent retailer is convenience stores. Convenience stores are shopping areas with minimal items majorly constituting everyday grocery needs. They are open for longer hours than other kinds of stores. Many people prefer buying fresh stuff like eggs and milk from the convenience store near their house. Convenience stores help build community and are more of a community setup. They require less capital and cater to the daily needs of people.

Departmental Store

The next kind of independent retailing business is a departmental store. You can make significant money from a departmental store if you have sufficient capital. Departmental stores have departments that cater to different requirements. For example, a departmental store has the sports goods in the sports goods department, whereas lentils, rice, etc., are in the grocery department. They provide a large variety of options to the buyers. Most people buy groceries in bulk from departmental stores to save costs. It allows the customers to buy everything under one roof.

Specialty Stores

Besides convenience and departmental stores, specialty stores are independent retailers with their limitations. You may also find specialty stores of international chains like Sephora and Damas. But, remember that they are not independent retailers.

Let’s say that you open a store to sell skirts only. From mini-skirts to long pleated skirts – you have it all.

Sometimes specialty stores may have other related items as well. But, their focus is on that particular range people visit them for. Examples include perfume shops, candle shops, etc.

Single–Business Corporate Retailing Stores

Corporate retailing stores are a well-known type of independent retailer (some stores are also partnered, though). It refers to having stores in more than one location. It is an independent business until you do not sell one or more branches to other people. If you sell or buy franchises, it is no more independent retailing.

Automated Vending

Automated vending is a less-popular type of independent retailing. Yet, it is becoming common in different parts of the world. People are purchasing and placing vending machines in other locations. It requires less capital and gives you a certain return on sales. You do not have to sell the product physically. The vending machine will do the job for you. However, it comes with power and maintenance costs.

Service Retailing

woman on the Service Retailing

Besides selling products, you can also sell your services as an independent retailer. One common example includes salons and at-home grooming services. Many people offer grooming services for women at their doorstep. Usually, these businesses are managed single-handedly without partnerships.

Advantages of Independent Retailers

Complete Control

Independent retailers have complete control over the operational and financial aspects of the business. They do not have to worry about anyone else’s opinions about business matters and make independent decisions.

Less Cost

Being an independent retailer, you can start from any amount you have. You do not require a fixed amount to buy a franchise. You can invest as less or more as you want, and all the profit is yours.

Less Risk

You take calculated risks and add or subtract products or stores per need. The stakes are quite less when you do not have many stakeholders involved. It further reduces the risk when you follow an affiliate or coaching leadership style to benefit your employees. You only focus on your profit, employees, and customers.

Disadvantages of Independent Retailers

Takes Time

If you set up your independent retail business in a community with existing competition, your business may take some time to settle. People prefer trusted companies and will hesitate to try a new place. Yet, you gain trust and customer loyalty in some time.

Complete Responsibility

While entire control over the store or business is an advantage of this system, it also comes with complete responsibility. All independent retailers have to take responsibility for every action and decision. You cannot blame anyone else for a failed strategy or loss in business. As an independent business owner, you are accountable for everything regarding your company.

mans complete the responsibilities

Difficult to Resale

Partnered businesses may have many advantages, yet they are easy to sell. In such businesses, you either buy a franchise or make sales for another company based on a profit margin. As people trust those names already, you can easily find buyers or investors. However, an independent retailing business might not attract many purchasers until it is popular. You may face difficulties in reselling your independent business.

The Bottom Line

Independent retailers do not depend on anyone for capital or decision-making. They run their own setups instead of buying franchises or working for others. The common types of independent retailers include convenience stores, departmental stores, specialty stores, service retailing, etc. Independent retailing comes with full control over the operation and finances of the company. However, it also gives you the complete responsibility for the decisions and actions.

matt harbour
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.

Filed Under: Commerce

Purpose of One-on-One Meetings

Last Updated on November 16, 2022 By Methew Harbor Leave a Comment

One-on-one meetings are essential in any company as they help build better relationships between managers and employees. They are quite common in affiliate leadership styles where the leader encourages harmony within the company. 1:1 (one on one) meetings allow the employees to talk heartily to their boss. It also enables the leaders to take and insight into their team’s performance. Let’s tell you all about the purpose of one on one meetings and how they are important in a successful organizational structure.

What are 1:1 Meetings?

A one-on-one meeting refers to a discussion between two people in a closed setting. Managers arrange these meetings with their team members to evaluate employee experience and progress. They may also take place between peers and inter-departmentally. Sometimes the upper hierarchy also conducts such meetings to understand working dynamics within a department. 1:1 meetings provide a private space for the teammates to convey their issues to the leaders.

One-on-one meetings help instill harmony in the workplace and build trust. They may unblock your teammates facing problems in the department. Such meetings are excellent to convey your expectations to the employees and discuss their shortcomings. Addressing their lacking in person elevates their respect for you. The managers may also guide them per need without embarrassing them in front of others.

Purpose of One-on-One Meetings

Some organizations with an authoritative mindset may think that one on one meetings are a waste of time. However, they contribute widely to the success of the company. Adding one on one meetings to your calendar enables human-to-human relationships with your direct reports. Here’s why organizations carry on one on one discussions in the company.

two woman in a meeting

Builds Trust

Work-related relationships take time and effort to build. These one on one meetings enables instilling trust among employees and the management. Your teammates are open to discussing situations within the company when they rely on you. 1:1 meetings enable you to communicate with them privately to assure that their suggestions and problems matter.

Safe Space

No employees like being insulted in front of other team members. They are perfect for direct interaction between the management and employees without anyone’s interference. 1:1 meetings provide a safe space where you can inform your employees of improvements in their conduct. It also allows them to convey any issues to other members of the management. Sometimes the topic of discussion might not be suitable for a public sitting. Many times employees wait eagerly for these meetings to talk to their leaders directly.

Discuss Objectives and Results

Personal meetings with the team are perfect for revising the goals and OKRs (objectives and key results). You can assess the performance of your employees and ask if they are stuck anywhere. Failing to follow up might push back essential tasks that may be left undone. It is important to talk about previous objectives and their key results to discuss future strategies for improved functioning.

Unblock Teammates

Often some members of the team face problems at work but fail to communicate with coworkers or their bosses. One-on-one meetings can act as an unblocking mechanism when your employees cannot find a suitable solution. They may be looking for guidance but do not feel comfortable asking in front of others. A personal meeting with your teammate can inspire, re-energize and unblock them. They might also benefit from your knowledge or resources they do not have. It might just require you to call the IT department to make your employee’s work easier. They will appreciate what you did for them, and you will get the work done earlier. Win-win!

Two-way Meeting

Unlike management briefings, one on one interactions is two-way. They let you understand what the employees think about the organization and their bosses. And also enable you to discuss your concerns with them. Flexible leadership styles like Laissez-Faire leadership encourage the exchange of feedback to and from teammates.

Motivation

If you observe a fall in your team’s morale, it could be due to an unaddressed personal or professional issue. Giving them a safe space to express themselves provides them an opportunity to do better. They feel valued and motivated to give their best.

Insight into Team Dynamic

Talking to the employees individually tells you about their relationships. Understanding the team dynamics is one of the vital purposes of one on one meetings. People might not open up about how they feel about their teammates in team meetings. One-on-one meetings provide a suitable environment to discuss team dynamics. The employees comfortably share if any of their colleagues do not behave adequately. It can help the organization arrange training sessions to improve harmony in the company.

Professional Development

Most importantly, one on one meetings provides an excellent opportunity for professional growth. The team can improve their strategies and performance by discussing the problem areas with the leaders. Harmony in the workplace makes processes faster and more efficient. The guidance from seniors can be of immense help in their professional growth.

How to Prepare for 1:1 Meetings?

When you plan on conducting 1:1 meetings with your team, it is important to be fully prepared for it. The team must not be afraid to come and talk to you. Let’s tell you how you can prepare for 1:1 meetings.

  • Welcome your team to talk about anything that bothers them.
  • Offer them constructive criticism instead of telling them how they are failing at work. 
  • Coach and mentor them through flexible conversation. 
  • Do not make strict agendas for the meeting. Collaborate with the employee and talk about mutual agendas.
  • Show commitment to one on one meetings and schedule them often.

The Bottom Line

A one-on-one meeting is an essential factor in improving and maintaining organizational functions. An important purpose of one on one meetings is that they enable the employees to gain trust in their managers. These meetings provide a safe space for the team to talk about personal or professional problems through two-way feedback. One-on-one sessions are critical to check the objectives and key results. 1:1 meetings also help employees with their personal and professional growth. Failing to communicate with the team can result in long–term problems.

matt harbour
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.

Filed Under: Management

Disadvantages of Specialty Stores

Last Updated on November 16, 2022 By Methew Harbor Leave a Comment

Specialty stores are quite common globally, and many people prefer them over general stores. They allow you to choose from various products in the same category. However, specialty stores also have some drawbacks besides advantages. You cannot buy everything in one place and may need to visit multiple stores for different items. Or the products might go out of stock sooner as people needing a particular product visit specialty stores more likely.

What are Specialty Stores?

A specialty store refers to any store or shop with only products of one category. Most specialty stores have a particular product in various varieties. Let’s say a particular shop around your house has all kinds of bedsheets. As they specialize in bedsheets, it is a specialty store. But, if they start selling mats, crockery, sanitary, shoes, and everything else, it would not be a specialty store anymore. 

Specialties stores are common in areas where people have specific preferences. Many areas have specialty luxury cloth shops because the residents are more interested in buying branded clothes. Cities with a large population usually have multiple specialty stores to provide customers with a better experience. Sometimes the specialty stores expand and add other relevant items to the inventory. For example, a makeup store might also keep skincare items for sale, followed by perfumes and fragrance diffusers. They still call it a specialty store because the products are related to beauty. 

A common specialty arrangement is an apparel store. Sometimes, the stores have only particular clothing like jackets and coats. At the same time, some of them have clothes of all kinds. Both of them are specialty stores. 

Disadvantages of Specialty Stores

Here’s all you need to know about the disadvantages of specialty stores.

Less Convenient

The most noteworthy drawback of a specialty store is that it is less convenient. When people have a long list of items to buy, specialty stores are not their first choice. They prefer going to a general store or mart where you can find everything in one place. Specialty stores are also not the best choice for people looking to buy products on a large scale. Specialty stores are good if you want to buy a particular item. But, people find it inconvenient to travel to multiple stores for various purchases.

Seasonal Influence

The changing weather also influences specialty stores a lot. Many stores only specialize in objects suitable for a particular season, which can be a major disadvantage for specialty stores. For example, if you own a specialty store for beachwear, the sales will fall in the winter. It does not influence the customers as they can fulfill their needs from another source. However, store owners may experience lesser sales in the off-season. 

Less Variety

While specialty stores have various items in a particular category, they lack variety in others. Some stores have more than one specialty product related to one another. For example, a store specializing in clothes may have footwear as well. But, the variety of footwear will be less compared to other stores.

Departmental stores have sub-divisions within departments. It allows customers to look through a larger variety of items. Most people visit specialty stores when they have only one or two items on the list that they can find in the store.

Fewer Customers

Super store

Less choice also means fewer customers. Specialty stores are suitable for people looking for a particular type of product. Customers who want to explore more options usually head to a departmental store to have as many options. A person going to a specialty store typically knows what they need and is looking to pick up the item quickly. The queues are shorter in specialty stores because of limited options. 

Market Dependency

A major drawback of specialty stores is their market dependency. As specialty stores operate on only one or two kinds of items, they depend on their vendors significantly. It can be quite difficult to manage such stores in case of a back-end shortage. Specialty stores also suffer when people choose alternative methods. For example, a store sells scented candles, but the people in that area start using automatic fragrance dispensers more. It will affect the inflow of buyers and loss to the store.

The Bottom Line

Specialty stores are excellent for buying a particular product. Yet, a disadvantage of specialty stores is their inability to provide a large variety. A change in season and people’s choices also affect the sales of specialty stores. Study the needs of the neighborhood and the future of your products in the next few years before setting up a specialty store. 

FAQs 

What are the disadvantages of general stores?

While general stores offer many advantages, there are also some disadvantages associated with general stores. While general stores. Usually, finding a suitable space in a small town is difficult. A high influx of customers also means more damage.

What are some specialty stores examples?

Specialty stores for sports goods, flowers, books, furniture, and perfumes are quite common besides the examples mentioned above.

What are the features of specialty stores?

A specialty store’s main feature is that it only sells one kind of product. Other features include better customer service, high-quality products, more variety of a particular category, and better prices.

matt harbour
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.

Filed Under: Commerce

Signs your Boss is Testing you

Last Updated on November 14, 2022 By Methew Harbor Leave a Comment

You might be tired of the extra workload, negative changes at your workplace, or little appreciation from the managers. But, do you know this could be positive too? These are some of the signs your boss is testing you.

Sometimes managers look for hardworking and talented individuals from the department for a designation raise. Yet, there could be more than one employee in his mind for the position. They might test the waters to find if you are suitable for the job. Let’s tell you all the possible signs if your boss is testing you.

Increased Workload

Nobody likes the increased workload at the office. Most people would tell their managers that the work is beyond their scope or time. However, it might not be the best approach. If your manager is looking forward to pitching you the job, this attitude might change their decision.

As a project manager or leader, you often have to take care of extra work. Your boss might increase your workload to see how you can manage in such situations. They might also assign you longer work weeks than usual. Prolonged workload increment may be due to increased competition or mismanagement of another employee as well.

New Projects

Your boss might also give you new projects unrelated to your expertise. You may wonder if they are trying to see you fail. But they may be testing you to see if you can manage per need. It may also involve short deadlines to see how you can deliver work before the deadline. It can be tiresome to manage complicated tasks in less time. But, it will show that you are dedicated and responsible. You will also learn new skills through this exercise.

No Check-ins

Has your manager been ignoring you for a while? They might either be disappointed in you or want to see how soon you notice their behavior. Being a leader requires you to function on your own and communicate with the hierarchy yourself. Your boss might ignore you for a few days to see if you connect to them to sort out the issue.

Reduced Involvement

Another sign your boss is testing you is giving you less importance. Let’s say your boss always involves you in projects and takes your opinion. If you observe a change in this, they might be waiting for you to take the lead. As an enthusiastic employee, they expect you to step forward and prove your worth. It shows your concern about how your boss thinks of you.

Little or No Appreciation

You will notice certain changes in the work environment when the bosses involve the management. They want to see if you take the lack of appreciation negatively or positively. Many times employees think of leaving the workplace when they are not appreciated. Your managers would like to see how you fight the situation and work to gain praise.

Fewer Responsibilities

While the managers might increase your workload, they may take important responsibilities off your shoulder. You might wonder if they are trying to snatch your job or demote you. Instead, they want to judge your flexibility. They want you to be a team player and not feel upset about your job role.

Change in Co-worker’s Behavior

Rude Employee

Sometimes, co-workers get to know that you are being considered for a position. They might not be happy about your promotion and exhibit unfriendly behavior. The bosses may or may not show concern about the behavior. They may use this to their benefit to evaluate your ability to deal with situations. They expect you to manage such situations on your own to instill harmony in the workplace.

Certain Restrictions

Your boss might ask you not to discuss a particular employee in the workplace. It could be a sign of favoritism and how you handle it. Favoritism can lead to disrupting harmony in the company. You must not comply with this behavior in the organization and call out where needed. Instead of gossiping with your co-workers, talking to the manager directly is better.

Bad Performance Review

Leaders must always have the ability to face criticism and make changes in their working processes. Bad performance reviews can be a disappointment at work. However, your managers expect you to take the reviews positively and improve your performance.

The Bottom Line

Increased workload and decreased importance at the workplace can be frustrating. But, it might be one of the signs your boss is testing you. It can be among the factors to make your way towards a better place in the company. Managers expect their top performers to handle uncertain situations per need. They might engage you less in meetings or reduce communication to see how to perceive their behavior. You must not get annoyed and express your distress. Work on the problems and prove how good you are at your job.

FAQs

How can you tell if your boss wants you to quit?

Sometimes going on with your boss can be quite difficult in your workplace. It could be due to many reasons. Signs that show that your boss wants you to quit include that he does not give you new assignments or exclude you from meetings. The boss might want to replace you with someone else or fear that you might take their position later.

How do you know if your boss trusts you?

You can tell if your boss trusts you when they rely on you and give you specialized tasks. They might also share workplace issues with you to find a better solution. You feel respected around them, and they recognize your efforts. Managers may also talk to other employees about your conduct when they trust your abilities.

How do you know if your boss is trying to replace you?

It can be unpleasant to see your boss trying to replace you or favoring others. They may start ignoring your suggestions and prefer other employees over you. Managers sometimes act like you do not exist while they communicate in meetings.

matt harbour
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.

Filed Under: Management

What is Piece-Rate Wage System – Advantages and Disadvantages

Last Updated on November 7, 2022 By Methew Harbor Leave a Comment

The piece-rate wage system is widely applied in areas with cheap labor. It is not the best system of paying your workers as it pressures them to do more than their capacity to earn better. However, it may also help improve productivity because it forces lazy employees to work properly to get paid. Piece-rate wage system advantages and disadvantages exist simultaneously. Read further to see if it suits your organization.

What is the Piece-Rate Wage System?

Piece-rate wage system refers to paying the workers per piece of product they produce. It may also refer to paying the workers per the duty performed. It is different from hourly wages and does not necessarily depend on how much time you work. Instead, it considers your performance and output to calculate your payout. However, most companies ensure that the worker’s pay is per the minimum wage. They keep a record of the working hours as well. It ensures minimum wage if the employee is not able to achieve assigned goals.

Types of Piece-Rate Wage System

The piece-rate wage system is of two basic types:

Straight Piece Rate System

The straight piece rate system means that the workers are paid for the number of pieces they produce regardless of the time taken.

Differential Piece Rate System

On the other hand, the differential piece rate system is reward-based. In such a system, workers who perform the tasks within the given time get paid better than those who reach their goals past the deadline.

Considerations of Piece-Rate Wage System

The piece-way system has its own conditions and considerations. It is not adapted widely, instead opted for in situations when the tasks are repetitive, and the output quantity has to be high. The organization must make sure to comply with minimum wage and overtime laws. There are a few factors you must consider when going for the piece-rate wage system in your company.

Payment After Task

Opposed to hourly or monthly payments, piece-rate pay depends on paying after the assigned tasks only. It enables the workers to make more money by completing more tasks in a specific period. It is a good choice for those who want to increase their by working more. Yet, the workers must know that they will be paid only after completing the task. Also, the employees might not be paid for an incomplete task in the given time despite 50% completion.

Worker-dependent Output

Another factor to consider when thinking of this wage system is that your production is somehow dependent on the workers’ performance. You might assign a task to a set of workers expecting it to be done by the end of the day. But, let’s say three of the workers are slow compared to the others. They might not be able to complete the task in time leading to delayed output.

Independent of the Time Spent

The piece-rate pay system does not directly rely on the time taken to perform a task. The company does not pay the workers depending on their time on the workstation. It may be considered an advantage for the company and a disadvantage for the workers.

Applications of Piece-Rate Wage System

The piece-rate wage system is utilized when:

  • The tasks are repetitive
  • You need to get the work done sooner
  • Not many supervisors are available
  • The quality of goods needs to be assessed
  • The company has appropriate workstations and machinery
  • A fair rate is fixed for the workers

Advantages of Piece-Wage System

While the piece-wage system has its con of dependency on the worker’s capacity, it is manageable. The piece-rate wage system comes with numerous pros like easy calculation of wages, improved production, less wastage of time, etc. Let’s tell you about the advantages of the piece-wage system in detail.

High Production

The piece-rate system enhances the employee’s productivity. They work hard to do as many pieces per day to get the best amount in the end. They understand that their performance directly affects their total income and they work more efficiently to get paid more.

Reduced Production Costs

When a set of employees work hard to achieve their targets, you will not need to hire and train more people. Skilled, experienced people reduce production costs. They understand the process and are less likely to make mistakes. They also work vigilantly to give their best output and earn more money.

Less Idle Employees

Let’s say I tell you that each minute of your work at your office will contribute to your salary. Would you waste time sitting idle or gossiping with colleagues? Most likely not.

Piece-rate pay workers typically work without long breaks, so they do not fall short of money at the end of the month. This structure motivates the employees to utilize every moment of their work. It gives you a more productive environment.

Easy Quantification

When the workers are working per piece at a particular belt, it is easy to quantify production. The management understands the labor cost per product and uses it to make quotations. It also helps the employees to estimate their working capability.

Easy Wage Calculation

It is quite easy to calculate the overall wage when you are paying your workers per piece according to a pre-decided rate. It eradicates the need for calculating the hours worked or leaves taken. The management calculates the wage by multiplying the number of units produced by the pay rate per unit.

rate in-a-credit-card

Less Supervision

The production efficiency also leads to a lesser need for supervisors when the employees have self-decided goals to meet. They work the same way without supervision as more units mean better wages.

Easy Planning

When you understand the capacity of your workers, it also makes it easy to calculate and plan the tasks accordingly. You can measure the capability of the employees and assign minimum targets accordingly. The management can also see if they need to employ more people in the department to achieve daily goals.

Disadvantages of Piece-Rate Wage System

Besides some advantages, the piece-rate wage system also has some not-so-favorable features. Here are the piece-rate wage system disadvantages.

Less Workforce Interest

One of the disadvantages of the piece-rate wage system is that many people do not prefer being paid by the piece. If a worker is not feeling well, they might not be able to produce many items. The output affects their income eventually. However, if they work in a monthly-payment setup, they can avail of sick days and join when they feel good.

Low Quality

The race to do more in less time deteriorates the quality many times. While the raw material and processes are validated throughout, your workers might not give their best towards every piece. If they ignore the quality of the products altogether, it can damage the brand’s reputation. Continuously degrading quality may also incur a financial loss to the company.

Job Pressure

The employees working in a piece-rate wage system are usually in bad financial condition and working hard to improve their circumstances. Such jobs give them money according to the performed tasks. They do not care about their health or job satisfaction initially. However, they lose interest in the job and feel tired. This leads to discontentment and deteriorating health. They also constantly live in fear of losing revenue if they are not able to perform well any day.

Dependency on Workers

The organization is dependent on workers and divides tasks accordingly. Yet, if one of the workers is injured or sick, it impacts the whole process. The absence of even one worker can disrupt your batch production.

FAQs

How to Calculate Wage in the Piece-Rate Pay System?

The company usually decides a specific rate per piece for each item and multiplies it by the number of pieces produced by each worker. The worker and the management both keep a record of the daily output.

How does the Piece-Rate Method Impact Performance?

Piece-rate method works on the reward system. It increases productivity and requires less supervision. The employees work hard to get the rewards for their performance.

What are the Limitations of the Piece-Rate Wage?

The piece-rate wage system does not promise high wages to the workers. The organization may also face difficulties in fixing a fair rate. This system does not give a guarantee of a fixed income. The payout of a worker may be high in one month and low in the next, depending on his performance.

matt harbour
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.

Filed Under: Management

Types of Project Organization Structure

Last Updated on February 10, 2023 By Methew Harbor Leave a Comment

Every company has some organizational structures according to its needs. Some follow an autocratic leadership style for its benefits, while others prefer affiliate leaders or an organic organization style. A few organizations also opt for a matrix system to have a dual check on the processes. The project managers and functional managers work together and manage the teams. Besides functional and matrix systems, you may also choose from line organization, divisional organization, organic organizational structure, etc.

Here are all the types of project organization structures in a company.

What is a Project Management Organizational Structure?

Project management organizational structures refer to the leadership or organizational structures applied in a company. Each organizational structure gives authority and responsibilities to the employees and managers in a specific way. Businesses choose a project management organizational structure depending on their requirements. You may find four kinds of organizational structures or 8 types.

We have explained all eight types of organizational structures in an organization.

Types of Project Organization Structure

Functional Structure

The functional structure is the most common type of organizational structure. It includes different groups of people in the company based on their expertise and specialization. The functional structure reflects a centralized organizational approach. Such systems have a manager that oversees all the functions. The managers usually have authority over the tasks of the lower hierarchy. Common functional departments in such organizations may include human resources, sales, quality assurance, etc.

Divisional Structure

A divisional project organization structure is similar to a functional structure. However, it applies to more than one unit of the company. Each division is a separate functional unit that performs its task under its manager’s supervision. They might report to the same top-level hierarchy. One such example is setting up plants for a company in different countries. When multinational companies set up their plants in various countries, many departments multiply. For example, production units may exist in New York, Egypt, Spain, Nepal, etc., at the same time. While the head office could be in New York, the workers report to the head of the respective plant per hierarchy.

Line Structure

The line structure of the organization is well suited for companies with fewer employees. It is a suitable structure for businesses that emphasize crystal clear communication. It simplifies the hierarchy in the form of a line for easy delegation of tasks. Straightforward delegation of tasks enables quick performance and results. It also allows the employees to get in touch with their boss quickly for any confusion instead of waiting for approval from the top.

This kind of structure is often successful with very few problems. Let’s say a department has a manager as the head. An assistant manager works under the manager. The assistant manager manages the executives who oversee the performance of new officers. The officers can ask the assistant manager about any problem directly instead of waiting for the manager to give him time. It also takes less time for modifications due to simplified communication.

Line and Staff Organizational Structure

Unlike line organization, line and staff organizational structures are preferred in larger companies. It is a blend of the functional and line hierarchy systems. When both of them combine, the managers of the line system manage the employees under them. Each specialized functional group has its own manager. The managers of each group (HR, production, quality assurance, etc.) then report to their managers.

For example, the marketing department in a pharmaceutical organization has further sub-divisions like gynae, ortho, hepatic, etc. Each sub-team has a manager known as the segment head. All these segment heads eventually report to the marketing manager of their company.

Project Structure

Girl leading a team

The project structure is one of the most commonly used types of project organization structure. It is applied when the company wants to allow a project to a specific set of individuals. The management picks these employees from different departments and creates a team for the project. The project manager manages each team member to achieve the goal in time. The team members may or may not have the same role in the functional system. Project teams usually constitute people from various domains like marketing, software development, quality assurance, data management, etc. The project structure is less complicated compared to other complex systems like the matrix system.

Organic Structure

An organic structure is a decentralized organization system where the employees do not strictly follow a manager’s orders. The employees in such a system work together to achieve goals without pressure from the higher hierarchy. It is similar to the laissez-faire leadership system that allows innovation and flexibility. Project managers in such situations do not possess an authoritative power. Instead, they only provide a structure to work on.

Virtual Structure

Considering that technology has become an inevitable part of business, many companies are moving towards the virtual structure. The virtual organizational structure may be applied to the organization or some specific departments. It has a proper management system with defined roles. However, it does not restrict the employees from being physically present at the physical location.

One example is the work-from-home model during Covid-19. Many offices have not moved back to working from the office. Instead, they are making working from home more convenient. Another example includes selling your product to an international party without stepping out of your office. Many times you just log into Google Meet and market your product online. Virtual organizational structure has become a popular organization system today.

Matrix Structure

The matrix structure is a combination of functional and project organization systems. In such a type of project organization structure, the employees report to two managers at once. It is beneficial in a way that the project manager and supervision or functional manager are aware of the progress without communication barriers. It has cons as it can also sometimes be time-taking and confusing to make changes according to the feedback of both managers. An organization may have a weak, strong, or balanced matrix organization system depending on the authority of each manager.

Weak Matrix System

A weak matrix system does not give much authority to the project manager. Instead, the functional manager acts as the fundamental decision-maker in the company. The project manager does not report to the functional manager. The team members wait for the functional manager’s approval.

Strong Matrix System

A strong matrix organizational system is more inclined towards a project structure. It gives more authority to the project manager. He delegates tasks and provides feedback about the progress. The cross-functional staff works with dedication according to the instructions of the project manager.

Balanced Matrix System

As the name suggests, the balanced matrix system gives a balanced authority to both leaders. The functional manager takes the managerial role, and the project manager ensures the smooth functioning of processes.

The Bottom Line

Every organization follows a specific project organization structure per need. You may opt for a simple project structure or a functional structure. Or think of the benefits and choose a matrix system that combines the authority of both managers. Other types of project organization structure include divisional structure, line structure, line and staff structure, organic structure, and virtual organization structure. The virtual system is gaining popularity as it enables managing the functions without the physical presence of the employees.

matt harbour
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.

Filed Under: Management

Different Approaches to Promotion Budgeting

Last Updated on July 16, 2022 By Methew Harbor Leave a Comment

Did you again overspend on the promotion budget this month?

Marketing and advertising are essential for a company to bring itself to the limelight. However, sometimes, businesses go overboard with promotions.

It is important to understand your marketing needs and their outcomes and set a budget accordingly. You may need to alter a few marketing strategies, but it is all about the best promotion in the right budget.

Here are the different approaches to promotion budgeting to make sure you spend within the limit.

Percentage Method

The budget for advertising is calculated per a percentage of the total sales. Most companies follow the percentage method to take out a budget for promotion. You may figure it according to current, previous, or anticipated sales.

It is not a scientific method, but many companies follow it successfully. You may increase or decrease the advertisement budget depending on the sales. For example, if you see a product performing outstanding, you can use a percentage of the revenue to highlight another product simultaneously. It is a preferred method of estimating the promotion budget because it is correlated to the company’s sales. You wouldn’t have to move anything else to accommodate promotional needs.

Objectives and Task Method

Unlike the percentage method, the objectives and task method is a scientific method to prepare a promotion budget. This method consists of defining goals and deriving the tasks to achieve them. The objectives and task method are customized per the company’s environment instead of sales. The objectives refer to the goals to be completed by advertising. The cost of performing the tasks to accomplish the goals or objectives is the estimated budget for advertisement. It does not offer financial parity like the percentage method. This method comprises four steps:

Selecting the Objectives for Promotion

  • Dividing the goals in terms of profits, sales, stability, brand loyalty, etc.
  • Determining the tasks that would lead to accomplishing the goals
  • Estimating the cost of each task involved in the process to calculate the total budget required

Competitive Parity Method

Why is there a need to advertise your company?

The answer is competition.

Competition in the industry drives the need for marketing and advertisement to grow your business.

This approach of promotion budgeting considers the budget of competitors and creates a budget for the company accordingly. The promotion budget is based on the competitor’s advertising budget. This method helps understand current trends. However, you must not follow your competitors blindly. A company creates a promotion budget considering many other factors like their long-term goals, product life-cycle, company values, shareholder’s demands, leadership, financial conditions, etc.

Leaders following this kind of budget approach believe that rivals in the business are more or less right. They are doing their best, and there is no harm in trying the same for your company. Yet, ensure you do not copy their budget. Make sure to consider the situation of your company before making a decision.

Fund Availability Method

As the name suggests, the fund availability method refers to utilizing the available funds for advertisement. While it is not a scientific method, it is among the different approaches to promotion budgeting. Companies that think they cannot allow a specific percentage or amount to the marketing budget every year opt for this way.

The fund availability method emphasizes that a company should only spend according to its capacity. Let’s say it means to spend on marketing and advertisement after meeting all other expenses. So, a business that follows this approach might not spend anything on advertising if nothing is left for it. A large enterprise may spend more on promotion than a small business with fund availability.

man hand holding in pen and other man is hand touch to laptop

While it may look like a suitable approach, it can damage your business in the long run. In the era of social media and multiple marketing options, ignoring the importance of promotion can be fatal for your reputation and sales.

Zero Method

Many companies do not believe you require proper marketing or advertising to sell your product. They believe in lowering the costs as much as possible. While some utilize the fund availability method, others resort to the zero method. The zero method for determining the promotion budget is not a favorite among experts. Businesses following the zero method try to keep the budget as close to zero as possible. It helps businesses cut costs on advertisements. Yet, let us not forget that killing the advertisement budget can also kill your business.

Sales Force Opinion Method

Salesforce is an essential part of any organization. They not only help increase sales but may also enable you to derive better marketing strategies. The sales force personnel help the business market in the right direction by pointing out areas for improvement. Salesforce has in-depth knowledge about their respective area sales. They can also predict the coming season or year.

The Bottom Line

Promotion budgets are critical to boosting your business and achieving your business mission. Different companies adopt specific approaches for marketing and advertising. Some of the commonly utilized approaches to promotion budgeting include the percentage method, objective and task, fund availability method, zero methods, and sales force opinion method. Some organizations also opt for expert opinion, co-op only, profit maximization, arbitrary allocation, and incremental methods. Promotion is essential to any business. Compromising the promotion budget may damage your business.

FAQs

What is a Promotional Budget?

The promotional budget refers to the amount allocated for marketing and advertising a business to grow sales. It also sometimes includes the cost of maintaining a brand name.

What is the Best Approach for Determining a Promotion Budget?

The percentage method is one of the widely followed promotion budgeting methods. You may determine a percentage of your budget for marketing considering the previous year’s budget, forecasted sales, or your competitors.

What are the Characteristics of Successful Promotions?

Successful promotion is convincing and persuasive. It utilizes the promotion budget in the best way to provide relevant, factual information to the consumer and present your product in the best way. Lastly, a successful promotion is repetitive until you achieve the objectives.

matt harbour
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.

Filed Under: Marketing & Advertising

Disadvantages of Matrix Structure

Last Updated on January 27, 2023 By Methew Harbor Leave a Comment

Among various organization structures, the matrix structure provides an expanded organizational approach. It is different from traditional leadership, where you only report to top management. It enables a flow of accurate information horizontally and vertically. Employees in a matrix structure organization report to the functional manager and project manager/leader.

It connects the managers directly to the employees of each department. However, the matrix structure prolongs decision-making, and the managerial roles are not clear. Sometimes, there could be disagreements between managers leading to a disturbed environment.

Let’s tell you all the disadvantages of the matrix structure.

Lack of Role Clarity

Having a complex organizational structure can lead to leadership confusion within the company. The team members may not be clear about the power of each leader in decision-making. New members of a project or team may not understand the nature of reporting to each manager. The power dynamics depend on the type of matrix structure in the company. Yet, the managers still might not be satisfied and want the other’s final take.

The lack of role clarity is also present among the team members. Employees from different departments working together as a team may not be sure of their role in the project. They might perform the same duties as their departmental roles. Though, the project roles are often varied compared to the departmental role. It is important to inform the workers about their contribution to the project.

Conflict Between Managers

Each hierarchy in an organization works according to its priorities and goals. As the project and functional managers have different long-term goals, they work accordingly. Let’s say the production department manager is concerned about the overall weekly production. On the other hand, the project manager might focus more on particular products essential for the project.

This difference in goals and opinions can lead to disagreement, confusing the employees. The employees may also feel free to do whatever they want in such situations. The situation of conflict between managers can be highly harmful to the company. The lack of role clarity also sometimes makes it difficult to consider the final decision.

Slow Decision Making

Slowed-down decision-making is quite a prominent disadvantage of a matrix structure. The process is automatically slowed when you have to wait for the final call from both managers. One of the good aspects of this organization is that the team members from each department are in direct contact with the managers. Yet it is also a major con. When the managers get updates about each step, they want to change their way. This tug-of-war between them delays the process and is accompanied by multiple changes.

confliction

Overload

As mentioned above, reporting to two managers means working according to two instructions. One of the managers might be satisfied with the task, while the other might require changes. It can lead to overload caused by double roles and frequent modifications.

Employees May Act as Managers

This might sound unrealistic, but it is quite common in companies where everyone does not report to one manager. The division of power and conflicts among managers might empower the employees to take over job roles. Some employees might start acting as managers or other team members. They dictate tasks and distribute roles regarding the project. It may also be a plan by some of the employees to take over the job duty.

Unsuitable for the Long Term

The matrix structure is a flexible organizational structure. It is a good choice in ensuring the performance of the employees and efficient working. The matrix structure is suitable for short-term projects. But, it is not a preferable option for short-term projects.

Costly

The matrix system is a costly organizational structure for the company. It requires two competent and more experienced managers to oversee the process adequately. This structure requires more resources to ensure smooth working. Matrix structure requires you to hire more employees if needed for the projects. The company might also have to keep some employees who are not needed at the moment. They could be of use in other projects. Thus, adding to the overall cost.

Chance of Failure

If your employees are not used to working in a complex hierarchy, the matrix system might not be the best choice. It can fail despite spending more resources if not managed properly. The confusion between the employees regarding job roles can lead to some of them acting as managers. The functional and project managers may feel left out and not find the structure satisfactory. It can also lead to the loss of clients when the managers and employees within the team disagree.

The Bottom Line

The matrix system is a modern organizational structure. It comes with a few advantages. However, the disadvantages of the matrix system cannot be ignored either. Sometimes it does not clarify roles within the team, leading to discontentment. The employees might try to walk over each other to show their better performance. Disagreements between managers can also cause issues within the team. Moreover, this system is costly, unsuitable for the long term, and might not be a success in every organization.

matt harbour
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.

Filed Under: Management

Is it Good to Invest in Art?

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

Did you just fall in love with the masterpiece you saw at the recent exhibition?

The detail and finish of that art piece must have caught your eye immediately. Besides art fans, many investors also fall in love with art. While they observe the delicacy of a painting, they also look for its financial aspects. Investors may pick a beautiful art piece as an investment.

Though, did you know that art is not always a safe investment!

Art and art forms evolve. Apart from a few timeless pieces, art goes out of fashion like clothes or hairstyles. Yet, it does not stop investors from purchasing them.

Investing in fine arts can be excellent to expand your portfolio. It shows that you are willing to invest in high-profile businesses and not scared to take risks.

Plus, you may brighten your place with the art piece as originals never go old.

The most important aspect of being an art investor is to understand the difference between an original and a copy. You might buy a copy for a million dollars, and it will be too late when you know.

Is it reasonable to invest in art? That’s uncertainty.

But, here’s what you should consider before investing in art.

Long-Term Investment

Man painting in museum

Investing in arts is not the same as stock. It does not multiply overnight giving you massive returns immediately. While the possibility of it happening is not quite high in stocks either, it is close to zero in arts. When you plan to invest in art as an investment, make sure you have enough to forget about that piece for at least 10 years. Experts say it takes 10 years or more to estimate if your art piece will profit you or the demand will fall. Thus, it is not the best choice if you cannot hold on to the art piece for a long time.

Art is Non-Liquid

Investors typically put their money into liquid assets like stocks or savings that can give them immediate cash in case of need. However, art is not a liquid asset. It is non-liquid or illiquid like real estate. It may not sell immediately when needed, thus not very sustainable.

Research

New investors often think they can invest in art if someone around them has the slightest knowledge. Yet, considering the huge sum involved, you do not want to invest when the risk ratio is more than the benefit. Always research on your own about the artist, their artwork, its popularity, and the estimated reach of the art piece in the future. It may take some time to understand the intricacies, but you can start with a few basics like:

  • How many galleries have displayed their artwork?
  • Do people vouch for its authenticity?
  • Have they gained recognition for their work?
  • Do people appreciate their work?

You can get this information from the displaying gallery, or social media is your best friend!

Compare Returns over Long Term

As mentioned earlier, art is a long-term investment, and you cannot expect high returns in less time. Thus, it is significant to understand the art piece’s worth in the best 10 years. It usually depends on the economy and reputation of the artist in the coming years. Still, thorough research about the artist will enable you to make a rational decision about investing in the product or not.

Ignore the Hype

museum wall painting

You might feel that this contradicts the research. But, it does not.

The return on investment is not based on how popular the artist is today. Instead, it relies on what people think of them and their work in the next decade. Do not fall for the momentous hype. Invest in art pieces based on their quality, not recent trends. Look for a bigger picture when you invest in a non-liquid asset.

Create Contacts

Contacts are important for any business. They help you get a better deal and good-quality products. So is with art. Establishing relationships with artists, gallery owners, and art critics will help improve your knowledge about the business. Getting in touch with other art investors or advisors from the Art Dealers Association of America is even better.

Buy what you Like

You might think that you are not the best critic to judge the right investment choices. But, we would say you must believe in your intuition besides research. Do not buy any art piece without proper research. Though, you may choose one of the two which you like better.

The Bottom Line

Art is a non-liquid asset, yet it may prove to be beneficial after a decade or so. You can buy an original, print, or reproduction per your budget. However, reproductions and prints may not give significant profit compared to originals. Ignore the hype, compare returns over time, establish contacts, research, and buy the one that seems most appropriate.

matt harbour
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.

Filed Under: Investment & Money

How to Count Money as a Cashier

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

Unless you operate as an online selling business, counting money is integral to every business. It is vital to have a skilled cashier to make sure no mistakes occur. However, that does not mean not hiring beginners.

Proper training is inevitable if your new cashier is inexperienced or you do not have a cashier at the moment. Here’s how to count money as a cashier without making any mistakes.

Understanding the Need for Training

Counting cash comes naturally to all of us. Yet, keeping a cash drawer for a business is different from counting money in your pocket. You must tell your employees why they need to be trained before managing huge amounts of cash. The need for human interference does not go away even when you have cash registers and counters. Learning to count money as a cashier will come to the rescue in case of a power failure. It also allows easy rechecking of money count.

Verifying Registers

The first step in training new employees is training them to verify the drawer balance. Do not forget to tell them to verify the balance before starting their shifts. It is better to do the verification process under the supervision of a manager or a supervisor. It will help reduce the chances of mistakes when they add money to this account. The cashier must know that they are responsible for the cash drawer. No other employee except the manager can access the cash register beside them. Counting the cash in the cash register is critical before you add more money to it.

Making Change

Many people might think that it’s an easy job to make a change. However, you may not be aware that major blunders often happen in giving change to the customers. Most customers usually do not pay the exact amount. Instead, they would pay a round-off figure, and you have to give them their change.

Train your employees to make changes for the customers correctly. The best way is to use the count-up method. It involves adding the amount to the total purchases, bringing it to the amount paid by the customer. The cashier takes the amount of cash from the customer and sets it on the register. Next, they count up to obtain the nearest round figure, then to the total paid by the customer. For example, a customer pays you $100 for a $76.60 product. You firstly add coins to make it $80 and then add bills to make it $100. It is an easy method of counting money with fewer chances of error.

Counting Back

While the chances of mistakes are less with the count-up method, they are still possible. The next step is to count the money again while giving the money back to the customer. You may also count it verbally and place each piece of currency in the customer’s hand gradually.

Balancing the Drawer

Just like verifying the balance at the beginning of the shift, the cashier has to balance the drawer before winding the shift. The cashier must count the total amount in the register and non-cash (ATM card/ Credit card) transactions. The ending balance should be accurate according to the opening balance and daily transactions. All the data must be added to a spreadsheet or other computer software.

Train for Cash Devices

Training your cashiers to use cash devices saves their time and allows rechecking the amounts. You may add a cash counter or coin and note recycler to count money as a cashier error-free. It is a vital addition for efficient cash counting.

How to Count Money Fast?

Cash counting mashine

The ability to count money fast is one of the essential skills for a cashier. No one wants to stay in the line for a long time. Your cashier should count money fast without errors to avoid damage to the company. Here are a few tricks to count money faster:

  • Firstly organize your denominations into different groups.
  • Then make reasonable stacks if you have a particular amount to work with.
  • Improve your speed by practicing in your spare time. 
  • Always double-check the counted money before you are sure you are a pro.
  • Use a money counting machine when you are low on time. You may also use it to recheck the amount after counting.

What to do When Someone Asks for Change?

You may sometimes come across situations when people come to ask for change for a particular bill. The best approach is to ask them about their needs and use your techniques to count money as a cashier. Lay it down on top of the cash drawer and count the change in bills as required. Hand over the cash to the customer, verbally counting it to them. If it’s a large amount, it’s better to give some bigger bills and a few smaller ones.

matt harbour
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.

Filed Under: Career

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