Atlanta (1302)

Monday, 26 January 2009 19:00

The Geiger file

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Born: Syracuse, N.Y. I don’t like to tell everybody that though. It’s one of those places that it’s a good place to be from.

Education: Bachelor’s degree in accounting and pre-law from Clarkson University

As a child, what did you want to be when you grew up?

Every boy I knew on the block wanted to be the president of the United States. I asked my son this question, and his friends, last year, and I said, ‘What would be the best job in the world?’ From Bill Gates to hedge fund manager to Derek Jeter, and I said, ‘What about the president of the United States?’ and they looked at me like I had two heads.

What was your very first job?

Unloading boxcars at the farmer’s market at age 14. I had the morning and the evening newspaper before that — I was a delivery boy before that, but my first real job that I got a paycheck and had to show up at a specific time was at the farmer’s market.

What did you learn from that job that still helps you today?

I worked for a gentleman who was one of the best entrepreneurs that I ever met. His name was Mr. Mento. He owned Mento Produce, and he taught me a lot. I’m forever in his debt.

What was the best thing he taught you?

Integrity. I watched the way he dealt with the people around him. He was just very candid, very firm and very caring.

What has been the best business lesson that you’ve learned in your career?

Probably getting my butt fired. It was about 20 years ago. I think I learned a lot from it. Mostly that primal fear can be overcome by believing in yourself, and I believe I coined the phrase that it was a defining moment and not a moment that defined me.

Friday, 26 December 2008 19:00

Built on trust

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Charles Lipman admits that he has limited skill sets when it comes to technical products. And that’s not an easy admission to make, given that his company, DiversiTech Inc., manufactures air conditioning condenser pads and supplies other technical components for the heating, ventilating, air conditioning and refrigeration industry.

But Lipman has found ways to overcome this weakness and has grown DiversiTech to annual revenue of about $150 million by trusting his 350 employees and knowing when they can help him with something he’s not as knowledgeable about.

“It’s, one, confidence in your capabilities and that of your people,” the president says. “Second is being unafraid of risk, and third, it’s understanding that every decision you make can be wrong and [having] a commitment to review and adjust.”

Smart Business spoke with Lipman about how to grow your company by trusting in people and being unafraid to take risks.

Don’t fear risk. It’s confidence in your people. Of course, you have to have the people to be confident in. That’s important. You can’t have confidence and have it be misplaced.

[You know that] by the results. They have to be placed in situations where they have options, and they have to illustrate the right choices.

You can gauge that even in the simplest of actions — someone who spends enormous amounts of time in critical situations and burns the midnight oil, as they say, is a person with energy and passion, and that matters. A person that will come to you and tell you that the situation is bad. That’s the person you want on board because you don’t have to wonder about it.

If you have people who have demonstrated their abilities to get stuff done and deal with difficult areas, then you shouldn’t be afraid of going into another one.

I have confidence in people because they’re here, first. Second, the review process is proportionate to the amount of trust and the amount of risk. If the risk is great and the trust is modest, then one would have to review fairly frequently. On the other hand, if the risk is low, then the review would be a very long period in between.

It’s very important to have metrics on anything you do. Even if it’s wild speculation, it’s important to put that speculation in writing and have a measurement of where you expect to be and when you expect to be there and milestones to that objective.

Involve people in decisions. You ask them the questions leading up to the ultimate question — what are we doing well, what are we not doing so well, do we have the resources we need to achieve the objective, what will we do if the results are no better in a period of time, what are the options, what option would you choose, what’s the reason?

I prefer not asking one question, and that’s, ‘What should we do?’ Then they don’t tell me what else they’re thinking about.

Many times, one of their other options is one that they really prefer but think you will not and therefore don’t present it.

Let people make mistakes; let them lose money from time to time. You can be wrong, and they can have a success with respect to an idea that you consider worthless, and second is the fact that they know they have your confidence that could cause them to come out with other ideas, some of which might be the game-changers, and they won’t do that if you’re going to be hypercritical of their ideas and not give them the freedom to implement them.

But there are exceptions. The two exceptions are it’s ethically inappropriate, and the risk is too great. That’s not a metric decision. It’s more of taking a look at what could go wrong and how much damage that event would cause. If that event would cause a catastrophic problem for the company, it’s unlikely that we should go forward in any circumstances.

Live your values. A leader has to articulate the values, and he has to do it on a consistent basis. Those values rarely should change. They should be constants. Refer to them at a time of decision-making, and make sure you live up to them, as well. If you don’t live up to them, anything else you do won’t matter.

It’s internal — how do you make decisions, how do you do the right things, how do you want people to deal with people and deal with situations. People use words all the time, but unless you think them through, they don’t have the full meaning that they could. Words like integrity. What does that really mean? If you give it some thought, that’s helpful. It can be as simple as working out what’s the right thing to do and then go from there to decide what we should do. Always keep in mind what the high road is — always know that.

Look forward. You have to have the attitude that you’re not too interested in history — you’re more interested in going forward.

No one likes to change. The only people who like to change are people who like to change others. It’s something that we all have a problem with, and very few of us acknowledge it.

Be persistent in terms of demanding it and rewarding those who do. Rewards are almost always monetary. People are paid based upon their results and the results of the company, and we tell them that.

HOW TO REACH: DiversiTech Inc., (678) 542-3600 or

Friday, 26 December 2008 19:00

Estate tax, revisited

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When the popular thought was permanent repeal of estate tax, Robert N. Greenberger, a tax partner in the Advisory Business Services Department at Habif, Arogeti & Wynne, LLP, predicted that estate taxes would not be repealed. With President Obama taking office, Greenberger sees more adjustments ahead.

In his fourth interview on estate taxes for Smart Business, Greenberger provides more insight on the tax’s current status and how business owners can plan for the near future.

What changes can we expect in regard to estate tax rates?

The estate tax levied a 55 percent maximum tax rate on all inherited assets above a $1 million exemption. The exemption level has risen and the tax rate has been dropping since 2001, down to 45 percent with a $3.5 million exemption. Current law calls for the tax to be repealed in 2010 with a reversion back to 55 percent tax rate and $1 million exemption in 2011. The estate tax rates also apply to gifts during life; however the gift tax exemption has remained fixed at $1 million.

Obama proposes freezing the estate tax at 2009 levels — a 45 percent tax rate on estates valued at more than $3.5 million. Married couples can combine their exemptions for a total of $7 million. Obama’s plan would completely exempt 99.7 percent of estates from taxation.

If 99.7 percent of estates are exempt, shouldn’t the estate tax just be repealed?

According to the Treasury Department, a permanent repeal would cost $522 billion in lost tax revenues over the next decade. The cry from ‘death tax’ opponents that many small businesses and farms are devastated by estate taxes is a myth. The Urban Bookings Tax Policy Center reported that when the exemption was $1.5 million, only 440 small businesses and farms were hit with this tax. An analysis by the Congressional Budget Office added that at the $3.5 million exemption level, only 159 small businesses and farms would owe any estate tax.

What about taxpayers who are still subject to the 45 percent rate?

The unfortunate taxpayers that are still subject to estate tax undoubtedly are not completely satisfied with a reduction in the estate tax rate from 55 percent to 45 percent. Almost half of their estate will fall into the hands of the IRS. But there is hope for them. First of all, among the estates that do owe taxes, the ‘effective’ tax rate — which is the percentage of the estate that is paid in taxes — averaged about 20 percent in 2005 (the latest year for which IRS data is available). As for planning for estate tax reduction, now is an opportune time. The current low valuations in the stock market and depressed real estate values provide estate-planning and gifting opportunities. In addition, low interest rates provide for certain gift-leveraging techniques, which rely on the IRS’s monthly published Applicable Federal Rates (AFRs). A combination of low valuations and low AFRs creates phenomenal gift-leveraging techniques for those that believe in the long-term strength of the U.S. economy.

Are there any other advantages to implementing gifting or estate tax reduction strategies now?

Yes. President Obama’s campaign position included attacks on valuation discounts. Minority interest, fractional interest and lack of marketability discounts have allowed taxpayers to significantly reduce the value of assets subject to gift and estate tax. These discounts may be limited or disallowed by future legislation, so implementing techniques before Congress eliminates or restricts such discounts is imperative.

What are some specific planning techniques?

Annual gifts to donees are partially exempt — the annual exclusion rose from $12,000 to $13,000 in 2009. A husband and wife with three children and seven grandchildren could transfer $260,000 per year out of their estate with no gift tax consequences.

Further gifting to utilize the gift tax exemption amount of $1 million (per donor) will pass appreciation and income from the gifted assets to recipients.

Utilizing a Grantor Retained Annuity Trust (GRAT) remains a beneficial estate-planning tool. Appreciation of assets in excess of the IRS AFR hurdle rate (3.6 percent at the time of publication) would pass gifts tax-free to the grantor’s designated beneficiaries. If the assets do not appreciate above the IRS hurdle rate during the term of the GRAT, the assets would come back to the donor with no economic downside.

Use of an installment sale to a grantor trust would allow you to lock in low AFRs for several years. This would allow for a shift in value (above the AFR hurdle rates) and also protect against possible changes in law that would restrict discounts and limitations on GRATs.

There are many other viable estate-planning tools and techniques that should be discussed with your tax adviser, but the key is to plan ahead.

ROBERT N. GREENBERGER, CPA, PFS, AEP, MAcc, is a tax partner in the Advisory Business Services Department at Habif, Arogeti & Wynne, LLP. He has more than 25 years of experience with a strong concentration in taxation, estate tax planning and closely held businesses. He has achieved the Accredited Estate Planner designation and assists with the planning and implementation of family limited partnerships, trusts, Subchapter S corporations and estate/gift tax reduction. Reach him at (404) 814-4949 or

Tuesday, 25 November 2008 19:00

Westfield Insurance weathers the storm

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Tornados, floods and other catastrophic events can have a devastating impact

on your business. In addition to possible damage to your own building or inventory,

there is the potential for loss of infrastructure services like power, water, or data

and telephone lines. Road closures or even

complete lockdown of devastated areas are

also common after a severe storm.

“The ability to repair, reopen or relocate

your business can be the key to survival,”

says Corry Novosel, director of Catastrophe

Claims Operations at Westfield Insurance.

Smart Business spoke with Novosel

about how to protect and preserve your

business when faced with catastrophes.

How can business owners mitigate risks?

A well-rounded insurance plan should

consider the possible catastrophic events in

your local geography. Tornadoes, floods

and even a terrorist event in a nearby city

can impact nearly any business at any time.

Until this year, Ohio business owners

would have laughed at the idea of being

affected by a hurricane, but the remnants of

Hurricane Ike struck large areas of Ohio on

Sept. 14, 2008. Winds as fast as 75 miles per

hour caused one of the largest storms in the

state’s history with damage estimates as

high as $1 billion.

How can you uncover commonly missed

areas of vulnerability?

First, you need to consider the ancillary

impact of a catastrophic event. What

impact would a tornado or flood have on

your supply chain or delivery? Would you

lose customer traffic or be unable to access

data, records or billing?

Next, you should discuss often-excluded

causes of loss with your agent. Flood damage, for example, is often not covered

under typical commercial policies. Loss

caused by the interruption of power to your

property or by road closures by municipal

authority may also be excluded.

Finally, think about business income coverage. In many instances, the loss of business income exceeds the cost of repairs to

the building. Even if you are a tenant, catastrophic damage to your building or your

area can result in suspending operations for

weeks or months.

What are the best ways to speed the recovery


Provide good contact information when

you turn in your claim; many times, it is difficult to locate individuals in the aftermath

of a catastrophic event. Also, don’t wait for

your claims person to contact you before

working on your own plan of action. The

sooner you have a plan in mind, the sooner

you can be advised on what is covered.

What are some important dos and don’ts following a storm?

  • Do report your loss. Contact your agent

    or the 800 number for direct claims reporting to your insurance carrier. The sooner

    you notify your carrier of your loss, the

    sooner you will be contacted and the

    process of handling your loss started. 

  • Do take emergency measures to mitigate additional damage to your business. In

    the end, you may not be covered for the cost of removing flood water from your

    floor, but leaving it there for a week while

    you await your carrier to call will not help

    the situation. 

  • Do document your loss. Taking photos

    is always a good idea. Keep all receipts for

    any emergency repairs. Your policy requires damaged property be available for

    inspection. If you must throw out damaged

    goods before your claims representative

    arrives, be sure to document them before

    they are hauled away. 

  • Don’t panic. Your policy is a contract

    like any other. If you are covered for loss

    caused by wind, you will be paid for covered damages caused by wind. The best

    way for you to avoid coverage surprises is

    to meet with your agent on a regular basis

    and understand what is covered and what

    is not. 

  • Don’t assume your claims person is

    familiar with the details of your business.

    While it is likely the person handling your

    claim has an understanding of commercial

    enterprises, you can help him or her by

    explaining how this loss is impacting your

    operations. Good communication can often

    alert your claims professional to coverage

    you may not realize you purchased.


What else should businesses know?

Most insurers understand that their

response to catastrophic events is an

opportunity to make a very positive

impact. Keep in mind, however, that the

intake of thousands of losses and the

movement of hundreds of claims persons

to an area that may have limited infrastructure available is, at best, difficult to coordinate. Initial focus is usually on making contact with all claimants and assessing the

most severe losses using the triage system.

Less severe losses may be handled later

with instructions to the insured to make

any necessary temporary repairs and begin

the process of finding a repairer who is

willing to come out and write an estimate

of damages.

CORRY NOVOSEL is the director of Catastrophe Claims Operations at Westfield Insurance. Reach him at (724) 776-7200 or Westfield Insurance provides commercial and personal insurance services to customers in 17 states.

Represented by leading independent insurance agencies, the product we offer is peace of mind and our promise of protection is

supported by a commitment to service excellence. For more information, visit

Tuesday, 25 November 2008 19:00

Stretch time

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Five years ago, Ken Baggett stood before Reznick Group PC’s partners and unveiled a goal to become the 10th-largest accounting firm with 10 offices over the next 10 years — a huge stretch for a company that was, at the time, a $70 million regional player.

“I’ll never forget, one of my partners said, ‘You’ve lost your mind,’” Baggett says. “I knew buy-in was not there yet.”

Over the next year, this CEO and managing principal worked to get that buy-in. And when Baggett presented the following year, the firm had progressed so much that he recast his 10-year projections. This time, that doubting partner asked if Baggett was being a bit conservative. Today, the firm has reached that initial goal of 10 offices, and in 2007, it posted revenue of $230 million.

“It takes a little time when you have a stretch goal to get people to believe you, and you have to continue to preach it until they do,” he says.

Smart Business spoke with Baggett about how to get buy-in for massive goals.

Use your leaders. I don’t always formulate the plan myself. Sometimes it comes from others who say, ‘What do you think about this?’ and we’ll sit down and bat it around.

First, you have to get a small group. You will not get buy-in to something by doing it large scale. Get that smaller group, and let them go out. Be strategic in who you pick.

You have to pick people who will be recognized as leaders already. They’re already go-to people. You say, ‘Gosh, they’re the busiest people,’ but they will still rise to the occasion.

Share history and trends. This was a mistake that I made. I had done the analysis of the history, but I didn’t share that with the partners because you assume everyone knows your history.

When that guy stands up and says, ‘You’ve lost your mind,’ I said, ‘There’s something missing here.’ I re-presented the strategic plan and said, ‘Guys, if we grow at the same 15 percent pace that we have the last 12 years, we will exceed this goal.’ Then people went, ‘Oh, OK. You’re not out to lunch.’

Study your history. There’s a reason we all study history, and it isn’t to tell nice stories — it’s so we can either predict that future or try to not replicate the mistakes.

Now, if history isn’t in your favor, think another methodology. Maybe it’s the rest of the industry. The industry has grown, let’s assume, from an average of 10 percent over the last 10 years. We’ve grown at 6 — we can certainly be better than average.

If everyone’s averaged 10, don’t play to be average. Therefore, you look around the room and you say, ‘Everyone else has been able to do this. What has hindered us from that?’

Use the industry, No. 1, and then benchmark against other peer group people. Don’t benchmark the guy who’s doing 7 — benchmark against the guy who’s doing 15.

Recognize where people stand. In any organization, there’s going to be 20 percent that’s going to jump on the bandwagon and be a cheerleader with you. There’s going to be 60 percent going, ‘Let me wait and see what he does or what happens.’

Then there’s 20 percent that are naysayers. Neutralize the naysayers. Absolutely spend time with your cheerleaders — make sure they truly understand what it’s going to take. Let them, along with you, infiltrate that other 60 percent that’s waiting and seeing. It’s like any execution — you have to break it down into smaller parts.

Neutralize naysayers. It’s one-on-one. I had to sit down with them and say, ‘Why do you believe that?’ ‘Well, it’s talent.’ ‘Well, part of our plan is to bring in high-level talent in these areas of growth.’ You had to go down a one on one. That was one part of it.

One part was I had to go to a couple people and say, ‘I understand that you’re not buying it, and I appreciate that you’re not buying in to it and that you have a kind of negative personality. All I ask you to do is to not speak in an open meeting negatively against it. If I am proven wrong, I promise you I will give you the floor to talk about how badly I predicted what we could do.’

I have a wonderful group of partners, and those who were uncertain stayed quiet.

I knew I needed their involvement in certain things. I’d say, ‘I understand that you don’t really buy in to it, but this is an area you’re in, and I really need you to do this,’ so I gave them a major task.

If you’re the guard on the football team, and every day you have to go out for blocking assignments, you may not like it, but at the end of the day, if you block well, something good might happen.

Capitalize on cheerleaders. You have to cultivate that 20 percent and say, ‘Here’s what we’re looking for. Let’s think that through,’ and they became part of the solution. They were part of the process. Spend time with them and understand what their desires are.

If you’ve got six parts you’re trying to accomplish, it’s very seldom that one person is going to be involved in all six parts. You have to look at their strengths.

Once you get someone in the right direction, stay out of their way. Let them lead. Just because you’re CEO or managing partner or whatever the title might be, part of that is knowing when to get in there and get involved and knowing when to leave it alone and let smart people run with it. It’s trial and error.

HOW TO REACH: Reznick Group PC, (404) 847-9447 or

Tuesday, 25 November 2008 19:00


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Thanks to the revised version of the Financial Accounting Standards Board’s (FASB) FIN 46, most franchisors can avoid consolidation with franchisees and the related liability and accounting complexities. However, it’s important to be aware that there are still interpretation concerns regarding the application of FIN 46R.

Smart Business asked AnneMarie Scully, CPA, senior audit manager for Habif, Arogeti & Wynne LLP, to explain why it is crucial for franchisors to understand the fine points of FIN 46R.

What is the story behind FIN 46R?

Formerly known as FASB Interpretation No. 46 (which interprets Accounting Research Bulletin No. 51, Consolidated Financial Statements), FIN 46 was adopted in early 2003 to address special purpose entities (SPEs), which had been a pivotal factor in some corporate scandals, where these SPEs were being used to hide losses from auditors and investors. FIN 46 was FASB’s way of applying broader accounting principles to require companies to consolidate the financial results of SPEs on their balance sheets and into the operating and cash flow statements of their sponsoring business enterprises.

Under the original release of FIN 46, basic contractual relationships, including virtually all franchise arrangements, were included under the umbrella of the interpretation.

The ensuing burden and impact on franchisors was enormous and posed a threat to the franchise industry’s continued existence. FASB responded to the concerns by issuing FIN 46R in December 2004.

Does the interpretation eliminate the need to consolidate?

Under the original FIN 46, franchisors would have been required to prepare consolidated financial statements that include information about some of their franchisees. The revised interpretation, FIN 46R, exempts many entities from these requirements. But there are still ‘grey areas’ regarding how much a franchisor must know about the financial picture of its franchisees.

Many franchisors are involved to some degree with their franchisees or have set up, effectively, a ‘corporate store’ — making loans to franchisees, providing debt or lease guarantees, or subleasing to franchisees. It’s important for franchisors to be alert to the decision points along the way that might unintentionally lead to consolidation.

What are the key aspects of a FIN 46R evaluation?

In order to be excluded from consolidation issues, a franchisor must be examined on three main points:

1) Business scope exclusion — Is there a business? FIN 46R defines a business as a self-sustaining, integrated set of activities and assets conducted and managed for the purpose of providing a return to investors. A business consists of inputs, processes applied to those inputs and outputs. If a franchisee is not a business under the FIN 46R definition, further analysis is warranted. If a franchisee is in fact a business, an assessment of the franchisor-franchisee relationship needs to be considered to be certain the entity can be excluded from FIN 46R. This examination requires a deeper digging into the franshisee’s business structure.

2) Variable interest entity evaluation (VIE) — Does the franchisee have sufficient total equity at risk to carry out its business without additional subordinated financial support? If the equity at risk is less than 10 percent of the franchisee’s assets, the total equity at risk is deemed insufficient. However, if the total equity at risk is over 10 percent, the franchisor needs to look at other qualitative factors.

3) Who is the primary beneficiary? This is the party that absorbs a majority of a VIE’s anticipated losses, recognizes a majority of the entity’s residual returns or does both.

While these evaluation points may eliminate consolidation worries for many franchisors, there are still further interpretation concerns pertaining to FIN 46R.

How can we resolve these ‘gray areas’ of interpretation?

It’s important for franchisors to plan in advance and include the possibility of consolidation in their franchise agreements. If the franchisor is going to guarantee the debt or the lease or provide other financial support it might be worthwhile to add to the franchise the requirement to provide audited financial statements. This is certainly not an area to tread into alone — count on using your accountant to help you navigate these waters to ensure that you don’t inadvertently take on the additional liability of a franchisee entity.

ANNEMARIE SCULLY, CPA, is a senior audit manager with Habif, Arogeti & Wynne LLP. She has audit experience in various industries such as manufacturing, service and real estate. AnneMarie has worked with several publicly held companies and assisted them by ensuring that their financial and filing responsibilities with the U.S. Securities and Exchange Commission were in full compliance with all rules and regulations. She can be reached at (404) 814-4955 or

Sunday, 26 October 2008 20:00

Lost and found

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If your IT guru has told you that something called search engine optimization is the way to go, but you’re still foggy about what it is or why you should care, consider this: When done right, SEO could double your return on investment and help you acquire scores of new customers.

Search engine optimization in its most basic form is simply about making your Web site appear higher up in search results from sites like Google and Yahoo.

Search engines are the starting point of almost all online activity, second only to e-mail, yet 83 percent of readers surveyed by Smart Business say they plan to invest less into their 2009 marketing budget. Search engine optimization has a rightful place in every company’s budget, yet few companies ‘get it,’ and they don’t allocate serious funds into the development of a program.

It all starts when a potential customer enters a search term into Google. Two types of search results are displayed: natural and pay-per-click.

Natural search, which are the results shown on the left side of any search page, are based on merit and validity to the keywords used. The results in the narrow column on the right are pay-per-click results.

When you optimize your site for natural search, it can take three months to see progress in your rankings. The better the optimization, the higher up your site will appear in relevant searches, increasing your chances for a sale.

Pay-per-click gets immediate results by displaying your ad when someone searches for a particular keyword that you choose, but you are charged every time someone clicks on your site. This is an advertisement and a temporary fix.

Why optimization is important

The name Google is so widely used that it’s the newest verb in the English language. Everyone knows of the search engine because it has a commanding market share (various online sources cite 60 to 70 percent on average), so the connection is easy to make: If your Web site ranks high on Google, that’s the best way to reach an audience that’s looking for your goods or services. SEO gets your name in front of consumers at a time they are looking to buy what you sell.

SEO creates compelling information on your site, makes it easy to find and spreads your name around the Internet as much as possible. In the process, your site will be placed ahead of your competition when keywords are searched related to your business.

“SEO is the new Yellow Pages, but it’s not all alphabetical,” says James Yancey, managing director, 360i. “Consumers look at the first sites they see as the best. Making sure your site ranks high is the best way to influence people in digital space.”

Competition plays a role in the difficulty in ranking high, but a series of criteria installed by Google and implemented by SEO firms help make the ranking determination.

“Companies shy away from SEO because they don’t understand it, or they’ve had a bad experience in the past,” says William Flaiz, vice president of SEO and Web analytics, Avenue A/Razorfish “This is unfortunate because their site is suffering in the end. A professional SEO firm will be able to tell their clients what keywords generated traffic to their site, how long people stayed on the site and what pages they clicked on.”

The longer you wait to take action, the more difficult it will be to get your site ranked higher.

“Waiting to perform SEO will increase the amount you’ll need to invest in optimization to achieve the same goals as investing today,” Yancey says. “Competition for keywords and overall growth of the Internet will make it more expensive to wait and [take] longer to see results.”

What to look out for

Although understanding the intricate details of what makes search engine optimization work would require two Advil and a clear schedule, knowing the basics and what questions to ask will minimize the use of your mental reserves. There’s no accreditation program for SEO firms, but getting a brief education of the process will allow you to know your opportunities instead of becoming one.

First, there are different forms of SEO, none of which comes with a guarantee. There are two main types of search: local and global — and you’ll also hear the term “universal search,” which encompasses both, plus video. A business like a restaurant would probably be interested in a local search only, so would focus on keywords and phrases that include the city name.

One of the easiest ways to measure what keywords might help you rank high is Google Analytics ( It’s a free service provided by Google that allows you to test the current value of your Web site and gives you detailed reports on what keywords are being used to find your site.

But keywords are not the only measure of success.

“A big barrier to success is implementation,” Flaiz says. “It’s good to know if a company will be working for you at a greater capacity than just finding keywords.”

Web site design also plays an intricate role in the process. Your site may have an impressive appearance, but spiders — software robots that “crawl” the Web indexing data — must be able to understand information on the page, or it will not be efficiently indexed, dropping your Web site’s ranking.

Mobile search is the newest type of optimization and sometimes it’s referred to as “third screen.” In the U.S., mobile marketing is largely used for local search, but foreign markets rely on mobile Web access heavily for all facets of search.

Getting the most return from your site requires a balance of compelling information, easy access and optimization that gets it to the top of the search engine rankings. Most professional firms will be able to handle all of these needs, but again, ask questions before signing anything.

Ask the SEO firm if it performs link building, which places a link to your site from other reputable sites. Also ask what techniques it uses to create incoming links to ensure they follow search engine guidelines.

Also, ask the company how it tests, measures and reports results. Think about what you want to know, such as how many people visited a page and if they made a purchase, and make sure the firm can provide that data. The SEO firm must provide updates that mean something to you. Also ask to see samples of its work and see where those clients rank.

Once you find a company you are comfortable with, think long term.

“If you are thinking of hiring an outside company, you should definitely engage in it for a year,” says David Roth, director of search marketing, Yahoo. “SEO is a long, iterative process with delayed results; you’ll want to keep the agency around so they can maximize the benefit to your company and hold them accountable for their actions.”

Like anything else, SEO gets you what you pay for and that means hours of work and a decent chunk of your marketing budget. Since a feasible figure depends on your budget, factor at least a quarter of your marketing budget for SEO.

“The good news is, once SEO is put into place, the cost of attracting a new user is practically zero,” Roth says.

Sunday, 26 October 2008 20:00

Real estate now

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Although the news changes on a moment-by-moment basis about the credit and liquidity crisis, there are some enduring principles that can help you to make wise choices in this turbulent business climate.

“If you own, lease or invest in commercial real estate for your business, you need to be aware that commercial real estate values are entering a period of high volatility due largely to this national credit and liquidity crisis,” says Bill Tyler, senior vice president of debt and equity finance at CB Richard Ellis.

Smart Business spoke with Tyler about the current real estate investment market and how to capitalize on these opportunities.

What are some of the causes of the current real estate landscape?

Banks created credit velocity by periodically selling their loans through securitization. This enabled them to make more loans with less equity on their balance sheet. The process of slicing commercial real estate loans and selling them in the open market ceased more than a year ago. This was due to buyers’ inability to get comfortable with the risk and associated pricing of these loans, led primarily by residential defaults. This has decreased the amount of available capital to the commercial real estate market by 35 to 40 percent annually.

Without securitization, banks have become overweighted in loans and underweighted in equity. To solve the problem, they need to sell loans (often at a discount), make fewer loans and raise equity. This is called de-leveraging. Wall Street firms have suffered from the same securitization problems as the banks. But due to higher leverage on their balance sheets, they have required higher amounts of equity to stabilize their financials, and several haven’t been successful there. Life insurance companies are now the primary providers of capital for commercial real estate loans.

Why is it essential to re-evaluate current investment strategies?

In this capital constrained environment, equity is the key. Today, you need 30 to 40 percent equity to purchase or finance commercial property as opposed to 10 to 25 percent just a year ago. As a result of this lower amount of leverage availability and potentially higher interest rates, property prices are declining for the first time in several years.

What are some of the opportunities in today’s market?

If you are a renter, now could be the time to buy as prices fall. As an owner with leverage, you need to know that commercial mortgage capital is severely constrained, and it takes more time to locate and negotiate leverage. In many cases, credit enhancement in the form of a guarantee may be required to access affordable capital.

For a person with access to enough capital, this could be a great time to buy reasonably sound properties at a discount. Some owners who are over-leveraged or just need cash flow may be willing to sell at a previously unacceptable price point. In the commercial market, I think office buildings and warehouses are some of the strongest properties. Due to the availability of capital from government agencies, multifamily properties are also a solid option. But with reduced consumer spending, retail property is one of the weakest real estate investments.

What other factors should contribute to investment decisions?

In addition to a reduced supply of debt capital and potentially higher interest rates, underwriting standards have also increased. To ensure the best debt execution for purchase or refinance, the factors that matter the most to lenders are the quantity, quality and duration of the income stream. Put another way, the best properties are those with the highest occupancy, the strongest and most diverse tenancy and the longest lease terms.

How can companies develop an effective plan?

Current and correct information is paramount in this volatile environment. Seek out professionals of all types in the commercial real estate arena including leasing brokers, sale brokers, appraisers and mortgage bankers. These professionals can assist with realistic market evaluations because they see many transactions. Not only can they show you the historical data but they can also tell you what the market will say to you if you’re looking to buy or sell.

Also, an effective plan would include finding access to the right level of capital, such as senior, mezzanine, bridge capital or preferred equity. Real estate professionals can help with locating this capital and also may know of investors interested in joint ventures.

What tactics should be avoided?

Do not be pressured or rushed in this market. This process of de-leveraging of balance sheets will likely take 12 to 24 months. Although the headlines will often contain stories of failure and bankruptcy, these are necessary steps and will provide positive opportunities during the process and into the future.

Now is the time to begin your property and market analysis. If you look at alternatives now, you’ll be prepared to quickly and confidently make a decision when the time is right, and properties adjust to the lower leverage environment.

BILL TYLER is senior vice president of debt and equity finance at CB Richard Ellis, Atlanta. Reach him at (404) 923-1575 or

Sunday, 26 October 2008 20:00

Accounting for change

Written by
When Brad Branch took over as managing partner of the Atlanta/Birmingham practice of Deloitte LLP in January, he didn’t have to spend months trying to understand what to do next. After 30 years and several leadership roles across two continents with the firm, he already had a feel for how to take his practice— one of the firm’s 10 largest in the country — to the next level.

“The change was really two things,” Branch says. “One was to deliver one Deloitte — how we go to market. The other was to really take advantage of our size. There are a lot of things you can do in the marketplace as the Goliath. ... The change was to get us focused but also to get us acting like we had capabilities that our competitors did not.”

With any major change — even if you’re not part of a $9.85 billion professional services firm like Branch’s — you’ll need to follow certain principles to ensure success. He says leaders have to do three crucial things: Define the reality, paint the vision and provide hope. After doing these things, he already has seen changes in his firm.

“The talk and the thinking that we’re seeing now throughout the firm around delivering one Deloitte to the marketplace is really inspirational,” he says.

Branch is proud at how quickly he’s seen his 1,500 people adopt that mentality and communicate more across functions to better serve clients.

“You can hear it in the break rooms,” he says. “You can hear it as they talk to our partners. You can hear them thinking about it when they’re organizing their plans around serving our customer. ... We’re starting to see the fruits of our labors and the actions in how we’re actually going to market and how we’re serving our clients reflects a one Deloitte way of doing business.”

To successfully lead your own change, here’s how to do those three crucial things.

Define reality

In any change process, you first have to explain the status quo to the people in your organization.

“The leader has to first define reality,” Branch says. “Defining reality is important to understand what the current situation is and defining a reason for change.”

He says this must be done on two separate levels. “It occurs at the institutional level where you look at the marketplace and the overall factors causing change, but you also have to define a reality for all individuals involved because change is personal,” he says.

In order to clearly see what reality your company is facing, you have to be honest.

“Unbiased objectivity is really important to defining reality,” he says. “Not a slanted view, not a view that is for any other purpose than to paint the facts so that everyone can start on a level playing field.”

Objectivity is best found in facts. “Oftentimes, facts are hard to come by,” Branch says. “Sometimes data is hard to come by ... but having facts and having a fact-based analysis is really important to define reality. That takes some research.”

In defining Deloitte’s reality, he looked at what the company was capable of delivering against the market and competitors and what he considered to be important to achieving success. One change associated with that was to build Deloitte’s international work. He saw that a lot of the work in Atlanta was either coming in from or affecting other countries, and if it was that heavily focused now, he could only imagine what it would look like in five years.

“One of the things about change is, the changes that are most successful are those that are marketplace-driven,” Branch says.” Having a burning platform is really important in order to make sure the change happens and that you get all of the enrollment and buy-in of an employee base.”

While you may have facts and be able to clearly present those facts to people, you also have to make that reality personal.

“One of the things that I’ve learned is that all politics is local,” Branch says. “Well, for an individual, all change is personal. The reality of change and the effects of the current situation on an individual is important also to consider.”

To best do that, he suggests having someone who can easily relate to your employees communicate that reality.

“Defining the reality for the individual has to be done at a level relevant for that person ... in a place that is closest to him or her,” he says. “That is the supervisor or team of individuals comprised at that level to gather the facts around what’s going on, what needs to change and what impact the change will have on the individuals.”

Create the vision

After you’ve defined the reality of the situation for your people, you next have to show them where you’re going.

“The second thing a leader is responsible for doing is delivering a vision around what the future state will be and the benefits and what life will be like or what the situation will be after the change occurs,” Branch says.

Creating the vision, like defining the reality, is grounded in what the market is doing.

“It’s fact-based, and it’s based on the business imperative,” he says.

“There is a data element to it. There’s a factual element and a research element of understanding the facts of things that a reoccurring around you. It’s sensing where the market is going, and it’s putting all the data together to create some assumptions —some hypotheses — of what’s going to be important in three, four, five years.”

Once you have an idea of the future, you have to make it actionable.

“Put that together in terms of ‘What do we have to do at 9 o’clock on Monday morning to build those capabilities and change the organization to be effective in that marketplace,’” Branch says. “That’s the important piece.”

He suggests creating a road map for the change you’re implementing.

“Along that road map, there are different streams of work that relate to different pieces of the organization or processes or technology that have to change,” he says. “You have the requisite milestones of things that are expected to be done at a certain period in time.”

Having a road map with milestones allows everyone to have a common tool to track the progress, and then you have to create subcategories for the road maps.

For example, Branch says if there is a plan related to technology, that will probably have several subcomponents because there may be many systems or applications associated with technology.

“Break down the overall road map of going from current state to future state into actionable work streams with benchmarks or milestones to know that you’re getting there actually,” Branch says. “That’s how change processes are deployed effectively in an organization.”

When setting those benchmarks, you have to take into account your organization’s capabilities to change.

“The philosophy on how you set those as to how aggressive you want to be, how much you claim that you want to have accomplished in a set period of time, all of that is related to the entity’s capability to change — that is how quickly the ability for a company to change but also how aggressive or substantial the change imperative actually is,” Branch says.

While a written vision with benchmarks is important, the vision lies in more than apiece of paper.

“When I say vision, it’s not just describing it in a document,” Branch says. “It’s for the leader to be personally identified with the future state. That is delivering the vision. Most effective leaders are those that can be readily identified with a future state, and we see it all the time in business where senior executives are identified with changes that are effected in their organizations.”

Provide hope

After you’ve defined reality and created the vision, you still have to help your people believe they can get there.

“Third, and probably the most important one, an important thing a leader can do is provide hope and the inspirations for all of the people involved in the change to believe that success will happen and it will be a good thing,” Branch says. “Providing hope is a very important thing for a leader to do, and I assure you you’re not going to find that in any of the textbooks around change management.”

There are two elements crucial to providing hope in your organization.

“The first is showing up,” he says. “A big part of providing hope is to show up personally in a change process.”

He says that being visible and accessible is the single most important thing in the change process from the leadership perspective because it provides inspiration.

“People associate change initiatives —again all change is personal — with the leaders personally,” Branch says. “If Brad doesn’t show up, then it’s considered to be either not important or not supported — a whole variety of negative reactions can occur if the leader doesn’t show up. Being visible is the single most important thing.”

But even if you show up, you have to be there mentally — not just physically.

“Stay connected,” he says. “Talk to people, talk to partners, talk to staff. Listen to everyone, but just be available. You’ll be surprised what you’ll pick up. It’s just amazing the great things you learn from your people.”

Branch will often ask about how the change is going, what they see, what changes have they noticed, and is it easier for them to be effective or do their work. He says to then listen specifically for feedback and opinions about what’s going on.

“The most important part of good listening is not talking,” Branch says. “I don’t mean that flippantly, but listen to what people say in a nonjudgmental fashion so they feel empowered and open to talk.”

This helps them not be nervous about talking to you as a senior person in the organization. Then you have to take that feedback to heart.

“If you’re soliciting opinions, it’s important to really listen to those opinions and use those opinions around what the final judgment is going to be,” he says. “It has to be genuine.”

While you may not be able to incorporate all their feedback, if they’ve been heard, it goes a long way in providing hope and creating buy-in.

“If the opinions are valued, part of the outcome, even though they may not agree with the outcome, as long as they’ve been heard and considered, that tends to work pretty well,” he says.

The other element of providing hope is providing support even when things get rough.

“Not all change happens perfectly,” Branch says. “Change is hard for a reason — it is difficult. Providing hope is providing support in the face of adversity so when things don’t go well or there are setbacks, to continue to have confidence in the team, in the people, in the change process.”

To do that, you have redefine your reality. “You’ll define reality throughout the process,” he says. “Keeping a view of delivering the vision — you do that constantly.”

This will build trust and help people get through the process successfully.

“Change isn’t a destination,” Branch says. “It’s a process. Halfway through the change process, if the destination changes, that’s OK, and you would expect that as you learn more and as you become more competent on the marketplace.”

HOW TO REACH: Deloitte LLP, (404) 220-1500

Thursday, 25 September 2008 20:00

Westfield Insurance on property coverage

Written by

Many companies require the services

or goods of another company to

make their product or to run their business. As a business owner, your company may never experience a tragic loss or

damage, but what would happen to your

business if one of your suppliers experienced

such a loss? Do you have the proper insurance to cover your loss if your sole supplier

can no longer provide goods or service?

Business income provides for the business

what it cannot provide for itself. Dependent

property takes this coverage to the next level

to protect the business even if the loss happens to a third party on which it relies, says

William V. Reedy CIC, AU, The Learning

Group, Westfield Insurance. Business owners who understand the protection offered

with dependent property coverage and recognize their need are considered savvy insurance consumers and risk managers, he adds.

Smart Business spoke with Reedy about

the need for dependent property coverage,

how it can help protect your business and

how to evaluate your company’s risk to determine if such coverage is needed.

What is dependent property coverage?

Most businesses depend on other businesses to supply them with the raw materials or

finished products they will sell. Conversely,

supplier businesses rely on having other businesses that will buy their product. In both

cases, the business is dependent on another

entity to conduct its business. When a business cannot get the materials or product to

sell, it will experience indirect financial loss.

The fact that it is indirect does not lessen

the loss. Conventional business income

insurance reimburses a business for income

and expense after its own loss. Dependent

property coverage is used to protect a business when the loss takes place at a business

on which it relies.

Why is this type of coverage so important?

Dependent property coverage is extremely

important because the actual physical loss

(fire, wind, etc.) may happen to the business

you depend on and not your business. The

fact that this coverage responds on your

behalf relieves you of the financial loss you

would have had. These losses can be debilitating to a company.

Most business owners and insurance

agents readily identify buildings and business

personal property when they consider property exposures. Business income is sometimes overlooked in this process. Business

income coverage without the dependent

property endorsement will not respond to

the dependent property exposure. It requires

both business income along with the dependent property endorsement to make sure all

dependent exposures are addressed.

Who requires such coverage?

Any business that relies on another business is a candidate for dependent property

coverage. This coverage is especially important and most often provided when there is a

single or short list of key contributing or

recipient dependent property businesses.

For example, perhaps the insured business

makes wooden rocking chairs that are

known for their craftsmanship and quality. It

may only use one particular supplier of hickory that provides the best wood. Since the

chair company bases its reputation on quality, it is dependent on this particular wood

supplier. If the chair company added the

hickory supplier as a dependent property and

a fire occurs at the hickory supplier’s location

(rendering it unable to supply the insured

company with top-quality wood), it is considered a covered peril, since fire is a covered

peril under the policy.

The business income policy endorsed with

dependent property would pay the insured

company the amount it would have earned

until the wood supplier is back in business.

With dependent property coverage, the company is indemnified for the business it normally would have done, and it does not have

to resort to using inferior wood and potentially damaging its reputation for quality.

Are there different types of dependent properties?

There are four main categories of businesses that may require this coverage.

  • Recipients: businesses that rely on others

    for product 

  • Contributors: businesses that rely on others to whom they sell their product 
  • Manufacturing locations: businesses that

    sell a product on behalf of a manufacturer 

  • Leader locations: businesses that rely on

    other businesses to draw traffic to their location. An example would be a card shop located near a large retail chain store. The card

    store benefits from the traffic and would

    experience a downturn in revenue if the

    chain store were to close.


How can one determine risk of exposure?

If a business has a number of potential suppliers or available markets in which to sell its

product, then the need for dependent property coverage is not as great as if it depends

on a more limited and thus more important

few. The questions any business owner

should ask are: On what other businesses do

I depend? What would happen if they were

forced to shut down for a month, six months

or a year? Would I lose income as a result? If

the answer to these questions results in identifiable companies that would cause financial

loss if they were out of business, then one

may conclude that dependent property coverage is necessary.

WILLIAM V. REEDY, CIC, AU, is with The Learning Group, Westfield Insurance. Reach him at or (330) 887-0859.