What is an LMS, and What Can LMS Do for Your Business?

Michael got a new achievement called “The Ambassador.” Now, he’s number fifteen in the overall ratings. But what’s even more important, he’s one rank higher than his colleague George from Miami (they’ve been competing for a while). No, they aren’t playing World of Warcraft. In fact, Michael is a manager at a supermarket which is a part of a well-known retail chain. He got the achievement for completing the e-course “The Standards of Service.”

You can launch your own online learning resource and implement the same gaming principles using a learning management system, or LMS. In this article, we’re going to tell you what it is and how it can help you.

What’s an LMS?

An LMS is a platform for digital learning. Its key features can be found in the abbreviation.

L — Learning. With an LMS, you can create a single source of online courses and training materials. This will become a unique source of knowledge in your area, so that you can keep and increase the in-house expertise of your company.

M — Management. You can manage courses and learners, and even improve your own efficiency.

Unlike file sharing services, an LMS is not just a heap of files; on the contrary, it’s a well-organized system where you manage the training process. To start training, simply add employees and assign courses.

Have you recently hired some new employees? Send them invitations to the onboarding training course. Experiencing low sales? Ask your salespeople to practice with virtual clients.

Thanks to features like a calendar, you’ll be able to assign and manage not only online training, but also in-class sessions. In this way, an LMS can be a sort of a to-do app designed specially for eLearners.

S — System. Computer system, to be exact. An LMS automates the most boring and tedious work such as grading, processing statistics, and preparing reports. Plus, you can train your employees without leaving the office, managing all the processes right from your work computer.

In other words, an LMS is like your own online university. The system allows you to store and create eLearning courses, provides learners access to the content, and helps you evaluate the results.

Watch the video to see how an LMS works and how it can help your business grow.

What Type of LMS Should I Choose?

Now that you know what an LMS is, it’s time to figure out which learning platforms exist and how they differ. Here’s a description of different types of LMSs:

Corporate vs. Academic LMS

Both corporate and academic LMSs give access to learning materials online and automate different aspects of training processes, but they have some differences.

Learning goals

Academic learning is aimed at producing good students that have deep knowledge of the subjects and strive to learn more. Here, theoretical knowledge is the end goal. Corporate training focuses on learning related to practical applications, and one of its main objectives is ROI.

Course timeline

For workforce training, time limits are shorter, so a corporate LMS must be flexible to fit all time frames and business needs. Semesters, trimesters and quarters — these are the time frames for educational institutions. For them, the LMS should offer such scheduling units as holidays, exam times, and periods.

Certifications vs. grades

A corporate learning platform usually offers the capability of tracking and completion in the form of certifications. An academic LMS typically tracks learners’ progress through its grading system. It provides gradebooks for monitoring attendance and assignment results, as well as keeping other information for each student in the roster.

Tools for social learning

Other functionalities that an academic learning platform usually provides are capabilities for creating student groups for class projects and breakout sessions, discussion boards, and a built-in web-conferencing tool.

Content updates

The content students require is based on the sciences and humanities; that’s why an educational LMS doesn’t need to update it regularly. Since market needs change quite rapidly, a corporate LMS should have the ability to quickly and easily update courses.

Free vs. Commercial

This is usually one of the first challenges companies face when choosing an LMS: deciding between a free, open-source system, or a commercial platform. In fact, there’s a major misconception that all open-source LMSs are free. There may be no license fee, but that doesn’t mean there are no costs. You are likely to spend more on your open-source platform than a commercial LMS, as you may need to set up a server and a hosting architecture, customize LMS features that come standard, fine-tune the site branding, and regularly upgrade your system. Plus, if you don’t have technical talent in your team who can make it highly customizable for your company, your eLearning project is likely to fail.

The ideal solution for users without an IT background is commercial software. It’s typically much easier to deploy and use, offers tech support services, and doesn’t require additional costs.

SaaS / Cloud LMS vsLocally hosted LMS

You can choose a SaaS (Software as a Service) LMS or store the data on your company’s own servers. If you decide to host the system yourself, you’re fully responsible for all server specs, uptime and security.

If you select a SaaS system, it will be your LMS vendor who takes care of server load, backups, and all the other things concerning storing your training data. This is the best match if you don’t have IT staff in place that can manage the system and handle support, customization and scalability concerns. Instead of spending time on managing the LMS, you can focus on creating learning content.

Some companies avoid cloud-based LMSs because of data security concerns. They believe that their information that is stored on a remote server may be compromised. However, there are different ways to safeguard your data. For instance, ensure that the LMS vendor has effective encryption protocols and will back up your information.

Course-creating (LCMS) vs. Non-course-creating (LMS)

To be more precise, an LMS (learning management system) is a tool that allows you to simply distribute ready-made content. And a system that, beyond this, has functionality for creating courses, is called an LCMS (learning content management system).

There’s a tricky balance between these systems. An LCMS has greater capabilities for building and managing eLearning content, while an LMS focuses on user management and provides a wider range of learning experiences. For example, it lets you manage more traditional forms of learning, such as scheduling face-to-face training.

If you’re going to build courses in-house, you can choose between two alternatives: either buy an LCMS, or purchase an LMS and an authoring tool separately.

However, here you can face two problems:

Built-in course editors usually have serious functional limitations, so you will be able to create only simple courses or tests.

Not all LMSs and authoring tools are fully compatible. For instance, there may be difficulties with uploading courses to the system or tracking learners’ progress.

If you want to avoid compatibility problems and create beautiful interactive courses, choose an LMS with a bundled authoring tool. For example, iSpring Learn LMS is fully integrated with iSpring Suite. This integration allows you to create professional-looking e-courses, easily upload them to the platform, and enjoy advanced reporting capabilities.

The best practices for custom eLearning development

eLearning has the potential to make a great impact as long as it is crafted exclusively for a particular organization. Apart from conveying the learning objectives effectively, it can also maintain a brand’s tone. A successful custom eLearning development benefits in performance improvement and altering learning behaviours thereby making the entire experience memorable, meaningful, and motivating.

Even though customization of eLearning courses can be expensive at times, they are easy to update as and when required which offers decision-makers of a company a great return on their investments in the long run. Besides, without customization, a particular digital learning course will consist of irrelevant information for employees. It will not be engaging nor impactful to make the learners retain the knowledge. Hence it can defeat the purpose of online employee training in general. These scenarios can be avoided by customizing the courses via –

Themes and backgrounds in the learning environment.

Audio, video, text, graphics, etc.

Interactive elements and social shareability in the course.

Assessment and feedback components such as quizzes, games, etc.

Additional elements like simulations, tutorials, discussion forums etc.

So, how can one create an online course which stands out? Here are some best practices to follow while developing a custom eLearning solution.

Define the needs of your employee training:

While creating a learner-centred online training programme, make sure that you define the target group of employees who need to be included in it and what kind of learning they require. Sometimes budget and time constraints may become a challenge to this process. However, training need analysis is an essential way to focus on learner needs while addressing the factors of motivation and engagement which in turn aids companies to achieve their business goals and employee expectations. Brainstorming with the project stakeholders and subject matter experts (SME) is the best way to analyze and define employee training needs.

Implement the perfect eLearning approach:

After you have defined your training need, you need to make sure that it is created in such a way that it captures the learner’s attention. To achieve this objective, you should adopt the best principles of instructional and graphic designing to aid the employees retain the training information for a longer time and upskill themselves in the process. It is essential to implement the appropriate eLearning approach coupled with the right online course design techniques for custom eLearning course development. These approaches may consist of branching scenarios, storyboards, case studies, interactive multimedia elements, simulations, and gamification for creating an engaging learning experience.

Adding relevant eLearning content:

The average attention span of human beings is less than 8 seconds hence it is essential to avoid irrelevant content in an online training programme. The information which is important and needed for a particular job designation should be presented in these programmes. Another important aspect to keep in mind should be to refrain training the employees what they already know and respect their prior knowledge. Instructional designers and subject matter experts need to work closely to ensure contextual eLearning content is presented in digital training programmes.

Encourage collaborative learning:

In today’s socially connected world, collaborative training helps employees facilitate peer-based learning. Adding social shareability options allows them to interact with each other through discussion forums, knowledge portals, and social media groups. Additionally, simulations and real-life scenarios can help employees get a better understanding of the training topic. Hence from the standpoint of problem-solving in a group setting, collaborative eLearning experience creates a stronger training environment in an organization.

These practices increase the potency of your overall corporate training programme if executed in the right way. SMEs need to play a big role in the entire custom eLearning development process. These courses should be curated keeping in mind the company’s future and should allow updation based on industry knowledge from time to time. At the end of the day, knowledge fuels the employees to go the extra mile and improve your business outcomes

The Advantages of Outsourcing Custom eLearning Development

While we discussed areas that can be outsourced but may also be handled in-house in the section above, we need to touch on a few of the more critical advantages that outsourcing custom eLearning development can offer.

Expertise and Knowledge: How much expertise and knowledge does your team have when it comes to eLearning design and development? They might be subject matter experts, but are they experts in user experience? What about curriculum development? How many times have they created course content in the past? Are they familiar with ensuring that the content developed meets industry or government rules and regulations? These are just a few of the expertise and knowledge-related reasons that organizations opt to outsource eLearning development.

Time and Money Savings: Another critical reason to consider outsourcing custom eLearning development is that you’ll save a great deal of time and money. Your teams have other responsibilities, so tapping them to create content just adds to what they have on their plate. It also slows down mission-critical processes. After all, every minute that your team spends developing eLearning content is one more minute that they’re not focusing on their core responsibilities within your organization.

Of course, you might choose to build your team of content development specialists. That comes with its own time and cost constraints. It will take you time to recruit and onboard those individuals, and yet more time for them to get up to speed on your brand and training requirements. You’ll also be on the hook for things like payroll, taxes, and even physical space for the team to work. With an outsource provider, none of those are your responsibility. With a trusted outsource provider, your team can focus on what they do best, saving you time and money without sacrificing content quality.

Custom eLearning Development: Which Way Should You Go?

The answer to the question posed above about custom eLearning development will lead you to either reach out to an outfit like eLeaP or choose to work in-house. We can tell you there are many good reasons to develop in-house if you have the resources (time, money, expertise, etc.). After all, no one knows your brand, your customers, or your product/service range like you do.

As a matter of fact, we give classes on how to use the popular Articulate Storyline program. Not familiar with it? You can see an Articulate training outline here.

Of course, there are also equally compelling reasons to let folks like us, who enjoy doing this for a living, take care of the task of developing your custom eLearning course content. This is particularly true for startups and SMBs who lack the time, money, in-house expertise, and other resources necessary for custom eLearning development.

Besides, there may be some areas of custom eLearning development worth outsourcing, while others may be best suited to in-house design and creation. Below, we’ll discuss four areas where you need to carefully consider your options.

A Quick Refresher on Gross Profit Margin

It’s difficult for a small business owner to know where they are going if they don’t have a full understanding of where they have been. That’s why accountants and financial analysts play such an important role in helping small business owners guide their business into profitability. There’s a lot of ways for business owners to measure the way their businesses are performing. Each line item on a financial statement has a very specific meaning. It tells a story about some aspect of the business and how it operates. To enhance the meaning of numbers, financial professionals have developed several meaningful calculations in the form of what they refer to as ratios. These ratios provide a fast and easy way for business owners, banks, and government regulators to see how a particular business has been performing. As you contemplate where your business stands today, we thought it would be useful to provide you with a reminder of how to calculate and use one very important ration called gross profit margin. Your company’s gross profit margin offers you and others insight into how effectively and efficiently your business is performing. In the sections below, we would like to give you a quick refresher about the concept of gross profit margin. We hope you will find this information useful as you make key business decisions in the future.

Understanding Gross Profit

Before you can learn how to calculate a gross profit percentage, you need to first understand the meaning of gross profit. As a business owner operates their business, they sell goods or provide services. In the process of doing so, they bring in revenue and incur certain expenses, often referred to as “cost of goods sold” or “cost of services rendered.” Gross profit is calculated as follows: Gross salesCost of goods sold = gross profit To simplify the following explanation, we want to focus on a business that sells sneakers. Here is an example that will hopefully paint a proper picture of how to calculate your company’s gross profit: Company A sold 100 pairs of sneakers at $20 a pair. The cost of manufacturing those 100 pairs of sneakers was $10 per pair. Let’s calculate the company’s gross profit: $2,000 (gross sales) – $1,000 (Cost of goods sold) = $1,000 (gross profit) If this were a stable business, the business owner could rightfully expect to make a gross profit of $1,000 for every 100 pairs of sneakers their company sells. That information is important because it gives the business owner a sense of direction. Before we move forward to discuss a gross profit rate or gross profit ratio, we want to explain the cost of goods sold in more depth. The cost of goods sold is comprised of two types of expenses, variable and fixed. Variable expenses are incremental amounts a company will incur with each unit they manufacture or purchase. Typical variable costs include shipping costs, manufacturing materials, and direct labor costs (factory laborers, commissions to salespeople). Fixed expenses are expenses the company expects to incur no matter how many units they manufacture or sell. The most common fixed costs will generally include office salaries with payroll taxes and benefits, facility rent, property taxes, utilities, office supplies, and insurance. All of these expenses combined make up the cost of goods sold. The only business expenses not included in this number would be things like business income taxes, amortization, and asset depreciation.

How to Calculate the Gross Profit Rate

Once you know your company’s gross profit, you can determine your company’s gross profit margin. By converting the gross profit to a gross profit percentage, you will be better able to make useful industry comparisons to see how your company is performing against the competition. The gross profit ratio is calculated as follows: Gross salesCost of goods sold (gross profit) / gross sales = gross profit margin. Using the same information from the aforementioned example, here’s Company A’s gross profit margin: $2,000 (gross sales) – $1,000 (Cost of goods sold) / $2,000 (gross sales) = .50 or 50%.

Practical Uses for the Gross Profit Percentage

The importance of your company’s gross profit margin will depend on your willingness to use it to make important business decisions. You might be asking yourself, “what is a good profit margin?” Well, that depends on the industry in which your company is competing. If you sell sneakers, your competition might be major footwear manufactures like Converse and Nike. If the normal gross profit margin within your industry is 75%, a 50% profit margin would not be healthy. Conversely, a 50% profit margin in the sunglasses industry might be quite healthy if other companies within the industry are operating with gross profit margins around 40%. As a good business operator, you should be using such ratios to help you make business decisions. Let’s take a look at some practical applications of the gross profit ratio. We’ll stick with the same example. Let’s say you manufacture and sell sneakers at a 50% gross profit margin. The industry standard is 75%, and you would like to benefit from having the same kind of gross profit margin. There are two things you can do to increase your gross profit margin. The easier option would be to increase your prices. If you are selling quality sneakers below-market prices, you should have some room to increase your prices and bring in more sales revenue without losing market share. That would effectively increase your gross profit margin. Of course, you are competing for customers. The marketplace will restrict your ability to increase your selling prices if the quality of your company’s sneakers is not comparable to the competition. In that case, you might want to consider lowing your costs related to producing and selling your sneakers. Even the slightest savings will serve to increase your gross profit margin to some extent. How would you go about lowering your company’s costs? You might start by negotiating better contracts with your vendors and suppliers. If that’s not possible, you might have to consider lowering your company’s fixed costs by as much as possible. If neither of the above options is possible, you might resort to a small price increase to be complemented with a slight lowering of expenses. The point is you will want to use your gross margin to help you decide how to move your business forward in the future. At first, it can be intimidating to look closely at your financial data in a meaningful way. If it’s not something that comes naturally to you, we can help educate you. Over time, you will find that using ratios to make important business decisions will become second nature to you. When you hit that point, you will have earned a “degree” in business management 101.

FAQ

What is the difference between gross profit margin and gross margin?

Many people are initially confused into believing that the gross margin and gross profit margin are the same, but there is an significant difference between them. Gross margin is what we calculate to know if the business is profitable. It is to know if the sale price of the product or service sold covers what it cost to manufacture the same product, i.e. the cost of production. Nevertheless, the gross profit margin is different because it is the percentage of the gross margin; we use the formula of the gross profit margin dividing the result by the sales, in order to know the exact gross profit margin percentage. These data must always be taken into account, even if we do not use them in the formula of this operation. They are mattering, such as fixed cost, the variable cost, direct cost, indirect cost, net income, total revenue, net sales, or total sale. Calculating what we want will allow us to find out if the company has the profitability, we are looking for and if it exceeds or stays away from the industry percentage, where the company is located.

Automatically calculate your gross profit percentages?

For any business manager to calculate the Gross profit or gross profit margin ratio is not a difficult task, as they are supposed to have the exact knowledge to calculate them. However, some applications and websites make this job easier in order to save more time. Websites or Excel, you only need to enter the necessary data that the formula asks for to automatically calculate the gross profit margin percentage. On the Internet, you will find a profit margin calculator, and there are many ones to choose from, but most of them work the same anyway. Finally, as a recommendation, it is important to know how to get the percentage even if you use an application that takes everything out automatically, knowing the formulas and why they are important and vital for the life of an entrepreneur. There are similar formulas but they do not end up being the same as the gross profit formula, the profit margin formula and the gross profit percentage formula.

What does it mean when operating income as a percent of net sales increases each year?

It means that your company has not only increased sales but also that there have been fewer expenses that affect your business. It is good news to know that the percentage of operating income has gone up, it means that the company is on a good track, is well-positioned and there is a good operating profit margin. However, it does not mean that calculating this percentage will answer all the questions. For instance, by means of this percentage, we are not seeing the exact profitability of the company and not knowing this would put the company at risk, since we would rely on data that helps but is not enough. If you really want to know if your company is being more profitable you have to take out more operations like the gross profit margin

How do you calculate gross margin in dollars?

It is basically the same to calculate it in dollars, you just have to subtract the income with the cost of the goods sold, but without forgetting that they are direct costs, i.e. direct labor cost and staff cost. Returning to the calculation, you have to do everything based on the dollar numbers and the result will be the gross margin in dollars. Now if you want to convert it into a percentage you simply do the same but add divide the total income and then multiply it by 100.  The gross margin whether it is in dollars or in percentage, you need to take it out and more for the financial analysts and accountants to make recommendations based on the results, also it would not hurt to take out net profit margin and margin of contribution.