Arthur G. Sharp

Wednesday, 20 September 2006 10:32

The stakes have changed

Astute corporate leaders recognize that ignoring diversity hiring issues can result in unnecessary and unwanted tangible and intangible costs in time, money, productivity and lost investments in recruiting and training. As a result, they are focusing more on recruiting and retaining diverse talent for their management teams. Doing so enhances their companies’ competitive advantages in the global marketplace and helps them avert significant problems, such as a loss of productivity because of conflicts between different groups of employees and legal actions. And it creates a cycle that perpetuates their ability to build a more creative work force, which is a natural byproduct of diversity.

Smart Business talked to Paula Harrison of TNS Partners Inc. to learn more about the changes in the strategies corporations use in their attempts to attract diverse talent into leadership roles and how they can benefit from this process.

Is corporate America aware of the need to attract diverse talent to strengthen its position in the global business environment?
The real-world challenge of identifying and hiring the right people who are racially and gender-diverse is faced again and again in corporate America. A recent situation with a Fortune 500 global market leader is a clear example.

Having successfully identified and recruited multiple individuals to a highly specialized and important sales function, the company needed to address the same need by also identifying the diverse executives. After extensive efforts, the company found it much more difficult to identify similar talent who met the same qualifications. Ironically, the difficulty arises at a time when leadership opportunities abound for professionals of color, as well as women.

How does a company operating globally benefit from filling leadership positions with a spectrum of talent that reflects diversity?
The world is getting smaller at breathtaking speed, requiring us to adapt constantly to new ways of doing business. Companies are compelled like never before to understand how a competitor, customer or alliance partner halfway around the world is motivated and thinks. Strategically employing a racially and gender-diverse work force helps meet that challenge.

Have factors like globalization, the Internet and the transition to a service economy increased leadership opportunities for people of color and women in the business world?
The realities businesses face to attract strong leaders who reflect diversity is that career choices and opportunities are expanding. Just 20 years ago, globalization, the impact of the Internet and explosive growth in the service economy had not occurred. All executives now have career path and options that did not exist for earlier generations. A college graduate can now almost as easily be interviewed for a position in Bangalore as New York City. Also, the new business opportunities that the Internet has created are required subject matter in most business schools. Corporate America’s plan for identifying and attracting diverse talent has to be no less adaptive and innovative.

Have the increased opportunities resulted in an equal playing field as far as factors like pay scales and perks are concerned?
The current business environment has changed how we think about pay scale and perks. Competitive pressures are forcing companies to recruit and employ the best talent and compensate them accordingly, whatever their racial or gender background.

How do long-term business plans affect short-term plans to attain diversity?
In the war for market position, quarterly results, and — many times — a company’s fiscal survival, we often see tactical, short-term results in attaining diversity. A company frequently will identify diversity as an objective. Then, in a specific position it will narrowly set job criteria only to be diverted by other candidates who are readily available and who may exceed the criteria.

Can companies fulfill their diversity objectives and meet short-term business goals simultaneously?
Companies can take a more pro-active approach while addressing short-term needs by building position definitions that allow for growth, development and mentoring as well as short-term career development. In the longer term, a specific plan for identifying and recruiting diversity into ‘feeder’ positions can be implemented, building bench strength for top leadership roles. In most successful business situations in which diversity is achieved, the commitment has come from the top leadership and it is unwavering.

How can executive search firms help in the diversity recruiting process?
They can assist in identifying, evaluating, and recruiting individuals who possess the specific knowledge, expertise and personal qualities required by clients who are seeking to create a diverse work force. As part of the process, they match individuals who best fit their clients’ philosophies, management styles and cultural environment in view of their expectations and the realities of the marketplace.

PAULA HARRISON is a vice president of TNS Partners Inc. Reach her at (214) 369-3565 or

Wednesday, 30 August 2006 02:38

Negotiating office leases

The old real estate axiom of “location, location, location” suggests to business owners that they should find the most suitable location to attract customers and present a professional appearance. That often means negotiating property leases that do not have a significant adverse effect on their business’ finances or create unanticipated adverse consequences down the road.

Crafting an office lease that is beneficial to both tenants and landlords should not be left to chance. It requires guidance from experienced third parties, often attorneys.

Smart Business talked with Terry Thornton, a commercial lease specialist at Godwin Pappas Langley Ronquillo LLP, about the attorney’s role in negotiating office leases and how critical it is.

Why should landlords and tenants include attorneys in lease negotiations?
Unfortunately, most disputes that arise regarding lease agreements don’t have anything to do with basic things like rental amounts and the length of the lease term. It’s the seemingly inconspicuous verbiage in the rest of the lease to which landlords and tenants don’t normally pay much attention that tends to create problems.

Tenants and landlords will often be married to their lease terms for the next 10, 15, 20 years — so they want to look carefully before they leap. Lease agreements can contain many loopholes. It is the attorney’s function to help close these loopholes.

At what point in lease negotiations should attorneys be introduced?
That depends. Tenants and landlords don’t want to wait until after their leases are signed to ask attorneys what is wrong with them. But they also may not want to get an attorney involved too early in the process before the initial lease terms are discussed.

Tenants and landlords may want to work out what both parties want in a lease before they engage attorneys. If the tenant and landlord aren’t going to find a suitable match with each other from the get go, and they bring in attorneys to try iron out basic terms, they may incur unnecessary attorneys’ fees if the deal isn’t going to work anyway.

Tenants and landlords are wiser to do some homework in advance on some of the basic terms, such as rent, terms of lease, and finish-out allowances. Once they have done that, then they should bring in the attorneys to iron out the remainder of the lease issues and finalize a lease document.

How can attorneys help landlords and tenants in lease negotiations?
Attorneys think about the ‘bad stuff’ that tenants and landlords may not consider when drafting their leases. After leases are signed is the wrong time to start thinking about them.

Attorneys can also assist tenants or landlords who are in disparate bargaining positions to negotiate items that are the most important to them in the long run and that may be critical to their business. The attorney can help provide the legal leverage that lets tenants or landlords know how far they can push to gain favorable leases, or when they should back off.

Is it the attorney’s role to provide business advice to tenants and landlords when negotiating leases?
Attorneys provide legal advice, not business advice. They act as advisers in commercial lease negotiations and advise the clients on their legal positions. Ethically, attorneys are prohibited from giving their clients business advice. There are times they might suggest to a client that, legally, the terms or provisions of a lease are not a very wise choice for them or their business.

Attorneys point out the legal pitfalls tenants or landlords might face deep into a lease if they accept a lease agreement as written. The clients, however, must make the final decisions as to whether those problems are worth the risk.

How do clients select an effective attorney who specializes in leasing?
They can ask for referrals from real estate brokers, lenders or people they know in their industries, and then concentrate on retaining attorneys with significant experience in negotiating commercial leases. It is a bonus to work with attorneys who are board certified in commercial real estate.

The best thing, though, is for clients to find an attorney who fits their personal style, and with whom they feel comfortable. Commercial leases can run 20 to 30 years, and clients want to retain attorneys with whom they can develop good communication and long-term relationships throughout.

TERRY THORNTON is a partner and chair of the Real Estate Transactions Section with Godwin Pappas Langley Ronquillo LLP in the Dallas office, and is board certified in commercial real estate law. Reach her at (214) 939-4897 or

Sunday, 30 July 2006 10:54

Appealling specialists

One of the bright spots in the American judicial system is the appellate courts. If parties in lawsuits are not satisfied with the outcomes of their trials, they can appeal to higher courts. Today, with so many cases being resolved before going to trial, most cases reaching a trial tend to be significant cases. They also have a good chance of being appealed. Since success in appellate court is predicated to a great extent on the abilities of appellate specialists, it is wise to involve appellate attorneys before the trial process starts <m> and to select the ones best suited to argue cases in appellate courts.

Smart Business spoke with R. Alan York of Godwin Pappas Langley Ronquillo LLP about the role of appellate specialists in the trial process, and how litigants can benefit by involving them from the start.

At what point in the trial process should an appellate specialist become involved?
An appellate specialist should be involved from the beginning, especially in significant cases. These specialists can help provide road maps throughout the case by looking at evidentiary issues, how evidence may be introduced or excluded at the time of trial, and by working thoroughly on jury charge issues.

This practice gives the client a big picture perspective of the entire life by looking at predictions of the possible progressions that various cases may take. These predictions can help clients determine if it is preferable to go to trial or to try to resolve the matter through some type of mediated settlement.

Appellate specialists provide a perspective of what to expect after a trial.

Why would litigants want to include appellate specialists on their legal teams at the beginning of the legal process?
Appellate specialists do specific things, such as significant motion practice, motions for summary judgment, work on the jury charge, and preserve error at trial.

In the event that a case does go to trial, it is good to know if it has a significant degree of danger for a high exemplary damage award. An appellate specialist can look at that issue not only in terms of what the jury might do, but if the case approaches an appeal, how the appellate court might react to a large exemplary damage award. The appellate specialist provides a broader picture.

Does including an appellate specialist in the early stages of the legal process make good economic sense for business people involved in the legal process?
Business people are very cost sensitive. The idea of bringing on someone else to work on a case can sometimes be daunting for a client. In reality, bringing in an appellate specialist makes good economic sense, because it can ultimately save the client money.

Appellate attorneys work hand-in-hand with the trial lawyers during discovery, as the case is being prepared for trial, meaning they are already up to speed on the background of the case and are ready to run with the appeal. This approach is typically more cost effective than hiring the appellate specialist after the fact.

Doesn’t the inclusion of an appellate specialist in the entire legal process signal the client that the case is likely not winnable?
No. Attorneys have to make it clear to the clients that the case is not necessarily going to go to an appeal. Including an appellate specialist is simply one step in trying to figure out the best way to win, and not just a protection against a possible loss.

And when there is a victory, having an appellate specialist on the team can help preserve that victory if opposing counsel to appeal, because these specialists can help close loopholes that the opponents can try to exploit later at the appellate level.

Remember, both sides have access to appeals courts. If one side has an appellate specialist on board throughout the entire process and the other doesn’t, that may be a significant advantage for the one that does. In fact, it may mean the difference between winning or losing the case at any level.

How does a client choose a proficient appellate specialist?
One criterion in our state is to verify the attorney’s Texas Board of Legal Specialization certification of specialty in appellate law. Clients should also look for appellate specialists who have actually handled cases at trial, and who preferably have argued cases before the Texas Supreme Court. Those types of experience give them better perspectives of the overall legal process.

Another way is to seek recommendations from local, county or state bar associations or search through Web sites such as Hubbell-Martindale, which includes attorneys’ peer ratings.

R. ALAN YORK is the administrative partner of the Houston office of Godwin Pappas Langley Ronquillo LLP, and serves as chair of its Appellate Section. Reach him at or (713) 425-7420.

Sunday, 30 July 2006 06:44

Place your trust in a trust

At first glance, it may not seem prudent for business owners to relinquish control of their assets while they are still alive. But if their estates are sizable and they want to protect them from taxes due after their deaths and benefit their heirs, they may want to consider an Irrevocable Life Insurance Trust (ILIT).

The primary question the potential trustor has to make is whether it is worth losing control, either direct or indirect, over the trust property or income. After all, the regulations included in the Internal Revenue Code govern closely the provisions of an ILIT.

Smart Business spoke with Sherry Maynard of J.J.B. Hilliard, W.L. Lyons Inc. to learn more about the benefits of ILITs and why they are gaining in popularity.

What is an Irrevocable Life Insurance Trust?
An ILIT is a legal arrangement in which one individual or institution controls property given by another individual for the benefit of a third party. It provides life insurance when a certain event is triggered, usually due to the demise of the trustor.

The trustor cannot purchase the policy. A third party has to purchase the insurance for the policy owner, after which a trustee oversees the trust. The trust can be created from scratch, or existing life insurance policies can be transferred into it, which is something trustors must consider carefully. The life insurance proceeds of trustors who die within three years of the date of the transfer are taxed as part of their estates.

What are the advantages of an ILIT?
The major advantage for the heirs is that they will receive a sizable inheritance from the life insurance, and they will not have to take on a financial burden. The advantage for the trustor is intangible: the ILIT provides peace of mind in the knowledge that heirs are well taken care of and assets are protected.

Who typically owns an ILIT?
Generally, it is people with large assets who realize that taxes will be owed after their death, which can place a burden on their heirs. For example, a business owner has a large amount of acreage that is appreciating rapidly, which will result in a tax liability. The ILIT is a way of providing the funds to pay the taxes on the asset. Money left over after the taxes are paid goes to the heirs, since there is no maximum face value for the life insurance policy.

Other ILIT owners might be the proprietors of family businesses who want to make sure that management is uninterrupted should they become too old or ill to run the business themselves.

An ILIT might be worthwhile for an individual whose net estate, including life insurance, exceeds the estate tax exemption of $1 million, or for a married couple whose net estate is more than both spouses’ exemptions of $2 million.

Who should business owners work with to set up an ILIT?
The best qualified people to consult include tax attorneys who specialize in estate trusts and financial planners. The planners evaluate the clients’ assets, ascertain their long-term goals, assess their tax liabilities, and determine how an ILIT can be created to protect their assets.

It is important to remember that ILITs cannot be set up without the involvement of tax attorneys, financial planners and other advisers. That is because the trusts have to be monitored continuously by a third party to make sure they conform to changing tax laws and comply with IRS guidelines and federal and state laws.

What role do financial advisers play in setting up and maintaining ILITs?
They become the trustors’ custodians after the attorneys design the irrevocable trusts. They send out what is called a ‘crummy letter’ to advise beneficiaries that the trustor has made a gift to them. Once the beneficiaries refuse the gifts - which is generally the option they choose by default - the trustee reinvests the declined funds to pay for the insurance policy and remits them to the insurance company.

As mentioned earlier, heirs have the option of refusing the monetary gifts given by the policy owner. Although beneficiaries can accept the funds, it is not in their best interests to do so, since it would defeat the purpose of the ILIT. If the beneficiary declines the gift, the trustee reinvests the funds to pay for the insurance policies.

It is nuances like these that make financial advisers integral parts of the ILIT process.

SHERRY MAYNARD is a financial consultant, Chartered Financial Analyst and Chartered Wealth Advisor with J.J.B. Hilliard, W.L. Lyons Inc in its Columbus branch office. Reach her at (614) 210-6284 or

Wednesday, 28 June 2006 07:49

Client relationships

The difference between a customer and a client may not be readily apparent to some business people. Failing to recognize the difference can result in lost sales and goodwill and have an otherwise adverse impact on a business — particularly for service providers such as banks, law firms and wealth management advisers.

Contemporary financial service providers have become specialists who operate within narrowly defined parameters. For example, commercial bankers often deal specifically with real estate companies whose expertise lies primarily in building suburban shopping malls. Or wealth management advisers may work strictly on succession planning with small business owners. These are the types of specialists who benefit the most from developing client — rather than customer — relationships.

Smart Business discussed customer versus client with Vince Laughlin of MB Financial Bank to find out how such distinctions foster improvement in a business’s bottom line and client relationships.

What is the difference between a client and a customer?
In its simplest terms, a customer relationship really implies a vendor relationship. Vendors, by definition, sell products mostly by competing to be a low-cost provider. On the other hand, a client relationship implies service, which means much more than being a low-cost provider. It involves the creation of some lasting intrinsic value within the context of the ‘seller/buyer’ relationship.

Businesses such as law firms would never think of the ‘seller/buyer’ relationship in any terms other than ‘client.’ Yet they too must deliver their services in a cost-competitive fashion.

While banks offer tangible products, the delivery of these products has become more specialized. Arguably, then, the greater value to the buyer is not merely product price; it is the ability of the banking specialist to recognize the buyer’s specific needs and match those needs to the most appropriate product. That is truly service and more representative of a client relationship than it is of a customer relationship. Nevertheless, the banking industry remains steadfast in its reference to the ‘seller/buyer’ relationship as a ‘customer’ relationship.

Can a business be on both sides of the relationship?
Yes. Banking is a great example. Banks offer products such as checking accounts and consumer loans. Therefore, they are clearly competing on a cost-competitive basis. But — especially on the commercial side of banking — bankers are providing their ‘buyers’ with more than just products.

Whether it is credit, capital markets products, treasury management products or anything else, commercial bankers and service providers in general have to be competitive. But the cost equation is rarely the primary driver of that relationship. We have to offer more than products. There must be an element of service as well, in the form of recognizing how to identify and tailor products that will most appropriately meet the needs of the ‘buyer.’

How does a business benefit from treating people as clients rather than customers?
The most significant benefits are profitable long-term relationships with people, increased revenues and expanded goodwill, which often lead to additional business through word-of-mouth in the form of referrals.

In commercial banking, as in other client-driven service businesses, it is important to recognize the value of goodwill. For instance, while commercial banking to a degree relies on traditional cold-calling to develop leads, a far more efficient and productive source of new business is referrals from clients with whom the banker has built relationships by anticipating their clients’ needs, maintaining dialogues with them, understanding their business plans and providing the specific services tailored to their operations.

Why is it important to learn a client’s business?
It helps to recognize the entire spectrum of a client’s businesses, not just a few parts. Learning the unique needs of a specific business’ss individual divisions contributes to a strong client relationship and leads to another important aspect: earning the client’s confidence.

Building a strong client relationship is more than placing a couple phone calls or occasionally meeting with a client to discuss a product. It entails recognizing that the business environment world and service providers like banks and law firms have become highly specialized, and they will benefit most from dealing with businesses that understand one another’s operations. That is a confidence-building process, which requires teamwork.

How does teamwork apply in the client-building process?
Service providers in today’s complex business world must rely on a coordinated team of specialists to build a client relationship. That includes professional and support staff personnel. The members of the support staff play an important role in the process. They have to be visible and articulate, and understand the process and the products we offer, just like the specialists they support.

VINCE LAUGHLIN is the manager of the Commercial Real Estate Division for MB Financial Bank. Reach him at (312) 456-8510 or

Tuesday, 23 May 2006 05:56

Looking ahead to retirement

There is a difference between dreaming about retirement and actually planning for it. However, dreaming is not what helps people attain their retirement goals. That can only be attained through solid financial planning, which should start early in life, although it can be initiated at any age.

The keys to planning for retirement are to start thinking early about what you want at a particular age, recognize that there is no “one-size-fits-all” package, and use a collaborative team of retirement and estate planning professionals in the process. That is true for business owners, employees and anyone who wants to enjoy as much security as possible in their retirement years.

Smart Business spoke with Douglas Walouke of J.J.B. Hilliard, W.L. Lyons Inc. to get an insight into the retirement planning process for business owners and employees alike.

When should people start planning for retirement?
Ideally, people should start placing some urgency on retirement — or life — planning as soon as they receive their first paycheck. That is a good time to start putting a little money into an IRA, a 401(k) or some type of plan.

One advantage to a 401(k) or a similar plan is that employers often match employee contributions, which can help retirement funds grow considerably and quickly. Remember, there is power in compounding interest.

What results should people be looking for when planning for retirement?
The most significant is financial security, not only for individuals but for their spouses and families as well. Another is to gain an education about financial planning and pass it on to other people.

What is the ultimate goal of a retirement plan?
It is essentially the same for everybody: to build a ‘life plan’ in which you attempt to prepare financially as well as you can for the unexpected, and to satisfy your hopes, dreams, fears and aspirations. The plan should include taking care of yourself and your loved ones. Once you have that plan in place, stick to it but be flexible.

Even if people start planning early for retirement, they can expect a lot of unexpected events along the way that will impact their plans. Building flexibility into a retirement plan can alleviate some of the problems that might result from those events. A solid financial plan allows you to change your mind along the way as your expectations and situations change.

Is it important for individuals to develop and recognize their expectations?
Everyone has to develop and communicate their own expectations to their advisers. That is especially critical for people who are teaming with financial planning professionals. If financial consultants do not clearly understand their clients’ expectations, they cannot possibly meet, let alone exceed, the expectations.

Successful retirement planning is a team effort, and there must be a good fit between clients and advisers if it is to work effectively.

What are some of the concerns that prompt people to get involved in financial planning?
As with most aspects of the combination of financial and estate planning, the issues differ from individual to individual. For some people, such as business owners, one issue might be what happens if they become disabled and unable to run their companies. For others, it might be guardianship of children, financial support for spouses once they can no longer provide it, or individuals’ health concerns. These are all critical issues that can be — and should be — addressed in setting up life plans.

Another concern that some people have is what happens if they outlive their money, or do not even reach retirement. These are legitimate concerns which need to be discussed, because there are solutions.

Again, there are products and techniques available to address every concern, which is why a collaborative team approach to financial and retirement planning is recommended. The team typically includes a certified Financial Consultant, a CPA and an estate planning attorney.

How do you determine whether you need a financial adviser?
Most people need a financial adviser. The issue is what service the adviser can provide for you now. For example, if you are just starting the accumulating process, you may simply require a plan and some guidance to get the ball rolling. If you have accumulated some assets, you may require active management of those assets to help you reach your goals and to examine more closely your estate planning needs.

Maybe you are in or near retirement, in which case you should be working with a team of advisers to make sure all your affairs are in order and working to your benefit.

If you have not already started planning for the future, start now.

DOUGLAS WALOUKE is a vice president, financial consultant, Chartered Financial Analyst and Chartered Wealth Advisor with J.J.B. Hilliard, W.L. Lyons Inc., in its Columbus, Ohio, branch office. Reach him at (614) 210-6285 or (800) 285-9667

Monday, 15 May 2006 12:40

Never accept no

Business people who do not negotiate effectively with suppliers, customers, staff members and other parties who can affect their operations over what at times can seem like seemingly insignificant points put themselves at significant competitive disadvantages. Their inability or unwillingness to negotiate can force them to accept business costs, labor terms, settlements, etc., that are not in their best interests.

Their alternative in such cases is to hire attorneys. That drives up their costs, cuts into their profits, places their fates in the hands of third parties who might not have their best interests at heart — and still does not guarantee them favorable settlements.

Business people can avoid negative outcomes in such situations by developing effective negotiating skills.

Smart Business spoke with Donald E. Godwin, founder, chairman and CEO of Godwin Pappas Langley Ronquillo LLP to learn more about how business owners and key personnel can learn to negotiate successfully and gain a competitive advantage in the process.

Why should business people learn the fine art of negotiating?
They can substantially reduce their business risks and legal fees, lower costs from suppliers, increase sales and resolve issues that might arise with employees without resorting to the courts for settlements.

To be successful, business owners should spend a significant amount of time negotiating many aspects of their businesses.

Isn’t it more practical for business people to hire legal counselors to do their negotiating for them?
Not always. In fact, they should allow attorneys to intercede only as a last resort.

For one thing, relying on attorneys increases their legal costs, which is contrary to the purpose of negotiations.

For another, many of the issues involved in the negotiations might eventually end up in court, rather than be resolved directly between parties.

Over the years, people have learned that — even though they think they have facts and the law on their side — jurors and judges might not see the issues the same way the parties involved do. That could lead to adverse results in the form of unwanted and costly settlements.

Direct negotiations between parties can often eliminate these outcomes.

What are the goals of negotiations?
The goals are to make sure all the parties involved get something, that the negotiations end on a high note, and that everyone has been treated fairly. It is unproductive to draw a line in the sand or make the other side feel like they’ve been taken advantage of.

Are there any hard and fast rules to negotiating?
One rule to follow in every negotiation is to be willing to consider both sides of an issue. Be open minded, and be willing to listen more than talk. When you are listening, you are learning. The more you learn about your adversary’s position, the more effective you will be in your negotiations.

How do people learn to negotiate?
The best way is to actually do it. There is some training involved. For example, watching and emulating competent people who are experienced in the practice. Listening carefully to the other side’s wants and needs is critical.

Negotiating is just like learning to swim or ride a bike. You actually have to practice them to develop and retain your skills. The same is true in learning to negotiate. Over time, you will learn to negotiate effectively.

What are the keys to successful negotiating?
Among the most important are learning as much as you can about your adversary, keeping an open mind, understanding that not everyone is coming into the negotiations with the same mindset, determining the other side’s wants and needs, personalizing your negotiations, never accepting ‘no’ for an answer, exercising patience and perseverance, being organized and refraining from putting all your cards on the table too early in the process.

Should negotiators treat the other side as adversaries?
Adversary has a negative connotation. Often, business people involve themselves in negotiations with people with whom they have ongoing relationships. Therefore, it is important that they be as fair as possible in their negotiations, without making the other side think that they are out to win at all costs.

Approaching negotiations in that vein can lead to strained relationships with the same people who are a constant part of their business dealings, which can hurt them in the long run.

Should business people approach negotiations with a sense of empathy, rather than power?Always negotiate from a position of strength, rather than empathy. Never let anyone think that you use power as a part of your thinking process. People are offended by the term ‘power.’ People should always negotiate from a position of being informed, well advised and fair.

DONALD E. GODWIN is the founder, chairman and CEO of Godwin Pappas Langley Ronquillo LLP. He specializes in commercial litigation, environmental issues, labor, employment and mass tort litigation. Reach him at (214) 939-4412.

Tuesday, 28 March 2006 11:58

The emergence of VoIP

VoIP, the process of sending telephone calls over data networks such as the Internet instead of POTS (plain old telephone lines), is catching on with business owners of all sizes. Its primary advantage is the ability to deliver new services that combine voice and data with traditional telephone service such as local and long-distance calling over broadband Internet connections. Often, users pay one flat monthly charge without incurring telephone local or domestic long-distance charges.

Smart Business spoke with Jim Ferguson, president of sales and marketing for Mpower Communications, to learn more about VoIP and the advantages it offers.

What are customers buying when they implement VoIP?

Customers are not — or should not be — actually buying VoIP. They are buying the value of what VoIP can bring. In fact, VoIP should be sold as service, not just voice.

We look at VoIP as a solution, not just a product. We offer one provider and single billing convenience for customers, which is a decided advantage for any business owner.

What are the advantages of VoIP for business owners?

Business owners of all sizes realize several advantages from the implementation of VoIP.

Among them are control over costs, flexibility in terms of managing their calls, reporting capability in user management from a desktop, and the ability to have one common platform and a common dialing plan regardless of their location. For instance, a company with a phone center in India, headquarters in New York and a location in California can have one inter-company dialing plan for all of them. That is hard to do with traditional circuit-switched networks.

Another advantage is the ability to combine voice and data. VoIP provides a very fluid ‘pipe,’ which is more efficient than the traditional circuit-switched network used commonly today. Data applications are easily layered on an all-IP network. Voice is packetized, and becomes one of the data applications.

With whom would business owners consult when considering the acquisition of VoIP?

Integrated Communication Providers (ICPs), which provide hosted IP Telephony and IP Trunking services. ICPs provide turnkey solutions for small enterprise businesses. Small companies naturally want to avoid the large capital expenditures typically needed for PBX and IP PBX telephone systems, yet desire the next-generation services that VoIP can provide. Providers that are going after the smaller business market, which is really an underserved market, are taking what larger enterprises enjoy typically and pushing their services downstream to smaller businesses. So the ICPs are providing that sort of consultancy — or solutions.

If providers are selling voice, they should really be selling it as it relates to improving customers’ productivity with better communication tools, not just because it’s ‘cool’ to have VoIP. Mid- to large-sized enterprises typically have an IT manager and CPE partner or vendor who works with ICP providers. ICP providers have built the high quality of service (QoS) IP networks needed to deliver to voice.

How can employers determine whether VoIP is viable for them?

Perhaps the best way is to do a cost-benefit analysis and assess the return on investment. One thing to look at is the cost of buying IP Trunking service and IP PBX equipment versus hosted IP telephony. Smaller companies may not have the resources to purchase and manage their own systems, so utilizing hosted services may make more sense for them.

What should business owners be looking for when they implement VoIP?

Businesses should be looking for communication providers or CPE vendors that can assess their internal LAN (local area network) to support VoIP, provide security solutions that support VoIP, end-user training, and guarantee service levels. It is important that businesses qualify their LAN to support VoIP and have robust, secure firewall protection when connecting to an IP network.

Whether purchasing a CPE-based or hosted VoIP solution, businesses need to consider their future needs. Telephony technology is evolving rapidly, and emerging services are developing. Therefore, the system a business owner implements today must be capable of ‘layering on’ new services. Without getting too technical, a viable VoIP system should feature a network architecture that fully supports integrated communications services from POTS to integrated voice and data over IP — and it should be designed to support future applications.

When should business owners consider switching to VoIP?

Now. VoIP and IP networks have enabled new services that improve how businesses communicate. Web and video conferencing, online collaboration, secure instant messaging, and find-me-follow-me services are just the beginning. VoIP communication platforms already integrate mobile and wireline handsets regardless of your location or mobility. Virtual workplaces will become more common, improving business productivity. Since most business owners use broadband internet connections today, now is an ideal time for them to get involved in VoIP.

JIM FERGUSON is the president for sales and marketing for Mpower Communications, which serves California, Nevada, and parts of Illinois. Reach him at

Thursday, 26 March 2009 20:00

International tax planning

The closest thing to a minefield in today’s

global business environment may be the

myriad U.S. and foreign tax rules affecting cross-border business. Companies involved in international business need an

effective global tax strategy, or risk incurring

highly unfavorable tax consequences. Worse,

uninformed companies can miss the opportunities to take advantage of U.S. and foreign

incentives available to companies engaged in

cross-border business transactions. International tax pitfalls and opportunities exist

even for relatively small U.S. companies that

merely sell goods destined for U.S. export or

engage in foreign R&D.

Smart Business spoke with Doug Wright of

Burr Pilger Mayer LLP to gain insights into

the complexities of global tax planning, how

companies can simplify them, and how international tax consultants can help.

How do companies benefit from partnering

with international tax consultants?

International tax specialists can help companies convert tax traps for the unwary into

opportunities. Effective upfront international tax planning can reduce a company’s global tax costs by minimizing the potential for

paying double taxes to a foreign jurisdiction

and the U.S. An effective global tax strategy

will balance U.S. and foreign tax considerations in the context of a company’s broader

business and financial objectives. This translates into increased after-tax cash flow,

increased after-tax earnings and financial

statement benefits, and ultimately increased

shareholder value.

Why is international taxation so complex?

The various U.S. and foreign taxing jurisdictions are all seeking a bite of the same

cross-border revenue apple. They have

become increasingly proactive and diligent

in pursuing collection of what they consider

to be their ‘fair share’ of a company’s cross

border revenues. A good example of this is

the development during the last decade or so

of widespread and complex international

transfer pricing rules, which require companies to document their annual compliance

with strict ‘arm’s length’ standards for

pricing intercompany transfers of goods

and services. These and other international

tax rules are constantly changing, which

becomes a major minefield for uninformed

companies that are engaged in cross-border


International tax consultants can meld the

U.S. and the foreign tax sides of a company’s

business into a coherent tax and business

strategy. They are well-versed with the

issues, trends and changes involved in

international tax planning, and track them


What is the key to an effective international

tax strategy?

To do international tax planning properly, a

company has to develop a global tax strategy

that facilitates its global business objectives.

The starting point is developing a solid understanding of a company’s business and financial position, its international operating strategy, and where and how it intends to operate

outside the U.S. With this knowledge, an

international tax consultant can help a company develop an overall global tax strategy

that makes good business sense and is practicable. International tax planning for specific situations can then be approached in a

coherent manner, taking into account the

company’s broader global tax and operating


Do international tax rules provide incentives

for companies?

Yes, there are significant cross-border tax

incentives available in the U.S. and abroad. A

key U.S. incentive for exporters is the IC-DISC (Interest Charge Domestic International Sales Corporation). Although this incentive

has existed for more than 35 years, many U.S.

companies aren’t aware of it or may not realize that they qualify. It can significantly

reduce the U.S. tax by 50 percent or more on

income from sales of certain export products

and from certain international services. The

IC-DISC rules are highly complex, however,

so an experienced international tax consultant can help a company identify and capture

the maximum IC-DISC export tax benefits.

What risks exist for companies that do not

develop effective international tax strategies?

Companies that are not familiar with international tax rules, cross-border transfer pricing requirements and double tax treaties are

much more likely to suffer unnecessarily

high global tax costs, including increased tax

compliance burdens and tax penalties. For

example, many less-developed countries

don’t have a good international tax treaty network, so it takes careful cross-border tax

planning to minimize tax burdens, including

high foreign corporate tax rates and high

withholding taxes applied to a wide spectrum of ‘outbound’ payments from such

countries. The same holds true with transfer

pricing. The U.S. has had fairly well-developed transfer pricing rules for many years,

including potential transfer pricing adjustment penalties and interest charges, but

developed and developing foreign countries

also now have their own sets of transfer price

rules. So, it’s no longer just a matter of being

focused on the IRS side of the transfer pricing equation, but also making sure that foreign transfer pricing problems are not created. An experienced international tax adviser

can assist a company in establishing a tax-effective cross-border transfer pricing strategy that helps ensure that U.S. and foreign tax

and transfer pricing landmines are not inadvertently stumbled upon.

DOUG WRIGHT is a partner in Burr Pilger Mayer LLP’s International Tax Practice. Reach him at (925) 296-1044 or

Monday, 23 February 2009 19:00

Don&#x2019;t be wowed

In the past, processing financial data often proved to be a long and arduous task. But, today, financial professionals can quickly and easily process data thanks to technologically advanced financial software specifically created to simplify financial calculations. But, when a company is implementing financial software, it has to be careful about what packages it chooses.

“Don’t fall prey to the ‘wow factor’ — being blinded by bells and whistles and unnecessary applications that can do lots of fancy things,” says Robert B. Brenis, CGEIT, CISA, MCP, PMP, a principal in the IT Consulting group at Skoda Minotti.

Succumbing to the ‘wow factor’ often means acquiring expensive, generic software that is not exactly what you want or need to manage financial data. To avoid that outcome, according to Brenis, select financial software that not only meets your specific needs but also aligns with your IT capabilities.

Smart Business spoke to Brenis about implementing financial software and what criteria to consider when acquiring it.

What software does a company need to manage financial data?

It depends on the company’s business requirements. Those requirements determine which software applications will best help the company manage its financial data. Another factor to consider is a company’s size. There are applications available for small, medium and large businesses. What works for a mega-corporation may not be applicable for a one-person business, and vice versa. A third criterion is the type of business. As is the case with size-related packages, for instance, financial software designed for a manufacturing business may not work for a financial business.

What should a company look for when selecting financial software?

Again, it is the requirements. If you want to acquire the right financial software for your specific needs, you have to take the time to define what you need and where you are trying to go with the software one, five or 10 years down the road. Companies want software they can use today and grow with in the future. Software like that leads to huge cost savings, opposed to regularly implementing new financial applications, which can become a costly endeavor.

You also want software that is properly implemented the first time and the first time only. Thus, it is important that business professionals ascertain exactly what they want in a financial software package before they implement it. Doing so will save them the two most precious commodities in the business environment: time and money. Not only that, it will make you and your data more secure.

How can a company ensure that its financial data is secure?

There are several ways. One depends on the software’s application. For example, is it sitting on a server or on a regular PC? Either way, you need to make sure no one can hack into its environment. You also have to make sure that the financial data that helps you generate financial reports is secure. So, before the company purchases a financial package, it should have a network expert come in to make sure the system is secure.

Even if you’re housing data within the system’s environment (e.g., credit card numbers), those numbers have to be encrypted in its database. And, they have to be unreadable so someone within the organization can’t just call up the database software and use the numbers to commit fraud or, worse, take them to another company. You really have to consider both the external and internal security of data when acquiring financial software.

What are the current trends in the area of financial software?

One is ‘cloud’ computing, which allows software applications to be provided as a service over the Internet. The cloud is a metaphor for the Internet, based on how it is depicted in computer network diagrams. You don’t have to maintain the applications or worry about them being up and running. You simply pay for a service similar to your monthly utility bill, or pay on a subscription basis. There are some concerns about cloud computing, however, including security issues, regulatory compliance and long-term viability.

Another trend is the move toward more secure systems. Financial software providers are making sure their packages include enhanced data security procedures. This is in response to the increasing number of organizations, such as the banking and credit card industries, that are requiring data audits.

A final trend is the consolidation of financial software packages. Larger companies like Microsoft and Infor are buying applications at a rapid rate. Some vendors say they will continue to support their applications, but they may not continue to put out new releases. That may or may not be a problem, since the larger companies are trying to buy the best applications available and blend them together to create more efficient software — which is what companies want to acquire in the first place.

ROBERT B. BRENIS, CGEIT, CISA, MCP, PMP, is a principal in the IT Consulting group at Skoda Minotti. Reach him at (440) 449-6800 or