How to Diversify Your Portfolio: Strategies and Benefits

There’s a reason manufacturers make different product lines, and stores carry a range of goods: It protects their profits. If one item suffers a seasonal decrease in demand or is an outright flop, they may still be ok if the majority of the other items do well.

It’s a business strategy called diversification. And just as diversification is important in industry, it’s important for your investment portfolio as well.

The primary goal of diversification isn’t to maximize returns; it’s to limit risk. When you diversify your portfolio, you reduce your risk of experiencing massive losses when a few of your investments underperform. Read on to learn more about the benefits of diversification and for a step-by-step guide to diversifying your own portfolio.

Understanding risk

At its most basic level, risk refers to the chances that a particular investment or portfolio could suffer financial loss. Beyond this definition, risk can be broken into multiple categories:

  • Company risk: What is the financial strength of the company or government entity that you’re looking to invest in (often through stocks) or loan money to (often through bonds)? Does it have a low, moderate, or high chance of bankruptcy?
  • Volatility risk: On average, how often does the particular asset that you’re looking to invest in have losing years? For example, large-company stocks lose money once every three years on average.
  • Liquidity risk: How easy would it be to get your cash back out of the investment if you needed the money to cover an emergency expense?
  • Interest rate risk: How would your investment be impacted by a rise or fall in interest rates? Bond values, for example, tend to go down as interest rates go up.
  • Inflation risk: Is your portfolio’s rate of return at risk of being outpaced by inflation? This could be a legitimate possibility for portfolios that are invested solely in cash equivalents.

All investments involve some level of risk.

If safety is your ultimate goal, however, look to bank or credit union deposit accounts (savings accounts, CDs, money market accounts, etc.). Since these accounts are insured up to $250,000 by the federal government, they offer the closest thing to an investment “guarantee.”

How diversification benefits you

Diversification involves owning a mix of investments to reduce risk and volatility. Here a few common ways to diversify:

  • Company diversification: Owning shares of multiple companies so that your portfolio won’t be significantly harmed if one stock declines or goes bankrupt.
  • Industry diversification: Owning stocks from a variety of industries (technology, healthcare, energy, consumer staples).
  • Size diversification: Investing in companies of different sizes, or market caps, such as small-cap, mid-cap, and large-cap companies.
  • Global diversification: Investing in a mix of domestic and international stocks
  • Asset class diversification: Moving beyond stocks and bonds, the traditional financial assets, to invest in additional types: real estate, commodities, private equity, and cash.

The more diversified your portfolio becomes, the less of a chance you’ll have of experiencing a huge loss in any given year.

Downside to diversification

Unfortunately, with investments, the chance of big losses usually goes hand-in-hand with the possibility of big wins. Diversification’s benefits often come at a cost: diminished returns.

To illustrate: a recent study, using historical data from 1970-2016, which compared the performance of three hypothetical portfolios:

  • Conservative: 30% stocks, 50% bonds, 20% cash
  • Moderate: 60% stocks, 30% bonds, 10% cash
  • Aggressive: 80% stocks, 15% bonds, 5% cash

If avoiding declines was your only goal, the conservative portfolio would be the clear winner. The maximum one-year loss it suffered was 14%, vs. 32.3% for the moderate, and a whopping 44.4% for the aggressive.

But when it came to annualized returns for each portfolio, the conservative gained 8.1%, the moderate, 9.4%, and the aggressive,10%.

Those slight differences may not seem like a big deal. But over a 40-plus year investment horizon, they add up. For example, if each portfolio had begun with $10,000, their final account tallies would have been:

  • Conservative: $389,519
  • Moderate: $676,126
  • Aggressive: $892,028

Riskier investments tend to offer higher potential returns. So, smoothing out the risks, as diversifying does, means no sickening drops — but no exhilarating lifts, either. Most investors are willing to accept the tradeoff.

How to diversify your investment portfolio

Ready to start building a diversified portfolio? Here are four diversification tips to guide you along the way.

1. Determine your risk tolerance

Your risk tolerance is how much money you are willing to lose in the short-term in exchange for the potential for higher long-term growth. There are various factors that can affect your risk level. These include your:

  • Time horizon: How soon will you need to take your money out of your investments? Someone who won’t be retiring for another 30-40 years may be willing to take on more risk than someone with a retirement window of 5-10 years from now.
  • Income needs: If you’re still working, you may decide to invest in higher-risk, growth-oriented investments. But if you’ve already reached retirement, you may prefer to focus on lower-risk investments that can provide a stable income, such as bonds, dividend stocks, and CDs.
  • Portfolio size: As your portfolio grows, you may choose to raise your risk tolerance since you’ll have more capital available to sustain short-term losses.

The investments you select should be guided by your risk tolerance. Those with a high tolerance for risk may invest a large percentage of their portfolios in equities. Conversely, the percentage of bond and cash holdings will typically be higher for investors with lower risk tolerance levels.

How can you determine your risk tolerance? Many investing brokers and robo-advisor websites offer free risk- level questionnaires. Some will even offer asset allocation recommendations based on your answers. You can also work with a financial advisor or money manager to build a portfolio that’s customized to your individual risk level.

2. Take advantage of mutual funds and ETFs

Once you’ve determined your risk tolerance, it’s time to begin buying the investments that will comprise your portfolio. And it’s at this stage of the game that baskets of securities such as mutual funds and exchange-traded funds (ETFs) can really come in handy.

Let’s say, for sake of illustration, that you want an asset allocation of 70% stocks, 25% bonds, and 5% cash. To truly build a diversified portfolio with that asset allocation, you’d need to buy dozens (at the very least) of stocks and bonds. And for the stock portion of your portfolio, you’d also want to make sure that you were investing in companies of different sizes, industries, and geography.

Even if you had enough capital at your disposal to invest in such a diverse set of stocks of bonds, how would you go about choosing your individual investments? Most non-professional investors simply don’t have the time that this kind of market research would require.

But by investing in mutual funds and ETFs, you can eliminate these problems. Funds make it easy to invest in hundreds or thousands of stocks, bonds, or alternative investments at once, even with limited capital (getting the variety of assets diversification requires can be expensive). And some mutual funds even offer a predetermined mix of stocks and bonds to serve as a “one-stop-shop” for all your asset allocation needs.

3. Consider moving beyond stocks and bonds

When financial professionals talk about asset allocation, they’re often referring to your ratio of stocks to bonds. But it’s worth noting that with both of these assets, your money is heavily invested in companies.

To increase your diversification, you may want to consider investing a portion of your portfolio in additional asset classes as well. For example, you may want to consider investing in raw materials by buying shares of a commodity mutual fund.

If you want to gain more exposure to real estate, you could invest in a real estate investment trust (REIT). Other alternative asset classes worth considering include private equity, collectibles (like stamps, art, or antiques), cryptocurrency, and hedge funds.

4. Regularly reevaluate your asset allocation

How do you know when you’re properly diversified? The reality is that diversification is an ever-evolving process that will change as your time horizon shrinks.

To estimate your ideal asset allocation for your age, some experts recommend subtracting your age from 110 to 120. The result is the percentage of your portfolio that should be in stocks.

Using this rule of thumb, a 30-year-old would look to invest 80% to 90% of his or her portfolio in stocks, with the rest invested in bonds and/or cash equivalents. But an 80-year old would reduce his or her stock holdings to 50% to 60%.

The estimates above are just that…estimates. To determine your own ideal ratio, you’ll need to take your specific financial situation and investment needs into consideration.

Even if your portfolio’s asset allocation is perfectly matched to your age and needs, it can become out of alignment as certain assets outperform others. That’s why it’s important to monitor your portfolio and rebalance your original asset mix when necessary.

The financial takeaway

Investing is a game of risk and returns. Take on too much risk and you could lose big, especially in the short-term. Take on too little risk (like, say, by only investing in cash equivalents) and you could really hurt your long-term returns.

Diversification is the best way for investors to find their own personal balance of risk and reward. To build a diversified portfolio that works for you, consider your risk tolerance, time horizon, and investing goals.

Related Coverage in Investing:

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ETFs and mutual funds can instantly diversify your portfolio, but they differ in how they’re traded, managed, and taxed. Here’s what you should know.

How to invest in mutual funds and grow your money for retirement, a bucket-list trip, or any other long-term goal

Investing for income: 7 money-generating assets for your portfolio and how to get started

The Rule of 72 is a quick, simple way to figure how long it’ll take for your savings and investments to double in value

By:

Source: How to Diversify Your Portfolio: Strategies and Benefits

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We’ll cover the concept of what is portfolio diversification and should you diversify your investment. First, I want to explain to you what is the concept. Secondly, I want to show you what the smartest approach is. #tradingportfolio #diversification #investmentdiversification #portfoliotrading #investing Posted at: https://tradersfly.com/blog/portfolio… 🔥 GET MY FREEBIES https://tradersfly.com/go/freebies/ 🎤 SUBMIT A VOICE QUESTION https://tradersfly.com/go/ask 👀 START HERE: FOR NEW TRADERS https://tradersfly.com/go/start/ 🎉 START HERE: OPTION TRADERS https://tradersfly.com/go/start-options/ 📈 MY CHARTING TOOLS + BROKERS https://tradersfly.com/go/tools/ 💻 MY COMPUTER EQUIPMENT https://backstageincome.com/go/comput… 💌 GET THE NEWSLETTER https://tradersfly.com/go/tube/ 🔒 SEE OUR MEMBERSHIP PLANS https://tradersfly.com/go/members/ 📺 STOCK TRADING COURSES https://tradersfly.com/go/courses/ 📚 STOCK TRADING BOOKS: https://tradersfly.com/go/books/ ⚽ GET PRIVATE COACHING https://tradersfly.com/go/coaching/ 🌐 WEBSITES: https://tradersfly.com https://rise2learn.com https://backstageincome.com https://mylittlenestegg.com https://sashaevdakov.com 💌 SOCIAL MEDIA: https://tradersfly.com/go/twitter/ https://tradersfly.com/go/facebook/ ⚡ SUBSCRIBE TO OUR YOUTUBE CHANNEL https://tradersfly.com/go/sub/ 💖 MY YOUTUBE CHANNELS: TradersFly: https://backstageincome.com/go/youtub… BackstageIncome: https://backstageincome.com/go/youtub… 📑 ABOUT TRADERSFLY TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing. Stock trading can be a brutal industry, especially if you are new. Watch my free educational training videos to avoid making big mistakes and just to continue to get better. Stock trading and investing is a long journey – it doesn’t happen overnight. If you are interested to share some insight or contribute to the community we’d love to have you subscribe and join us!

Understanding Branch Managers: A Demanding and Highly Visible Job

https://i1.wp.com/onlinemarketingscoops.com/wp-content/uploads/2021/04/lp030.jpg?resize=844%2C493&ssl=1

A branch manager is an executive who is in charge of a particular location, or branch office, of a bank or other financial services company. Branch managers are typically responsible for all of the functions of that branch office, including hiring employees, overseeing the approval of loans and lines of credit (LOC), marketing, building a rapport with the community to attract business, assisting with customer relations, and ensuring that the branch meets its goals and objectives in a timely manner.

Key Takeaways

  • A branch manager is an employee who oversees the operations of a branch of a bank or financial institution.
  • Branch manager’s responsibilities include managing resources and staff, developing and attaining sales goals, delivering exceptional customer service, and growing the location’s revenues.
  • In prospective branch managers, employers look for someone with experience, proven success, and leadership skills.
  • Academically, branch managers typically have undergraduate degrees in finance, accounting, or related fields of study.

Understanding Branch Managers

A financial institution’s executives place great confidence in the company’s branch managers, expecting them to run their locations as their own businesses. A branch manager’s job description includes assuming responsibility for virtually all functions of their branch—including growing that location’s customer base and elevating the community’s perception of the company’s brand.

Branch managers also have the responsibility of delegating tasks to skilled workers and are responsible for their successes and failures. In fact, the branch manager is responsible for the success or failure of the branch they manage. Excellent multitasking and organization skills are necessary to accomplish tasks in a timely and efficient manner, not only for the branch manager but also for the people they manage. The branch manager will also oversee the performance of subsidiaries, such as bank tellers, loan officers, and back-office workers.

Requirements for Branch Managers

Because branch managers’ responsibilities include developing and maintaining good relationships with customers and employees, they should possess strong sales, people-management, and customer-service skills. Other attributes required of a branch manager are diligence, strong analytical skills, and the ability to prioritize, multitask, and focus on detail.

Branch managers are expected to be proactive about networking to bring in new business and increase revenue. A new branch manager might join the local chamber of commerce and attend business and networking events, where one often can meet influential community members. For example, a branch manager might meet a local hospital administrator and work out a deal to provide the branch’s services to the hospital’s employees.

Branch Manager Qualifications

Branch managers usually have undergraduate degrees in finance, accounting, or related fields. Some financial institutions will look at a branch manager job candidate with a non-finance-related bachelor’s degree as long as they have a master’s degree in a finance-related field.

Financial institutions hiring for branch manager positions look for candidates with both prior financial experience and proven leadership experience. They also seek candidates with a track record of increasing the number of a bank’s accounts, and hiring banks expect branch managers to be deeply knowledgeable about banking-industry regulations. Once hired, branch managers have the freedom to choose their teams, but they also must be able to ensure their teams’ success.

Source: Branch Manager Definition

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IRS Delivers Covid-19 Surprise To Workers:  A Chance To Redo Their 2021 Health Plan And FSA Choices

If your employer lets you make changes to your workplace healthcare elections for 2021 under new Treasury guidance, it could cut your tax bill.

 

Wish you could change your health plan for 2021? In newly released guidance on new flexible rules for healthcare and dependent care FSAs, the Internal Revenue Service has included a new Covid-19-relief surprise: Employers can allow employees to make changes prospectively to health care coverage for 2021.

“The guidance is very employer and employee friendly; it really gives a lot of flexibility,” says Jake Mattinson, an employee benefits lawyer with McDermott Will & Emery in Chicago.

Notice 2021-15 allows for mid-year changes to employer-sponsored health care coverage, healthcare flexible spending accounts and dependent care accounts. It will help employees whose medical and caregiving situations have changed because of the coronavirus pandemic. That is, if your employer is on board.

Usually healthcare elections are set in stone on a calendar year basis. Last May, the Treasury Department came up with a partial mid-year fix for 2020, allowing prospective changes and extending grace periods and carryovers through year-end (IRS Notice 2020-29). But employees still cried foul: they had socked away more money than they could spend in these workplace tax-favored accounts, and would be subject to forfeiture rules.

In December, in the tax provisions tied onto the year-end spending package, Congress passed new special rules allowing rollovers and more for leftover 2020 and 2021 FSA money for employees and ex-employees. Notice 2021-15 answers a lot of the open questions about how to implement the new rules.

For 2021, you can revoke an existing healthcare plan election and make a new election, or revoke an existing election and attest that you’re getting coverage elsewhere. Say you picked an HMO plan, but really want to be in a PPO plan. Or say you decide you’d be better off under a spouse’s plan. This gives you the chance to make a mid-year change. That allowance is not in the December law, so it was a surprise, Mattinson says.

For healthcare and dependent care FSAs, the guidance says employers can allow employees to carryover unused amounts they’ve stashed in these accounts from the 2020 and 2021 plan years. It wasn’t clear before, but the IRS says that any plan can implement a 100% carryover or extended grace period, no matter what feature the plan had before, Mattinson says. That means employees might be able to carry over their whole balance (instead of just $550 under current law) from one year to the next.

The extended grace period could go out 12 months, instead of just 2.5 months. as of January 1, 2022, everything would shift back to the regular rules. Under the regular rules, you can stash up to $5,000 pretax per year in a dependent care FSA, but if you don’t use the money for the specified year, you lose it. You can put up to $2,750 in a healthcare FSA, and if you don’t use it, you may be able to either use it up during a grace period or carry over $550.

Don’t get your hopes up just yet: Employers have to adopt these changes, and while some have already been working on amendments to their plans based on the December law even before today’s guidance, others have decided to do nothing. “The reaction among employers is mixed; everyone has their own ideas of what to implement. It’s all optional,” says Mattinson. One client said they would implement it all, while another client said they wouldn’t make any of the changes, for example.

Some of the nitty-gritty guidance surrounds COBRA and health savings accounts. For COBRA, the guidance makes clear that if an employer lets terminated workers seek reimbursement from an FSA, that won’t hurt their qualification for COBRA. For health savings accounts, the guidance clarifies that for employees who want to make a midyear change into a high deductible health plan with an HSA, they could convert a general purpose FSA to a limited purpose FSA so as not to be disqualified from contributing to the HSA.

Notice 2021-15 is 34 pages long and includes detailed examples, suggesting this is an area of the tax code that could be simplified! Here’s a bullet point summary of the law changes addressed in the IRS guidance; employers can:

 

  • allow employees to carry over unused money up to the full annual amount from the plan year 2020 to 2021, and also from the plan year 2021 to 2022 for healthcare and dependent care FSAs
  • allow up to a 12-month grace period for employees to incur new expenses and submit claims against unused accumulated funds for plan years ending in 2020 or 2021 for healthcare and dependent care FSAs
  • allow midyear election changes on a prospective basis without a change in status event for plan years ending in 2021 for healthcare and dependent care FSAs
  • allow dependent care reimbursement up to age 14 in cases where an employee’s dependent turned 13 in 2020 and the employee had leftover funds from 2020 (this special carry forward rule helps employees whose dependents “aged out” during the pandemic) for dependent care FSAs
  • allow health FSA participants who stop participating in the plan (ex-employees) during calendar year 2020 or 2021 to continue to receive reimbursements through the end of the year, including grace periods (this post-termination benefit applies to healthcare FSAs, not dependent care FSAs)

 

Further reading: Healthcare And Childcare FSA Fix For 2021, Finally: Special Carry Over Rules And More

Follow me on Twitter or LinkedIn.

I cover personal finance, with a focus on retirement planning, trusts and estates strategies, and taxwise charitable giving. I’ve written for Forbes since 1997. Follow me on Twitter: @ashleaebeling and contact me by email: ashleaebeling — at — gmail — dot — com

Source: IRS Delivers Covid-19 Surprise To Workers:  A Chance To Redo Their 2021 Health Plan And FSA Choices

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What Is Management 3.0 & Why You Should Pay Attention To Energize Your Teams

What Is Management 3.0 and Why You Should Pay Attention to Energize Your Teams

Jurgen Appelo is a software engineer, trainer, entrepreneur, author, speaker and traveler, who has been driving agility in companies. One of his works, Management 3.0 , condenses a team management methodology so that they can survive amid chaos and fragility.

This model, based on Edgar Morin’s so-called complexity theory, is based on the notion that a system – a company, a government, a project – is not feasible to analyze as a mere sum of its component parts; rather, it is the relationships and interactions that give it meaning and momentum. To graph this, imagine a network, with interlocking threads connecting each component. These threads are the facts, actions, decisions, and interactions that make up the world.

That is why management has been seen for several years as a system of networks and people, of dynamic relationships, and not only about areas or departments, profits and processes. It is a living system, not machines that systematically replicate the same result.

Principles for energizing and developing talent

In its 3.0 model, Appelo shares several principles that serve to support the work of leaders and teams in today’s changing world. Here are some of them:

1. Energize people

To achieve this, it is necessary to know what it is that motivates them and that is part of their life purpose: the more consistent it is with the purpose of the organization, there will be a greater individual commitment and team cooperation. For the psychologist and professor Edward Deci, there are two types of motivations:

  • Extrinsic: stimuli that are provided from outside the person (for example, a performance bonus, constant congratulations from the leader, etc.).
  • Intrinsic: those stimuli that are internal and relevant to the person, even when it is not their primary goal (for example, a project in charge). However, if you find a meaning, a why in what you do, you connect better and there is your own reward.

Author Daniel Pink offers a similar look at intrinsic motivation in his book “Drive”, where he affirms that most people are moved more by this type of impulse than by extrinsic. In other words, in the end and in essence, people care more about satisfaction than external rewards, although they should not be lacking, and he explains that there are three factors that new management leaders need to take into account to boost talent: mastery -the desire of each one to be better in what is important to him-, autonomy -the impulse to guide his own life-; let me mention self-leadership-; and purpose – intention to serve something greater than ourselves.

2. Empower teams

To achieve this, the author of Management 3.0 points out that it is entirely possible for each team to organize itself, if it has the confidence of the leaders.

At this point, it is essential that those who lead people focus on doing their job and not on micro-management and that teams participate in collective decisions on relevant issues. In addition, it is necessary for everyone to understand that they are part of a joint system, and not the mere sum of individualities, and that the knowledge of market needs is not in the hands of a single person, but that there is a broader perspective of their needs.

To empower, there are four lines of action that are strategic to generate relationships of trust:

  • Let the leader trust his team.
  • Let the team trust their leader.
  • Let team members trust each other.
  • Let the leader trust himself.

3. Development of skills

We already know that it is difficult for any company to achieve results if its members are not trained; and the leaders are responsible for enabling the conditions for this process to take place. Some ways are:

  • Leading by example: living what is preached.
  • Promote self-learning: appreciate personal maturing time.
  • Coaching and mentoring: as transversal support and support tools throughout the organization.
  • Training and certification: to raise standards against the competition.
  • Collaborative learning: internal development, where everyone learns from each other.
  • Learning from error: doing retrospectives and tests in controlled environments.
  • Measure the results: feedback in the shortest possible cycles; use of keeping metrics on information radiators; indicators agreed between those who participate.
  • Smaller teams: the author recommends no more than 10 to 12 people.

4. Improve everything and observe the team environment

It is key in the management 3.0 model to focus on real continuous improvement, for which it is necessary to facilitate change processes and model the natural resistance that may appear.

Some suggestions for leaders are to observe the team environment, what they need, and let it be known that you are available; find cracks or faults and go to their roots to promote solutions that the team implements; define clear and specific goals and have great communication skills, a key factor of every good manager.

Also, incentivize defining small victories or milestones that energize people; review achievements and not just failures; and it is also essential to recognize people.

The implementation of this leadership style implies a cultural change in companies that is not necessarily rapid, although it can be agile, if you have the conviction and vision to carry it out.

Ultimately, it depends on each company how far they want to go and on each leader, how much they want their teams to develop. Two questions that only they can answer.

By:

Source: What Is Management 3.0 and Why You Should Pay Attention to Energize Your Teams

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Many teams use Mind Maps to explore certain topics. Similarly you can use Personal Maps to explore your team itself. Personal Maps facilitate team collaboration and bonding in a rather distant world. With this video, you will learn how to use Personal Maps to break down the barriers of cubicles and longer distances, and then you may even learn how silly you were when you thought you had nothing in common! Here you can learn more about this Management 3.0 Workout: https://management30.com/product/work… Here’s a trick, instead of presenting your own, spark conversations by presenting each other! What are you waiting for? Try this 7-minute exercise out and tell us below how it went!
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To Recognize Risks Earlier, Invest in Analytics

You’ve probably heard business leaders justify their flat-footedness in a crisis by claiming that every organization is flying blind in times of deep uncertainty. But in fact some leaders know precisely where they’re going. They understand what’s required to chart a course through market turbulence, and they’ve built organizations with keen situational awareness.

When it comes to developing the ability to figure out where things are heading and respond nimbly to a changing environment, nothing is more important than analytics. Unfortunately, in recent years analytics (also known as data mining or business intelligence) has become the unloved stepchild of data sciences, overshadowed by machine learning and statistics. Those two disciplines layer mathematical sophistication on top of a foundation of human intuition, creating an appealing illusion of objectivity and deft steering. Ironically, of the three, analytics is the most essential competency for navigating crises.

Solutions based on AI and machine learning hum along well during stable times but fall apart when disaster strikes. These technologies automate tasks by extracting patterns from data and turning them into instructions. Such models can quickly become obsolete when the inputs to the system change. Analytics, in contrast, alerts you when the rules of the game are changing. Without that kind of a warning, automation solutions can quickly go off the rails, leaving you exposed to exogenous shocks.

Statistics has a similar shortcoming during a crisis. Statisticians help decision-makers get rigorous answers. But what if they’re asking the wrong questions? While statistical skills are required to test hypotheses, analysts have the acumen to come up with the right hypotheses in the first place. To attempt statistics without analytics, you’d need great confidence in your assumptions—the kind of confidence that’s foolhardy when a crisis pulls the rug out from under you.

Analysts thrive in ambiguity. Their talent is exploration, which makes them particularly good at foreseeing and responding to crises. By searching internal and external data sources for critical information, analysts keep a finger on the pulse of what’s going on. They scan the horizon for trends and formulate questions about what’s behind them. Their job is to inspire executives with thought-provoking yet qualified possibilities. Once the highest-priority hypotheses have been short-listed by leaders, then it’s time to call in a statistician to pressure-test them and separate true insights from red herrings.

During good times, leading organizations build analytics capabilities to strengthen their ability to innovate. Analysts’ ability to find clues to such things as shifting consumer tastes can help firms take advantage of opportunities before less-savvy competitors do. When the going gets tough, however, what looked like a nice-to-have innovation booster turns into a must-have safety net. To be sure, some events are impossible to see in advance—the true black swans—but addressing their fallout is a game best played with open eyes.

Unfortunately, it’s very hard to cobble together a mature analytics department on short notice. The technical skills that allow analysts to guzzle data with lightning speed merely increase the mass of information they encounter. Spotting a gem in it takes something more. Without domain knowledge, business acumen, and strong intuition about the practical value of discoveries—as well as the communication skills to convey them to decision-makers effectively—analysts will struggle to be useful. It takes time for them to learn to judge what’s important in addition to what’s interesting. You can’t expect them to be an instant solution to charting a course through your latest crisis. Instead, see them as an investment in your future nimbleness.

It also takes time to secure access to the promising data sources analysts need. Ideally, business leaders won’t wait for a big disruption to begin building relationships with data vendors, industry partners, and data collection specialists. Bear in mind that in the face of an extreme shock, your historical data sources may become obsolete. If your understanding of the past fails to give you a useful window on tomorrow’s world—perhaps because a pandemic has changed everything—it doesn’t matter how good your information was yesterday. You need new information. After the 2008 financial crash, for example, banks around the world recognized that there might be an advantage to analyzing nontraditional signals of creditworthiness, such as data from supermarket loyalty cards, but not all players were equally positioned to get access to them.

Additionally, your internal data stores may require special processing before analysts can mine them, so it’s worth thinking about hiring supporting data engineers. If analytics is the discipline of making data useful, then data engineering is the discipline of making data usable; it provides behind-the-scenes infrastructure that makes machine logs and colossal data stores compatible with analytics tool kits.

When I began speaking at conferences about the importance of analytics, I found that convincing an audience of its value was the easy part. The mood changed when I explained the catch: Analytics is a time investment. You can’t count on getting something useful out of every foray into a data set. To succeed at exploration, your organization needs a culture of no-strings-attached analytics. As the leader, you are responsible for setting the scope (which data sources should be looked at) and the time frame (“You have two weeks to explore this database”). Then you must ensure that analysts aren’t punished for coming back empty-handed.

During an extreme shock, your historical data sources may become obsolete. Then it doesn’t matter how good your information was yesterday. You need new information.

Once business leaders accept that analytics represents an investment that may not immediately pay off, I hit the next stumbling block: the perception that only a large and technologically sophisticated company such as Alphabet can afford it. This is nonsense. In my experience you’re more likely to find analytics thriving in start-ups than at well-established behemoths.

Start-ups naturally invest in analytics as they try to navigate a new market, with several generalists taking on a share of the exploratory work. Then as the venture grows, the culture changes. Workers are trusted less and made more accountable for return on their efforts, and overzealous management stifles opportunities for analytics to thrive. Analysts hired into this culture rarely get to enjoy the most interesting part of their work—exploration—and instead serve as human search engines and dashboard janitors. Many quit out of frustration as their potential is squandered.

Creating a culture where analytics flourishes takes thoughtful leadership. As organizations grow toward incumbency, only the most visionary will have the courage to nurture a true analytics department and make sure that business leaders have access to it and are influenced by it. Industries that have been burned by a previous crisis — banking is a good example — are especially likely to invest in analytics and apply it to risk management.

Becoming a leader in analytics takes a commitment to trust your analysts and give them space to do their work. Their job, after all, will be to reveal threats that you never even imagined should be on your radar. That sort of work can’t be managed with a stopwatch and a checklist.

Crises such as a pandemic—when no one has the answers, and uncertainty is high—remind us of the importance of asking the right questions. Analytics gives firms an edge in learning and adapting. When the world is suddenly upended, those who can learn the fastest are best positioned to succeed. Smart companies will invest in analytics today to get ahead of whatever is coming tomorrow.

By: Cassie Kozyrkov

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RedRisks

👀 OVERVIEW: On the 3rd June 2020, I presented a live event on Risk Management Fundamentals. This video is an extract of the “Risk Identification” presentation. Due to demand, a future live event rerun is planned and if this appeals to you, please subscribe to the weekly newsletter on the website and I can keep you posted. 🖥 WEBSITE / POST: https://www.redrisks.com/risk-managem… 📧 SUBSCRIBE to my free WEEKLY newsletter: https://www.redrisks.com 🙏 ABOUT THIS YOUTUBE CHANNEL (“RedRisks”): https://youtu.be/AsXUaIACQrA 🔔 PLEASE SUBSCRIBE AND SUPPORT THIS YOUTUBE CHANNEL: If you liked this video, please give me a thumbs up (or a thumbs down – they’re all important). 👪 CONNECT WITH ME: Linkedin: https://www.linkedin.com/in/sonnigopal/

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How Sales Enablement Can Drive Revenue Growth in 2021

How did your leadership priorities change in 2020? If you started paying more attention to the sales enablement needs of your organization, you’re not alone.

According to recent HubSpot research, 65% of sales leaders who outperformed revenue targets in 2020 reported having a dedicated person or team working on sales enablement efforts instead of making it an initiative someone works on off the side of their desk.

[New Data] The 2021 Sales Enablement Report

For sales organizations that have been waiting to implement dedicated sales enablement measures — the time is now. With 2021 right around the corner, intentional sales enablement is a must-have for organizations that want to remain competitive in the future.

HubSpot recently sat down with Chris Pope, Director of Sales at Crayon, to discuss how companies can implement sales enablement strategies that can move the needle and drive revenue growth.

“Crayon defines sales enablement as providing our account executives with the resources and content they need to win more deals. Closing deals is more important than ever, especially in today’s competitive market where there are fewer deals to close,” he says.

In 2020, Crayon placed even greater emphasis on sales enablement to support their sales force. “We’ve put even more effort into making sure that our sales teams have the resources they need, simply because every deal matters more than ever,” says Pope.

How to Improve Sales Enablement for Your Team

1. Use data to inform your sales enablement content.

Crayon uses data to inform sales enablement decisions. According to Pope, his team relies on “velocity reports” to determine what areas of the sales process reps need the most support with.

“Velocity reports tell us what our reps conversion rates are at every stage of the sales funnel. How many opportunities are turning into discovery calls? How many discovery calls are turning into demos? How many demos are turning into proposals? And how many proposals do we send out that turn into closed business?” says Pope.

“We leverage that data to inform us where each individual rep needs to spend the most time, and where managers need to spend time training individual contributors.”

From an organizational level, this approach helps sales leaders know how to support sales managers and reps, and provides valuable insight into the type of training and content would be most effective.

Two examples of enablement content Crayon leadership has provided to their sales team include:

Call Recordings

“We love call recordings. We not only have call recordings of what the perfect call sounds like, we also have recordings of ideal discovery calls, effective demos, and successful closing calls. We share these recordings with reps who may need help in those areas, and we share them broadly across the organization so everyone is on the same page,” Pope says.

Battle Cards

Battle cards are a valuable tool for preparing reps to speak to features and objections related to your product. Crayon relies heavily on battle cards to ensure sales reps understand what they’re selling inside and out.

“We use our own product to make sure that our individual contributors have the most up to date messaging on how we position against our competition. This knowledge has been crucial not only for our organization, but for our customers as well,” says Pope.

2. Focus on sales team culture.

Chances are, you’re familiar with the term “company culture” — the idea that a company should have a shared set of beliefs, values, and practices. But when was the last time you assessed the culture of your sales team?

Sales teams are often dynamic organizations with motivated team members whose ability to sell is critical to the health of a company. Building strong rapport among members of the sales team and having a culture of open communication, especially in a remote environment, is an effective way to support sales enablement.

Feeling supported and included while selling remotely can be challenging for reps. For Crayon, sales team cohesion is a high priority.

“We’ve done our best to create a team atmosphere. We have daily calls where the entire sales team is on together, we have a peer program where our more experienced reps are paired with less experienced reps to offer coaching and mentorship, and we’re creating cross-functional opportunities for our pipeline generation team to work closer with our closing team,” says Pope.

These activities build trust across the team, and strengthen communication among sales managers and reps, creating a better environment to tackle sales enablement issues as they arise.

3. Prioritize sales enablement at each level of the organization.

At Crayon, sales enablement is an all-hands-on-deck initiative from the top down.

“Sales enablement is a team effort at Crayon. It starts at the top with our Senior Vice President of Sales, who delivers insight on broad topics and training related to overarching sales themes such as a demo workflow, or how to run a closing call,” says Pope.

“The managers and directors are responsible for individual training tailored to the needs of their reps. This can include listening in on at least a few calls for each individual contributor weekly, and providing regular feedback.”

In addition to the sales enablement work of leadership, Crayon focuses heavily on team selling to get everyone involved.

“If one of our reps is great at positioning our product against a competitor’s or they’re strong at demoing a certain aspect of our platform, we’ll invite their team members to tune into their sales calls so they can learn from them.”

Everybody within the organization plays a role in our sales enablement.

In 2020, sales managers at Crayon took a hands-on approach to coaching reps who had opportunities for improvement.

“We’ve really made it a focus to make sure managers are involved in more calls. Managers are putting time aside to give individual contributors and feedback that they need after calls, and benchmarking performance after every stage of the sales cycle,” says Pope.

According to Pope, if a rep is struggling with a specific part of the sales process, Crayon’s team will “focus our training on the specific aspect of the process they’re struggling with to help them improve and get their overall win rate up.”

4. Don’t wait to give feedback.

When sales managers and seasoned team members are coaching reps, the Crayon team makes it a point to provide feedback quickly.

For example, if Pope were to listen in to a rep’s sales call with a prospect, he would schedule 15 minutes with the rep right after the call to deliver feedback on how it went.

“When you let time pass, the call is not as fresh in the rep’s mind, and your feedback is not going to be as direct as it would be if you delivered it right away.”

5. Make sure sales managers feel supported.

Sales managers often have a lot on their plate. They are responsible for coaching and leading their reps to success, and are accountable for their team’s performance to leadership. For growing companies, relieving pressure from sales managers is crucial for a healthy organization.

“As you continue to scale your teams you don’t want your managers to feel overwhelmed. You want to make sure they have enough time in the day to give every individual contributor the attention that they need to to perform their best.” says Pope.

Pope says Crayon focuses on conscious staffing and resourcing to avoid sales manager burnout:

“If we know we’re going to hire a new group of sales reps, we make sure we already have enough managers in place who have the bandwidth to lead.

So when those people start we don’t have a new manager meeting new reps, we have experienced managers working with new reps, and we make sure that team members have the data they need to understand what their path to success will be as an individual contributor.”

Improving Team Morale in 2021

Per HubSpot’s 2021 Sales Enablement Report, 40% of sales leaders expected to miss their revenue targets this year. That means sales enablement efforts are not only necessary for growth — they are critical for survival.

In a competitive landscape where sales teams are working with volatile markets and buyer uncertainty, keeping morale high is more challenging than ever. Pope shares why communication is Crayon’s greatest tool for keeping employees engaged.

“Morale has been all over the map for different members of the team. At Crayon, we never go a day without checking in on our reps,” he says. “I try to at least have two times a day where I’m asking them how their days are going, what they’ve been working on, what calls have gone well, what calls haven’t gone well, and asking how can I continue to support them.”

This approach to communication happens at the organizational level as well.

“Crayon has done a really great job of communicating, being honest about when we might go back into the office, and making sure we’re meeting with folks who are concerned about not having an office atmosphere to make sure that they’re comfortable with their remote work setup,” says Pope.

If you’re looking for more advice on boosting sales rep productivity and morale, check out this post for advice from an Aircall sales leader on navigating employee fatigue.

By: Lestraundra Alfred @writerlest

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HubSpot

Learn more about Sales Enablement: Why You Need Sales Enablement: https://clickhubspot.com/Sales-Enable… The Sales Enablement Certification will teach you how to develop a marketing-driven sales enablement strategy. This course was designed with marketing managers in mind, but other marketers, as well as sales leaders, can benefit from learning the principles involved in this approach to sales enablement.

This course is made up of 12 classes and a 60-question exam. Completing this course will help you: 1. Align your marketing and sales teams around business-level goals 2. Define your target customer using buyer personas and Jobs to Be Done 3. Implement marketing processes that will provide your sales team with a steady flow of qualified leads 📔 Grow Your Career and Business with HubSpot Academy: https://clickhubspot.com/Popular-Courses 📔 Favorite Free Certification Courses: • Social Media Marketing Course: https://clickhubspot.com/Social-Media… • SEO Training Course: https://clickhubspot.com/SEO-Training… • Inbound Course: https://clickhubspot.com/Inbound-Cert… • Inbound Marketing Course: https://clickhubspot.com/Inbound-Mark… • Email Marketing Course: https://clickhubspot.com/Email-Market… • Inbound Sales Course: https://clickhubspot.com/Inbound-Sale… • Taking your Business Online Course: https://clickhubspot.com/Business-Online

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