Marcia Passos Duffy

Sunday, 29 October 2006 10:56

King for the day

If named president of their companies, executives say they would make the office a better place for employees.

Twenty-six percent of senior managers said that creating an employee-friendly work environment would top their to-do lists; 17 percent would improve communication. One in four respondents said they were happy with the ways things were going and would not change a thing.

“This survey acknowledges what we’re seeing in the work force, which is that workers place value on work-life balance,” says Rachel Caviness, division director for Robert Half Management Resources in Columbus.

Half, the provider of senior-level accounting and finance professionals on a project and interim basis, conducted the survey of 150 executives — including those from human resources, finance and marketing departments — with the nation’s 1,000 largest companies.

Smart Business spoke with Caviness about what employees really want from their workplace and how employers can help.

Twenty-six percent of those executives surveyed said that they would create an employee-friendly environment. Did the responses go into detail on what exactly that would look like?
We got quite a number of ideas, many of which had to do with achieving a good work-life balance. Some of the responses included: supporting more flexible programs such telecommuting options; allowing staff to wear business casual attire all the time; increasing vacation days; reimbursing for tuition and mileage; making things more exciting and promoting entrepreneurship; celebrating more often; and offering individual thank-yous for accomplishments.

These comments acknowledge what we already have seen and heard in the work force, particularly with Generation Y (those in their 20s and 30s), that they place more value in balancing work-life, rather than working 24/7 at a company. And even baby boomers are looking for flexible schedules and consulting projects as they near retirement age.

Did anything in the survey surprise you?
It was surprising that 26 percent of those surveyed said they wouldn’t change a thing about their work environment. What that says to us is that we are seeing more of the work-life balance already addressed in some companies. In Columbus, for example, we’re seeing more companies touting work-life balance (including telecommuting options and extra vacation time) when recruiting employees.

What can business owners take away from this survey?
The survey highlights some of the things it takes to attract and retain talent in today’s markets. It is important to understand the need of today’s workers — the need to telecommute sometimes, or have job-sharing opportunities, and stick with the 40-hour work week instead of burning out employees with an 80-hour-a-week work load.

The survey also revealed that 17 percent would improve communications. That is very important, because employees do value clear and honest communication in their workplace.

How can business owners and executives communication more effectively with their workers?
Survey comments included:

  • Improve internal communication so everyone is on the same page.

  • Have senior management do more walk-arounds so that people feel a natural connection with those leading the company. It puts a face to a title.

  • Improve the company vision so everyone is aligned with where the company is going.

  • Be more frank with employees about what is going on with the company.

  • Listen to employees more.

Would it be valuable for a business owner to create its own survey of its employees to find out what the gripes are in the company?
It is always valuable to ask employees how they can improve the workplace. Even more important is to ask what the key concerns are in a company. This is often not easy to achieve since there is the confidentiality factor.

If a business owner does conduct a survey, it must be clear that it is confidential. And it must be measurable.

What is more important than conducting a survey is for business owners and key executives to keep an open line of communication with their employees. You won’t know what is ailing employees unless you talk to them. Remember that employees want to hear from top executives about how the company is performing and most want to be asked about their ideas on improvements that benefit the business and the workplace.

RACHEL CAVINESS is the division director for Robert Half Management Resources in Columbus. Reach her at (614) 224-1660 or Rachel.caviness@rhmr.com.

Sunday, 29 October 2006 05:49

King for the day

If named president of their companies, executives say they would make the office a better place for employees. Twenty-six percent of senior managers said creating an employee-friendly work environment would top their to-do lists; 17 percent would improve communication. One in four respondents said they were happy with the ways things were going and would not change a thing.

“The overarching message in this survey was that if employees were ‘king for the day’ they would put their time and effort into creating a work environment that was conducive to achieving a work-life balance,” says Pam Miller, district director for Robert Half Management Resources in Cleveland. The company, a provider of senior-level accounting and finance professionals on a project and interim basis, conducted the survey of 150 executives — including those from human resources, finance and marketing departments — with the nation’s 1,000 largest companies.

Smart Business spoke with Miller about what employees really want from their workplace and how employers can help.

Could you tell us a little about the survey and what the participants wanted most to change about their work environment?
Twenty-six percent said that they wanted to create an employee-friendly environment. They suggested a wide range of things such as offering telecommuting options, allowing staff to wear business casual attire all the time, increasing the number of vacation days, tuition and mileage reimbursements, making things more exciting in the workplace, promoting entrepreneurship, and even simple suggestions such as celebrating more often and thanking individuals for their accomplishments.

These suggestions are in line with what we expected: that there’s always an element that things can improve and get better. This also underscores that the work-life balance issue is a very hot topic within companies these days.

Did anything revealed in the survey surprise you?
We were surprised at the high percentage — 26 percent — who said they would not change anything in the company if they were president. This may indicate that the climate in companies has changed. Organizations have flexed, bent and have made a lot of these work-life balance adjustments already. This suggests that many employees are happy with their company’s leadership and that things were working for them in a satisfactory way.

What can companies learn from this survey?
One key observation is that improving communications is a key issue among employees. Regardless of hard or tumultuous times, employees want to know what it going on at all times — even if that means bad news. Employees would rather know than be kept in the dark. This is also key to keeping morale high in a business. Keeping employees in the loop is critical to maintaining a loyal staff.

What other things can companies do to improve their work environment for employees?
It is important to note that some of the responses seemed like small changes, but were things that meant a lot to employees. For example, one respondent said that the lunch time allotted ought to be increased because there were no lunch spots nearby, and many employees had to travel if they wanted to eat lunch at a restaurant. This problem certainly could be remedied with very little cost to the employer, but would make a big difference in the employee/employer relationship. Think about it — the employee would feel understood and certainly appreciative if the lunch time was increased by 10 minutes.

What can be changed is often very individualized, which leads to the point that employers need to communicate with — and listen to — their employees.

Any suggestions on how companies can get their own input from their employees, and if a similar survey would be valuable internally to find out what the concerns are?
Yes. It could be done very effectively right now, when companies are ready to close out their business year.

Pool groups of people together in a task force and take a temperature of employee morale. It all comes down to asking. And if some employees are uncomfortable stepping up and revealing problems, business owners ought to make sure there is an anonymous way to get this information.

This is all important, because, hands down, happy and satisfied employees are far more productive than unhappy ones. If, at end of the day, people are working more effectively, it will help company’s bottom line and retention, and that’s ultimately what every business wants.

PAM MILLER is the district director for Robert Half Management Resources in Cleveland. Reach her at (614) 224-1660 or Pam.miller@rhi.com.

Sunday, 29 October 2006 04:43

Hiring and compensation trends

Unemployment rates are low. There is a talent shortage. Still, some employees may not realize how much negotiating power they have in regard to compensation.

While 55 percent of hiring managers say it was difficult finding qualified candidates a year ago, 81 percent say that it was just as difficult, or more so, today, according to this year’s Employment Dynamics and Growth Expectations (EDGE) Report. But while the balance of power has shifted to favor highly skilled workers, the majority of employees surveyed said they are still feeling cautious about the job market and not very willing to negotiate higher salaries.

The survey and report were developed by Robert Half International (RHI), the world’s largest specialized staffing firm, and CareerBuilder.com, the United States’ largest online job site. The survey, which included responses from more than 1,000 hiring managers and 3,000 workers, was conducted to determine which group has more clout in the current job market.

“There is an increasing talent shortage that hiring managers are keenly aware of, but that reality is not on the radar screen of job seekers,” says Steve Kass, president of the Great Plains District of Robert Half International in Chicago.

Smart Business spoke with Kass about this curious discrepancy, and what it means for both workers and employers.

Could you explain the reason for the talent shortage?
With unemployment rates at around 5 percent, the country is basically at full employment and there’s a more shallow talent pool to draw from. The talent shortage is particularly acute in the fields of accounting, finance and information technology.

There is an increased need for accounting, auditing and finance professionals because of the stricter corporate governance created by the Sarbanes-Oxley Act. These regulations have created accounting jobs that did not exist just five years ago, and has led to a demand by employers to find highly skilled employees to fill staff-level positions. In the information technology sector, companies are increasingly faced with a large number of baby boomers retiring and smaller generations of replacement workers entering the work force.

If jobs are plentiful, why are workers being cautious when taking a new job? And why are they hesitant to ask for more money?
Although the job market is currently in the employees’ favor, our report indicates that 74 percent of those surveyed are not looking for a new job. One reason is because the layoffs and workplace uncertainty from a few years ago are still fresh in people’s minds, and many employees are hesitant to test the job market when they have the security of a job. Another reason may be the perception of the economy.

If you look at the facts, you can see that the job market — and the economy — is strong. But if you turn on the news, there’s a lot of negativity and bad news. So, as a result, people make that leap and assume that the economy is bad. But it’s not. It fact, the economy is actually doing tremendously well.

What should workers do in this environment?
The survey showed that employees are hesitant to push for more money even when employers are open to paying more money. While 45 percent of the workers surveyed said their compensation had increased in the last year, only a small percentage are willing to ask for more money in the future. Job seekers with in-demand skills have much more leverage than they think they do, and they need to try and use that leverage to increase their compensation and benefits packages.

What does this all mean for companies that are hiring?
It means that the market is more competitive than it has been in the past. Businesses need to be more open to paying more money, particularly when they find the right candidate. They also need to focus on retention strategies. Employers are becoming worried about turnover, and it is important to step up retention efforts, especially since 21 percent of hiring managers in the survey reported that turnover was higher than last year at this time.

What are actions surveyed companies taking to increase staff retention rates?
Thirty percent of hiring managers reported their firms have put in place new policies and programs to increase staff retention rates in the last 12 months, up from 23 percent this time last year. The primary measures taken included offering pay raises, bonuses, better benefits and more flexible schedules. This is a wise step considering the competitive hiring environment at the moment. The key is for employers to make sure their employees feel valued.

STEVE KASS is the president of the Great Plains District of Robert Half International in Chicago. Reach Kass at (312) 616-8200 or steve.kass@rhi.com.

Wednesday, 30 August 2006 19:31

Don’t get roasted

In the health care industry, the right kind of due diligence is critical.

“Health care providers are heavily regulated, both at the federal and state levels,” says Barbara Pankau, partner and senior health care lawyer with Shumaker, Loop & Kendrick LLP of Tampa. “Many lawyers conducting due diligence are not familiar with the ever-changing health care laws and the ramifications of not following them.”

The consequences of not following these laws mean more than just a slap on the wrist: it could mean criminal penalties and jail time, says Pankau.

Smart Business spoke with Pankau about the importance of conducting a proper due diligence with purchasing or entering into a joint venture with a health care provider, and the steps to take to ensure that all federal and state laws are being followed.

What makes due diligence in health care different than any other business?
The difference is the laws and regulations with criminal and/or civil fines against anyone that does not comply. Things that make perfect sense in other businesses — like arranging referrals — can have serious consequences in the health care industry.

Could you give a summary of some of the prominent federal and state (Florida) laws and regulations that need to be considered when conducting due diligence?
The penalties for not complying with these laws are severe.

The federal anti-fraud statute makes it a crime for anyone to pay, receive or arrange for a referral for Medicare business.

The so-called ‘Stark’ law, which applies only to physicians and certain designated health services (DHSs), says that a physician may not refer a patient for DHS to an entity with which he has a financial interest unless the transaction fits into one of the exceptions explained in the Stark Law and its accompanying regulations.

In Florida, the Patient Brokering Statute provides criminal penalties for activities similar to those covered by the federal anti-fraud statute. The Patient Self Referral Act applies to physicians, and is somewhat similar to the Stark Law, except that the Florida Act applies to any health care service and the Florida Act applies only to physician ownership interests.

Florida also has multiple prohibitions on ‘fee splitting’ with broad regulatory interpretations. For example, a management company that advertises for the health care provider (or otherwise assists in obtaining patients for the provider) engages in an illegal fee split if its fee is based on a percent of revenues of the provider.

Could you explain the unique steps that are necessary to conduct a thorough due diligence of a health care provider?
Some questions are unique to this industry.

Are the licenses current? Have the license holders ever been sanctioned?

When is the renewal date? What ‘change of ownership’ (‘CHOW’) procedures apply?

Do any current activities threaten the accreditation status? What are the backgrounds of the key employees? Have any employee ever been sanctioned under the applicable state or federal regulations?

What could run up a red flag?
Red flags include any current audits or regulatory investigations and any obligation to repay reimbursement overpayments that the business has received in the past. Also, any ‘clouds’ on the licensure of the current owners or key employees, such as limits on their licenses or certifications.

What are the consequences of not conducting due diligence?
The consequences are severe. Even if the investor does an asset purchase rather than a stock purchase, the investor may be subject to civil and criminal penalties if he or she participates in a health care business that violates the many applicable regulations. If the investor is a licensed health care provider, such as a physician, he may lose his license to practice medicine.

What are some of the other considerations when conducting proper due diligence on a health care company before acquisition?
It would be helpful, from a business standpoint, if the investor gained an understanding of the market. This would uncover nuances that might prove detrimental to business. For example, one current market trend is for specialty groups to invest in expensive equipment to provide services that, historically, hospitals have provided (such as diagnostic imaging like CAT Scans, MRIs, etc.). However, there also has been a trend to limit these activities, or there may be regulatory restrictions already imposed.

The Florida Patient Self Referral Act, for example, requires a group practice with ‘ancillary equipment’ — such as an MRI — to meet six conditions before the group can provide services to patients of other physicians.

BARBARA PANKAU is a partner and senior health care lawyer at Shumaker, Loop & Kendrick LLP of Tampa. Reach her at (813) 227-2321 or bpankau@slk-law.com.

Wednesday, 30 August 2006 02:33

Self-policing policies

Corporate governance, through the federal Sarbanes-Oxley Act, is now mandated for publicly traded companies. While privately-held companies are exempt from this legislation, the process of creating corporate governance procedures is a wise step for all companies — private, public, or not-for-profit and regardless of size — says Dr. Constantine Konstans, executive director of the Institute for Excellence in Corporate Governance at the University of Texas at Dallas School of Management.

“Weak corporate governance may result in financial reporting that is lacking transparency and clarity, and does not reflect economic reality of a company,” says Konstans. “Having a system of accountability is critically important to the health of a company, even if that company is private and does not have to answer to its shareholders or to the SEC.”

Smart Business spoke with Konstans about the importance of corporate governance to privately-held companies, and a strategy of putting a plan in place.

Could you describe corporate governance?
Corporate governance is the structured system of policies and processes established and maintained by a board of directors to oversee an organization’s strategic activities and resulting performance. The reason for corporate governance is to ensure proper accountability, clarity and openness in a company’s finances, and for the long-term benefit of shareholders.

While corporate governance is required in larger publicly traded companies, why should private companies be concerned about corporate governance?

Private companies are not required by Sarbanes-Oxley (SOX) legislation to have corporate governance in place. The risk of corporate scandals — whether in a public or private company — can be minimized if a good system of internal controls that corporate governance provides is in place.

Another reason that a private company will want corporate governance is that it may wish to go public at some point in the future. If there is even a chance that the company will go public, it is in the best interest of the business owner or owners to put these corporate governance systems in place now. A company needs to comply with SOX once it is publicly traded.

Does having a corporate governance plan help in other ways?
It is beneficial to companies seeking investors, who will also look for financial information that can be viewed as reliable, transparent and true. Without this high degree of confidence, investors — both foreign and domestic — will be reluctant to part with their money. Having a corporate governance plan in place certainly enhances the image and reputation of a company, and will make it more attractive to investors. Similarly, in nonprofit companies it is also extremely beneficial in establishing trust with potential donors.

What are some steps a private company should take to put a corporate governance plan in place?
Most private companies have some form of corporate governance already. But business owners should take the following steps to get the right elements in place.

  • Create a board of directors. Many privately-held companies may already have a board, but make sure your board is composed primarily of independent outside directors. These directors should be like a portfolio of investments that are varied and balanced. Directors should be leaders from a variety of industries who provide value, contacts, opportunities and plenty of objective advice. A good board is worth its weight in gold.

 

  • Develop policies and procedures. While this sounds like a lot of busy work, the beauty of creating this is that once it is done, everyone knows exactly what the rules are. The board of directors should approve this document and provide oversight in its application.

 

  • Develop efficiencies. Make sure that the company’s physical processes and day-to-day operations are efficient. These processes include: purchasing, vendor receipts, how sales are generated, how the business gets customers, etc.

 

  • Get a good financial accounting system. Get a good accountant that can pull all the financial data together with strong controls that will flag any inconsistencies. Without good accounting, a business owner will never be certain that what is recorded is reliable. Good accounting is an accurate financial expression of the physical process of the business; it should reflect reality. All too often there is a huge gap between what is actually going on in a business and its financial statements.

 

  • Establish a culture of honesty and accountability. Management needs to set the tone of ‘doing the right thing.’ If you set the example of honesty and project an image of caring about your company, customers and employees, pretty soon you’ll have not only a company but a family that believes the same way.

CONSTANTINE KONSTANS is executive director of the Institute for Excellence in Corporate Governance at the University of Texas at Dallas School of Management. Reach him at (972) 883-6345 or konstans@utdallas.edu.

Sunday, 30 July 2006 20:00

Builders and CGL policies

Building contractors’ Commercial General Liability (CGL) insurance premiums keep going up. But what many contractors may not realize is that the hefty checks they write each month may not cover them for things that are written in their insurance contract. Contractors need to be extra careful about the completed operations coverage in their policies, which is supposed to cover them for damage to a completed project that is caused by faulty work of subcontractors.

“Most carriers deny coverage for such claims even though their policies clearly say this is covered,” says Steven Schember, senior litigation partner at Schumaker Loop & Kendrick law offices in Tampa Bay.

Smart Business spoke with Schember about builders’ CGL policies, the problems facing contractors trying to file claims for the faulty work of subcontractors, and what is being done about the problem in the state of Florida.

 

What is happening with CGL ‘completed operations’ policies at the moment?
Right now, by law, insurance companies must pay for any claim filed by a contractor for shoddy work done by a subcontractor who has already completed the job and has left — by going out of business or not being otherwise available.

This policy takes effect if, for example, a general contractor gets a roofer to install a roof. The roofer completes the job, the contractor pays the roofer, and then shortly thereafter the roofer goes out of business. Later, the roof leaks and the contractor must pay to repair the damage and install another roof. The CGL policy should cover this expense and reimburse the contractor.

The problem is that insurance companies — which were very vocal in the press a few years ago about providing this kind of insurance — are now denying the claims that are coming in for this kind of coverage.

Right now, it is law that these claims must be paid because of a ruling in a Tampa appeals court. However, this case is on appeal in the Florida Supreme Court. We are hoping that the decision will fall in the favor of the contractors. But this whole area is in a state of flux, and some states have gone in favor of the contractors, others in favor of the insurance companies. If the Supreme Court reverses the appeals court ruling, it certainly will be a huge blow to the construction industry.

 

What is some of the confusion surrounding this issue?
The problem is that a lot of contractors don’t even know they have this protection in place at all. And those that do — and try to submit a claim — are getting denied. This has really be a disingenuous move by the insurance company; first agreeing to provide this coverage a few years ago and now denying claims that contractors are filing.

 

What is the fallout from this move by insurance companies to deny these claims?
Premiums continue to go up because, in part, contractors are paying higher premiums to cover completed operations. In addition, surety bonds, which are mandatory for government projects, are getting very expensive and more difficult to obtain because the bonds are being forced to cover items that should be covered by the CGL policies.

 

How can a builder be sure that a CGL policy covers what he or she wants covered?
Almost all CGL policies today specifically provide completed operations coverage. However, to insure that they are truly covered, contractors should get in writing from their CGL carriers that they will cover damage to the completed project caused by the faulty work of subcontractors, as is it set forth in the CGL policy. Many contractors not only have their CGL insurance with a particular company, but also its property, auto and other insurance.

If an insurance company balks and doesn’t want to put it in writing, renewal time is a good opportunity for contractors to gain leverage and threaten to seek out another insurance company. I’ve seen this done by contractors and it is quite effective in getting the insurance company to commit to ‘completed operations’ policy in writing.

 

Are there other things builders can do to cover any exposure they may have not covered by their CGL policy?
The standard CGL policy contains several exclusions — an example being damage caused by spillage or overspray or other contamination by pollutants on the job site, such as painting, spraying, airborne particles, etc. Depending on the type of work done by the contractor, the CGL policy exclusions should be reviewed and removed from the policy where appropriate. It may cost an additional premium but it will be worth it.

 

STEVEN SCHEMBER is senior litigation partner at Schumaker Loop & Kendrick law offices of Tampa Bay. Reach Schember at (813) 227-2247 or sschember@slk-law.com.

Saturday, 29 July 2006 20:00

Breaking the mold

Corporate board seats have traditionally been filled by white males. While this reality is changing, the process is slow. Catalyst, a New York research group focusing on women and leadership, reports that females held 14.7 percent of Fortune 500 company board seats in 2005, which is a slight increase over 13.6 percent in 2003. Women of color hold only 3.4 percent of all Fortune 500 board seats. The same research shows that one in nine of these corporate boards have no female representatives at all.

The good news is that opportunities abound and seats can be gained by women, says Diane S. McNulty, Ph.D., associate dean of external affairs for the University of Texas at Dallas School of Management, which will host a three-day residential program on this topic in November. However, she notes, board selection committees nationwide find that seeking qualified women to fill key positions on boards of directors can be a difficult task.

“Outstanding women candidates are out there. However, women leaders need to improve their visibility - and, often, their strategies and skills <\m> to become successful board candidates,” says McNulty.

Smart Business spoke with McNulty on how today’s business women can best improve their visibility and skills to prepare themselves for leadership on corporate boards.

 

What is the reason that comparatively few women sit on corporate boards?
Studies show that several factors tend to hold women back. In general, women lack significant general management experience. Research reveals that women are often excluded from informal communications networks and male bonding experiences in the workplace. Cultural factors, such as stereotyping, play a role in decisions regarding the adequacy of preparation for females in leadership roles. Perceptions of women’s traditional roles and abilities also contribute to a general corporate environment that stifles the advancement of women to the C-level and thus to the board room.

 

How does having women on corporate boards improve or enhance the board’s effectiveness?
Current research does not address board effectiveness in regard to female representation. However, women do have certain attributes that could earn them increased recognition as valuable board leaders.

Women tend to hone their social skills better than men. They are able to multi-task and balance responsibilities. Females tend to be better team builders than their male counterparts, and this skill is essential for success in today’s global corporate environment. Women are also the great communicators, and for many communicating and relationship problem-solving seems to come more naturally.

My own research finds that some companies actually seek females for board representation because women are their best customers and boards appreciate the input women can provide on products and services.

 

How can women improve their visibility to become successful board candidates?
A candidate can take a number of steps to improve her chances for success. First, to get solid board experience, she can serve on nonprofit or advisory boards or boards of private, midsize companies. Along these same lines, she should join professional organizations. Becoming active and volunteering to speak at functions will raise her visibility.

Networking is key! Networking expands the candidate’s spheres of influence outside the corporate walls. She should join business networking organizations, chambers of commerce and other organizations in the community and volunteer for committee work. This helps her develop a broad reputation for doing good work. She should seek other women leaders as mentors. And she should make sure that board members and top management are aware that she is interested in a seat on a board.

 

What specific skills can a woman improve upon to be more effective on a corporate board?
Fortune 500/1000 companies look for a variety of experiences, including financial expertise and industry-relevant experience at top levels. Women also need to seek outside instruction on analyzing and interpreting financial information, if they are weak in this area.

To get a seat on a board and to improve their knowledge about boards, women need to network more with senior business executives. Additionally, women need to learn as much as they can about the actual operations of boards and what responsibilities and liabilities directors have. It is helpful if they gain a perspective of top management and its views of governance.

All these steps will help develop understanding of what a board does, the members’ responsibilities and goals, legal responsibilities and ‘best practices.’

 

DIANE SEAY McNULTY, Ph.D., is the associate dean of external affairs for the University of Texas at Dallas School of Management. Reach her at (972) 883-4489 or dmcnulty@utdallas.edu.

Saturday, 29 July 2006 20:00

Outsourcing your accounting

Accounting in many businesses is relegated to a part-time bookkeeper, or the responsibility may fall squarely on the business owner. Business owners know deep down inside that neither of these options is in their best interest. They may even have a sneaking suspicion that they are losing valuable opportunities to analyze and make decisions based on solid financial data.

One way many mid-sized businesses can solve this problem is by outsourcing their accounting functions, says Joanna Eggett, associate director and head of the Outsourcing Department for SS&G Financial Services Inc. “By outsourcing accounting, a business can have anything from simple bookkeeping all the way to payroll and controller services taken care of by one firm. Outsourcing saves money in payroll and overhead costs, and it frees up the business owners’ time.”

Smart Business talked to Eggett about the advantages and disadvantages of outsourcing accounting functions, and what to look for when seeking an accounting services provider.

 

What is the major benefit to outsourcing accounting for a mid-sized company?
It helps the owner stay focused on the business. It takes the onus of the day-to-day accounting tasks off the owner’s shoulders and into a place where it’s properly taken care of. This frees the owner to focus on core duties that are important to growing the business.

 

Are there other benefits to the company?
Outsourcing accounting functions instills a discipline and efficiency in the accounting process that is often difficult to get if these duties are done by one bookkeeper or the owner. There’s a lot to be said for having professional expertise at a business owners’ side, particularly if the accounting firm has access to all kinds of professionals within the firm, such as experts in tax, auditing and accounting.

Outsourcing saves the company money in a variety of ways. Businesses save on personnel and training costs as well as the cost of upgrading technology. If a company has multiple locations, outsourcing can eliminate the need to have a bookkeeper in each location and centralize the entire company’s accounting functions.

 

Are there any disadvantages involved with outsourcing accounting functions?
Yes, there are two disadvantages that the business owner needs to seriously consider. The first is that outsourcing could mean that someone in the company will lose his or her job. If a company has an entire accounting department, this may mean that many people will lose their jobs. An owner needs to carefully weigh what this will do to company morale, particularly if the business is older and established and has had an accounting department for many years.

This leads to the second disadvantage, which is the decrease in company morale and loyalty should you let go an entire department. This may not be an issue in a younger company that does not have its accounting practices as established, or if there is a sole bookkeeper.

 

What are some typical accounting jobs that are frequently outsourced?
Accounting, controller, bookkeeping functions and special projects such as budgeting, report customization, accounting software conversions, streamlining and documenting of processes and procedures. With the advancement of Web-based accounting programs, a company can outsource its accounting to places other than its hometown. This has led to outsourcing companies starting up in places such as India. Of course, any time financial information is transferred electronically, there is always a need to consider the security risk of the data. On the other hand, the ability to have information at your fingertips can be a very powerful resource.

 

What should a business owner do before attempting to outsource a project or ongoing work?
He or she needs to determine precisely which functions need to be outsourced. For example, an owner may outsource all accounting functions but retain the company controller to manage the process.

Next, interview several reliable accounting firms; find a company that is well established in the community and is referred to you by a business associate or other trusted adviser. Spend some time researching your options. I would recommend doing even more diligent research on companies that may be just starting out or that are located in a foreign country.

Then narrow choices to companies that have knowledge of your specific business or niche. You also want to see if the firm is compatible with your own corporate culture. Look at firm’s ability to customize services according to your specific needs. Cost is also a consideration, which can be hourly, monthly or a fee based on the number of transactions.

JOANNA EGGETT is associate director and head of the Outsourcing Department of SS&G Financial Services Inc. Reach her at (440) 248-8787 or jeggett@SSandG.com.

Sunday, 14 May 2006 20:00

The time crunch

Women business owners are making quite an impact in the marketplace. According to the Center for Women's Business research, the growth rate in the number of women-owned businesses is nearly twice that of all firms (17 percent versus 9 percent). Women-owned businesses account for 28 percent of all privately owned businesses (there are 9.1 million women-owned businesses in the U.S., a 42 percent increase over a decade ago); they employ 9.2 million people in this country and contribute $2.38 trillion in revenue to the economy.

Women face different circumstances than men in the world of business because of the demand placed on them in their personal lives, says Camille Ussery, vice president of business banking for ViewPoint Bank in Plano. Women's lives are typically spread thinner, and, I believe, the pressure is greater because of it.

Smart Business spoke with Ussery about the time-crunch challenge businesswomen face and how they can make sure that business opportunities don't fall through the cracks while living their full, busy lives.

 

What are some of the unique challenges females face when starting up and running business?

 

Women are making decisions in the board room, and then making decisions about what's for dinner, child care, and who will pick up a child from the track meet. While there have been many changes in the way men help out with household responsibilities, the reality is that the burden of the house and child rearing fall, for the majority, squarely on the woman's shoulders. As a result of this, many women feel they are barely able to keep their heads above water. While we tend to do a great job in multitasking, the result may be that business opportunities can and do fall by the wayside. Then there is the added challenge of competing in a male-dominated business world.

 

What is the solution to the unique challenges that women business owners face?
Because women are making a huge economic impact in the marketplace, many outstanding organizations have formed to provide education and resources for women in business. These organizations from the local Chamber of Commerce to the Office of Women's Business Ownership at the U.S. Small Business Administration offer special courses, workshops and programs just for women who are either starting their own business or already own a business.

 

How can women make sure that they are doing all they can to help their business succeed?
One thing that many successful business owners do male or female is to create and maintain business relationships. If a woman business owner does one thing to help her business, she may want to consider organizations and clubs that can help her develop business relationships. Because of the time factor, this is one business opportunity that is often overlooked.

However, it's important for women to stay visible in their industry and in the community. Adding networking to the to-do list could be as simple as attending one Chamber event per month. But without realizing its importance and adding it to the calendar, networking can be one of those important business activities that will fall by the wayside.

 

What else can women business owners do to network?
Women should continually take advantage of the educational opportunities that are available in the community. There are a host of seminars, workshops and courses that a woman can take to not only learn but to also fulfill the goal of networking. Many of these workshops are provided as a community service and are very useful in developing marketing techniques, effective sales strategy and time management.

Many times business owners only consider a banking relationship as a source for working capital. However, business bankers who specialize in meeting the unique needs of a business can provide much more. With ever changing technology, your business banker can provide resources and ideas to help manage the day to day transactional needs to maximize the flow of cash within a business. They work directly with business owners in many industries and can often provide financial solutions to meet diverse needs as well as networking opportunities for increased business.

 

Other than increasing networking opportunities, how else can women improve the way they conduct business?
Businesses frequently have limited working capital. They need to have all the right financial components of a business and to learn about cash flow and contingency plans. Because without money, the business will fail. The best thing a woman can do is to educate herself, learn as much as she can about the elements of a successful business, and reach out to people in her industry and community for help and advice.

 

CAMILLE USSERY is the vice president of business banking for ViewPoint Bank of Plano, Tex. Reach her at (972) 578-5000, ext. 2354 or mailto:Camille.ussery@viewpointbank.com..

Thursday, 23 March 2006 19:00

Evaluating possible lenders

When you are ready to take your company to the next level, you may also need to access capital. Do you go to a bank and apply for a business loan? Or do you look for an investor? The debt-versus-equity financing question looms large in many owners’ minds when thinking about accessing capital.

While focusing on the pros and cons of debt-versus-equity financing is an excellent starting point, business owners need to make sure that the people behind the financing commitment really understand your business, advises Patrick Ramsier, managing director of commercial lending for ViewPoint Bank of Plano, Texas.

Smart Business spoke with Ramsier about the questions a business owner needs to ask a lender to ensure that the financing process is successful.

 

What should a business owner evaluate when considering debt or equity?
There are significant differences between debt and equity for both the provider of capital and the business owner to consider. For the business owner, it is generally less risky to do the deal with equity because you will not have fixed debt services associated with the loan. Usually, you can’t provide the equity source with the returns required without layering in some debt. The obvious downside to equity is the cost. Equity will require preferred returns in excess of the rate you will pay on most bank loans and they will expect some ownership in the company and their share of profits. The downside to debt is that too much will suffocate the business. It’s the right blend of debt and equity that will serve you the best.

 

What are the criteria for selecting either a debt or equity lender?
A business owner needs to take similar steps to ensure success. There are many books written about this topic and how to get your financial ducks in a row, how to write a strong business plan, and how, generally, to ready yourself for either debt or equity financing. The SBA, for example, offers a lot of help on this topic.

But one step that is often overlooked is the criteria for selecting the right lender, which is the key to successful financing.

 

How can a business owner find the right lender?
While it may be tempting to jump at the first offer that comes your way, it is wise to step back. The process of finding a source of capital is a lot like a job interview. Yes, they are interviewing you, but you must also interview them. For financing to be successful, you and the capital source must have interests aligned, and you both need to know the business intimately.

If neither party knows what they are doing, that is a recipe for failure. If you know what you’re doing and the lender doesn’t, that’s setting yourself up for frustration, because you will spend most of your time educating the lender.

 

What are some questions to ask the lender to make sure it’s the right fit?
Say you want to expand your afghan manufacturing business. You need to ask, specifically, if the lender has ever financed an afghan manufacturing company before. Short of that, you need to ask if they have ever financed a manufacturing company in the past. It does not have to be exactly the same — same loan amount, exact same business — but close enough so that this lender knows your needs. Past deals, basically, should be in the same ballpark, or they should have the ability to do a pro rata analysis.

 

What are some specific questions to ask a lender?

 

  • Has your lending institution ever financed businesses like mine — successfully?
  • Have you financed within the range of what I’m asking?
  • How many of these businesses have you financed?
  • Do you consider yourself experienced in financing this type of business?
  • Do you think our interests are aligned?

These questions will help you narrow down the choice considerably. When you get several lenders that meet your standards, ask the lender for a list of similar customers that borrowed money from the institution.

When you meet with the customer, ask the following questions:

  • Did the lender understand their needs?
  • Was the lender flexible and willing to accommodate the business?
  • What were some of the negatives during the process?
  • What were the positives?

When you further narrow down the capital sources on your list and determine which lender is best prepared to handle your financing, you are well ahead of the game in helping your business obtain financing that is a win-win for you and the lender.

 

PATRICK RAMSIER is the managing director for commercial lending at ViewPoint Bank, Plano, Tex. Reach Ramsier at (972) 801-5832 or Patrick.ramsier@viewpointbank.com.