Born: Wichita Falls, Texas
Education: bachelor’s degree, business administration in accounting, Texas A&M University
As a child, what did you want to be when you grew up?
I wanted to be a sports broadcaster. I was very passionate about sports and football and played it for many years. At some point, I realized I wasn’t talented enough to take it to the next level.
What’s your favorite board game and why?
I love to play chess just because it’s incredibly intellectually challenging, and I routinely get thumped by one of my 6-year-old twins. It’s an intellectual battlefield.
Burkett on people: An organization is nothing more than a group of people trying to accomplish the best they can, and the single greatest organizing principle that there is, when you have a group of people, is to allow them to build relationships and get to know each other. If you start thinking of a company as an inorganic thing, then you’re missing an opportunity. Think of it as an organic thing, and the life and blood of it are the people people like to do things with people they know. They get energy out of that and get focus out of that.
Resume fast fact: Burkett founded and then served as CEO of SourceNet Solutions Inc., one of the first pure finance- and accounting-focused business process outsourcing companies. He led it to growth of 500 employees throughout North America and Europe between 1996 and 2005.
Pam Sessions has been an entrepreneur and enjoyed working from an early age.
As a 7-year-old, she hosted mini carnivals, and by age 12, she was ordering candy as if she had a real store. She says she loved working and felt she was wired to do so because she enjoyed making people happy and providing them with something that they wanted and for which they were willing to pay.
That love for work and an entrepreneurial flare stayed with her as she and her husband, Don Donnelly, founded home-building company Hedgewood Properties in 1985. In 2006, the 70-employee company posted revenue of more than $100 million, and Sessions’ leadership as co-owner and president is being tested as the company faces the steep housing recession.
Smart Business spoke with Sessions about how to alleviate uncertainty when your company is facing tough economic times.
Communicate. What people fear the most is uncertainly. There’s such an important need to keep strong and consistent interaction and communication, so you don’t have uncertainty lead to rumors, lead to fear, lead to who knows what from there.
It’s humbling, and it’s important to be completely honest. Although we can’t give them certainty as to what the market will do, we can let them know the strategies, the effects and the impact, and not just talk at them but include them and get their feedback and opinions.
At the heart of how everyone listens is, ‘How does this affect me?’ Be sure that you’re speaking to them and you’re able to walk in their shoes and understand what their concerns are, what their uncertainties are and be confident. It’s so critical to be confident, to be courageous.
If you have self-confidence, you can instill it in others. It’s building partnerships and maximizing the energy. In times of uncertainty, leadership is even more important, so it’s not having all the answers and needing their input to make good decisions but still exhibiting confidence.
Hire great people. It’s times like these that highlight the quality and spirit of our people. You see clearly what your culture is about and the character of your company. It’s all about your people. It sounds trite, but it absolutely is the difference.
We look for more than just the job skills. It’s important to hire people with positive attitudes and creative thinkers.
We have a testing process that is behavior-driven for compatibility of that job and to help us understand how to bring out the best in that employee. We like to meet people’s family, if possible, because a job isn’t just a one-person factor it affects the whole family.
Then it’s just a matter of asking the questions that matter to you most and getting people to talk to you. ... Ask open-ended questions that enable people to open up.
When you hire people that share your philosophy, passions and principles, you are working within a trusting environment, and when you are in a respectful environment, all ships rise. Everyone learns that respect for each other is part of the culture. It definitely can provide a more trusting atmosphere.
Be in it for the long term. Make the commitment to a long vision. The decisions that are made short term are not always the most impactful.
Think about where you want to get and all the smaller impacts that are necessary to get you there. You have to hone down, refine and make as efficient as possible everything that you are today just to survive.
It’s important to not fall into the trap of being myopic. You have to stay in the broader world and be aware of what’s happening, changing trends, changing demographics, population trends everything that influences tipping points and social changes.
It’s not just about your business. Your business is interconnected with everything else that’s going on in the world, so it’s looking at that for logistical reasons but also for inspirational reasons.
Having a long-term focus helps you get through the day to day.
Solicit input. When you work in a participatory style, you’re working together, you’re communicating, and everyone has an important role in the process.
Don’t call a meeting to discuss things. You’re just out amongst your people all the time. You’re talking, and it’s casual and comfortable, so it’s not intimidating because you’re doing it all the time.
People still look to you, as the leader, to be the decision-maker, but they know their voice matters. They continue to give good advice and good consult because they know it does matter. They see that you’re taking in their input and understanding that perspective, and your decisions are influenced by that.
Do what’s right. Make those sound decisions to do what you believe to be right all the time, even in times of conflict, even times of temptation. Take that high road, do what is right and make good, sound decisions in that spirit. Just do right by people.
Leadership is over time I don’t think anyone is an instant leader. Over time, it’s those little pieces one happy customer, one great partnership, or one loyal employee, all of those things where you make decisions and little rewards add up to a successful business.
It’s that same commitment, even when there’s apparently nothing in it for you.
HOW TO REACH: Hedgewood Properties, (770) 889-3667 or www.hedgewood.com
On Feb. 13, 2008, President Bush signed into legislation the Economic Stimulus Act of 2008.
While its benefits to individuals have been widely touted in the media, there are advantages available to businesses as well, including a number of tax incentives.
Smart Business spoke with Leslie Balmforth, principal and chief operating officer of Tauber & Balser, P.C., on its impact to businesses and how they can take advantage of the tax savings opportunities it provides.
What are the major business tax incentives of the new law?
The Economic Stimulus Act increases the Code Section 179 depreciation deduction and brings back bonus depreciation for 2008. The Internal Revenue Service Code provides an immediate expense deduction for taxpayers who elect to treat the cost of qualifying property, called Section 179 property, as an expense rather than a capital expenditure for the year the property is placed in service. Before the Economic Stimulus Act, the maximum Code Section 179 deduction for 2008 was limited to $128,000 of qualifying property. With the new law, the deduction will almost double to $250,000. For tax years beginning in 2009, the maximum deduction will be reduced to $125,000, adjusted for inflation. Qualifying property must be tangible depreciable business property (new or used), depreciable under Code Section 168, and acquired by purchase for use in the active conduct of a trade or business.
What are some of the limitations of the Section 179 deduction?
There are two main limitations to the Section 179 deduction: the taxable income limitation and the investment limitation. The taxable income limitation states that the total cost of property that may be expensed for any tax year cannot exceed the total amount of taxable income derived from the active conduct of any trade or business during the tax year. The amount disallowed as a result of the taxable income limitation can be carried forward to future years subject to certain limitations.
The investment limitation affects businesses that purchase a significant amount of assets during the course of a year by limiting the amount of the allowable Section 179 deduction. A business can lose part or all of its Section 179 write-off by reducing dollar for dollar the amount of qualifying assets in excess of the investment limitation for that year. The Economic Stimulus Act increased the threshold for 2008 to $800,000. In tax years beginning in 2009, the threshold will be reduced to $500,000, adjusted for inflation.
How will these deductions and limitations work?
These examples illustrate how these deductions and limitations will work:
- A business purchases qualifying new and used assets during 2008 in the amount of $225,000. Under the new law, the entire $225,000 can be written off as a Section 179 expense on its business tax return, provided the income limitation is met. Prior to the new law, only $128,000 would have qualified as a Section 179 deduction.
- A business purchases qualifying new and used assets during 2008 in the amount of $850,000. Since the investment limitation threshold under the new law has been increased to $800,000, only $50,000 of the excess investment purchase will need to be applied dollar for dollar against the eligible Section 179 deduction. This will result in a Section 179 deduction of $200,000 versus a zero deduction under the old law.
How does the bonus depreciation work, and how does it impact the business taxpayer?
The new law also provides business taxpayers with 50 percent bonus depreciation for qualifying property. Under first year bonus depreciation, a business can deduct half of the cost of a new asset and write off the remaining cost with the Section 179 deduction (if available) and/or regular depreciation deductions during the asset’s recoverable life. In essence, businesses can take advantage and utilize both the increased Section 179 deduction amounts and the bonus depreciation to reduce a significant amount of their taxable income.
For property to qualify, it must be purchased and placed in service by Dec. 31, 2008, or by Dec. 31, 2009, for certain long-lived assets.
Check with your tax adviser to see what property qualifies for the bonus depreciation and for more information on the new Economic Stimulus Act of 2008 and how it can benefit your business or you individually.
LESLIE BALMFORTH, CPA, is a principal at Tauber & Balser, P.C. and serves as chief operating officer. She is responsible for managing the financial and operational aspects of the firm including human resources, marketing, employee benefits, technology, facilities management, cash management and internal accounting. Reach her at (404) 814-4985 or email@example.com.
When it comes to workers’ compensation costs, even the most comprehensive safety programs won’t completely eliminate workplace accidents.
“When an injury happens on the job, many employers feel like they lose control,” says Jim Bowers, claims workers’ compensation large loss team lead at Westfield Insurance. “Through a partnership with your insurance carrier, you can develop a return-to-work program that will keep you in control.”
Smart Business spoke with Bowers about the positive impact of return-to-work programs on employers and their employees.
Why should businesses have return-to-work programs?
The National Council on Compensation Insurance (NCCI) indicates that average indemnity costs rose 5.5 percent in 2006, which was the largest increase in five years. This trend is expected to persist. At the same time, NCCI reports medical costs continue to increase at near double-digit rates.
The best way to prevent these workers’ compensation increases in your business is through a return-to-work program. The goal of these programs is to have employees with on-the-job injuries or illnesses back doing meaningful, productive work as soon as is safely possible. This proactive strategy can lead to:
- Reduced indemnity benefit costs
- Decreased overall recovery period and
medical costs in the typical claim
- Contained workers’ compensation insurance premiums
- Good will through reinforcing employer
concern for employees
- Reduced or eliminated costs associated
with the recruitment and hiring process
- Increased retention of a trained, skilled
and knowledgeable work force
- Maximized operational productivity
- Boosted employee morale
- Decreased likelihood of malingering
- Less claim litigation
Study information published by Workers Compensation Research Institute (WCRI) showed a successful return-to-work program could improve the average return-to-work outcome by as much as 15 weeks. Although benefit levels vary by state, at a weekly benefit level of $700, this translates into direct savings of $10,500. WCRI data also show that workers returning to work within one month are more likely to remain employed, while those who remain off work for more than six months are far more likely to remain unemployed long term.
Finally, WCRI study information documents a significant opportunity for business owners to realize substantial financial impact by adopting these systems. The costs associated with a valued employee not returning to work can quickly affect customer relationships, productivity and operating results, as well as insurance premiums.
What’s the benefit for the injured employee?
For the hurt worker, the advantages of a return-to-work program are just as significant as they are for the employer. Returning to safe, productive work as soon as possible provides the injured employee with these favorable outcomes:
- Improved self-esteem
- Decreased financial hardship
- Reduced stress, boredom and depression
- Less physical and mental deconditioning
- Alleviated concern about continued employment and employment benefits
- Shortened overall recovery time
- Continued positive relationships with fellow employees
How should organizations develop them?
First, organizational support and commitment need to exist so the program can have the intended impact. Businesses should then look for an insurance carrier to partner with long term that has the experience and resources to help them develop, implement and maintain an effective program. A meaningful program includes a few key steps:
- Develop a formal return-to-work policy
and document it in writing.
- Consider all applicable local, state and
federal requirements, such as ADA and
FMLA, and consult with the appropriate legal
counsel to confirm complete compliance.
- Designate a coordinator to be responsible for ongoing program administration.
- Build procedures for reporting injuries,
referring for medical care and communication between the involved parties.
- Create forms and documents, such as a
Job Analysis Form, a Return-to-Work
Coordination Sheet, a Return-to-Work
Telephone Log, a Sample Transitional Duty
Physician Questionnaire and a Sample
Transitional Duty Job Offer Letter.
- Complete a job analysis or a job description for each position. Consider transitional
duty opportunities that may exist in addition
to current positions.
- In states in which the employer has medical control, meet with your designated medical provider to review your program.
- Communicate your return-to-work program with all employees during the initial rollout, as part of the new hire process and at regular intervals on an ongoing basis.
JIM BOWERS, CPCU, AIC, AIM, SCLA, AIS, is the claims workers’ compensation large loss team lead at Westfield Insurance. Reach him at firstname.lastname@example.org or (330) 887-6529. 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 www.westfieldinsurance.com.
Despite the market changes, investors still have great opportunities in real estate, including manufactured home communities one of the most affordable forms of housing.
“Land lease manufactured home community investments are typically more passive than some of the common real estate investments but provide great cash flow, and some have a significant future upside,” says Michael J. Nissley, senior vice president of the manufactured housing group at CB Richard Ellis, Atlanta. “Some investors view them as ‘land bank’ investments.”
Smart Business learned from Nissley about investing in manufactured housing (MH) communities.
What differentiates MH properties?
Other rental investments are much more active investments because owners have the responsibility for maintenance and repairs of the buildings as well as the property's landscaping. In land lease MH communities, the investor typically doesn’t have any responsibility to repair or maintain the interior or exterior of the homes. Operating expenses for apartments typically run closer to 50 percent of income, while MH communities on average run closer to 40 percent.
Where are MH and RV communities located?
The U.S. has approximately 50,000 MH communities and 15,000 RV communities ranging from a single unit to 2,000 units. The majority of the homes and communities are located in the Sunbelt states. Florida is the largest followed by Texas, North Carolina, California and Georgia. Other states with a large number of MH sites are South Carolina, Alabama, Arizona, Michigan and Tennessee.
What types of MH communities exist?
There are two main categories of MH and RV communities with three subtypes including: senior (55-plus) communities, family (all age) communities and resident-owned or condo communities. It is generally believed that the 55-plus communities have fewer turnovers, more pride of ownership and more stable paying residents many on fixed incomes. The all-age family communities are also good investments that can have high demand but are believed to have slightly higher operating expenses due to the higher turnover related to younger families with less stable incomes. Resident-owned communities are not typically available as investments, but the people living there always have the option of selling the entire community by a unanimous resident vote.
What kinds of investors could easily transition into this type of real estate ownership?
Many apartment and self-storage owners also buy land lease manufactured home community investments. They like the passive nature of the investment and the ability to combine similar management components with their other property types.
What third-party management services are available for these properties?
Currently, both the MH and RV community segments have several quality, regionalized third-party management companies throughout the U.S. with the largest ones based in California, Oregon, Texas and Florida. At this time, both the MH and RV segments do not have a single management company serving all of North America. But as the field continues to consolidate, the need for a single national source of third-party management will likely emerge and would give completely passive investors the ability to easily enter this industry segment.
What exit strategy options exist with these investments?
The majority of MH and RV community investments are bought and sold for a price based solely on cash flow. The best investment grade communities, in the high-demand Sunbelt states, such as Florida, Arizona and California, trade for cap rates of 5 to 6 percent. But investors can find higher returns in this industry. It’s common to see 7.5 to 9 percent cap rates depending on the location and condition of the community.
Alternative strategies: A popular option in Florida is to sell the community to the current residents, which is known as a ‘condo or resident-owned community.’
Lastly, owners can sell the community to a buyer for a ‘change of use.’ This means that eventually the community residents will be relocated and the land will be developed into something else. It’s highly recommended that you consult a professional and understand the risks and the varying state laws before getting involved in an alternative method of acquisition or disposition.
Are there companies that can provide information about investing in MH communities?
A good place to start is to call Michael O’Brien at the Manufactured Housing Institute (www.mfghome.org) or look up the MH industry guru George Allen, who publishes the Allen Letter and wrote the book ‘How to Buy Manage MH Communities’ (www.manufactured-housing.net). Another good place for resources and communities for sale is the Mobile Home Park Store (www.MHPS.com). Or visit CB Richard Ellis’ manufactured housing group site (www. cbre/manufacturedhousinggroup.com).
MICHAEL J. NISSLEY is the senior vice president of the manufactured housing group with CB Richard Ellis in Atlanta. Reach him at (404) 504-5970 or email@example.com.
“Despite being well-to-do and all that, the reason I admired him was he embodied the people focus of the business,” Choate says.
When Choate was 12, he began cutting Smith’s massive lawn. Some days he got more than a sweat-filled workout when Smith would come home for lunch and he and his wife would sit and talk with Choate.
“They would take time out of their day to talk to a 12-year-old kid, and then going forward with advice, with coaching and showed an interest,” Choate says. “I’ve never forgotten that.”
The care the couple showed made Choate continue working for them through his teenage years.
“I enjoyed learning from them,” Choate says. “He was a very successful businessperson who didn’t let it go to their head. So many people let it go to their head, and egos run amok. If you can be successful and yet keep grounded in what got you there and the people that got you there and faith in God, I think that’s what I admire most.”
Now as founder and president of Choate Construction Co., he tries to emulate the behavior he witnessed as a child and the care he experienced as a teen with his own people. He says that people are critical to success, so if he doesn’t get the right ones and then motivate them and respectfully help them improve, then they’ll become complacent. If that happens, then his business stops growing, so it’s crucial to maintain that people focus.
“Our No. 1 production units are human beings, our professionals,” Choate says. “You have to stay close to it.”
Hire the right people
Choate evaluates potential employees on a few characteristics. He obviously wants people with integrity, but he also wants candidates with solid people skills.
“Everyone is basically in sales because everyone is trying to get someone to do what they want them to do,” he says. “How good are they at persuasion? How good are they at getting people to want to help them?”
He also looks for people who have the ability to eventually make good decisions on their own and exude intelligence.
“Basic, innate intelligence means the capacity,” Choate says. “That doesn’t mean experience right off the bat, but intelligence is the capacity to learn and develop.”
On top of those, he wants people with experience. Despite knowing what he wants, actually evaluating these attributes can prove difficult.
“Anybody can look good in an interview,” Choate says. “They key is to just ask. We try to develop some intuitive questions that we can ask people and gauge their response.”
For example, he may ask questions surrounding personal ethics or those of the company, such as what the person would do upon receiving confidential information not intended for him or her or if he or she received a payment greater than necessary.
He also asks about hobbies, interests and passions to gauge the intensity of the response and the candidate’s verbal expression skills.
“After all, 90 percent of our success comes from the ability to communicate one’s message, need or request,” Choate says.
Despite background checks, psychological analysis and having multiple people interview, in the end, he says, it simply comes down to those little voices speaking to you in your head.
Once, when Choate was interviewing people for an assistant position, he thought one candidate was energetic, sharp and just excellent all around. Despite all this, something just seemed a little off with either the person’s character or sophistication level. Whatever that something was, he brushed it aside and told himself it was trivial.
“I brought the person on and wish I had given the little indication more credence than I did because it turned out to be true,” Choate says.
He says that many people brush off their gut instincts, but those are some of the most important feelings you should use when hiring people.
“Trust your instincts, and don’t just gloss over what seems an insignificant indication really analyze that and explore that a little further before you make that final decision,” Choate says.
If you truly can’t make a decision about how important a vibe is, have one or two other people also interview that person and get their input.
Throughout interviewing and the feelings you get about different candidates, Choate also advises to not move too quickly. By hiring the assistant he had a red flag about without fully exploring it, it cost him time in needing to hire someone else.
“Typically, a manager is looking to bring someone on because we’ve grown or are expanding, and we have a definite need, and, usually, that need is now,” Choate says. “The temptation is almost to want to subconsciously have that candidate be successful because that takes care of the immediate need. ... Don’t let that be the overriding influence. Even though it makes sense now, in the long haul, it’ll cost you.”
Motivate your team
When one of Choate’s managers came to him expressing that he was in a rut and needed to be invigorated, Choate knew he had to recommit to motivating his people to ignite the sparks in them.
“You have to keep people enthused and pumped up,” Choate says. “Otherwise you’re not going to get the maximum return.”
Enthusiasm starts with you. Choate passes along his excitement for his people by calling each of his 450 employees on their birthdays to wish them a good day.
While time-consuming, he says it’s an investment in them and sets an example for his managers.
“Show people what they have to do,” Choate says. “Enthusiasm is infectious. I’m a type A, and I like to go after things with as much gusto as I can, and I like my managers to do the same thing. You meet with people and talk to them, and they’re all different characters and personalities, so not everyone is going to be overtly excited and running through the walls. There’s quiet personalities, but even quiet personalities, in their own way, get pumped up and enthusiastic.”
One way to get people excited is to give them control of part of their destiny by providing a base salary and making part of their income tied to their performance. This incentivizes them to work harder to reach those additional financial rewards and shows them how their work affects the business.
“People realize their position, and they realize they’re of value to the company, and above all, that they’re proud of what they’re doing,” Choate says.
Beyond financial rewards, strive to create a family atmosphere. Instead of working to build one large team environment, Choate instead promotes smaller groups so that people can become closer and feel more connected to the people they’re around most.
“That develops a person-to-person relationship and just helps promote a sense of family,” Choate says.
Then these close-knit groups can plan social events or form recreational sports teams.
“That helps build teamwork and build relationships internally,” Choate says.
The more teamwork you have, the more productive your company will be.
Push for performance
Even with the best and most enthusiastic people, sometimes employees do things wrong, so it’s important to help them improve.
“If a person is a keeper, you want to help them develop and improve and excel,” Choate says. “Some of our best people, by far, are ones who may have, at one point in time in their development, struggled or hit a flat spot. By demonstrating our commitment that we want them to be successful, it’s amazing how it motivates them, inspires them, and now they’re some of our best production people. It’s really a people skill and an investment.”
Having metrics in place that are important to your business are a given. Beyond that, you have to know your employees.
“A manager simply has to invest time in that person, has to get to know that person,” Choate says. “Go to lunch with that person or visit them in the field. Spend time with that person. Talk to them. What do they like to do? ‘What did you do this weekend? What’s your pet peeve on a project or job or position? How do you see things? What do you think we can do better?’”
Knowing your employees helps you communicate with them in the most effective manner.
“Everyone has to be treated very specially,” Choate says. “Everyone has to be treated on a custom basis and addressed on a custom basis because which buttons you push or how you do it can be very productive or extremely counterproductive if it’s not done the right way. It just all depends on the individual. There’s no magic there. You just got to know the person.”
While people respond in different ways, one thing that shouldn’t be different from person to person is how you communicate your message.
Choate was once alarmed to overhear a manager speaking in a demeaning tone to a subcontractor on the phone.
“I told our manager, ‘This guy isn’t going to make it. He has to realize that whoever he’s talking to isn’t going to be motivated to make a change or please this guy,’” Choate says. “It’s important that you do it in a proper way so people understand the benefits of it, and you don’t alienate the person and their push back is not there.”
When communicating problems, speak firmly, yet calmly and clearly, and avoid raising your voice. Doing this ensures you don’t speak down to someone.
“Address deficiencies straightforward and without any reticence,” Choate says. “You can hone any knife sharper, so there’s always ways to improve yourself as well as others, so when someone is not performing, you address it clearly, you outline it, you structure it. Say, ‘Here was the expectation, the requirement. Here is where it didn’t occur, and here are the results of the nonperformance or the noncompliance.’ Then you illustrate what that does, whether it’s an economic loss or a reputation loss or whatever the impact was.”
Doing these things to help employees improve helps them buy in to your ideas and trust you as a leader.
“Treat that person with respect and that transfers,” Choate says. “In any leadership position, there has to be an inherent sense of humility. I think anybody that thinks, ‘I got here all because of what I did,’ is a person pretty much delusional or misled. Anyone has been successful because he helped put together a team, but the team as a group is what made the group successful, so humility is very important.”
Choate keeps that humility and team focus at the forefront of his thoughts. Despite starting the company himself from his basement 19 years ago, Choate is quick to note his team has gotten him to the $675 million in 2006 revenue and the projected $850 million in revenue for 2007. And as long as they collectively stay motivated and maintain a sense of urgency by not settling for the status quo, those numbers will continue
“You can spend all the money you want on computers and back-hoes and systems, but if you don’t have people out there leading the charge, you’re not going to be successful.”
HOW TO REACH: Choate Construction Co., (678) 892-1200 or www.choateco.com
Business is as competitive as it’s ever been, and trademarks can help a company get that extra edge. Trademarks promote a brand with which consumers can identify.
Companies that propose new trademarks must follow a certain process in order to eliminate or reduce the chances of litigation, says Tom Hodge, a shareholder in the Atlanta office of Baker Donelson who concentrates his practice in the areas of patent, trademark, copyright, trade secret and unfair competition law and related litigation.
Smart Business spoke with Hodge about the steps companies need to take in establishing a trademark and the potential consequences of not doing their homework.
A company comes to you with a proposed trademark. What happens next?
When a company wants to adopt and use a trademark in connection with certain goods or a service mark in connection with certain services and then register that trademark in the U.S Patent and Trademark Office, I often ask about the process the company used to select that trademark. That process may be important in regard to a willfulness claim in an action for trademark infringement.
A fundamental concept is that a trademark refers to or indicates the source of goods. While you may not know the specific source, the trademark functions to indicate the source.
A trademark is also an indicator of a level of quality for the goods produced under that trademark. For example, when you see the McDonald’s trademark, you have a good idea of the quality you are going to receive.
How can a company make sure no one else is using its proposed trademark?
We always recommend a full search before a company begins use of a trademark.
A first option is to use the U.S. Patent and Trademark Office Web site and do a limited computer search. That type of search is quick but limited and not reliable. However, that type of computer search may determine if your proposed trademark is already being used by others for their goods.
A second option is to have a full search conducted by a professional search firm it’s usually about $450 to $500 for the search itself. This is a more thorough search because it looks at many sources such as U.S. and state trademark databases, trade journals, domain names, telephone directories, etc. A professional search, however, is still not 100 percent.
The issue is whether the proposed trademark is likely to be confused with the trademark of another company for similar goods. A risk can be low, medium or high. For example, to use the Kodak trademark for any goods would be a high risk, which we would not recommend.
What is the filing procedure for registration of a trademark?
There are two types of applications for registration of a trademark in the U.S Patent and Trademark Office, both of which can be filed in paper form or online in electronic form.
The first type of application is the ‘use-based’ application, which states that the trademark is already in use in interstate commerce in connection with the goods.
The second type of application is the ‘intent-to-use’ application, which states that the applicant has a bona fide intention or good faith intention to use the trademark in the future in interstate commerce in connection with the goods.
Both types of applications are subject to examination at the U.S. Patent and Trademark Office and, if approved, are then published for opposition by other entities, which may allege that they will be ‘damaged’ by the registration. After the opposition period, or after any opposition is concluded in favor of the applicant, the registration is issued for the ‘use-based’ application. The registration for the ‘intent-to-use’ application will not issue until the trademark is used in interstate commerce in connection with the goods. There is a maximum period of three years after publication for use of the trademark in an ‘intent-to-use’ application. During that period of three years, the applicant must periodically inform the U.S. Patent and Trademark Office of the steps that are being taken to begin use of the mark. Without use in that three-year period, the application is deemed abandoned.
What are the penalties for misusing a trademark?
You can be sued for trademark infringement, unfair competition and for violation of other federal or state laws. Specifically, a lawsuit can seek damages and an injunction. The damages could be significant if any infringement is determined by a court to be willful and intentional. If granted by a court, an injunction could stop all manufacture and sales of the goods and could require a company to recall unsold goods.
In the U.S., generally, the first user of the trademark in connection with the same or similar goods has priority over the first applicant for registration of that trademark for use with the same or similar goods.
However, registration of a trademark provides certain rights that nonregistration or common law use does not. <<
TOM HODGE is a shareholder in the Atlanta office of Baker, Donelson, Bearman, Caldwell & Berkowitz. Reach him at (678) 406-8706.
Maureen Herrmann believes that knowledge is power, and she wants all her franchisees to believe that, too. Herrmann is co-founder and co-president of Ageless Remedies Franchising Co. LLC, which combines a medical skin care treatment center and a retail apothecary into each of its stores.
Herrmann and Jennifer Curtin, also co-founder and co-president, have developed a comprehensive training program that prospective franchisees must take to receive certification. Then it’s their job to pass that training down to employees.
Since founding the company in 1999, Herrmann and Curtin have grown it to 11 locations in five states with more than 100 employees, all of whom have a voice in the company.
Smart Business spoke with Herrmann about how to ensure your employees have a voice at your next management meeting.
Q. How do you train your leaders?
Jen and I started the original store; we learned a lot from having that business. We worked internally to where we felt we could create management by inspiring our workers to work as a team. One of the important things within that was to support ongoing learning and study for them in almost a mentor environment.
So if we brought someone on, we’d really want to mentor them and really create that teamwork and that learning environment. Everyone learns from everyone.
We also want our leaders to direct others in ways that make the brand more cohesive. So it’s important our leaders all incorporate a certain belief, value and knowledge of the brand.
We also support a lot of communication. Our leaders need to influence people by communicating and incorporating them into the team.
Q. How do you make the brand more cohesive?
They have to really understand the vision and what we like our leaders to share to understand our vision. Not everyone works together on a daily basis, all the employees from other locations or other regions. That’s why it’s important for us to come together through workshops or conference calls, so we can really keep to the core of the vision.
That’s what I mean by cohesion: The leaders at the top like to communicate together so the cohesion of the overall brand stays consistent.
Q. How do you make sure your message filters down through the ranks?
We have trainings and workshops at the management level on down. The leaders direct to the managers, and the managers are the ones who hand the information to the team. They work together.
It’s important that our managers work for the team and the employees not the other way around. This allows our employees to excel and feel as if they are part of the company. It is the managers in the individual stores who actually take the information, take our vision and incorporate it into each individual center.
We encourage them to motivate and empower the individual employees by mentoring them and [through] effective ongoing training to help them gain the new skills and keep the promises we put in place.
Q. How do you empower your employees?
Allowing them to have a voice within the system has empowered them. We include them in the decision-making process. That allows them to make a difference, and we really encourage feedback from them.
If they have concerns or ideas, we are very open to that. If there is a consensus from a lot of the different centers, we do make changes. If it’s an effective change, we will strongly consider it.
Q. How do you attract and retain quality employees?
We’ve put together an employee manual that creates a very positive working environment, and we expect our franchisees to follow that. The intense training and professionalism that our concept and vision incorporate really helps us to retain employees.
We definitely look at talented, empowered human capital as a prime ingredient of any organization, as far as success, and it is very costly. We understand that cost when we bring on employees and lose them.
So what we try to do from the front is create incentive, a very fair, aggressive pay scale and growth system for them to do really well in. Then we provide a good amount of training and skill to employees.
We’ve created this environment in such a positive way, that it would not behoove them to leave unless they want to relocate because the location was too far away. We have a strong retention rate for employees because we listen and we support them. We try to make it a win-win for both Ageless Remedies and our employees.
HOW TO REACH: Ageless Remedies Franchising Co. LLC, (404) 816-7550 or www.agelessremedies.com
It used to be that employees who decided to leave a company were given a farewell lunch and a hearty handshake on their way out the door. These days are now gone, as the termination decision merely ushers in a new phase in an ongoing relationship.
A good separation agreement sets out both parties’ obligations in a clear, easy to understand manner and is more likely to be upheld in courts, says David E. Gevertz, shareholder with Baker, Donelson, Bear-man, Caldwell & Berkowitz, PC in Atlanta.
Smart Business spoke with Gevertz on what comprises a good separation agreement and why separation agreements are essential in today’s business environment.
Why have separation agreements garnered so much attention of late?
As the cost and consequences of employment litigation have increased over time, employers have increasingly conditioned severance payments on the execution of agreements that release claims for harassment, discrimination, personal leave and the like. Plaintiffs’ attorneys, in turn, have increasingly raised arguments that such releases even when signed and paid for are unconscionable or otherwise defective, such that their clients can keep the monies provided and still sue their former employers. At the same time, governmental agencies, such as the Equal Employment Opportunity Commission, have aggressively argued that employers cannot use releases to prevent departing employees from bringing complaints to their attention for investigation.
In the absence of clear guidance from the Supreme Court on these issues, the lower courts are split on a number of these issues, creating a confusing and potentially costly patchwork of rulings concerning what claims employees can be asked to waive and under what circumstances.
Why are good separation agreements important for a company to have?
In addition to most employers’ obligations to continue health insurance via COBRA and/or pay unemployment insurance or accrued bonuses to departing employees, businesses must also consider the likelihood that a departing employee may go to work for a competitor or even reapply for employment some time in the future. In this environment, good separation agreements are essential to setting expectations for the relationship going forward much the way an employee handbook does at the beginning of the relationship. Separation agreements provide the ideal forum for the parties to negotiate where the employee may or may not work next, how the employer will handle reference inquiries, and whether and when an employee may reapply to return to work at the company.
What are some of the dos and don’ts that go into a good separation agreement?
First and foremost, a good separation agreement sets out both parties’ obligations in a clear, easy to understand manner. The use of descriptive headings before each paragraph and initial lines at the bottom of each page are important. Where a release of age discrimination claims is being sought, federal law requires that employees be given at least 21 and sometimes 45 days to consider the agreement as well as seven days to revoke their waiver. Further, certain claims, including those for unpaid wages and workers’ compensation claims, are only valid if they’re presented to and signed off by a court or appropriate administrative agency. Agreements that implicitly or explicitly impede an employee from filing a charge with certain state or federal agencies are not only invalid, they may actually provoke a lawsuit by the government. Also, while it’s often desirable to impose confidentiality obligations on employees who receive money or other benefits in order to prevent an air of expectation about such payments, it’s critical to avoid imposing unduly ‘punitive’ sanctions on employees who violate those obligations, lest the entire confidentiality obligation be overturned by a court.
Do courts generally side with those terminated from employment or the companies that terminate them?
While the past few years have definitely seen an uptick in decisions overturning overly broad and/or vague restrictions, courts continue to uphold separation agreements that clearly set out employees’ obligations and steer clear of the increasingly complex minefield of claims that cannot be released and post-employment activity that cannot be restrained. That said, parts of the country have long been perceived as being more ‘employer-friendly’ than others. Georgia courts, for example, are widely perceived to be straightforward in their analysis of releases while simultaneously zealous in their scrutiny of noncompete and nonsolicitation provisions to ensure that they’re fair to departing employees. Consequently, it’s always a good idea to clarify which state’s law governs the agreement as well as to include a severability clause to prevent a court from striking large parts or all of the agreement in the event one provision is found to be noncompliant.
DAVID E. GEVERTZ is a shareholder with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC in Atlanta. Reach him at (678) 406-8716 or firstname.lastname@example.org.
When Timothy Hall, founder, president and CEO of Digital Blue Inc., was getting his fledgling company off the ground in 2002, he didn’t think he could spare five minutes to breathe, let alone enough time to develop a five-year strategic plan.
But he made the time, and it was time well spent. Hall’s start-up which partners with brands including Disney and American Idol to target the tween and teen audience with products such as cameras, microscopes and binoculars has grown into a $20 million company. And although its products and marketing strategies have changed since Hall created the plan, having it helped him deal with basic growth issues, such as capital, infrastructure and resources.
Smart Business spoke with Hall about how he’s grown his company by learning to suppress that impulse to tell everyone else what to do.
Q: What are some pitfalls CEOs should avoid?
When you hire new managers, there’s a tendency to tell them what to do. Don’t take your managers and tell them what to do. Ask them to recommend what they should do. Challenge and understand their recommendation and either support it or redirect them.
That’s pretty hard for CEOs to do. A lot of us are type-A personalities, who are used to ordering people and telling them what to do. We know it, we can do it faster ourselves, but we could certainly get the job done faster if we just tell someone what to do and they go execute what we asked. If that happens, you still can’t grow a company beyond a certain limit.
But if you start challenging them and mentoring the way you’re always looking at the subordinate for a recommendation, either the subordinate gets really good at that and becomes able to mirror the type of behavior you would do yourself, or they leave and you get somebody better.
Q: How do you make sure you’re hiring the best employees?
A major pitfall is when people don’t really dig in on the recruiting and really spend a lot of time in an organized process recruiting new people. When you’re busy in start-up mode or early growth mode, you’ll hire somebody who fits the bill and put up with that.
That’s a pitfall to be avoided because the people you put on the bus are the most important thing in the company more important than the product.
We won’t hire a senior person unless we’ve interviewed them three times in different settings. We spend a lot of time with their reference checks and really dig into what they’ve done in the past that suggests they can succeed at a job here. We want to make sure they’ve done this job somewhere else and can hit the ground running.
Avoid the pitfall of recruiting too quickly and grabbing the first candidate who does well in a one-interview setting.
Q: What is the biggest business challenge you’ve faced?
The big change from being an executive at a public company to being in a start-up, then going from a start-up to a rapid-growth company was a second set of challenges.
I had to relearn how to do my job when I went from being a line executive with a couple hundred people beneath me to being a line executive with just a golden retriever at my feet. I had to relearn how to spend money wisely and watch the cash.
Entrepreneurs who start as entrepreneurs do this better than guys like me who come from public companies to do a start-up.
Then when we go from start-up to growth to a rapid-growth company, you have to relearn how to professionally run a company. When I left the public company, I said, ‘I’m so glad to go to a company where everything’s efficient, and we never have to have meetings, and everything is decided on the fly.’
That works really well up until your first $20 million in revenue, but then you have to go back to structure. You have to go back to having meetings. You’ve got to have human resources and vacation schedules and all sorts of things you associate with traditional companies.
Q: How do you deal with those changes?
My team had to talk me into having regularly scheduled meetings again. I always though that was anathema. In a public company, you’d have these ridiculous staff meetings that nothing got accomplished in. In a small company, we’d accomplish 10 times more in the hallway.
But, once you start having two-, three-dozen people, that doesn’t work anymore. Communication doesn’t flow from hallway meetings, so you have to have meetings that have agendas and carefully constructed reasons for being there and minutes to distribute.
As long as you keep those efficient, you can stay lean and mean and move quickly. You don’t have to get bogged down just because you have meetings.
The challenge to the CEO is to adapt to that world and run the company in a professional way.
HOW TO REACH: Digital Blue Inc., (888) 800-0502 or www.digiblue.com