It’s no secret that health care is a hot topic. But putting aside the politics of the issue, there are two things that can’t be argued: health care costs are constantly on the rise and people’s health is constantly on the decline.
An unhealthy work force is an unproductive work force. If your people aren’t as healthy as they can or should be, you’ll face absenteeism, decreased job performance and lower morale, just to name a few.
Luckily, there are ways to both lower health care costs and improve the health of your people: successful wellness programs.
“Companies have a great opportunity to impact their employees’ lives and really make a difference,” says Cecelia Wagoner, the executive director of Corporate & Community Health for WellStar Health System. “People spend a large amount of their time at work. A good wellness program can improve the quality of life for your employees and their families.”
Smart Business spoke with Wagoner about wellness programs, how to implement them and how to drive employee engagement.
What should an employer expect when starting a wellness program?
Expect a lot of hard work. Implementing a wellness program takes a lot of time, effort and commitment. Develop a solid plan so you’re ready every step of the way. Know exactly what you’re taking on, be prepared and have the right mindset. Wellness programs are more than just nice ways to help your employees; they are true business strategies, so adopt them as part of your culture.
Also, don’t expect an immediate return on investment. Improved morale and engagement could happen right away, but it will take time to see true results in terms of reduced absenteeism and health care costs. But stick with it the ROI will come.
How do you develop a successful program?
First, make sure you have complete buy-in from all levels of senior management. You’ve got to walk the talk throughout the organization. Show your employees that the company cares about them and wants to help better their lives.
Once management is on board, identify a wellness coordinator or advocate who will own the program. Or, if your company is large enough, you can have a wellness team that will promote healthy living. Either way, you need a clear and consistent message.
Next, solicit employee feedback. Find out what is important to employees. What health risks are they worried about? What types of programs would interest them? Involve all employees, deal with all major health risks and offer choices.
You’ll also want to conduct health screenings and surveys as well as testing for things such as blood pressure, cholesterol, glucose and body weight. A Health Risk Appraisal (HRA), an assessment tool that looks at an individual’s family history, health status and lifestyle, should also be used. An HRA can identify the precursors associated with serious illness and quantify the probable impact for each individual. It also will tell you about the fitness levels of your employees.
If you want to get people to change, you must educate, motivate and give them the tools to meet their goals. Educating employees on the health risks they face and showing them how they can prevent those risks is a great beginning step.
What are the key components of a successful wellness program?
Again, you have to be consistent. You can’t encourage healthy eating and then have unhealthy food in the vending machine or at the cafeteria. Also, if you encourage exercise, but don’t show employees proper ways to do it or give them the time and flexibility to do it, they probably won’t. You have to commit to and support the programs you implement.
How do you drive employee engagement?
This should come from your wellness advocate or team. Employees need to feel a connection from their peers; they don’t want to feel like management is forcing them to eat differently or exercise more. Having an excited and engaged wellness champion will make it easier and more likely that people will get involved.
Also, you can offer incentives and rewards such as cash, time off, health-related cookbooks or exercise equipment, or even just acknowledgement in the company newsletter or lunch with the boss. You could even offer a health care premium incentive lower your cholesterol or stop smoking and pay less for health care. Whatever you do, make sure the incentives are meaningful and valued by your employees.
How do you handle opposition?
Employees may be leery about sharing their health data or taking part in fitness activities. But if you have good wellness champions and show proof of the programs working, you can alleviate those fears. Employees will embrace a wellness program that challenges them both physically and mentally. Again, increased participation can be expected if you offer incentives. If that’s not enough, make sure the program is well organized and promoted so the employees are constantly aware of the wellness opportunities available to them. Focus on increasing awareness, supporting health management or personal change, and promoting healthy work climates.
How does developing such a program benefit a company?
It depends on your goals, but wellness programs have the potential to decrease absenteeism, reduce medical claims and improve employee productivity, recruitment and retention. All of those things are great and very important, but, bottom line, a wellness program is the right thing to do. Take care of your most valuable asset your people.
Cecelia Wagoner is the executive director of Corporate & Community Health for WellStar Health System. Reach her at (770) 793-7181 or firstname.lastname@example.org.
It doesn’t matter how great your products and/or services are, how experienced and qualified your people are, or how convenient and affordable your offerings are, if there’s a negative public perception about your company, you’re dead in the water.
That is why public relations is so important, now more than ever. PR is not just another line item that can be cut to save some cash to the bottom line. The only thing certain in this country right now is uncertainty. Consumers are being very careful about where and with whom they do business. If a customer doesn’t know you or, even worse, doesn't trust you he or she will move on to your competitor.
Because of this, PR leaders across the country are working overtime to highlight the positive impact and importance of the public relations industry. This was evident on Monday, March 29, at Windows on the River in Cleveland, where the Greater Cleveland Chapter of the Public Relations Society of America (PRSA) hosted the Hill Lighthouse Young luncheon. These annual awards recognize Northeast Ohio’s leading communicators and PR professionals.
Smart Business was at the event and sat down with the award winners to discuss PR and why it’s so vital in today’s business world.
Art Anton, president and CEO of Swagelok Company, won the John W. Hill Memorial Award, which honors a Cleveland-area chief executive who demonstrates a keen appreciation of the importance of public relations over the course of his or her career.
Anton on PR and why it's so important, particularly in today's business world.
Chris Lynch, senior vice president of Falls Communications, won the Lighthouse Award, which honors senior public relations professionals for their career accomplishments.
Lynch on PR, how it has changed and where it's going in the future.
George Richard, assistant vice president and director of college relations at Baldwin-Wallace College, won the Davis Young Award, which is given to a professional who excels in mentoring students and young professionals through hands-on instruction and support.
Richard on mentoring and what makes for a good mentoring relationship.
The fiduciary shield doctrine is an equitable doctrine that can protect individuals from litigation for actions they take on behalf of their employers.
It allows courts to decline to exercise personal jurisdiction over nonresident defendants sued for acts performed in their capacities as corporate agents. And absent personal jurisdiction, suits against nonresident, individual defendants can be quickly dismissed.
The rationale for the fiduciary shield doctrine is rooted in concepts of equity and fairness whether it would be fair to sue a nonresident in Illinois for acts carried out on behalf of his or her employer.
Generally, agents are not personally liable for acts they carry out for their employers, but this doesn’t always protect employees as planned, as they can still be sued, says Andrew D. Campbell, a partner at Novack and Macey LLP.
“While the doctrine of limiting the personal liability of agents is alive and well, it still doesn’t stop litigants from naming officers or agents of a corporation as defendants,” says Campbell.
But a motion to dismiss asserting the fiduciary shield doctrine can quickly extract individual, nonresident defendants from a suit, says Campbell.
Smart Business spoke with Campbell about the fiduciary shield doctrine and how to protect your directors, officers and other agents from litigation.
Does the law generally protect directors, officers and other agents from liability for actions they take on behalf of their employers?
For the most part, yes, but exceptions apply to the rule of limited liability, and getting to a determination of nonliability can be time consuming and expensive.
While exceptional cases can sometimes have merit, corporate agents are often parties to suits because plaintiffs perceive tactical benefits in suing them. These perceived benefits can include increasing the settlement value of a case, intimidating the individual litigant or saddling the individual with the time-consuming and expensive tasks of litigation.
Also, naming directors and officers can trigger D&O insurance policies, thereby increasing the pool of funds available to settle the suit or pay a judgment. The fiduciary shield often can be raised in a motion to dismiss early on, thereby nullifying these perceived benefits.
How does personal jurisdiction affect the application of the fiduciary shield doctrine?
To have jurisdiction over a defendant, whether it’s a corporation or an individual, a plaintiff must show that the court can exercise its power over that defendant. So, for a court in Illinois to assert jurisdiction over someone from Wisconsin, for example, there must be an Illinois statute allowing for the exercise of jurisdiction, and constitutional requirements must be satisfied.
In Illinois, the ‘long arm’ statute provides that jurisdiction may be had over a person for any basis permitted by the U.S. Constitution and the Illinois Constitution. The U.S. Constitution allows for personal jurisdiction as long as that person has ‘minimum contacts’ with the state. And it is rather easy to establish these minimum contacts.
Assuming there are minimum contacts, a court must then consider whether exercising personal jurisdiction would be fair and just. The fiduciary shield doctrine is an outgrowth of this inquiry.
What is an example of how the fiduciary shield doctrine applies?
It often comes up when a corporation and one or more of its officers are being sued. For example, suppose a Wisconsin corporation was hired to construct a building in Illinois and a lawsuit is filed in Illinois arising out of the construction project. The corporation would certainly be subject to personal jurisdiction in Illinois, but what about the officers Wisconsin residents who negotiated the contract and entered into the deal on behalf of their employer?
Entering into a contract for a construction project will often involve lengthy negotiations and will require the builder’s employees to travel to Illinois. But is this enough contact with Illinois to render them subject to being sued here in their individual capacities?
In a recent decision, with similar facts, the court dismissed two officers from a suit under the fiduciary shield doctrine. It found that one officer, who signed a construction contract and participated in telephonic meetings about the project but who never traveled to Illinois was not subject to jurisdiction here. Likewise, another officer, who did come to Illinois to attend progress meetings, but never for personal reasons, was also not subject to personal jurisdiction.
Are there circumstances under which courts are less likely to apply the fiduciary shield doctrine?
The doctrine is discretionary, so a court can decide whether to apply it based on the circumstances presented.
Courts often will refuse to apply the fiduciary shield doctrine to someone who is a high-ranking company officer with a direct financial stake in the company. A direct financial stake typically doesn’t mean an officer who holds shares as part of a retirement plan. Instead, courts are generally concerned with substantial shareholders, for example, those owning 20 percent or more of the company. But, monetary incentives aren’t the only thing courts consider.
Although less common, personal motives spite, vindictiveness or maliciousness have, at times, led courts away from applying the fiduciary shield doctrine. Further, where there are allegations that a corporate entity was merely a ‘sham’ utilized for an individual defendant’s personal benefit, the fiduciary shield doctrine is less likely to apply.
These exceptions notwithstanding, utilizing the fiduciary shield doctrine at the outset of a case can be a powerful tool in extracting nonresident agents from lawsuits during their initial stages.
Andrew D. Campbell is a partner at Novack and Macey LLP. Reach him at (312) 419-6900 or email@example.com.
While many stories have been written about the struggles of businesses, few detail the hardships hitting the nonprofit sector.
Private donations to charities doubled from 1987 to 2007 but dropped 6 percent in 2008. Some charities, such as human service organizations, saw donations fall nearly 13 percent last year. Foundation endowments and giving are down across the board, and many state and municipal governments facing deficits are reducing spending on social programs.
Further compounding the problem is a general decrease in government spending. Many nonprofit organizations are facing a changing funding environment coupled with a rising need for services in the communities they serve. The past decade saw a proliferation of new nonprofits, increasing competition for an ever-shrinking pool of funds.
“Overall, nonprofits are being forced to re-examine their operations in order to continue fulfilling their missions or just to stay above water,” says James P. Martin, CMA, CIA, CFE, CFD, CFFA, managing director at Cendrowski Corporate Advisors.
Smart Business spoke with Martin about nonprofits and the challenges they’re facing.
How do nonprofits contribute to the economy?
For many years, the nonprofit sector reaped what seemed like an ever-increasing level of donations each year. Moreover, the threshold to establish a nonprofit was rather low. These two factors together allowed the number of IRS-registered nonprofits to double in the past 15 years. In fact, nearly 10 percent of all U.S. employees work for a nonprofit organization, although this number appears to be falling as nonprofits struggle in the current economic environment.
Significant organizational changes need to be made in order for many nonprofits to survive.
What issues do nonprofits face today?
Most nonprofits today realize that they must focus on maximizing the amount of funds received by grantees. In previous years, some nonprofits believed part of their mission was to employ people in the community, but this belief appears to be going by the wayside. More and more donors want to see their dollars go directly to the causes of their choice, not to overhead costs internal to the nonprofit itself.
This can cause issues for nonprofits that have suffered greatly from a downturn in donations. These organizations might possess an internal cost structure that, today, just isn’t sustainable.
Additionally, nonprofits are facing pressure to provide measurable proof that the services they provide have an impact on the communities and populations that they target. Donors and the general public want evidence that nonprofits are effectively and efficiently doing exactly what they set out to do. Checks and balances such as these are essential; however, it is causing nonprofits to spend more time and energy on accountability, which can take attention away from their main goals and mission.
Do you see any differences in the struggles of large nonprofits and those of smaller ones?
Yes. I’d say that the economic headwinds have, in fact, widened the gap between the strongest nonprofits and those that are finding today’s operating environment difficult. Large nonprofits often have immense name recognition that keeps them going. Smaller nonprofits have to compete with millions of similarly sized organizations for a smaller pool of dollars, which is a difficult task in any environment.
How long will this pattern of decreased funding continue?
Unfortunately, it will probably continue for some time. It’s well known that charitable contributions fall in tandem with wages and earnings. However, it’s amazing how certain events can create a large outpouring of donations. The latest crisis in Haiti has created a tremendous influx of donations for many big-name nonprofits.
But, such crises, unfortunately, often have a reduced impact on smaller foundations and nonprofits. These foundations will likely have to wait a longer period of time before they see their donations rise again.
What strategies can you suggest for struggling nonprofits?
Many nonprofits today are examining potential mergers, in some cases combining entities with similar missions or, alternatively, dissimilar missions. Such mergers allow nonprofits to expand their mission, reach greater groups of individuals in need and help minimize organizational costs.
However, not all mergers go smoothly. Some nonprofits have experienced significant hardships in merging with other entities. It’s hard for nonprofits to combine their missions or to change course operationally. It is, nonetheless, a necessary part of being a nonprofit in today’s world.
What if a merger is out of the question?
If a merger is definitely out of line, nonprofits should consider spending the dollars they have on building name recognition within their communities, vocalizing their successes and providing visible services to the community.
Using this three-pronged strategy can help donors learn about the nonprofit, understand its mission and physically witness the benefits it provides. There’s nothing more compelling to donors than the ability to watch their donations have a direct impact on the community.
James P. Martin, CMA, CIA, CFE, CFD, CFFA, is a managing director of Cendrowski Corporate Advisors. Reach him at (866) 717-1607 or firstname.lastname@example.org.
Planning how you exit your business is just as important as planning how you start it. When creating an exit strategy, a business owner should start at least two years before retirement, but the more time available to plan the best strategy, the better it will work out for all involved.
The first step is to create a team of experts that is well versed in business succession strategies, finance, estate planning, investment planning and tax laws.
The next step is to determine the company’s fair market value. The best way to do this is usually to hire a valuation expert to analyze the business and assess the value of the business and its assets, including inventory, equipment, accounts receivables and good will. The fair market value of the business is often a multiple of the sales of the business over the past few years.
“With a good team of advisers and a solid valuation in place, the owner can then begin to strategize the best path to move toward his or her exit,” says Kim Milder, a vice president and senior relationship manager with Wells Fargo Bank.
Smart Business spoke with Milder about exit strategies and succession planning options and why succession planning is so important to today’s business owners.
What are some of the different succession planning options?
The owner can sell the business to employees via an Employee Stock Ownership Plan (ESOP), to family members via a family succession plan, to other owners or key employees through a buy-sell agreement, or to a competitor or other third party.
An ESOP allows employees to acquire beneficial ownership in the company as an incentive to remain with the company and a reward for valuable service. For the business owner, an ESOP can provide a guaranteed, in-house market for the business. As an ESOP can be complex, it is best to consult with a team of experienced advisers before proceeding.
Often, a business owner will want to transfer the business to family members. It is critical to have a family succession plan in place to make this transition go smoothly. Among other things, the business owner will want to address how to treat those family members who are active in the business versus those that are not.
If the business owner might want to sell to partners or key employees, it is important to have a good buy-sell agreement in place. The buy-sell agreement can address the various contingencies for an owner’s exit from the business, including a voluntary sale, death and disability. The agreement can define the terms of the sale, including how to determine the sales price and any financing terms.
For some business owners, an outright sale to a competitor or other third party may be the best approach. The owner will want to take appropriate steps to maximize the value of the business before putting it on the market, and will also want professional help to market the business and evaluate offers.
The right option will depend on the nature of the business and the owner’s goals. It is important for the business owner to have a team of experienced advisers to help evaluate the different choices.
How important is it to review the plan and make any necessary changes?
It is extremely important to review the plan as often as there are changes within the business, with owners, within the industry, or with the applicable rules and regulations. Tax law changes may also affect the plan. Change is inevitable so owners must always make sure they are prepared and all plans for the business are current. This should also include the owner’s personal financial, trust, investment and estate plans.
How should a business owner communicate the succession plan to employees and prepare them for the owner’s exit?
The best way to communicate to employees is by delegating responsibility and establishing the go-to people. When you start transitioning, you must relinquish some authority. The employees will see how the transfer influences the key personnel and then the conversation becomes easier. You cannot make everyone happy in the choices you make to replace yourself or the changes in key management, but you can keep their loyalty with constant communication of changes ahead.
How can a business owner maximize the value of the business in preparation of a sale or transfer?
There are several ways to increase the value of a business. Among other things, the business may want to ensure its books and records are in order, lock in key employees who might otherwise leave, reduce expenses and strengthen the management team so that they can run the business without the owner.
How important is it to have a financial adviser involved in the process?
I believe financial advisers play a crucial role in developing and implementing a successful exit strategy. Without the help of experienced advisers, an owner may miss opportunities to maximize the company’s value or run into tax problems or other issues.
Here at Wells Fargo, we have groups that specialize in helping business owners with their financial and business succession planning. They work with the business owner to define goals, evaluate different options and implement the strategy the owner chooses.
What would you say to a business owner who is reluctant to address succession planning?
Now is the time! At the very least, every business owner has the responsibility to address the contingencies of his or her disability or death. However, the right planning can also put more money in the business owner’s pocket if the owner sells while alive. Ultimately, having an exit strategy demonstrates the business owner is in control and focused on an organized and profitable transition.
Kim Milder is a vice president and senior relationship manager with Wells Fargo Bank. Reach her at Kimberly.Milder@wellsfargo.com or (281) 587-3037.
Just a few short years ago, life as a commercial office building owner was good. Rates were at all-time highs, vacancies were at all-time lows, and office buildings were trading left and right at unheard of prices.
Fast-forward to the present, and the reality is a little gloomier.
“The office space market is experiencing negative absorption and rental rates are sliding,” says Trey Miller, a leasing advisor with Moody Rambin Interests. “Both lead to one of the most talked about words in office brokerage these days: the sublease.”
Subleasing, the act of an existing tenant leasing all or part of its space to another tenant, has become increasingly popular as the overall economy slows. When businesses are laying off employees in large numbers and otherwise trying to decrease operating costs, scaling back office space is a very sensible move. However, planning your strategy is the hard part, and if you don’t have the right mindset going in (and the right broker) you’re going to waste a lot of money.
Smart Business spoke with Miller about subleases and how to use one to your advantage.
Why are subleases attractive to the subtenant?
Typically, subtenants should expect at least a 25 percent discount compared to direct space since they’re offered the space as-is, i.e. there are usually no build-out dollars available, and the lease term is normally shorter than a direct lease term. And with more and more sublease space coming online almost daily, the increasingly strong buyer’s market is only gaining steam. Consequently, a company shopping for lease space should have landlords (and sublandlords) fighting for its deal. Furthermore, if your company is searching for a ‘plug and play’ solution, it is not difficult to find. Plenty of ‘A’ buildings have sublease space available with quality build-out (including furniture, telephone systems, etc.) offered at a substantial discount.
What benefits can the sublandlord see?
The principal notion when dealing with a sublease is ‘cutting your losses.’ If marketed properly, a sublease can help a tenant cut its real estate excesses quickly and recoup as much money as possible. Be prepared to take a financial hit vis a vis your overall liability, but, depending on the remaining term on your lease, you’ll see a long-term benefit when that extra space is off the books.
How does the subleasing process work contractually?
The key to subleasing — for both the sublessor and the subtenant — is credit. Logic dictates that the sublessor should be concerned with the credit of the subtenant, and that’s true. Often, the sublessor is generally much too eager to find a willing subtenant to scrutinize that company’s credit. It is equally important for a subtenant to look at the credit of the sublessor. It’s a three-party agreement, but there is no privity of contract between the subtenant and the master landlord. As a result, a subtenant has to make sure that the sublessor is reliable, and will not default under the master lease. To protect against that possibility, a subtenant should request to pay the master landlord directly (in addition to maintaining the right to cure any default by the sublessor).
What should the sublessor expect from the subleasing process?
Besides credit, the next biggest issue to a potential sublessor is expectations. Again, remember that you’re cutting losses, not trying to turn a profit. It’s easy to have sticker shock if you’re paying, say, $30 per square foot for an office and have someone advise you to market it for $15 per square foot. However, that is the type of upfront conversation that a good broker will have with a client.
Subleasing can be painful, but how painful depends on keeping expectations in check. You have to weigh the economic pros and cons of getting a deal done quickly at a reduced rate versus trying to maximize your rental rate and potentially having the process drag on longer than necessary. Remember that an empty office is like an empty hotel room; every passing day is a missed opportunity to recoup part of your investment. It’s possible that the perfect subtenant will come along and you’ll get $25 per square foot on your $30 per square foot lease, but that’s unlikely. For most, the days of making money off of a sublease are long over, particularly those who signed leases at the height of the market in 2007 and 2008.
Who should a company turn to for assistance when looking to sublease?
You have to find a quality broker who knows your submarket and knows how to make your product stand out from the myriad of options available. In the past, a broker would simply send out an e-mail blast to the brokerage community and wait for the phone to ring. Now that the market is so inundated with space, brokers barely read these e-mails anymore. Believe it or not, better results are achieved by using good old-fashioned ‘snail mail.’ Additionally, sublease listing brokers need to be much more proactive in searching for possible subtenants in the existing building as well as the surrounding submarket. If you’re lucky, there may be an opportunity right under your nose.
Trey Miller is a leasing advisor with Moody Rambin Interests. Reach him at (713) 773-5584 or TMiller@moodyrambinint.com.
No one can argue that technology has changed the way we do business. We can now accomplish more tasks, from more places, than we ever could before. Technology has not only changed the way we work, it’s also changed where we work.
A big aspect of this is the emergence of the remote work force. Although you may be wary of a remote work force, fearing that your employees’ productivity will dip, it can offer many significant rewards, including reduced expenses and decreased attrition. Not only that, a remote work force can actually improve productivity.
Besides the business benefits, a remote work force will reduce your utility costs and make your company greener. By implementing a few procedures and processes, you can quickly and easily improve both your economy and the ecology.
“Remote work forces have already become an integral part of many U.S. companies,” says Monty Ferdowsi, the president of Broadcore. “There are many benefits for allowing your staff to work virtually anywhere and anytime.”
Smart Business spoke with Ferdowsi about remote work forces and how they can save you time and money and enhance your business.
How can virtual solutions create efficiencies for telecommuters?
In the early 1990s, the concept of telecommuting surfaced, promising to virtualize the work force via the use of new telecommunications technologies by allowing employees to work from home. At the time, however, it was just a concept, as the technologies required to easily implement the solutions were not readily available or matured enough to allow for companies to easily and cost-effectively implement telecommuting.
Today, though, with the advent of many technologies, including abundant broadband connectivity services (DSL, cable and wireless), remote access to corporate networks (Citrix and MS Terminal services) and a well-matured voice over IP (VoIP), it is now possible for companies to reap the many benefits of implementing telecommuting.
Many companies have already come to realize these benefits, and in the last few years, they have implemented capabilities to allow their staffs to use telecommuting on a per-employee basis, wherever and whenever it makes sense. Of course, with any disruptive and innovative technologies, there will be some companies that hesitate to embrace them, but with a well-planned implementation strategy, most concerns can be overcome. There are many success stories and case studies that would allow companies to see how other organizations have benefited using virtual technologies for their work forces.
In this environment, what kinds of advanced virtual capabilities can benefit businesses?
Allowing employees to telecommute enables companies to tap into a much larger pool of skilled workers, well beyond the geographical boundaries of the company’s physical office(s). Organizations will also be able to retain skilled and valued employees when someone needs to move to a city or state that’s not within driving distance of the corporate office. Studies also have shown that allowing telecommuting on a full-time or part-time basis will increase employee morale, since employees see several personal benefits of telecommuting, including reduced or no travel time, reduced costs associated with transportation and flexible working hours.
How can remote work forces save businesses money?
There are several cost savings to be had when you use virtual capabilities to implement remote work forces, including a need for a smaller office space and savings in many of the general costs associated with housing staff in the corporate office (furniture, electricity, etc.). Implementing telecommuting on either a full-time or part-time basis can also mitigate the need for a growing company to move its office location, which can be a major task with many related costs.
What technologies are needed to implement a remote work force?
Today, the virtual technologies needed to create virtual work forces are readily available, however, it is imperative for companies to evaluate all the solutions available in order to receive the most optimized services. In general, there are two categories of services that need to be virtualized to extend telecommuting to employees: remote desktop connectivity to the corporate network and voice connectivity to the corporate telephone system.
There are several technologies for remotely connecting employees to the corporate network, including Citrix and Microsoft Terminal Services. These technologies have matured and are relatively simple and inexpensive to implement. Voice connectivity is, however, a bit more complicated. Establishing remote connection to a corporate telephone system is no small feat. Luckily, in the last several years, hosted telephony services (Hosted PBX) has greatly reduced both the cost and complexity of implementing a virtual telephone system, allowing a corporate telephone to be extended to a remote telecommuting work force.
Monty Ferdowsi is the president of Broadcore. Reach him at (800) 942-4700 or email@example.com. Broadcore (www.broadcore.com) has more than 20 years of telephony experience with five years of deploying advance hosted telephony for major U.S. companies.
Business leaders often get so caught up in running their businesses that they neglect their personal finances.
But there is help available for overextended executives in the form of private banking, a comprehensive approach to personal financial management that gives you a single point of contact for all of your financial needs. It also provides quick and easy access to a local banking expert who will use his or her knowledge of your personal situation to deliver a customized solution.
“CEOs and business owners tend to focus on the day-to-day operations of their businesses,” says Brad Watson, senior vice president of private client services at First Place Bank. “Often, their personal finances get put on the back burner. Private banking can help mind the shop while you focus on your business.”
Smart Business spoke with Watson about how to build a private banking relationship to ensure your future financial success.
How do you qualify for personal banking services?
Most banks tend to segment clients differently, but generally, you’ll need to have at least $250,000 to $500,000 in banking assets to qualify for a private banking program. However, many banks will also look at emerging and affluent entrepreneurs who aren’t quite there yet but who are clearly on the path to being there.
How can using a private banker help you manage your finances?
Private banking goes well beyond checking, savings and money market accounts. A private banker will also offer you a wide array of services such as traditional depository products, treasury management, merchant services and foreign exchange.
Private bankers are also there to help you understand your current and future cash flow needs, how long it will take you to get out of debt, and how willing and able you are to save for the future. A private banker will help you ensure that both your short-term and long-term financial needs are met.
How can a company benefit from private banking lending options?
It depends on the type of business you have, but if your company has large cash flows and/or a need for cash management, private banking lending options can be highly beneficial. Not only that, a company can benefit from a private banker’s ability to customize service needs. Private bankers have the ability to underwrite, structure and approve loan requests in house, providing quick decisions and customized loans for clients.
How do you find the right personal banker for your needs?
Everyone will have a different focus, so you have to go in having some idea of what your needs are. The private banker will help you fully determine those needs, but be prepared nonetheless.
Ask a potential private banker questions such as, ‘Do you work with other clients similar to me? What is the lending limit of the bank? Do you have experience working with other people in my industry? How can you ensure that you’ll deliver what you say you will?’
You’ll also want to ask how many clients the private banker has. You want a private banker with experience, but you don’t want one who has so many clients that you just become a number.
The hierarchy of the bank is important, as well, because it shows you where the bank’s focus is. Many banks lead with whatever their strength is, so if you see a bank with a lot of commercial clients, it may focus more on that than on the private, personal side of its clients. But if you have an established banker who you can trust, one who is focused on you and your personal needs, you’ll have a true partner who can help you achieve any and all of your personal goals.
How important is it to find a banker who takes a holistic point of view?
Looking at banking from a holistic point of view is vital. Now more than ever, there are a lot of pitfalls in the marketplace — pensions are being reduced, benefits are being slashed or eliminated, and people are living longer, which on the surface sounds good, but the longer you live, the more money you have to spend.
Therefore, you have to make sure you work with a banker who has a grasp on your entire situation and will make sure everything works in harmony.
Generally, we all have the same goals — we want to send our children to college, retire comfortably and truly enjoy our golden years. But, on the other hand, everyone’s situation is different, and everyone has different tolerances and attitudes toward the market.
If your banker is looking at one specific piece of your finances and making recommendations on the entire situation, he or she is being very shortsighted and is not fully looking out for your best interests.
Again, you have to find a banker that you trust. You’re going to have to share all of your personal information with your banker and, in many ways, your future is in his or her hands.
Brad Watson is the senior vice president of private client services at First Place Bank. Reach him at BWatson@fpfc.net.
In early May, President Obama unveiled proposed changes to the tax code that could dramatically affect the financial reporting of businesses with foreign interests. According to the Obama administration, the proposed changes to the tax code are an attempt to reverse or slow the trend of U.S. jobs moving overseas.
Current views are that the current tax code provides a competitive advantage to companies that create jobs and invest overseas compared to those that create those same jobs in the U.S. The proposal aims to remove opportunities to evade taxes — legally and illegally — through offshore tax havens.
“Though these provisions have not been finalized as of this writing, the proposed changes could significantly affect both businesses and individuals with overseas investments,” says Lien Le, CPA, director of International Tax for Briggs & Veselka Co. “We advise that you talk with your CPA for more information about how you can best prepare to deal with these changes when they do take effect.”
Smart Business spoke with Le about the proposed changes to the tax code and how they could potentially affect you and your business.
Under the proposed changes, how will reforms in deferral rules curb tax advantages for investing and reinvesting overseas?
As of now, businesses that invest overseas can take current deductions on their U.S. tax returns for expenses supporting their overseas businesses. U.S. businesses can ‘defer’ paying U.S. taxes on the profits from those overseas investments until earnings are repatriated. Thus, U.S. taxpayer dollars are used to provide a significant tax advantage to companies who invest overseas in comparison to those who invest and create jobs at home.
The Obama administration proposed reforms of deferral rules so that, other than those for research and experimentation expenses, companies are not allowed deductions on their U.S. tax returns for expenses supporting their overseas investments until payment of taxes on their offshore profits is made. This provision would take effect in 2011.
So, will foreign tax credit loopholes be closed?
Current law allows U.S. businesses that pay foreign taxes on overseas profits to claim a credit against their U.S. taxes. Certain U.S. businesses may have used loopholes to artificially inflate or accelerate these credits. The proposal would close these loopholes, raising $43 billion from 2011 to 2019.
Will the research and experimentation (R&E) tax credit for investment in the U.S. be extended?
Currently, the R&E tax credit provides an incentive for businesses to invest in R&E in the United States. This incentive is set to expire at the end of 2009. The Obama administration proposes making the R&E tax credit permanent to enable businesses to make long-term investments in research and innovation. This will provide a tax cut of $74.5 billion over 10 years for businesses that invest in the United States.
How will loopholes for ‘disappearing’ offshore subsidiaries be eliminated?
Historically, U.S. companies have been required to report certain income shifted from one foreign subsidiary to another as passive income subject to U.S. tax. Since 1996, the ‘check-the-box’ regulations have allowed companies to make their foreign subsidiaries ‘disappear’ for tax purposes, allowing them to legally shift income to tax havens. As a result, the taxes they owe the United States disappear as well. The Obama administration proposes to reform these rules to require certain foreign subsidiaries to be considered as separate corporations for U.S. tax purposes. This provision would take effect in 2011.
Will the abuse of tax havens by individuals be more heavily scrutinized?
Currently, certain Americans can avoid paying U.S. taxes by housing their money in offshore accounts with little worry that the financial institution or the country of their offshore accounts will disclose the information to the IRS. In addition to initiatives taken within the G-20 to impose sanctions on countries judged by their peers not to have established information sharing standards, the Obama administration proposes disclosure and enforcement measures to make it harder for financial institutions and individuals to evade U.S. taxes.
The Obama administration estimates this package would raise $8.7 billion over 10 years by:
? Withholding taxes from accounts at financial institutions that do not share information with the United States — This proposal requires foreign financial institutions that have dealings with the United States to sign ‘Qualified Intermediary’ agreements with the IRS to exchange as much information about their U.S. customers as U.S. financial institutions report. If they don’t sign the agreement, foreign financial institutions may face the presumption that they are facilitating tax evasion and taxes would be withheld on payments to their customers.
? Shifting the burden of proof and increasing penalties for individuals who seek to abuse tax havens — The Obama administration also proposes stringent reporting standards for overseas investments by increasing penalties and imposing negative presumptions on individuals who fail to disclose foreign accounts and extending the statute of limitations for enforcement.
The Obama budget will enable the IRS to hire nearly 800 new employees dedicated to international enforcement, with the goal of increasing the ability to crack down on offshore tax avoidance.
Lien Le, CPA, is the director of International Tax for Briggs & Veselka Co. Reach her at firstname.lastname@example.org.
While some banks have stopped commercial lending or curtailed it in the face of economic uncertainty, many are still lending money — you just need to know where to look.
But in addition to finding a bank with available funds and a great interest rate, you need to find one that can service your organization’s needs and with which you can build a solid business relationship.
“The old adage of ‘You get what you pay for’ is very true right now in the banking world,” says Darlene Nowak-Baker, an executive vice president and lending manager with First Place Bank. “People often look at a bank as a commodity, but it’s not. Sure, money is money, but when it comes down to it, you need to partner with a bank that takes time to understand you and your business and will be with you in good times and bad times.”
One of the best ways to ensure that your banking relationships are as strong as they should be is to look at how the bank handles loan servicing, which includes everything that’s involved with your loan after the deal is closed, such as billing, payments of principal, and interest and escrow.
Smart Business spoke with Nowak-Baker about loan servicing, and why a good relationship with your bank is more important than any interest rate.
What should business owners know about the treatment of their loans?
After the loan is closed, the servicing starts. You want to find a banking relationship that is customer focused, and this will be evident throughout the process, which starts with your loan officer.
After the loan is approved, it gets handed off to a portfolio manager, who will have continued contact with you for the term of the loan, ensuring that the bank is doing everything it can and should be doing.
Your loan officer will stay involved, as well, particularly if you have a new or additional loan request.
With a two-tiered point of contact, you’ll know that you have two people at the bank who always have your best interests at heart.
How does the relationship between a business and its bankers work?
On the front end, the loan officer gets to know you and your business. He or she will find out about your business and its nuances, collect financial data and acclimate to you in order to assess exactly what you need, both now and down the road.
Once the loan passes through the credit department, the loan officer works to obtain the necessary approvals and then initiates the closing process, where the loan transitions to the portfolio manager.
This is where you determine that your bank is working for you. A good portfolio manager will maintain an ongoing relationship with you, offering an open line of communication. Your portfolio manager will be there if you have any problems or additional borrowing needs, which is vital, especially in an uncertain economy.
A good, relationship-driven bank wants to be there for you in your time of need. Whether you need cash flow relief, restructured debt, a longer amortization or an interest-only plan, you want a bank that’s willing to do whatever you need to help you weather the storm.
And internally, portfolio managers and loan officers have tight relationships. They’re your teammates, so to speak. So if something does go wrong, they will be there to help you through it.
What does a business owner need to know when meeting with banking partners?
The main thing is to be open and honest. Many borrowers think that if they tell the bank they’re having problems, the bank will pull the plug and their business will go under.
The bank wants to be a partner and help its borrowers through the rough patches. Also, consider the end game: The bank wants to get repaid. It doesn’t want to take a loss.
A business owner needs to be prepared when meeting with a banker, especially in light of this economy. Make sure you have all of your updated financials, interims, accounts receivable and payable, as well as what obstacles lie ahead for you and your business. The more open you are, the better your banking relationships will be.
What problems can arise during the loan process?
The biggest issue is being forthright and honest. Many times, something won’t be communicated in the early stages because business owners are afraid to tell the bank. Then, you get so far down the road, and all of a sudden, a problem comes up.
Most times, if the bank would have known about that issue beforehand, it would have made sure that you never even got into that situation in the first place. It’s easier to handle an issue before it happens, not right in the middle of it.
No matter what problems you may be having — back taxes, property liens, lawsuits, grievances, etc. — tell your banker. More often than not, there is a solution.
Bankers don’t want to play hide-and-seek; they want to help you get the loan you need to grow your business.