If the ball is too far forward, too far back, too far away, too close or if the club head and shaft are not properly aligned, then the player will have a very difficult time making a consistent and repeatable golf swing that will enable him or her to achieve the desired success.
As in golf, the set up is also the key to any successful business organization. More than half of new businesses fail within the first five years because most were not adequately structured or capitalized. Even the sharpest business person cannot succeed, or at least will not maximize his or her business potential, if they don’t begin with the right structure and adequate capitalization.
Having the correct type of business structure, whether it be a partnership, a limited liability company, a C corporation or an S corporation is critical in determining whether or not a business owner will be able to maximize his or her success. Unless the appropriate business structure is selected, the business owner may have difficulty in extracting revenue from the business, may not be able to obtain the revenues necessary to fund growth or may have difficulty securing bank financing for equity contributions.
At the same time, if a business venture has the appropriate structure but inadequate financing (whether debt or equity), that business will struggle to succeed. In capitalizing a new business, the hierarchy typically resembles the following.
- Owner equity or capital
- Equity or capital from friends and family of the owner
- Senior bank debt
- Subordinated debt
- Angel investors
- Venture capital investment
- Public investment
While there is almost an endless variety of other financing sources and alternatives (including, without limitation, factoring, government loan programs and grants, bonds, etc.), the vast majority of businesses are capitalized and financed with some combination of the above. While most businesses never receive financing beyond the first three items, it is nevertheless important to attempt to structure the business organization to maximize the potential availability of the other sources of financing.
As stated above, more than half of all businesses fail within the first five years. The vast majority of those failures occur because of not having the proper structure or capitalization. Like the golf analogy used above, businesses often fail because the business owners and operators focus almost exclusively on their swing (the business plan and operations) rather than on their setup (the business structure, capitalization and financing).
The golfer who focuses exclusively on the swing and neglects the set up may hit an occasional winning shot but, more often than not, that golfer will not hit the ball as strongly or accurately as he or she could. Like the golfer, the business owner who focuses on the business plan and operations, while neglecting the business structure and capitalization, may still succeed, but he or she is more likely to fail or fall short of his or her full potential.
Many business attorneys have the knowledge and experience to consult business owners at a variety of stages, from startups to established family companies and public corporations. They can help you to structure or restructure your business. They can also help you to locate financing sources and develop the programs needed for accessing those sources.
The bottom line is, with a 50 percent chance for failure, having your business structured correctly, with the right capital and resources in place, can only increase your odds for success.
Michael Smith concentrates his practice with Carlile, Patchen and Murphy LLP in the business, banking, mergers and acquisitions, and securities areas. He is currently chairman of the firm’s business law practice group. Reach Smith at (614) 628-0788 or MAS@cpmlaw.com
Internal Revenue Code Section 1031 allows a property owner to sell real estate that has been held for investment or for use in a trade or business and replace that property with real estate that will be similarly held (either for investment or for use in a trade or business) without incurring tax on disposition of the relinquished property.
Vacation homes not rented and with more than minimal usage by the owner, and principal residences do not qualify. The steps in completing a Section 1031 exchange are as follows.
- The selling party enters into a contract to sell the relinquished property and includes exchange cooperation language in the contract.
The selling party then executes an exchange agreement with a qualified intermediary and assigns the seller's rights in the sales contract to the qualified intermediary.
- At closing, any mortgage is paid off and net proceeds are paid to the qualified intermediary to be held in a qualified escrow to be used later to acquire replacement property.
- The selling party then identifies in writing within 45 days of the relinquished property closing date several suitable replacement properties that, if one or more are acquired, would satisfy the exchange obligation. The maximum number of properties that may be identified generally is (i) three properties of any fair market value, or (ii) any number of properties, so long as the aggregate fair market value of all such properties is not more than twice the fair market value of the relinquished property. Fair market value is determined without regard to liabilities secured by the property, such as a mortgage.
- Within 180 days of the relinquished property closing date, the seller completes the exchange with the qualified intermediary by acquiring one or more of the identified replacement properties. To completely avoid income tax (i) all exchange proceeds must be utilized in the exchange, and (ii) the aggregate purchase price of all replacement properties must equal or exceed the sales price of the relinquished property, net of transaction costs.
It works as follows: Assume you have an apartment building under contract to be sold for a selling price of $2 million, net of commissions and other transaction costs. The investment has a mortgage of $1.3 million, a tax basis of $900,000 (original cost $1.2 million, less depreciation of $300,000), and potential taxable gain of $1.1 million ($2 million selling price, less $900,000 tax basis). The net cash proceeds from the sale will be $700,000 ($2 million sales price less $700,000 mortgage paid), representing funds available for reinvesting in replacement properties.
You identify as suitable replacement properties the following:
- A warehouse leased to a tenant with a $1 million purchase price
Two hundred fifty six acres, land and timber, with a $1.5 million purchase price
- An apartment building newly constructed and without tenants that carries a $1.8 million purchase price.<.li>
You decide to select the warehouse and the acreage having an aggregate purchase price of $2.5 million ($1 million for the warehouse and $1.5 million for the acreage). The transactions are closed within the 180-day replacement period utilizing the exchange proceeds of $700,000 and a combination of new debt and additional cash contributed aggregating $1.8 million. Since all of the exchange proceeds were reinvested and you traded up in aggregate value, the exchange is tax-free.
Michael Smith is a partner with the law firm of Gambrell & Stolz LL.P. in Atlanta. He practices in the areas of business law and taxation. Reach him at (404) 589-3419 (direct) or at email@example.com.
Commercial condominiums offer business owners, developers and real estate investors maintenance conveniences similar to those enjoyed by residential condominium owners, as well as tax, marketing and ownership advantages that may not otherwise be available.
Under Ohio's Condominium Act, condominium units are created when a property owner or developer files a "declaration" with the relevant county recorder. Under current law, a condominium "unit," commercial or otherwise, consists of "one or more rooms on one or more floors," and may be created in new construction or buildings.
A unit is, essentially, an enclosed space owned and controlled exclusively by the unit owner. The buildings and the common areas within the development, both internal and external (corridors, public restrooms, elevators, stairways, parking facilities, green space and landscaping), are owned in common by all of the unit owners and administered by a condominium association.
Proposed amendments to Ohio's Condominium Act include a specific definition of "commercial unit." If adopted, this will eliminate the requirement that each commercial unit consist of rooms, instead relying on condominium declarations to define commercial units project by project. As a result, the creativity of the developer and drafter of the declaration, as opposed to statutory definitions, will be primary limiting factors in creating commercial condominiums.
Commercial condominium units may be combined with residential condominium units in a mixed-use development. Some examples of commercial condominium developments include newly constructed medical office parks, street level retail condominiums created in a refurbished urban building with residential condominium units created in the upper floors, and an existing office park or strip mall converted to condominiums to sell space to existing tenants or investors.
Marketing and sales flexibility may be the greatest advantage that condominiums offer the commercial developer. Upon creation, each condominium unit becomes a separate, independently transferable tax parcel and may be sold without seeking local lot split approval.
This allows a developer to sell small portions of a larger development over time, broadening the developer's range of potential purchasers and allowing the developer to realize a portion of its total return on investment at each sale. Developers can further expand the pool of potential purchasers beyond owner/occupiers by pre-leasing units to make them more attractive to investors.
Commercial condominiums also provide significant investment opportunities. Condominium units that constitute only part of a building or complex may appeal to real estate investors who are unable to purchase an entire building or complex. Additionally, condominium owners or investors may be able to avoid all obligations to perform maintenance of the unit or pay for maintenance of the common areas.
In many cases, an investor or owner can require tenants to maintain their entire units in good condition and repair. Owners and investors can also require that tenants pay, as part of their rental agreements, any maintenance assessments charged by the condominium association that would otherwise fall to the owners.
Finally, condominium units provide businesses that cannot afford to purchase the entire building or office park they occupy an opportunity to enjoy tax advantages on the part they do own -- advantages that would not be available to them as tenants, such as deductions for property taxes and interest, as well as assessments, utilities, insurance, repairs and depreciation.
The bottom line is that developers, investors and business owners will be well-served to consider the advantages of commercial condominiums as they seek to satisfy their development, marketing, sales and ownership goals. J. Theodore Smith is an associate in the Columbus office of Vorys, Sater, Seymour and Pease LLP where he concentrates his practice on condominium law, real estate acquisition and sales, real estate development, leasing, liens, evictions and real estate secured finance. Reach him at (614) 464-6232 or at www.vssp.com.
Most small businesses spend too much money on energy. Naturally, theyre more concerned about operating their businesses and making profits than they are about their energy costs. Many small business owners assume there is not much they can do about these costs, so they ignore them. But keeping an eye on those costs can have a positive influence on the bottom line.
Almost 70 percent of small businesses are tenants. Some pay their own utility bills, others have the cost included in their rent. One way or another, they are all responsible for their utilities, and all can profit from energy-efficiency upgrades.
One way to curtail costs is to invest in the EPAs Energy Star Small Business program, which helps small business owners upgrade their energy efficiency. Savings from these upgrades average about 30 percent per year. Each month small business owners operate inefficient equipment, they lose savings they never regain. They could use these savings as the down payment on new energy-efficient equipment.
Here are some additional easy, inexpensiveand in some cases freeways to make money on energy efficiency efforts.
Marketing adds profits by increasing sales
If you advertise your business as energy efficient, you may increase your sales. Some customers would rather buy from a business that uses energy efficiently and improves the environment. Several national surveys indicate about 76 percent of respondents would purchase goods and services from firms working to improve the environment. Also, 65 percent said they would switch if a comparable brand were better for the environment. In your advertising, stress that decreasing energy consumption prevents pollution and helps prevent global warming by reducing emissions of greenhouse gases from power generation plants.
Not all upgrades are expensive
Contrary to what you may have heard, energy-efficiency upgrades do not have to be expensive. Several low-cost solutionsand some that cost nothingcan generate significant savings for a small business.
Low-cost upgrade options:
- Caulk and weather-strip windows and doors;
- Install programmable thermostats;
- Install occupancy sensors in conference rooms or other areas not continuously occupied;
- Replace incandescent light bulbs with more efficient ones, such as compact fluorescents;
- Install awnings, window shades, or window films to keep out summer sun and reduce air-conditioning costs;
- Fix leaky faucets and toilets to conserve water.
No-cost upgrade options:
- Purchase Energy Star-labeled office equipment that uses less electricity and doesnt cost any more than other office equipment;
- Adjust thermostats when space is unoccupied;
- Turn off lights in unoccupied rooms;
- Take advantage of winter daylight by leaving window blinds open;
- Disconnect unnecessary or unused equipment.
Reducing energy used by small businesses reduces pollutants released into the air. Reducing electricity use decreases hours of operation of electric generation plants. Many plants produce large quantities of carbon dioxide, one of a group of greenhouse gases that are the primary cause of global climate change.
Other emissions from electric power plants contribute to both acid rain and smog. During the summer, emergency rooms in the larger metropolitan areas are often filled with people with respiratory complaints.
According to the EPA, about 50 percent of the U.S. population breathes polluted air at least part of the year. EPA data indicates that approximately $45 billion is spent each year on health care as a direct result of air pollution. Therefore, using energy more efficiently not only improves air quality, but it can also reduce health care costs.
Robert J. Smith is senior project engineer with Aspen Systems Corp. in Rockville, Md.
Some building managers offer a variety of reasons for putting off making improvements to the energy efficiency of their facilities. Several of the more common reasons are nothing more than myths. Lets look at some of these myths and see why they should not prevent businesses, particularly small businesses, from upgrading a building and reducing energy costs.
The myth: If it isnt broken, dont fix it. Old equipment should be replaced only when it burns out, wears out or breaks.
The fact: Heating and air conditioning equipment that is more than 10 years old uses more energy than modern replacements. The energy saved usually pays for the new equipment in less than three years. For example, new T-8 fluorescent lights use 25 percent less energy than T-12 fluorescent lights. Waiting for equipment to break down or lights to burn out is equivalent to throwing money away.
The myth: Energy conservation and energy efficiency are the same.
The fact: Energy conservation reduces the amount of energy used in a building without regard to employees comfort or productivity. Turning back thermostats in the winter and up in the summer will save energy. The result is that people feel cold in the winter and hot in the summer. Energy savings occur, but at the expense of employee comfort.
Energy efficiency also reduces the amount of energy used, but the comfort level is maintained or improved. Replacing older-style fluorescent tubes with new modem tubes can reduce the energy used by as much as 35 percent and produce an improved lighting level.
The myth: Energy-efficiency upgrades are expensive.
The fact: Simply turning off lights when leaving a room for more than a few minutes costs nothing and results in significant savings. Adjusting thermostats at night and on weekends creates energy savings, as does closing window shades during the hot part of a summer day. Some upgrades are very inexpensive. A programmable thermostat costs less than $100 and can reduce heating and cooling bills by as much as 30 percent. Motion sensors in offices and waiting rooms cost less than $100 and turn off lights automatically when no one is in the room. Some incandescent light fixtures will accept compact fluorescent light bulbs for less than $20 per bulb. Each CFL uses 75 percent less energy and requires one tenth the maintenance. Replacing filters on a warm-air furnace on a regular schedule will prevent restricted air flow caused by a dirty filter and allow the furnace to operate more efficiently.
The myth: Delay upgrades until after the electric industry is restructured, because the cost of electricity will decrease and some upgrades may no longer be cost effective.
Fact: Restructuring either is under way or under investigation in all but two states. The price of electricity is expected to go down in most areas as a result. However, in some areas, such as the Midwest, where coal-fired plants are predominant, electricity costs are low. Here, it is possible that electricity costs will increase for some customers as competition begins and other suppliers move in. Energy efficiency improvements temper any increase in price. Further, the largest price decreases may be available only to larger customers. From the suppliers perspective, small businesses normally have their peak demands at the wrong time of day or the wrong time of year, so they are not considered very desirable customers.
The myth: Fluorescent lights last longer if you dont turn them on and off repeatedly.
The fact: Turning fluorescent lights on and off does shorten their life slightly. However, if a room is unoccupied for more than 10 minutes, you save more energy by turning off the lights than the shortened life of the fluorescents costs.
Robert J. Smith is senior project engineer with Aspen Systems Corp. in Rockville, Md.
Collectively, the efforts have been fragmented, reactive and not focused on the needs of the business community.
Strategies were not designed with the needs of business in mind. Instead, they utilize a reactive strategy, responding well to calls for help, but not proactively targeting the types of businesses that would have a sustainable impact on the region. Limited resources have been dedicated on a first-come, first-serve basis, rather than with a sense of prioritization. And all too often, the businesses and industries requiring the most attention are at the end of their industrial life cycle.
Someone once said, "To be a bullfighter, you must first learn to think like a bull." This sets a fitting goal for the economic development entities in the region, which need to be more focused on the needs of companies and less focused on structure, process and turf.
On Jan. 22, Team NEO (Northeast Ohio) was launched in an effort to provide a new level of focus and cooperation that will help redirect the resources of the region's organizations and private companies toward key industry clusters to promote economic development. It will focus on relationship management to provide valuable resources to existing companies, as well as to companies we hope will expand into Northeast Ohio. This will help us in the ongoing interaction with companies to better understand and address their needs.
Initially, Cleveland Tomorrow identified this need for a more regional, proactive economic development initiative. One year later, the Greater Cleveland Growth Association, upon completion of its strategic plan, made creating this entity a priority.
Armed with funding from The Cleveland Foundation, the Growth Association and Cleveland Tomorrow hired McKinsey & Co. Inc. to review best practices from other competitive regions and assist with the design of Team NEO. The study identified a report card utilized by selection consultants when evaluating locations for clients interested in expanding their businesses. Infrastructure, public policy, work force and lifestyle are all criteria on the report card.
Northeast Ohio had an overall report card grade of "C," indicating why it might be eliminated from several location searches in the first round.
One of the more surprising revelations was the fact that quality of life, regarded as a regional strength, is merely considered a "nice-to-have," not a "must-have."
In addition to the Growth Association, Team NEO's founding partners include The Greater Akron Chamber, Lorain County Chamber of Commerce, Stark Development Board, Youngstown-Warren Area Regional Chamber, Cleveland Tomorrow and FirstEnergy Corp.
All recognize the need for accountability and establishing an appropriate performance matrix. It is imperative that our region's public officials and community leaders support this effort if economic development and jobs creation are to become priorities.
The Growth Association will take an active role in addressing one of the major challenges facing Team NEO -- improving public policy in Northeast Ohio to be friendlier and more responsive to business growth.
Team NEO's partners are involved in the search for a president who will staff the organization with the relationship managers required to begin work. The Growth Association is committed to supporting this effort and will dedicate the resources necessary to help Team NEO accomplish its goals.
We understand that to be successful, we must begin to think like the bull -- and then we, too, will become successful bullfighters. Robert Smith is chairman of the Greater Cleveland Growth Association and president of Spero-Smith Investment Advisers Inc. He is the former chairman of the Council of Smaller Enterprises. Reach COSE at (216) 621-3300.
Harvard professor Rosabeth Moss Kanter is a star of the corporate consulting world, advising major companies on managing international commerce on the verge of the 21st century. One measure of the respect accorded her thinking: She has been awarded 18 doctoral degrees.
She is a prolific author, with titles including Men and Women of the Corporation (1977) and The Change Masters: Innovation and Entrepreneurship in the American Corporation (1983).
Kanter grew up in Cleveland and proudly used the city as a model for urban renaissance in her 12th book, a 1995 business bestseller titled World Class: Thriving Locally in the Global Economy.
SBN spoke with Kanter about the citys renaissance and its future.
Q: Where did you grow up and what are some key memories?
A: I grew up in University Heights and Cleveland Heights and graduated from Cleveland Heights High School. My father was an attorney downtown. Downtown had a comfortable feeling and I liked to walk around there. The city had a small-town feeling, but the cultural parts were fabulous. But everything was a little oasis surrounded by difficult areas. I went to the art museum a lot, but nothing felt safe beyond the oasis.
Q: What got you interested in the world of high-level business and international trade?
A: When I was growing up, my parents friends were professional people, so I had little contact with the corporate world. I was interested in leadership, people, and organizations, and the business world was a very interesting place to look at the impact on people and society .... I only became a business strategist later because I was interested in the things that were most important in shaping American society.
Q: Give us the basic message of World Class with regard to what companies and communities must do to compete in the new global market?
A: It has become vital to become part of a network outside the local area because the advantages due to being nearby are being rapidly reduced. Even smaller companies need to be connected to bigger entities and need to have something distinctive and world-class to offer. They need to be innovative, to be good at execution, to be able to perform at high world standards and they need to have partners that can help them get access to the best ideas and technologies or markets outside their local area.
This means regions have to raise standards and think about how to keep and attract businesses.
Q: When you were doing research for your book in 93 and 94before most of the world knew about Clevelands comebackwhat caught your attention about Cleveland?
A: What especially impressed me were the people I knew who had this great civic spirit and I noted the collaboration that helped the manufacturing renaissance. ... When I went to do the book, I was looking for a place that would illustrate one kind of positioning in the global economymanufacturingand I thought of Cleveland.
I was aware of the level of collaboration there had been among business leaders. Cleveland CEOs put an incredible level of explicit attention into this, reflected in the formation of Cleveland Tomorrow.
Some of the comeback was simply tied to the overall manufacturing recovery in most of the Midwest, while the Northeast was still suffering because of the decline of computer hardware manufacturing. The Midwest companies had become more competitive and solved the problems they had in the early 80s. They had raised quality, developed a new bargain with the work force, modernized facilities and were using new production methods.
Ohio became a center with excellent political leadership from George Voinovich and Richard Celeste and Clevelands leadership built up the spirit of the city through big projects.
Q: How have things progressed since you did your initial research?
A: I have only watched from afar, but ... it seems to me that the Cleveland renaissance could be somewhat stalled.
Q: What should be done about that?
A: The civic leadership initially focused on the big, physical projectsrevitalizing downtown, encouraging development of the Flats, the Lakefront development, the Rock and Roll Hall of Fame, all of which are important [for] bringing in tourists and building pride.
There are areas I could never venture into when I was growing up which are now clean and well lit. The fact that there is a nightlife in downtown is just amazing. And there were some really wonderful things to get the revitalization going in the neighborhoods like Bicentennial Village. But these are all brick and mortar projects. Whats a lot harder is to fix the human infrastructure and to move into new industries of the future. It hasnt done as well there.
Q: Such as with the schools?
A: Right. Some of that has been due to the flight to the suburbs and the results of years of neglect and segregation. Leadership Cleveland has tried to reach out across ethnic groupsgetting blacks and whites to meet and work togetherand I think its been very effective. The keys to improvement are strong standards set at the top, school-based decentralized management and very strong support from the business community [by] investing in new kinds of education as partners, like the Finance Academy the banks put together. In Boston, we have school-to-work programs that have been valuable.
People and companies in the suburbs should offer to help fix the problems of the central city or you will continue to have serious weakness. School problems are a lot more complex, they dont lend themselves to the same kind of easy investment project that a Terminal Tower does.
Even at the higher education level, the universities are very good, but to get to the world-class level, one needs to build institutions that become major research centers. Obviously, in the medical field, that is already the case. If you provide positions at universities that draw the best talent, they will come and want to stay and they will draw others so that you build a critical mass.
Q: What else would help?
A: To attract and incubate the industries of the future, Cleveland needs several other things. One is that it should put in a greater communications structure for information technology. Also, consider the airport. Why is Atlanta an international airport hub? How did Singapore get to be a hub? There has been some international emphasis in Cleveland with this marketing campaign about the North Coast, but that was too much about image. The World Trade Center is important. You want to make this a crossroads place where you have easy access to anywherea place you have to be to do business.
Q: Yet, when you mention it to people on the coasts, even after all the promotion about the comeback, they still think its a rustbelt.
A: Exactly. The true image hasnt reached most of the people that you want to attract. I was just speaking with some people from Detroit and they said they always prided themselves on being Not Cleveland.
Q: In your book, you report the business climate in Spartanburg-Greenville, S.C., received a 69 percent approval rating, while Seattle only got 11 percent. Boston, Miami, and Cleveland were stuck around 25 percent. How can there be such a disparity and such low scores on something so fundamental to a healthy economy?
A: Spartanburgs government did everything it could to help business and the rating was whether people regarded city officials as being very helpful. Seattle has succeeded in spite of its government, which residents feel has not solved the traffic problems, business complains about too much regulation and so forth.
The companies actively thought about their international ties much earlier than Cleveland. The large numbers of young people, the entrepreneurial spirit, a great climate and being a high-tech center make it a hip place to be. Cleveland has to become a cool place for young entrepreneurs to grow a young company.
Scott S. Smith is an independent writer from Los Angeles. His work appears in Entrepreneur and Nations Business, among other national publications. To comment on this article, send e-mail to firstname.lastname@example.org.
Jean Moliere (Jean-Baptiste Poquelin), 15th century playwright
Many if not most businesses are faced with the unenviable task of informing employees that they must share more of the financial burden of health care costs a difficult pill to swallow for even the most realistic of workers.
As employees become more financially responsible for their health care, they want information to help them understand where their money is going. This is good, because it helps them think more like a business and brings them face-to-face with the real cost of their care.
The question is this: Is there relevant, reliable information available to help them assume more responsibility and make the transition smoother? The answer is yes, and you can help them find it.
It’s important to keep in mind that, as an employer, you don’t have to carry the educational burden alone most health insurance management companies have resources that can help you communicate with your employees.
In fact, it’s in the insurer’s best interest to keep people healthy and help demystify the health care system. Many of these companies have done a great deal of research in these areas and would be happy to share with you the tools and information they have available for your work force.
One of the strongest motivators for changing employee behavior (regarding health care responsibility) is cost. Employers have known this for a long time, but it’s actually a new experience for many employees.
Health insurers can give your employees access to powerful tools that include features such as cost estimators, which provide cost information for the most common services and conditions affecting families today.
Tools like this are easy to use and comprehensive. Employees who use these tools will have a much clearer picture of the actual costs for primary care visits, specialist visits, diagnostic and other medical services, as well as medication costs. Cost estimates are derived from claims databases and use a sound statistical methodology.
With the growing trend toward consumer-directed health care plans, health savings accounts (HSAs) and an increasing amount of medical information in general, there are also coverage advisory tools that can help employees understand how to fund tax-preferred HSAs and organize complex information into easy-to-read reports. By entering some simple financial and health information, these systems can calculate plan options best suited to their specific needs.
There are also extremely powerful and in-depth online research tools which allow your employees to login to secure Web portals to research medical illnesses, do specific hospital comparisons, find quality data, customer satisfaction ratings, success rates and more.
Independent medical experts evaluate all health information; hospital comparisons are based on current, publicly reported data pulled from nationally recognized accrediting agencies.
Education, of course, takes time. But by reinforcing the messages that, a) employees must accept an active role in their health care, b) there are resources available to help and c) they play the most crucial role in reducing costs, everyone stands to gain.
The shift toward employee responsibility has already begun, but employers can make a huge difference in how their work force accepts these changes. Businesses who take advantage of the educational resources available to them from their health plans may even boost employee morale and help employees feel better, not bitter, about the financial responsibility of managing their health care.
Graham Smith is director of marketing and product development for Care Choices, a nonprofit health care organization and a subsidiary of Trinity Health. Care Choices HMO is ranked as #7 among 257 commercial plans nationwide and is the top-rated plan in Michigan, according to U.S. News & World Report/NCQA “America’s Best Health Plans, 2005.”
The exercise is wonderful work therapy for the participants. After the pictures are presented, the budding Picassos wad them up. I set a large wastebasket underneath a toy basketball hoop, and after all the artwork has been shot into the wastebasket they set to work at creating the kind of workplace where they can flourish.
I know the exercise is effective, and not only because I've seen it turn around even the most calloused clients. It's an adaptation of a useful method I used 15 years ago when I quit smoking. I know breaking myself of this powerful addiction would be difficult both physically and emotionally.
To facilitate it, I wrote down all the negative results of smoking I could think of: money wasted, setting a bad example for my children, addictive behavior and so on. I put all those sheets into a pile. Meanwhile, I created another pile listing all the positives of quitting: better health, a longer life, a more efficient worker, etc. On it went.
When I finished, I lit a match to the pile of old negatives and watched my old smoking habit go up in flames. That made it official: I was done with cigarettes. Whenever I felt the urge for a cigarette in the next few weeks, I pulled out my list of positives and studied them to reinforce my decision. I haven't smoked since.
Too often we try to simply wish away bad habits and unproductive attitudes, but that's a flabby way to trigger change. No wonder we fail. We become like the would-be dieter who grabs for another piece of chocolate cake and vows to start the diet tomorrow. Deep down, we don't believe we can change. We don't know how. Awash in excuses, we tell ourselves that change is impossible.
That's why taking some physical action to rid yourself of limiting habits and limiting attitudes is so effective. I still do it, even writing a letter to God when all else fails, asking Him to rid me of negative feelings and behaviors. Then I burn the letter. As I watch the flames, I can actually feel the release of all the toxic behavior I no longer want to own.
Change is a choice. Watching negative habits dissolve into ashes turns "impossible" to "I'm possible." Try it. It's the most powerful way I know to kindle change.
Donna Rae Smith is founder and president of Bright Side Inc., which develops programs to inspire leadership and change. She is author, most recently, of The Power of Building Your Bright Side.
Part 2 of 2
Diane and Bill Johns, owners of the Coxsackie Antique Center in upstate New York, pay the utility bills for the building they rent for their antique shop. The building's ambiance was cozy, but its atmosphere wasn't, particularly in winter. Frigid drafts swirled through the uninsulated building, literally freezing out the shop's customers.
After discussing the problem with their landlord, the Johnses spent $1,100 to insulate the building and their landlord paid for a new roof. Annual energy savings should amount to $400, which doesn't include potential sales increases. That means the Johnses should recover their costs in less than three years. Both parties profited: The tenants slashed operating costs and the landlord got a more valuable building. If the Johnses ever relocate, the landlord can more easily attract tenants to his energy efficient building.
Most small businesses give little thought to utility costs. If you're like most owners, you view energy costs as a line item in the budget, a necessity which has little direct impact on the success of your operations. But ignoring those costs, whether you pay them directly or as part of your rent, affects your bottom line.
All businesses can profit from energy efficiency upgrades. Programs such as the EPA's Energy Star Small Business Program can help get your started.
Save yourself money
Investing in energy efficiency upgrades can cut your monthly utility bills and create a comfortable work environment for your employees. In a retail setting, new energy efficient lighting provides better color rendition, which means your merchandise will look more appealing.
Your landlord will also have a more valuable building because of your efforts, so you should negotiate a mutually beneficial deal. Your landlord may agree to lower your rent or to subsidize the upgrades. Remind your landlord that capital improvements to the building are tax deductible.
For example, two tenants lease similar stores in a shopping center. Both spend about $6,400 on electricity per year. Tenant A pays for utilities, but Tenant B has utilities included in the rent. Both propose upgrading lighting at a cost of about $3,000, with resulting savings of about $960 per year. Tenant A will get back the investment in slightly more than three years and increase profits by $960 every year after that. If Tenant B persuades the landlord to reduce the rent by $80 per month or $960 per year, both will benefit equally.
If you're not sure how to get started, or you need support to get your landlord moving in the right direction, the EPA's Energy Star Small Business Program helps small business owners implement energy-efficiency upgrades. Partners agree to voluntarily upgrade their equipment's efficiency within three years, but only if the upgrades are profitable and the quality and comfort of their facility can be maintained. Partners also agree to consider Energy Star-labeled products when they buy or replace office equipment. There are no reporting requirements, but partners can receive public recognition if they inform the EPA about successful upgrades. For more information on becoming a partner, call the Energy Star hot line at (888) STAR-YES or visit its Web site at www.epa.gov/smallbiz.
Just because you are a tenant, do not pass up the savings that can result from energy efficiency upgrades. As a tenant, you will probably not replace a heating or air conditioning system or put a new roof on a building, but you can improve energy efficiency in other ways. Most upgrades cost nothing or very little but result in significant energy savings. So become a partner in the Energy Star Small Business program and begin to enjoy the benefits of lower energy costs. SBN
Robert J. Smith is senior project engineer with Aspen Systems Corp. in Rockville, Md.