Deriving profit through properly executed accounting

Michelle Mahle, director, tax

Michelle Mahle, director, tax

What business owner doesn’t want to be profitable? Properly executed accounting not only allows you to maintain your current business, but it also can increase profitability and identify growth areas. Michelle Mahle, director of tax at SS&G, shares some advice on how accounting can make a difference.

Q. What accounting missteps might lead to decreased profitability?

A. Financial statements are a powerful resource for business owners. Knowing what information to capture, and to what level of detail, is key to making solid business decisions. Ensure that your chart of accounts suits your business and accounting needs.

Q. How can accounting help identify areas for growth?

A. Accounting, done properly, will allow you to project future results as well as report historical activity. Business forecasts can help identify opportunities for business owners to refocus, reallocate, dedicate or even restrict resources to achieve different results.

Q. What do businesses commonly overlook that can pose problems?

A. Scrutinizing expenses will improve your bottom line. However, focusing too much on your bottom line can be counterproductive. If you aren’t finding a way to maintain or increase revenues, it doesn’t matter how much you spend because, eventually, anything will be too much.

Michelle Mahle is a director of tax at SS&G. Reach her at (800) 869-1834 or [email protected]

Online banking improves business efficiencies and profits

Instead of calling to check an account balance or to find out if a check has cleared, time-starved executives are finding it easier to focus on sales and profits — through technology.

Jan Hoyt

Jan Hoyt

Online banking customers are the most engaged because they’re using all available channels and tools to drive efficiencies and profits, says Jan Hoyt, senior vice president of business banking product management for PNC Financial Services Group Inc.

“They’re managing cash flow by depositing checks from their smartphones and using electronic invoicing and bill pay to control the inflow and outflow of funds with a few clicks of a mouse from anywhere on the planet,” Hoyt says. “In turn, we’re able to discuss forecasting tools, global expansion or e-commerce solutions instead of routine banking transactions.”

For example, online statements allow business owners to review and print account statements on demand while the bank handles storage and security.

“Business owners can balance their accounts more quickly and can control who has access to their statements just by requesting online statements,” Hoyt says. “And since we archive statements for seven years, it reduces the need for secure document storage and disposal.”

Instead of purchasing hardware and software, smaller businesses can save money by using PNC’s treasury management, account alert and online payroll services. Many transactions can be processed by the bank’s computers, a process that not only saves time but also reduces the need for IT staff and infrastructure.

In addition, having a relationship with a major bank and using its invoicing and online payment system may boost a company’s credibility and stature with clients and prospects.

“Just as having a strong Web and social media presence levels the playing field for small and midsize businesses, banking in the cloud gives growing companies access to the same services as large companies without increasing overhead,” Hoyt says.

How to reach: PNC Financial Services Group Inc., or (888) 762-2265


Also see: Unearthing moneymaking gems is often just a case of exploring your company’s financial   statements

Unearthing moneymaking gems is often just a case of exploring your company’s financial statements

nat_sr_accounting_0513Business leaders today don’t need to be big data gurus to discover new ways to boost revenue and earnings as long as they understand the basic fundamentals of data analysis and have a few minutes to spare. Analyzing your financial statements can reveal a bounty of insightful trends and potential moneymaking opportunities that warrant and inspire a journey into the details.

Executives tend to discount the strategic value of traditional accounting reports like financial statements because they recap prior activity. But when complemented by operational measures, balanced scorecards and strategic performance measurement systems, valuable results may be found.

A dive into financial statements can create a competitive advantage by helping executives proactively identify trends and even predict future demand for products and services, says Kristy Towry, associate professor of accounting for the Goizueta Business School at Emory University.

“Consultants have traditionally used accounting data to make agile, first-mover decisions that are crucial to advancing and sustaining growth,” says Jeff Thomson, CMA, president and CEO of the Institute of Management Accountants. “Executives can follow suit as long as they know where to look and understand how to analyze data.”

Explore your income statement

Even if revenue is growing, a dive into your income statements and its supporting data can help you capitalize on emerging opportunities or head off a looming sales decline.

Which products and services are selling and which ones aren’t? Are customers responding to social media outreach or specific promotions? Are they opting for lower-price items with fewer frills or are they willing to splurge on luxury models? And what do these trends mean for the future?

A review of sales records may reveal an opportunity to sell more products and services to existing customers or shift your product mix without increasing overhead. A review of operational data may highlight areas of excess capacity that can be used to generate additional sales and profits.

Kristy Towry

Kristy Towry

“Segmenting your customer base by key demographics and tracking their activity and behaviors can illuminate opportunities to grab additional market share through upselling or by offering current customers discounts for purchasing greater quantities,” Thomson says.

Simply repositioning a product or putting it on the front page of your website can boost sales and profits without raising costs, says Alan Reinstein, professor of accounting at Wayne State University. In fact, storing raw materials and products for an extended period of time can tie up cash and erode profit margins.

“Grocery stores put milk near the back of the store because it forces customers to stroll past higher margin products,” he says. “It doesn’t cost them a dime to evaluate sales data or use the results to craft or validate the efficacy of a product-positioning strategy.”

Since a rise in customer satisfaction increases retention and generally precedes a growth in sales, using a balanced scorecard or dashboard to track revenue, sales activity and customer sentiment can help business leaders interpret the needs of the marketplace and make advantageous moves.

Robert Kaplan and David Norton of the Harvard Business School originated the balanced scorecard to give managers and executives a more poised view of organizational performance by adding strategic, nonfinancial performance measures to traditional financial metrics. A holistic view of the organization allows executives to synthesize multiple data streams and accurately predict future performance, Towry says.

“I’m an advocate of the balanced scorecard because it helps business leaders change course or adjust their strategy on the fly by aggregating financial data and other key metrics and compares them to the goals in their business plan,” she says.

Unearthing moneymaking gems is often just a case of exploring your company’s financial statements

Activity-based analysis and costing is a way for managers to assess the performance of assets on their balance sheet and which products and customers are generating the most revenue and profits. The process also helps managers determine where improvements in quality, efficiency and productivity will yield the best return.

Jeff Thomson

Jeff Thomson

“Comparing costs with activities is common among certified management accountants because it helps management identify key cost drivers and potential savings by allocating direct and indirect costs to every stage in the order, manufacturing and distribution process,” Thomson says.

The analytical methodology often highlights opportunities to increase profit margins by outsourcing distribution or ancillary services to less costly external providers or automating manual manufacturing processes, or it may disclose an opportunity to increase cash flow by offering quick-pay discounts or incentives to major customers.

If reducing costs isn’t an option, business owners may be able to raise prices and margins for a particular product by using a formula to calculate elasticity of demand, which measures how the demand for goods and services varies with changes in price.

Generally speaking, the greater the number of substitute products available, the greater the elasticity will be. Naturally, very high price elasticity means that customers are sensitive to price changes, while very low price elasticity means you can raise the price of a top-selling product without effecting demand.

From a trend perspective, a sudden rise in price elasticity may portend an upcoming decline in sales unless executives initiate discounts or take steps to develop and launch new products.

Business owners often decide to eliminate unprofitable divisions or product lines after conducting an activity-based analysis, but they should proceed with caution, Towry says.

“Executives assume that eliminating unprofitable segments will increase profits, but the fixed expenses don’t go away,” she says. “They may end up launching a fatal cash crunch or death spiral once the revenue from that discontinued segment is no longer offsetting those fixed expenses.”

By using the financial data from your accounting system and applying alternative costing models, you’ll be able to determine how much overhead is being covered by the sales of each product and whether it makes sense to discontinue a particular segment or service.

Dare to compare

Comparing key ratios and data from your accounting system to similar companies in your industry can highlight opportunities to lower costs, increase efficiencies and improve your company’s bottom line.

Industry associations often provide benchmark data, and sites like Valuation aggregate and provide information, research and analysis for more than 400 industries.

Start by breaking down your company’s accounting and operational data into standard industry measures, such as sales per square foot, same store sales growth or something as simple as the number of gallons of water used per car wash. Then compare your results to the standard for your industry to see where you have a competitive advantage or need to improve.

Major deviations from industry norms should invoke questions and a search for solutions, Reinstein says.

For example, a competitor may have lower selling, general and administrative expenses because they use e-commerce or distributors to push products instead of salespeople. Or they may be experts at using their point-of-sale system to increase loyalty and market share by offering customers incentives or rewards for making additional purchases.

“It’s critical to dive into the details and not ignore the trends, because a svelte, nimble company with ample cash reserves can force a sluggish competitor out of business in a heartbeat in a tepid economic environment,” Reinstein says.

Cash is king

While profits are important, cash is the key to survival for any growing company.

A cash-flow analysis tracks the movement of money in and out of your business by looking at operating, investment and financing activities. It also provides business owners with an accurate picture of their company’s profitability by using noncash items and expenses to adjust profit figures.

Another useful way to spot trends and analyze financial statements is by performing either a horizontal or vertical analysis, which compares numbers from one period to the next. The analytical methodology may point to favorable or unfavorable changes in cash flow that could spell trouble unless they’re corrected.

You’re probably in good shape if your cash is growing, and it accounts for 10 to 20 percent of your assets. If it’s not, then you need to figure out where it’s going. Is it costing you more to manufacture the same products, or have competitive pressures forced you to reduce prices during the last year?

Vertical analysis lets you compare each component of your financial statements over time to determine if and where significant changes have occurred. You may need to focus on collections or stop extending credit to major customers if receivables are growing too quickly, or you may need to reduce inventory if the payments on your short-term line of credit are chewing up cash and affecting your company’s liquidity.

Managing fixed expenses is critical for growing companies, Towry says. Otherwise, a blip in the economy can lead to an insurmountable cash shortage. Don’t just look at expenses when reviewing your financial statements. Break down fixed and variable costs and apply varying revenue forecasts to see how changing circumstances affect your cash position.

“Companies that overinvest in equipment, building leases or inventory can’t manage those costs down when the economy heads south,” Towry says. “Business owners need a cash budget and an awareness of cash in relation to profits because there’s no magic bullet for a major cash crisis.” ●

How to reach: Goizueta Business School at Emory University,; Harvard Business School,; Wayne State University,; Institute of Management Accountants,

In order to navigate the risk, you need to understand the terrain

The enterprise risk management process helps businesses identify hidden dangers. If used correctly, it could also uncover opportunity. James P. Martin, managing director for Cendrowski Corporate Advisors LLC, shares how risk management is beneficial.

Q. How might risk affect company value?

A. Risks are uncertainties in the business environment. Alone, they do not degrade a company’s value. Degradation of value often comes from management making poor decisions based on incomplete or erroneous information. Sometimes, this is from long-standing assumptions about the business or the competitive environment that are not founded in fact.

The objective of enterprise risk management is to engage the entire organization in a continuous and proactive discussion about risk, about what could go wrong, and to proactively plan to mitigate risk and perhaps even capitalize on risk events.

When implementing an enterprise risk management process, it’s important to include participants from all levels of the organization — people throughout the organization will have a different perspective on risk and about how things really operate. Senior management will tend to focus on strategic issues, while process operators will tend to focus on process anomalies and nonconformances. The enterprise risk management process should bring these perspectives together.

For example, senior management may have a strategic initiative to increase customer satisfaction scores by a certain percent. The process operators with direct knowledge of customer order fulfillment, including knowledge of complaints and processing issues, would have vital information to help accomplish the strategic initiative. Too often, without a process to gather, analyze and organize such information, companies overlook the wealth of information they have within their own organization. The enterprise risk management system should help facilitate this information flow and allow everyone within the organization to understand their role in accomplishing organizational objectives.

James P. Martin, CMA, CIA, CFE, is managing director for Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or [email protected]

Timely information leads to better decisions

Mark van Benschoten

Mark Van Benschoten

A trusted adviser can help you track data and review ways to boost profit. Mark Van Benschoten, a principal at Rea & Associates Inc., lists some things to consider in discussions with your accountant.

Q. What accounting missteps might lead to decreased profitability? 

A. Not having timely and accurate monthly financial statements can hurt a business. Within a few days of month’s end, you should have a current income statement, cash flow statement and balance sheet. A trusted adviser, like a CPA, banker or CFO, can help you understand how each of these reports reflects how your business is performing.

Q. What accounting tools could prove most valuable to business owners? 

A. It does not matter how large or small your business is, a budget will help you keep your eye on the things that are most important. Compare your actual results each month to your budget, giving you an indication of how your business is performing in key areas like sales, margins, overhead and cash flow.

Q. What do businesses commonly overlook that can pose problems?

A. Many businesses don’t have a good handle on the true cost of a product. This leads to underpricing and potentially critical losses. In addition, many business owners will cave into lower price points for larger clients without evaluating the impact of shrinking margins. You also need to review your current pricing. You cannot set prices for an extended period of time without considering price increases in raw materials.

Q. How does risk affect company value?

A. There is an inverse relationship between your business value and the amount of risk associated with your business. Why does risk lower value? It is because risk causes uncertainty about the future cash flows. Once you understand how specific risk factors impact your value, you will be motivated to set a plan of action to reduce your business risks.

Mark Van Benschoten, CPA, is a principal at Rea & Associates Inc. Reach him at (614) 889-8725 or [email protected]

How investing in your accountant can deliver big returns

Accountants can do much more than prepare your taxes. Stephen W. Christian, managing director at Kreischer Miller, offers some ways to work with your accountant to increase profits and grow your business.

Q: Can your accountant add value and help you increase your profitability?

A. Do you consider your accounting fees to be overhead or an investment? One stereotype of an accountant — bean counter, scorekeeper, tax preparer — deserves its connection with minimal value overhead. But the right accountant takes the historical numbers and information available and helps you navigate a path to increased profitability and a return on your investment.

Accounting firms add value in many ways, but one that C-suite executives are reaping the most benefit from revolves around determining and accessing the right information with which to make timely, informed decisions. Think of all the information embedded in a company’s systems — production statistics, time and productivity information, supplier and customer data, margin analyses, etc. Your accounting firm can assist you in harnessing it.

First, determine the information that would put you in the best position to make decisions and monitor activities. What are the key performance indicators? Your accountant can assist you in determining the appropriate indicators. You can then develop the type of dashboard report you would like to review.

Your accounting and technology teams can assist in automatically populating the dashboard reports. You will be able to review critical information on a daily, weekly or monthly basis from any smartphone, tablet or computer. Stop wasting time with the incredible amount of useless information available to all of us. Work with your accountant to focus on utilizing only the relevant data, putting you on a path toward timely, better decisions that lead to improved profitability.

Stephen W. Christian is a managing director at Kreischer Miller. Reach him at (215) 441-4600 or [email protected]

Protecting your intellectual property takes conscious effort

The term “intellectual property” applies to more than just a copyright. Here are some questions for companies to consider about their IP when security is a concern.

Q. What is considered intellectual property but is often overlooked when deciding what to protect?

A. When people think of intellectual property, they most often think ’patent’ or ‘copyright.’ There are other forms. One that’s often overlooked is trade secrets.

As noted in an influential restatement of the law, a ‘trade secret is any information that can be used in the operation of a business … that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.’ They take a wide variety of forms, including product formulas, data compilations, customer lists, manufacturing techniques and other types of business know-how.

Q. How might a company’s trade secrets be vulnerable?

A. A business has to identify its trade secrets before it can protect them. Common sense goes a long way here. Business owners should start by asking, ‘What does my business do better than the competition, which the competition doesn’t know about?’ The answer might qualify as a trade secret.

Q. What policies or procedures should a company put in place to protect its trade secrets?

A. There are no hard and fast rules, but a business must take ‘reasonable steps’ to protect its secrets. This could include password-protecting computers, limiting access on a need-to-know basis, keeping documents under lock and key, and/or requiring employees to maintain secrecy during and after employment.

Q. How has social media affected a company’s ability to protect its trade secrets?

A. It has made it more difficult for businesses to argue that it has trade secrets — a point underscored in Sasqua Group Inc. v. Courtney, No. 10-528, 2010 WL 3613855 (E.D.N.Y. Aug. 2, 2010), where the court held that compiled customer data was not a trade secret because the information was also available on the Internet and social media sites.

There are no easy answers, but one thing seems clear: Businesses must take care when posting to social media sites and educate employees about using social media sites.

P. Andrew Fleming is a partner with Novack and Macey LLP. He represents individuals and small, midsize and large companies in complex commercial litigation.

Social media: A window to your intellectual property

Social media tools provide an accessible and inexpensive way for businesses to expand their market footprint. But failure to protect and enforce intellectual property rights may quickly turn a great resource into a major headache, whether or not social media is part of a corporate marketing program, says Alexis Dillett Isztwan of Semanoff Ormsby Greenberg & Torchia LLC.

Together, social media and intellectual property pose internal and external issues. Internally, a business must monitor and control employee use of intellectual property. Given social media’s accessibility, problems can arise and grow rapidly. Imagine an employee prematurely tweeting about a new product launch or information never intended for the public. To reduce risk, businesses should establish a written social media policy that:

■  Sets clear guidelines for appropriate topics to be posted on any media, including company and employee personal accounts.

■  Identifies personnel permitted to post and the posting approval process.

■  Addresses use of third-party trademarks or copyrights or names of individuals or competitors.

■  Is clearly and regularly communicated and taught through annual training.

Externally, businesses should police unauthorized use of their intellectual property on social media sites. Defamatory comments can take on a life of their own. Businesses must also contend with trademark misuse or infringement, from someone using your trademark as its domain name to assuming your brand identity online, an aggressive practice called “brand-jacking.” To combat these challenges, businesses should:

■  Monitor social media for use of company trademarks.

■  Obtain formal protection for intellectual property, e.g., trademark registrations.

■  Avoid overreaction; weigh impact of potential negative backlash online against severity of misuse.

■  Consider availing itself of the social media site’s enforcement policies.

Alexis Dillett Isztwan, a member at Semanoff Ormsby Greenberg & Torchia LLC, concentrates on intellectual property and technology law.

Keeping your company’s secret information secret is a matter of increased focus on protecting company intellectual property

In the last three decades, international trade has increased by a factor of seven — but unfortunately, this advance has also ratcheted up the rate of trade secret theft, an impediment that costs corporations hundreds of billions of dollars a year.

That rate of growth has catapulted multinational commerce to such prominence that it now accounts for a third of all economic activity worldwide.

principal, Zavitsanos, Anaipakos, Alavi & Mensing

principal, Zavitsanos, Anaipakos, Alavi & Mensing

“The world is getting to be a smaller place at a remarkably fast pace,” says Joseph Ahmad, a principal in the Houston law firm Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing. “When we were kids, there might have been a handful of companies that did a particular thing and probably most or all of those companies were in America.

“Nowadays, we’re seeing competition come from everywhere,” says Ahmad, who primarily represents business executives in trade secret cases and employment-related litigation. “The barriers to entry are rapidly declining, so now a lot of companies are facing competition from all over the world.”

Other factors driving the increased incidence of trade secret theft include large pockets of economic stagnation around the globe and the widespread conversion of analog business information to digital formats, which lends itself more readily to leaks and cyber attacks.

Pamela Passman, president and CEO, Center for Responsible Enterprise & Trade

Pamela Passman, president and CEO, Center for Responsible Enterprise & Trade

“In the last few years, there are a couple of key reasons why trade secret theft has grown,” says Pamela Passman, president and CEO of the Center for Responsible Enterprise & Trade, a nonprofit group whose mission is helping companies reduce counterfeiting, piracy and trade secret theft.

“One reason is the economic times we’re going through. People feel constrained, and they’re working under great financial pressure, so many people are cutting corners. Also, a great deal of companies’ information is becoming digitized and, therefore, more easily transferable.

“So instead of walking out of a place with stacks and stacks of papers, a person can walk out with a USB drive that has a huge amount of information on it.”

Increased cyber leaks and cyber attacks are also contributing to the problem, Passman says.

“There are some fairly aggressive third parties that have stepped up their activity in that area,” she says.

Ahmad agrees but points out that the lion’s share of trade secret misappropriation he encounters is a consequence of actions taken by a company’s employees or ex-employees.

“Of course, we do hear from time to time about individuals or organizations — especially overseas — who hack in to companies’ systems,” Ahmad says. “But, in my experience, that’s not a common occurrence. Most of the trade secret theft I see occurs via a current or former employee.”

That is why, Passman says, it’s essential to be straightforward with employees about your company’s policies regarding confidentiality, particularly as it pertains to trade secrets and other types of intellectual property.

“You have to be very clear with your own employees about your policies and about how serious you are about protecting your intellectual property,” Passman says. “Because that’s definitely where your greatest risk lies. And this is a critical issue both while those employees are at the company and after they leave the company.”

The labor market factor

Unemployment and sluggish job markets are also key factors contributing to the increased risk surrounding trade secret theft.

“Unfortunately, in this type of market, job seekers sometimes resort to extreme measures to gain the kind of edge they feel they need to get a job,” Ahmad says. “I’ve seen many new hires — whether consciously or subconsciously — come into a job with the belief that their value is increased if they can, as some of them would put it, ‘hit the ground running’ when they get on the job.

“In other words, they feel that with the help of their previous employer’s trade secret information, they can do a better job for their new employer. Sometimes this happens with the complicity of the new employer, but sometimes employees do it on their own, because they feel it makes them more marketable.”

What, then, are some practical strategies CEOs and their teams can employ to insulate their companies against the risk of having their trade secrets stolen? One of the important early steps executives can take is to enlist the help of a broad cross section of people in their organization to tackle the issue.

“First off, what I suggest is establishing a cross-group team of people to focus on protecting the company’s intellectual property,” Passman says. “This team should include somebody senior in the legal department, somebody senior in R&D, somebody from business development, somebody on the operations side, for example if they have a manufacturing division, and somebody responsible for procurement and the supply chain. It’s important to bring all these disciplines together and instruct them to establish some policies in this area, including trade secret policy.”

Another step that should be taken by companies that have significant intellectual property to protect is requiring employees to read and sign confidentiality agreements.

“The confidentiality agreement is first and foremost,” Ahmad says. “You have to make sure that every employee understands the significance of holding your company’s information confidential. All employees must be required to agree in writing they will do so.”

There are a number of items and types of information that companies can put into their employee confidentiality agreements to help protect their intellectual property.

One approach is to list or enumerate the company trade secrets and other types of information that are required to be held confidential. Another tactic is to include language stipulating that inventions and similar types of newly created information automatically become the confidential property of the employer.

“This helps the company in several ways,” Ahmad says. “First, you get to define what your trade secrets are and what information is expected to be held confidential and you get to formally notify the employee about it. This also enables you to make sure that whatever new intellectual property your employees develop will be the property of the company, and they will agree to hold that information confidential.”

Vetting third parties

Another area where companies seeking to protect their intellectual property need to be vigilant is conducting due diligence on third parties, such as suppliers and customers, as well as companies they may be seeking to acquire or merge with.

“For any key third parties that you’re going to be sharing your intellectual property with, it’s essential to conduct due diligence on them,” Passman says.

Due diligence encompasses activities such as research, interviews and online searches. A key part of the process is being alert to “red flags” — potential problem areas signaling that the third party may not be effective at helping co-protect the company’s sensitive information.

“Basically, you want to see if [the third party] has any red flags you need to be aware of,” Passman says. “For example, if they’ve been involved in different kinds of litigation, especially litigation involving intellectual property or trade secrets. And you’d want to explore and make sure you understand how they go about managing and protecting the intellectual property of the third parties that they in turn do business with as well.”

Regarding the employee confidentiality agreement, Ahmad says it’s unwise and potentially dangerous for a company to regard this process as a one-and-done deal. In other words, it’s insufficient to simply have employees read and sign the agreement and then file it away. Companies need to remind employees periodically about their confidentiality agreements and about the importance of keeping the company’s sensitive information private.

“Companies sometimes leave themselves vulnerable to trade secret theft loss if they approach these confidentiality agreements like a checklist,” Ahmad says. “By that I mean they can’t just have the employee read and sign the agreement, and then they knock it off their checklist and forget about it. The problem with doing this is you can be sure the employee will forget about it too.

“Many times, an employee will enter into a confidentiality agreement, and then they’ll work for the company for 10 or 20 years, and they’ll forget they even have the agreement. As a result, they don’t really respect the company’s trade secrets the way they should.”

Thus, it’s important to periodically remind employees about their confidentiality agreement — and even more important to underline that agreement’s significance when the person’s employment with the company ends.

“That’s probably the most critical aspect — how the matter is handled at the end of the employment relationship,” Ahmad says. “I’m often shocked at how many employees I see who have signed confidentiality agreements, and at the end of their employment, whether they resign or are terminated, they’re not even reminded that they have these agreements. Many of them don’t even know they have them.”

Business executives would be wise to take advantage of the employee exit interview because it represents their company’s last chance to underscore the imperative of keeping its trade secrets just that: secret.

“At the exit interview, employees must be required to sign and confirm that they understand their responsibilities in regard to keeping the company’s information confidential,” Ahmad says. “By doing that, you’re drilling in to the employee as they’re leaving the company — and presumably going to work for someone else, who just may be one of your competitors — that, ‘Hey, listen, this is serious. We take this matter very seriously.’”

How to reach: Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing,; The Center for Responsible Enterprise & Trade,

Small biz, wholesale loan growth slows

Jordan Peterson, Senior VP and Business Banking Credit Manager, PNC Bank

The growth rate of bank loans has slowed over the last three months for small to midsized businesses in general and for wholesale distributors in particular as economic and political uncertainties cause business leaders to ease up on their growth accelerators.

“We started to see a slowdown in the summer,” says Jordan Peterson, senior vice president and business banking credit manager at PNC Bank. “In July, we started seeing a lower volume of applications for loans. We’ve been talking with our bankers about what they’re seeing out on the street. It mirrors what we’ve been seeing in the economic outlook surveys, and it’s also in sync with what we’ve been hearing from our customers. They’re hesitant right now. They’re concerned about the economy.

“And they’re looking at the upcoming election and wondering what government is going to do to help small business.”

Post-recession business has resumed for some wholesale companies in some sectors, but the recovery for wholesalers has been spotty.

“Whether they’re feeling optimistic and looking to grow depends on the type of wholesaler they are and the type of industry they service,” Peterson says. “Some are doing well and are optimistic. Others are still waiting for things to improve. An example would be wholesalers that sell building construction materials. They are still waiting for things to recover and get back to normal.”

Peterson says wholesalers and other businesses looking to take out loans to grow their businesses should take a dim view of recent reports that banks are currently in a tight-fisted frame of mind when it comes to lending.

“Wholesalers and others have probably heard on the radio or seen in the papers that banks are hesitant to lend right now,” he says. “But they should know that, in fact, banks are anxious to lend to them, as long as they qualify and they’re a good candidate to borrow — as long as they have good financial information and can show that what they’re selling has good value and can clearly demonstrate how much they need to borrow and why.” <<

How to reach: PNC Business Loans and Credit, (800) 762-5684 or