When Mark Mizer talks about partnership, he doesn’t have to think hard to find an example of it involving his company, RDP Foodservice LLC.
Last summer, a huge power outage afforded RDP the opportunity to show how an independent food service company partners with its customers.
“We took our tractor-trailers out to restaurants, and we collected their product because we had power and refrigerated the perishables so they wouldn’t lose their product,” says Mizer, president and the oldest grandson of company founder Richie DePaolo, who popularized not only the silver dollar-size slice of pepperoni but also the cardboard box for pizza.
Being an independent supplier right in the area has its pluses, but the premise that his company as an independent is a good fit for independent restaurateurs can’t be overlooked.
“Once you realize that you want to be the champion of independence, and you can go out and tell that story of being an independent yourself, it really helps clarify what your role is and what your job is,” Mizer says. “We decided, ‘OK, that is going to be who we are going to fight for. Those are the ones we want to create partnerships that we can help grow.’”
Here’s how Mizer aligns his company’s role as an independent food supplier to his customers, who are independent restaurants, and how the two grow in success together.
A journey to an identity
Developing your identity, that is, your brand, takes considerable thought. And maintaining it over a period of years is no small feat. RDP’s journey took it from a small business to a large enterprise.
The company originated in the 1930s as a family-run grocery store, and in 1957 added a food service business, primarily catering to pizza houses. From 1985-96, the company was part of Sysco Corp., the largest food service company in the world.
“But Sysco decided to dismantle the company, and our family decided to go back to being independent, and we started the whole process over again,” Mizer says.
RDP had drifted away from its identity while under Sysco, and the years there showed the company that food service is a huge, multibillion-dollar industry where it was a drop in a bucket.
When a company is in the position to assess its identity, it often happens at a crossroads. For RDP, its exit from Sysco was prompted by the family members that they had to stand for something.
“What we felt we needed to stand for was the independent restaurateur, the guy who creates that local flavoring in your community or in your neighborhood,” Mizer says.
Mizer and his team looked back on the company’s history and how it supported the independent restaurateur.
“He is the flavor of this country,” he says. “Someone has to go to bat for those guys. When there are people who move away from town and move back, they don't come back to relive their childhood by going to a corporate restaurant. They really want to find that neighborhood place that represents their childhood.”
Likewise, if you are visiting another city, you don’t want to experience it by going to a corporate restaurant like the same ones in your town.
“So you go to Baltimore, Md.; you want to find that guy who has those crab cakes,” Mizer says. “He has been making them for three generations on the beach, or near the water. That is where you get the flavor of your community.”
Once you realize that you want to be the champion of independence and you can tell the story of being an independent yourself, it really helps clarify what your role is and what your job is.
“So the whole industry became a little bit easier for us,” Mizer says.
Make the effort to hustle
Once your identity has been clarified and your role planned, it’s time to take action — and to hustle.
“I think one of the reasons why we are still here is my grandfather and my uncles just outhustled everyone; it was that dedication where they were manually checking orders to make sure they were correct, working ungodly hours all the time,” Mizer says.
While today’s employees don’t manually check orders off a clipboard, there is a new and better idea.
“I think computer technology today has kind of evened that playing field,” he says. “The technology that is available to me as an independent is the same technology that the big corporate people are using.
With technology as a tool, all players in an industry can work toward perfection — getting your order at the price you negotiated without any errors at the time you want your delivery.
“That's what we are all going to; all the things that my grandfather and uncles had to do in years past are now being done by a computer,” Mizer says. “If we all get to perfection, then how does that customer make his decision?”
This is when differentiation comes in. Call it added value or a bonus. Mizer calls it personality.
“I think for the very first time now, personality becomes a little bit more of a factor,” he says. “We not only have to sell you Heinz ketchup, we have to put a personality behind it — which is how do we help you grow your business? How do we create an experience for you buying from RDP that the other companies can't create?”
Going it alone — as an independent — is actually a strong point, he says. While conventional wisdom may say there is strength in numbers, Mizer can politely disagree; RDP’s annual revenue tops $164 million.
“Independence is a strength; independence isn't a weakness,” he says. “When you open your own restaurant or whatever that might be, you are putting your own personal interests on the line. And when you do that, you may feel like you have to go to a corporate giant because those corporate giants get the best deals with the best products or the biggest selection. That's not necessarily the case in food service. Bigger doesn't necessarily mean better.
“We think we are as competitive as anybody,” Mizer says. “We think that when we are helping the independent restaurateurs, they shouldn't have to sacrifice anything by working with another independent.”
Motivate with mottos
One of the last steps in securing your identity is to get all employees on board with the program. That means engagement in the mission, which when brought to fruition, creates a sense of satisfaction.
“When they get a chance to see that they can actually put their thumbprint on the growth of a company, it is really invigorating to them,” Mizer says.
While everybody at your company plays a role in your success, they need to realize how they fit in with selling a product that may not be unique. It’s the experience that will make it different from the competition.
“Every year we have these little mottos that we use like motivation throughout the year,” he says. “They are all part of it, so one year, it was 'Move the needle' and if there wasn't something in this organization that moved the needle, then we cut it out and didn’t use it anymore. We went with a different approach.”
Mizer and his team use a motivational phrase to help keep the excitement going.
“Last year, we had the motto ‘Create the experience’ and that was everybody in this company realizing that for a customer to be satisfied, we have to create an ultimate experience, whether it is from the receptionist to the salespeople to our drivers, to how we treat them to special events, you really create an experience for that relationship because we don't sell anything that is unique.
“I don't sell iPads. You want an iPad? You have to buy it from Apple. We sell Heinz ketchup, which you can buy from anyone, from a grocery store to any of my competitors, so you have to find a reason to create that experience.”
Mizer’s motto for this year is ‘Pull the rope.”
“We all realize for a restaurant to be successful, every department within this company has to work together; we all have to pull the rope at the same time,” he says.
Mizer passes his enthusiasm weekly with the senior management and three different huddles throughout the company with all the employees.
“Then they are hearing it from the passion of me so they all understand exactly what our goals are,” he says. “If there is something that we need to do a better job of, we will voice it then. But everybody needs to know that every department has to work closely together pulling that rope.
“This is what's on our plate for this week. This is how we can be a better company.”
How to reach: RDP Foodservice LLC, (614) 261-5661 or www.rdpfoodservice.com
Take a journey to an identity.
Make the effort to hustle in your business.
Motivate with mottos to keep the troops engaged.
The Mizer file
RDP Foodservice LLC
Born: Dayton, but I moved to Columbus right afterward.
Education: Upper Arlington High School, then I graduated from Ohio University. I studied business communications, and then I actually studied to be in the fashion world. My first job out of college, I went to work for The Limited, and it really set the tone for that kind of outside-the-box thinking.
What you was your first job and what did you learn from it?
My very first job was dragging clay tennis courts. I think I learned that people depend on you and punctuality. And if you're not there, you’re going to lose your job.
Who do you admire in business?
I admired a guy named Dick Solove. He has passed away. He was known as being a really tough businessman. Yet when he got older, he gave back to Ohio State University. They named the cancer hospital after him. Solove taught me the importance of giving back to the community and how important that is. Also the Les Wexners of the world. I think what I find interesting in business leaders are the ones who are successful, but yet they want to go down in history for more than just that. They are the ones who want to give back to the community.
What is the best business advice you ever received?
Sam Walton said, ‘The true CEOs of our company are our customers. And they can hire and fire us at any time by just buying their products from somebody else.’ That is one I use a lot.
What is your definition of business success?
I think the definition of success really is the ability to change the lives of not only your customer base, but of the lives of your employees. We really are a team over here with my two cousins who are executive vice presidents, Rich and Chris DiPaolo.
Summer time is best spent outdoors. Jumping in the pool. Taking the boat out. Getting away for a road trip on your motorcycle. However, it is easier to enjoy the great weather when you know your summer “toys” are properly insured.
“The season of summer usually conjures up feelings of fun, especially vacations, swimming, boating, fishing, picnics and other outdoor activities, but along with the fun comes responsibility,” says Cliff Baseler, vice president at Best Hoovler Insurance Services Inc., a SeibertKeck company.
Smart Business spoke with Baseler about how to handle insurance for these extra items.
What is personal lines insurance?
Personal lines insurance is a layer of protection that provides coverage for you and your assets, such as your home, car and possessions, against damage, theft and other potential risks.
When it comes to boats, jet skis, RVs, motorcycles, summer cars, pools, etc., what insurance should you have?
Watercraft, such as boats or jet skis, are placed under a marine policy. These annual policies would provide coverage for bodily injury and property damage. Bodily injury is any injury that you caused to someone else’s body, while property damage is damage caused to the boat.
Recreational vehicles (RVs), motorcycles and summer cars require an auto policy separate from your everyday auto policy that is specialized for unique autos. In some cases, a company will be able to add the watercraft and/or special vehicle to your current home policy as an endorsement.
While pools typically are covered under your homeowner’s policy, there are specific requirements to ensure safety. These include, but are not limited to, the depth of the water with diving boards, slides and fence specifications, such as height, area around the pool, self-closing and self-latching gates. Be sure to check with your agent for specific rules and regulations for your pool.
How can you make sure these items are insured to value, and what kind of cost could you be looking at?
While it is important to insure all of your summer toys, it is even more important that they are insured properly and to value; this is critical at a time of loss. The value of the item is best determined by using the year, make, model, value and any customized additions. These details are often reviewed at the annual renewal of your policy for updates and additions.
Premiums also will vary based on many factors. A stand-alone marine policy for a pontoon-style boat valued at $10,000 could have an annual premium of anywhere from $500 to $750, but this is all contingent on the individual’s underwriting information such as insurance score and loss history. Also, some companies provide credits if you package all your insurance, meaning you place your boat with your home and auto. This would also apply to an RV or motorcycle.
Are there ways to save on the premium upfront without jeopardizing important coverage?
Premium savings on ‘toys’ are similar to savings on your current insurance program. Your insurance score, loss history, location, age and marital status will influence the rates applied. The better your insurance score, the lower your premium — just as a high claims history will result in higher premiums.
What else do you need to know about this kind of coverage?
When making a claim, the first step is to contact the proper authorities to help if someone is injured. Then, you will need to call your insurance agent with the details of the event and secure the contact information needed from all parties. Taking photos and obtaining contact information from witnesses is highly encouraged. Your claims adjustor will assist in the entire process.
Surprisingly, most homeowner’s insurance does not cover summer toys for your kids, such as mini-electric cars and scooters. Considered a toy, these are often overlooked but have the potential to be harmful.
When purchasing ‘toys’ it is best to advise your insurance agent immediately. He or she will make sure they are properly insured to value and be able to offer some safety tips to ensure you have a safe and fun summer.
Cliff Baseler is vice president at Best Hoovler Insurance Services Inc., a SeibertKeck company. Reach him at (614) 246-7475 or email@example.com.
To keep up with the latest insurance news and how your company could be impacted, sign up to receive our newsletter at www.seibertkeck.com.
Insights Business Insurance is brought to you by SeibertKeck
Even in this recovering economy, businesses are trying to do more with less. While managing existing processes can enable flexibility for the ups and downs of business, incorporating software could alleviate pain points, improve productivity and save money.
“The big question is, ‘How do I improve what I do with my customers, my vendors or my employees?’” says Curtis Verhoff, systems integrations and applications manager at Blue Technologies. “Those are the big three, and every organization is like that — whether it’s somebody who sells widgets, provides professional services or is trying to find donors and support.”
Smart Business spoke with Verhoff about utilizing software to improve a range of business functions.
What are some examples of optimizing your software resources?
These software solutions often deal with enterprise content or customer relationship management, but they also can be transactional, such as helping handle invoices, statements, packing slips or the documents you use daily to communicate with customers. One business recently optimized its existing systems to reduce raw postage costs, saving anywhere from $4,000 to $5,000, or 20 percent, each month.
Two other organizations increased productivity by improving payment management. By adding to its software and adjusting existing systems, one company took better advantage of pricing discounts by paying vendors earlier. The other business tweaked the integration of its current system, getting its elite group of customers to pay on average five to seven days faster, which improved cash flow.
What can maximizing your software integration mean for your business?
In this economy, it’s critical to look at the level of success you’re having integrating your current software products. All businesses have to work harder to maintain their current customer loyalty, while trying to attract new customers. You must be more productive with the same or fewer employees.
Your competitors are already working to be productive and more customer friendly — you don’t want to be left behind. You need to provide advantages to your customers to separate yourself. Highlighting your software solutions through marketing can give your customers an indication of how it will make doing business with you more pleasant and reliable.
How can you discover if you have problems with existing software?
What complaints do you hear from your current staff about being more productive, servicing customers better or doing day-to-day activities more efficiently? Is each department running at peak efficiency? Where is your business not functioning at optimal capacity? If you’ve integrated certain solutions, then what’s the ROI and are you happy with that?
If you’re not hearing about problems, check with your managers. Some managers don’t take problems to the top until they reach critical mass.
Once you’ve spotted the pain, what’s next?
First, identify and pull together people to discuss the fine details of the problem. You don’t need to connect all the dots, just get a solid understanding. Develop a game plan that focuses on the most painful areas that, if resolved, can produce the biggest gain.
Many companies put together a laundry list, and then don’t move forward, fearing the cost and scope. However, if you prioritize the most critical items, you might be able to resolve the few problems that are causing most of the pain.
Then, reach out to a provider with the skills and abilities, as well as the offerings, to help you overcome your top challenges. It’s important for all parties to keep the larger list in mind because it could affect the software solution decision. Each resolution is a piece of the puzzle, and you want to avoid having to revisit it later once you’ve moved on.
Curtis Verhoff is a systems integrations and applications manager at Blue Technologies. Reach him at (216) 271-4800, ext. 2251 or cverhoff@BTOhio.com.
Save the date: Discover how your office technology can connect your business at our Aug. 20 Synergy Showcase. Meet us at the Q to see for yourself. Visit http://bit.ly/12PbQOd for details.
Insights Technology is brought to you by Blue Technologies
Many retirement plan sponsors don’t realize the significance of breaching their fiduciary responsibilities.
“Being a plan sponsor should not be taken lightly, and being a fiduciary especially should not be taken lightly. There can be, and have been, severe consequences for breach of fiduciary obligations,” says Rob Martin, ERPA, QPA, Senior Team Manager at Tegrit Group. “So, take them seriously and find sound professionals and service providers to guide you.”
Even though the company is sponsoring the plan, a fiduciary is a named individual. Therefore, with very egregious errors, the personal assets of the individual fiduciary could be at risk.
Smart Business spoke with Martin about handling fiduciary obligations.
What fiduciary obligations are retirement plan sponsors responsible for?
The fiduciary obligations are to look out for the best interests of the plan participants and to put their needs before any personal or employer needs. The plan sponsor must have a written investment policy statement that includes how the selection of fund offerings and service providers are made.
If one of the funds has a bad year, it doesn’t necessarily mean the sponsor didn’t do its job. As long as the process is in place to select that fund beforehand — a process that compares past history with benchmarks and other funds in that same category — then there will be no problems from a Department of Labor (DOL) standpoint.
What can happen if sponsors fail to meet their fiduciary obligations?
The DOL has made a point of emphasizing fiduciary obligations when it comes to auditing retirement plans. The DOL audits can occur randomly or if there’s been a complaint against the company.
If a DOL audit finds problems, the sponsor will need to correct them quickly. For egregious errors, the DOL will hold the fiduciary in violation and go through the legal system. Even if a fiduciary is found in good standing, it takes extra work and time, including possibly paying service providers, to find needed items.
Civil lawsuits are another danger if you’re not following DOL guidelines.
How should these obligations be managed?
One of the best places to find information is on the DOL’s Web page: Meeting Your Fiduciary Responsibility, www.dol.gov/ebsa/publications/fiduciaryresponsibility.html. Plan sponsors should call third-party investment administrators or investment advisors for further assistance.
Sponsors need to answer participant questions in a timely manner. Otherwise, participants may file a DOL complaint and/or lawsuit. Once a suit is filed, fiduciaries will have legal fees and face the consequences of the case’s outcome.
Plan sponsors should also have a default account, known as a Qualified Default Investment Alternative (QDIA). A QDIA protects the fiduciaries from participants who do not make an investment election or who fall short in making a full investment election.
What is the biggest hot button area to keep an eye on, as a fiduciary?
The hot button area right now is fees. Part of being a fiduciary is to provide the new fee disclosure notice to the participants. This started in 2012 and now must be provided annually or quarterly to the participants, depending on what’s being disclosed.
Another important fiduciary responsibility is making sure plans have reasonable plan expenses. The plan sponsor should have a process, as part of the investment policy statement, to examine service providers and see whether it pays reasonable plan expenses, by utilizing professionals who provide benchmarks for comparison.
Do late deposits remain a concern?
The DOL is still pursing this. These typically apply to making timely participant contributions and loan repayments — not employer contribution deposits. More specifically, for plans with fewer than 100 participants, the DOL considers timely to be within seven business days.
With all fiduciary obligations, the key is choosing professionals with a good understanding of the requirements, which can be investment advisors, third-party administrators or record keepers.
Rob Martin, ERPA, QPA is a Senior Team Manager at Tegrit Group. Reach him at (614) 458-2023 or firstname.lastname@example.org.
For additional retirement planning tips, visit Tegrit’s Advisor Resource Center at www.tegritgroup.com/arc.
Insights Retirement Planning Services is brought to you by Tegrit Group
The use of cloud computing is surging in the business world. Against such a backdrop it only makes sense that companies would want to emulate this model with their phone services — that is, make themselves available no matter their location. While traditional phone services have been slow to respond to the requests, VoIP providers are jumping at the opportunity.
“Telecommunications is a 100-year-old technology,” says Alex Desberg, sales and marketing director at Ohio.net. “Things have changed, and now it’s more important than ever for customers to get through to businesses quickly and effectively.”
Smart Business spoke with Desberg about how innovation is reshaping the telecommunications landscape and why it’s so important to always be available to customers.
How is innovation changing the telecommunications landscape?
Businesses are looking for different characteristics associated with their phone system that will help set themselves apart from their competitors. This goes beyond just having a business phone system designed to answer calls or put people in voice mail. In terms of innovation, these can be simple changes or complex changes — it depends on what the business is looking for.
How are companies integrating their telecommunication features into their business model?
Cloud computing is becoming very popular. People are pushing their data away from their facility so it is available anywhere. However, they haven’t done this with their phone system because of traditional phone service capabilities. This is starting to change. Now, instead of being subject to the capabilities of a phone system, businesses are dictating how they want to communicate with their customers.
Why is it so important to be readily accessible to customers?
Customers have short attention spans, and they want to be served quickly. They don’t have the time to leave a voice mail message and wait for someone to respond a half-day later or the next business day.
Much like the traditional way of finding a business in the Yellow Pages, if the first company didn’t answer, you’d simply call another one. A lot of consumers are doing that now because time is money. If they can’t immediately reach the person that they want to talk to, they will move on. You don’t want that to happen to your business.
How is VoIP helping incubated businesses that are not as moveable as they might think?
Business incubators are starting to crop up all over the place. Such entities support the development of entrepreneurial companies through an array of business support resources and services. When the companies grow and need to move out of the incubator, they realize that they can’t easily take the phone number that they’ve been using to conduct their business transactions.
Now VoIP providers are working with incubators to provide VoIP services that can be moved quickly and easily with a business when it’s ready to graduate from an incubator and expand its footprint.
Why is reducing system duplication becoming such a big trend?
Reducing system duplication is particularly popular with businesses that have multiple locations. When such businesses start pushing data out to the cloud and they are remotely accessing the information, they realize that every facility they own doesn’t need a server or duplication of other resources like phone systems.
It makes sense for these businesses to have centralized communications. Everyone accessing the phone system can share centralized voice mail and four-digit dialing between locations. Not only does this make sense economically, but also from a unity standpoint in terms of a single telecommunications presence.
Alex Desberg is ales and marketing director at Ohio.net. Reach him at email@example.com.
To find out more about Ohio.net’s VoIP solutions, visit www.ohio.net.
Insights Telecommunications is brought to you by Ohio.net
The Ohio safety council rebate program created by the Ohio Bureau of Workers’ Compensation (BWC) rewards employers for their active participation in a local safety council. It also provides an additional performance bonus rebate for reducing the frequency or severity of workers’ compensation claims.
“With the number of safety councils available across the state with a focus on a variety of industries, employers are able to not only receive information on new safety techniques, products and services to assist their businesses, but also reduce their premium for simply attending these helpful meetings throughout the year,” says Russ Hocutt, vice president at CompManagement, Inc.
Smart Business spoke with Hocutt about how this rebate program works.
How much of a rebate can be earned?
Currently the incentive program enables employers to receive a rebate of 2 percent of their annual workers’ compensation premium through program participation and an additional 2 percent performance bonus based on the reduction of the frequency or severity of claims.
How can a local safety council be found?
BWC’s Division of Safety & Hygiene sponsors more than 80 safety councils across the state, organized through chambers of commerce, trade and manufacturing associations, American Red Cross chapters or other local, safety-minded organizations. A list is available at www.ohiobwc.com.
What are the requirements for the participation rebate portion?
An employer must enroll in a local safety council by July 31. Once enrolled, an employer must attend 10 meetings or events between July 1 and June 30. Two of the 10 meetings may be external educational options such as BWC Safety & Hygiene training courses or industry-specific training. The chief executive officer must attend at least one safety council-sponsored function or meeting. Semiannual reports must be submitted for the calendar year to document attendance. The documentation must be an official certificate of attendance or transcript. Only employers that meet the participation eligibility requirements will be eligible for an additional 2 percent performance bonus.
How is the performance bonus calculated?
Employers that reduce their frequency or severity of claims by 10 percent or more compared to the previous year’s frequency or severity, or employers that maintain both frequency and severity at zero, will receive an additional 2 percent refund of their annual premium, assuming the participation portion of the safety council program is met.
BWC calculates frequency by multiplying the total number of claims reported in the measurement year by 1 million and dividing by the employer’s total reported payroll for that year. Severity is determined by multiplying the total number of days absent during the measurement year by 1 million and then dividing by the employer’s total reported payroll for that year. The measurement period for private employers is claims and payroll reported between July 1 and June 30 compared to the previous year. For public employers, the measurement period is between Jan. 1 and Dec. 31.
What impact would the program have on a midsize company’s premium?
Assuming the participation requirements are met and the employer was able to reduce the frequency or severity of claims as indicated above, a midsize service company could expect the following in annual premium savings, assuming the employer is participating in no other alternative rating programs:
- Payroll — $3,990,000.
- Individual discount — 16 percent.
- Individual premium — $14,683.
- 2 percent safety council participation rebate — $200*.
- 2 percent safety council performance rebate — $200*.
*Based on pure premium which does not include assessments for DWRF and administrative costs for operation of BWC/IC
Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with the safety council program such as Destination Excellence, Drug Free safety Program, Group Rating (performance bonus only), Group Retrospective Rating (participation bonus only), Large/Small Deductible, Individual Retrospective Rating, or One Claim Program. Always have your third-party administrator conduct a feasibility study to evaluate the best savings options available for your organization.
Russ Hocutt is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext. 65619 or firstname.lastname@example.org.
Save The Date: Safety council enrollment ends July 31 for the 2013 policy year.
Insights Workers’ Compensation is brought to you by CompManagement, Inc.
Much of the discussion about oil and gas production in Ohio has focused on hydraulic fracturing used to facilitate production. But fracking, as it’s often called, is only part of the process that takes the oil and gas from the ground to consumers.
“The wells are just one part of the overall industry. You can drill a well and be prepared to produce gas and natural gas liquids, but these materials have no place to go until you have a pipeline and processing facilities,” says Scott Doran, director, Kegler, Brown, Hill & Ritter Co., L.P.A.
Smart Business spoke with Doran about the various stages in the production of oil and gas, and the permits and regulations that govern them.
What permits are required for oil and gas production operations?
In addition to the drilling permits, you generally need permits for the pipelines that will take the gas from the well pad to collection and processing points. The Ohio Department of Natural Resources (ODNR) manages drilling permits; The Ohio Environmental Protection Agency (EPA) has authority to issue air permits. The Ohio EPA, the U.S. Corps of Engineers and other agencies are involved in pipeline projects. Construction of the pipeline may necessitate impacts to streams or wetlands, and you have to consider historical preservation and endangered species issues.
You have to delineate every resource along the expected path of the pipeline, which means sending engineers or field personnel to identify streams, wetlands, historic properties and potential endangered species habitats. Of course, that also involves getting easements and permission from landowners. Those field people prepare voluminous reports, and you identify the best path for the pipeline that achieves project objectives while avoiding as many resources as possible.
If a project does impact streams or wetlands, you can apply for and obtain a permit authorizing the project, but you also have to mitigate those impacts by restoring the streams or wetlands at the site or somewhere else, or buying wetlands mitigation credits. It’s expensive, but there are a number of mitigation options to compensate for these unavoidable impacts.
Why are air permits needed?
Air emission of certain natural gas occurs during the drilling process, and the U.S. EPA and Ohio EPA have established strict permitting requirements regarding how to manage emissions during and after drilling. After drilling, there are emissions associated with the transfer and storage of materials.
It used to be that companies commonly flared off excess gas — they didn’t want to or were not able to manage the gas, so they would burn it. New permit requirements are being phased in that will require the capture of that gas.
What is required regarding wastewater collected from drilling operations?
In Ohio, a regulatory decision was made that the wastewater associated with oil and gas exploration and production is to be injected into permitted disposal wells. These disposal wells are generally off-site and operated by disposal companies that collect waste from tanks at the well pad. They’re injecting the waste 10,000 feet into the ground in porous rock, where it is designed to remain.
Drillers and wastewater treatment companies are working very hard to demonstrate effective mechanisms to treat and recycle that water, because millions of gallons are used for every well and fresh water is very valuable.
Do you expect regulations to change as the industry expands its operations here?
Regulations will undoubtedly continue to evolve, but the basic structure is in place. There is every indication that companies are continuing to make substantial infrastructure investments in Ohio, and there is a regulatory program that is overarching and impacts every step of the process.
This industry is going to have an environmental impact, but it can be done in a very responsible manner. Economically, it will be a good thing for the state. There will be some trials and tribulations along the way, but overall Ohio is doing a nice job to ensure a very substantial long-term benefit while protecting environmental resources in Ohio.
Scott Doran is a director at Kegler, Brown, Hill & Ritter Co., L.P.A. Reach him at (614) 462-5412 or email@example.com.
For more information on Kegler, Brown, Hill & Ritter, please visit www.keglerbrown.com.
Insights Legal Affairs is brought to you by Kegler, Brown, Hill & Ritter
Don’t wait until you want to sell your business to find out you could have done more to make it more attractive to buyers.
Tim McDaniel, CPA/ABV, ASA, CBA, principal at Rea & Associates, says there are eight key factors that determine the salability of a company. Knowing how your business stacks up in these areas provides benefits even if you’re not thinking about selling.
“The more you make your business sellable, the more fun it is. Your business is sellable when it’s less reliant on you, there’s less risk, more cash flow and higher growth. You might work on all of those things and decide it’s so much fun you wouldn’t want to sell,” says McDaniel.
Smart Business spoke with McDaniel about salability factors and what buyers are looking for when considering an acquisition.
What are the key factors that determine whether a business is sellable?
There are eight main buyer considerations:
- Financial performance. The better and more consistent recent performance is, the more assurance it gives a buyer.
- Growth potential. Whereas financial performance is more about history, growth potential looks at the future. A future income stream with a lot of potential is very attractive. There are times when past performance might not have been great, but there appears to be a growth opportunity on the horizon.
- Switzerland structure. The business does not overly depend on any single customer, employee or supplier — they remain neutral if there is a loss in any of those areas. For example, one business owner had 80 percent of its business with one customer and went bankrupt when it lost that business. Things like that make the business less sellable.
- Valuation teeter-totter. Essentially, this is about having up-to-date equipment. If your equipment is old, you either have to invest in new equipment or a buyer will pay you less because they’ll have to buy new.
- Hierarchy of reoccurring revenue. Alarm systems sell for a premium because they have monthly reoccurring business, which lowers the risk. Reoccurring income is very important to buyers, and it’s particularly attractive if it’s under contract.
- Monopoly control. Future cash flow is important, and the higher the barriers to entry, the harder it is for a competitor to take away market share. Few people can start a business to compete with the iPhone. However, if you want to compete against a painter, you just have to hire people who are skilled at it and advertise.
- Customer satisfaction. High customer turnover will create ill will in the marketplace at some point and certainly makes a business more difficult to sell.
- Hub and spoke. This addresses how well the business can survive without you. Many small businesses are dependent on one person and will fall apart the day they leave. That makes the business less valuable and difficult to sell. A buyer might have some of the purchase price based on you staying, and have you sign an employment contract. That’s why it’s important to start building a good management team and relying on other people.
How can a business improve its salability?
Not all businesses excel in each of the eight areas above. However, an owner needs to work toward improving those areas where it is weak in order to make the company more sellable. Start by identifying what drivers need attention, and then develop specific action plans to positively impact them. You will watch the value of your business increase dramatically. It’s not something you want to start working on two weeks before you sell. It’s a process that takes time and focus.
Often, business owners are too busy running day-to-day operations to sit back and consider their business’ value. Yet, there is benefit in looking at the business through the eyes of someone who might be interested in buying it.
Tim McDaniel, CPA/ABV, ASA, CBA, is a Principal at Rea & Associates. Reach him at (614) 923-6532 or firstname.lastname@example.org.
Determine your business’ sellability score at www.reacpa.com/my-sellability-score.
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Some leaders take an “old school” approach to change management — employees get a paycheck, so they’ll deal with any changes without a need for much explanation. But that sets the organization on a path toward failure.
“The biggest problems are when leadership does not account for the fact that resistance is definitely an option,” says Mark Deans, practice leader in Organizational Development & Change Management at Sequent.
“You could build a perfectly streamlined business process, or add the most efficient tool, but if employees don’t understand how to execute it to meet your expectations, it’s not going to succeed. Try as you might, you can’t make people do things,” Deans says.
Smart Business spoke with Deans about ways to ensure successful implementation of a change process.
What is involved in change management?
It’s supporting a change in business processes or systems, technology, etc. The practice of change management applies to any significant change in an organization, including leadership change as part of an acquisition or divestiture. It’s about how employees are supported through the change process.
The methodology is that there is a journey the organization, departments and individuals go through, and each has a completely different time path. Two people might do the same job, but each has his or her own change capability, and it’s a matter of identifying and managing all of those within an organization to make the change as seamless as possible.
How does the change process work its way through an organization?
First and foremost, leadership must be on the same page. Start with getting leaders aligned so they can be the driving force behind the change, helping each individual understand his or her part.
Organizations are taking a more holistic view nowadays. A change might mean more work for some departments but provides an overall net benefit for the organization. It used to be that each silo fought for its own interests. Now, it’s about how departments operate together, and some teams taking a hit if necessary to ensure the overall organization is as successful as possible.
One of the first steps is acknowledging the need to change, and the benefits. There should be some compelling reason, whether it’s regulatory changes, an attempt to improve market share or boost the bottom line. If the overarching goal is to improve margins, explain what that means for each group, and ultimately for each individual. You have to manage change upfront and get everyone onboard at the start rather than waiting for problems. It’s analogous to going to the dentist. If you see your dentist on a regular basis, keep your teeth clean and get X-rays, you can catch cavities when they start and are easier to fix, instead of not going for a long time and having major damage. The same holds true for change management, if you start a project and haven’t thought about how to communicate it to employees, going back and fixing it is much more difficult.
Is it important to state a desired outcome?
Absolutely. That is where some companies fail as well. They make a change and aren’t sure why. A company buys hundreds of iPads as part of a mobile technology strategy without addressing the intended use. So people are updating their Facebook status or playing Angry Birds because they don’t have a burning business reason to utilize these tools. That might be a ridiculous example, but there are plenty of cases in which companies want to hurry up and do something because it’s a shiny, new object.
You also need to accept it if a change didn’t work. Evaluate the success of the change, including what happened and didn’t happen as planned. Change projects always take longer and cost more than expected. Organizations that handle change well go back and figure out what they did well, and what could have been done differently. Then they remediate anything that did not get executed as well as planned. They learn from the experience so the process can be improved next time.
Mark Deans is a practice leader in Organizational Development & Change Management at Sequent. Reach him at (614) 410-6028 or email@example.com.
Website: Visit our website to understand how to successfully incorporate change at your company.
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In nearly every marketing conversation, I am asked how to measure return on investment. It is a fair question, but the answer is not always simple to address.
ROI, and equally important return on opportunity, are measured differently for most companies and are calculated on factors that are specific to each organization.
Here are some considerations for formulating ROI and ROO:
Establishing marketing goals — Know the marketing outcomes you desire. Are you trying to generate leads, build exposure, get the phone to ring, grow market share or retain customers?
Also keep in mind that marketing goals and sales goals are different. If direct human interaction is not a factor in the sale, they could be the same. For most, this is not the case. Marketing creates the opportunity and sales books the order. They are different disciplines.
Make your marketing goals measurable — in other words, be specific by stating percentage of growth, number of leads, degree of increase in market recognition, increase in market share and percentage of retention.
Understanding tracking — Determine tracking methods for what you want to measure. If you want a hard measurement of increase in market recognition, you can establish a benchmark by implementing before and after research surveys of how well-known your company, product or brand is in the marketplace.
Sometimes tracking can be easy, such as the number of leads generated from Internet advertising or an email campaign. Other times, unless we train customer service and sales representatives to ask how that prospect heard of us, we may never know where that opportunity came from.
Tracking percentage of growth and increase of market share require that we understand current measures as well as the sales team’s impact on the overall result. We need to understand what result we are looking for so the marketing campaign can direct prospects to do what we want to measure.
Calculating investment costs — Determining the cost of advertising, creative development, printing, postage and so on is easy. The more difficult factors are what else you are including in that calculation such as technology costs, staff cost and sales cost including sales tools such as brochures and websites.
Understanding all that you want a return on is a big factor in measuring and managing the expectation for return. Typically the more you factor in, the longer it takes to anticipate a return.
Determining profitability — Cost of goods sold is the typical calculation for understanding what it costs you to produce a product or deliver a service to a customer. How quickly a company will see a return is based on how much gross profit is derived from the sale.
Another consideration is the lifetime value of new customer. If the sale of your product has the potential to generate future maintenance or service work, add-on components, replacement parts, reoccurring revenue and the like, then your return can more readily be met by factoring the lifetime profit your company realizes from acquiring a new customer.
Factoring the sales cycle — What is the typical time frame from when a lead is generated to when a sale is booked (signed, sealed and delivered)?
How quickly you will get a return on investment is largely based on how quickly you can book the new business. If it is a long sales cycle, you may want to engage interim measurements or milestones to ensure your return is on track.
So, what should you be measuring? There are numerous ROI and ROO measurements — I could easily name 25 off the top of my head. You need to determine which are most important to your organization. Choose no more than a handful so that your team can easily manage the tracking and measurement.
Kelly Borth is CEO and chief strategy officer for GREENCREST, a 22-year-old brand development, strategic and interactive marketing and public relations firm that turns market players into market leaders. She has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 30 certified brand strategists in the U.S. Reach her at (614) 885-7921, firstname.lastname@example.org, @brandpro or for more information www.greencrest.com.