Roger Vozar

By ruling that part of the Defense of Marriage Act (DOMA) was unconstitutional, the U.S. Supreme Court also set in motion some changes regarding federal income taxes.

The June decision struck down Section 3, holding that same-sex individuals who are married under state law also must be treated as married for income and estate tax purposes.

“The court’s decision will have an impact on many tax laws in states that recognize same-sex marriage,” says Tom Tyler, a partner at Crowe Horwath LLP. “Though being treated as married for federal tax purposes might provide certain tax benefits, it might also result in increased tax liability.”

Smart Business spoke with Tyler about the tax implications of the DOMA ruling and what they mean for employers.

How many states have legalized same-sex marriage, and which ones recognize those marriages from other states?

In addition to the District of Columbia, 13 states allow same-sex marriage: California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington. Thirty-five states, including Texas, have banned same-sex marriage, either through legislation or constitutional provisions. New Jersey and New Mexico have no laws either banning or allowing same-sex marriage. Five states — Colorado, Hawaii, Illinois, New Jersey and Oregon — allow civil unions or domestic partnership between same-sex couples, but not marriage.

What affect does the ruling have on federal income tax returns?

Joint returns can be filed for federal income taxes in states that recognize same-sex marriage. If not filing jointly, each spouse will need to file using married filing separately status. Affected taxpayers should review their 2013 filing status and adjust withholding and estimated payments as necessary, keeping in mind the marriage penalty for joint filers.

Generally, the statute of limitations for federal income taxes is three years, so the 2010, 2011 and 2012 tax years are open and returns can be amended. The IRS is expected to issue guidance regarding amending returns under the court’s decision. Taxpayers should wait for this guidance before amending returns.

How have strategies regarding estate and gift taxes changed?

The estate tax exclusion was increased earlier this year to $5.25 million, meaning an estate equal to that amount will not pay any estate taxes provided the decedent has the full $5.25 million exclusion remaining. In addition, the exclusion was made portable such that a deceased spouse’s unused exclusion amount carries over to the surviving spouse upon his or her death for use by the survivor. Therefore, a married couple could shelter up to $10.5 million by simply leaving everything to a surviving spouse. Same-sex couples can now take advantage of these rules as a result of the DOMA ruling. Before the ruling, they couldn’t.

For gift tax purposes, same-sex couples will be able to elect gift splitting, which treats gifts as made half by each spouse. Splitting gifts often allows each spouse to claim the full annual exclusion for gifts made to each recipient, currently $13,000 per person. This allows a spouse to gift up to $26,000 to a recipient without paying gift tax.

What should employers do in response to the DOMA ruling? How does it differ in relation to their state’s legal position on same-sex marriages?

Employers should review the decision with legal counsel to determine its impact. For example, employer-provided medical insurance is now available to same-sex couples on a tax-free basis. Prior to the court’s decision, these benefits were taxable to the nonemployee spouse. Employers might be able to claim a refund of payroll taxes paid on these benefits on a taxable basis, and individuals might be able to claim a refund of income taxes paid on these amounts.

As stated previously, Texas is one of the states that bans same-sex marriage. However, if a Texas business has employees in any of the 13 states or District of Columbia that recognizes same-sex marriage, it could be affected.

Tom Tyler is a partner at Crowe Horwath LLP. Reach him at (214) 777-5250 or

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Lean and Six Sigma were developed for manufacturing, but are gaining momentum within service industries.

“Both Lean and Six Sigma have been used almost exclusively in manufacturing. Now you’ll see black belts in all fields, from IT to financial services to health care,” says Chris Liebtag, a Lean Six Sigma Black Belt with Rea & Associates.

Smart Business spoke with Liebtag about Lean Six Sigma, a program that melds the two disciplines for maximum benefit.

What are the origins of Lean and Six Sigma?

Six Sigma originated at Motorola, but its roots can be traced through the Quality Circle Movement of the ’70s to the Total Quality Management teaching of the ’50s. It is a project-based methodology seeking quality and consistency. Lean, on the other hand, has a very complete toolkit and is mostly concerned with identifying and eliminating waste or non-value-added steps.

Lean Six Sigma combines the basic tenants of both to look at ways to remove non-value-added steps in a process and improve quality.

What types of businesses can be improved by implementing Lean Six Sigma?

It’s been very strong in health care and financial services. An emergency room might want to look at the process of admitting patients, or a medical billing organization that sends bills to multiple entities might want to determine how long it takes and ways to accelerate the process.

There must always be a business rationale; clients define the value and you’re looking to satisfy their needs and remove wasteful steps.

Should everyone in the company be trained?

It’s important to at least be exposed to the concepts. It does involve a cultural change within an organization, so implementation will require everyone to adopt the mindset of always looking for ways to continuously improve. Select employees should be trained as facilitators, but everyone should be thinking about how to better serve clients.

The results likely will be increased customer satisfaction, an enhanced business reputation and a competitive advantage. If you can deliver your product or service faster than competitors at a higher quality or even a lower price because of operational efficiency, it provides an enormous advantage.

Does that require Lean Six Sigma?

Efficiency and customer satisfaction initiatives can be tackled without Lean and Six Sigma. However, these techniques have been proven to be very effective when it comes to controlling costs and improving satisfaction among clients and employees. Employees are empowered to better their work environment, which eliminates turnover and produces a happier workforce. In turn, that leads to improved customer satisfaction. Lean Six Sigma provides a framework to generate these gains.

Does Lean Six Sigma need to be adjusted to fit the company?

The most successful projects are tailored specifically to address industry- or business-specific circumstances. The 30,000-foot view concepts and methodologies can be applied almost universally — define a problem, measure the variety of steps within that problem or process, and then analyze and improve it. However, the best results are produced by combining the tools and methods of Lean and Six Sigma with industry expertise. That industry expertise component also helps generate buy-in among employees.

How important is it to set goals for improvement?

You should always start with the end in mind, even if that goal might not be immediately achievable. If you want to reduce costs by 10 percent, process changes are designed to produce that result. You might only get to 8 percent — that doesn’t mean it wasn’t a worthwhile enterprise, it just presents an opportunity to continually improve toward that goal.

The idea behind Lean Six Sigma is continuous improvement. It isn’t designed to be a ‘one-and-done’ initiative. It’s a change in culture whereby employees embrace the mindset that the business needs to get a little better each year and sustain the gains. Lean Six Sigma is more than a technique or a process, it’s a discipline and approach to running your business.

Chris Liebtag is a Lean Six Sigma black belt at Rea & Associates. Reach him at (614) 923-6586 or

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More companies are using non-competition agreements as a means of protecting business interests when employees leave.

“Historically, the agreements in the employment context were narrowly focused on people exposed to technological secrets, or very high-level executives. It’s become more common to have contracts with employees who aren’t in the control group, such as salespeople,” says Robert Cohen, a director at Kegler, Brown, Hill & Ritter.

However, there are legal problems that arise, and courts have held that non-competition restrictions must be reasonable and exist for the purpose of protecting the business by ensuring fair competition.

Smart Business spoke with Cohen about when non-competition agreements make sense and what to incorporate in the language to avoid legal complications.

When are non-competition agreements being used in the employment context?

One example is an agreement that is used to protect confidential information in the employment context and prevent certain post-employment competition. Such an agreement typically spells-out that the employee will be exposed to confidential, proprietary information, and he or she agrees to only use that information to the benefit of the company. These restrictions are typically accompanied by a more direct restriction in the form of a non-competition covenant stating that the person cannot work in the industry for one year, or within a certain geographic radius of their work location, or that he or she cannot perform certain services for the employer’s clients.

How restrictive can companies be?

The general answer, based on Ohio Supreme Court decisions, is that agreements are enforced only if they are reasonable. Obviously the concept of reasonableness is a very general one. A test of reasonableness takes into consideration several factors, including:

  • Temporal and geographic restrictions.
  • Whether the employee represents the sole company contact with a customer.
  • Whether the employee possesses confidential information or trade secrets.
  • Whether the covenant seeks to eliminate unfair or merely ordinary competition.
  • Whether the restriction serves to bar the employee’s sole means of support.
  • Whether the talent the employer seeks to suppress was actually developed during the period of employment with the former employer.
  • Whether the forbidden employment is incidental to the main employment.

These factors don’t serve as a checklist, they don’t apply in all cases and they are not weighted equally. The overriding law is that non-competition restrictions are enforceable so long as they preclude unfair competition, but are not acceptable if they are being used to eliminate ordinary competition.

Court decisions vary regarding what is reasonable. There are decisions upholding competitive employment and customer restrictions for time periods of six months to five years. But there are also court decisions holding that restrictions of this same time range are not reasonable on the facts of particular cases. Ohio law also allows the court to shorten the time period set forth in the non-competition restriction to one the court believes is more reasonable.

What is your advice as to whether companies should have non-competition agreements?

Focus on whether either of the following is occurring in the particular business:

  • Is the company investing time and money to train employees or establish relationships between those employees and the company’s customers?
  • Is the company exposing its employees to confidential or trade secret information?

In those cases, the company has an interest in protecting its investment from being misappropriated to the competition.

If you’re going to have a non-competition agreement, include a question on the employment application asking if the person is willing to enter into such an agreement. This allows potential employees to consider the restrictions before committing to the employment relationship.

Narrowly tailor the agreement to protect your legitimate business interests. For example, geographic restrictions should be limited to your market area, or in some cases to the particular area where the employee functions.

Robert Cohen is a director at Kegler, Brown, Hill & Ritter Co., L.P.A. Reach him at (614) 462-5492 or

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Leaders are often viewed as great orators who inspire people with their words, but listening is actually the most important leadership trait, according to Matt Zumstein, a partner at Ropers Majeski Kohn & Bentley PC.

“Many leaders are great speakers. However, when you’re able to listen and respond to what clients and employees are saying, you can become a more effective leader,” he says.

Smart Business spoke with Zumstein about what he has observed in successful business leaders and how that translates into more successful organizations.

Why is listening the most important attribute for leaders?

Most people aren’t very good listeners. By listening carefully, you’re also able to ask better questions. Good leaders hear what customers and employees want and need. After listening and gathering useful information, a leader can provide better direction, and the company can focus more on the needs of its clients.

When speaking or presenting, it helps to include a compelling story. Storytelling, or having a theme to your story, is a powerful way to put forth ideas, whether selling a product to a client, giving a team its marching orders or for any other purpose. This can apply to a discussion with a prospect at lunch, in the boardroom or through an online video. The power of incorporating a real-life story into the message can be invaluable.

What other qualities do leaders need to demonstrate?

It’s very important to be authentic. When telling a story, you must be able to personalize the message in order to illustrate integrity, humility and vulnerability. These are characteristics a leader needs to create positive energy. When people can recognize authenticity, they will respond more favorably.

There used to be a clear separation between private and business lives. Today, with technology and social media, the separation is no longer clear. As a result, it is important to understand your client base and use available online tools to your advantage.

A good leader usually loves what he or she is doing. Colleagues and customers can easily recognize when you bring a passion to daily activities. Remember the Energizer bunny? In order to be an effective leader, find your bunny — the thing that energizes you and keeps you going. When you do that, it will become contagious. That’s why motivational speakers like Tony Robbins are successful — people can see their passion.

How do people sabotage their own leadership efforts?

If leaders become too focused on looking ahead at the challenges they face, they can forget what they’ve accomplished and miss out on significant learning opportunities. It is important to be grateful and thankful for what you’ve achieved.

Another problem is not empowering colleagues or support staff to help develop the self-confidence they need. A lack of confidence can breed negativity and infect the entire organization.

A lack of effective communication is the main reason that relationships, and businesses, fall apart. It’s important to be candid and authentic. If you promise a growth opportunity you can’t provide, you will quickly lose your credibility. When you admit what you can and cannot do, people recognize your authenticity and are more willing to support you.

To be an effective leader, don’t limit your focus to the end of a project. Carefully consider all that is needed to get there. If you’re looking to increase revenue by $1 million next year, what effect does that have on family time or the ability of the company to do charity work? How you get there is just as important as getting there.

Don’t forget about the fun part of life. Reward your team with tickets to a movie or gift cards for coffee. When people feel like they are recognized for their accomplishments, it creates a positive energy and everyone will be willing to strive for, and accomplish, a lot more. 

Matt Zumstein is a partner at Ropers Majeski Kohn & Bentley PC. Reach him at (650) 780-1641 or

Learn more about Matt Zumstein.

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The top two concerns of CEOs are talent management and risk management, according to a 2011 study by PricewaterhouseCoopers.

It’s not difficult to ascertain why. In addition to creating a positive work environment that attracts the best employees, good talent management avoids exposure to lawsuits. That’s a particular concern nowadays, as the U.S. Equal Employment Opportunity Commission (EEOC) received a record 99,947 charges of employment discrimination in 2011, with $455.6 million paid in relief.

“It’s a matter of being fair and consistent,” says Carin Zubillaga, SPHR, principal human capital consultant at TriNet, Inc. “Branding has also become important to companies, and they want to know how they can become a desirable employer.”

Smart Business spoke with Zubillaga about what companies can do to limit talent risks.

What do companies need to know today?

Employers need to understand that talent risks start at the onset of the hiring process. Many think they don’t have to be concerned about labor laws until employees are hired. In reality, employers need to create a solid job description to put their best foot forward and hire the best possible candidate.

Are there standard hiring practices everyone should follow?

The most important thing is to have a hiring process. It may differ depending on the level of the position. But, for example, if you ask every candidate for one position the same questions, you can easily benchmark answers to help you find the best fit among all applicants.

Another best practice is to conduct training for all managers or individuals involved in the hiring process. Talk about what can and can’t be asked in an interview. Many people have different ideas as to what’s OK — some think that if you share personal information, it opens the door to ask the applicant. That’s something you absolutely don’t want to do.

Ask your interviewers to not search for candidates’ names on Google or look up their Facebook pages. Already, there are more cases on the use of social media during hiring. Even professional background checks aren’t always reliable. A background report wrongly said an individual had been convicted of a felony, which led to his termination. Now, he is seeking compensation for lost wages, employment opportunity and other damages.

Make sure you pick the most qualified candidate based on knowledge, skills and ability. And be a professional: Close the loop by notifying applicants who didn’t get the job.

Do independent contractors pose particular problems?

If someone is an independent contractor, the employer is not required to pay payroll taxes.

Therefore, the IRS and Department of Labor look for misclassification because they’re missing out on funds; misclassification can result in back taxes and penalties.

There is a series of tests to discern if someone is an independent contractor, such as whether they’re required to be there from 8 a.m. to 5 p.m. or allowed to work for other companies. More often the person shouldn’t be classified as an independent contractor. To determine accurately, use the online test offered by the IRS.

Once a person has been hired, does employment at-will mean you can terminate employees without risk?

Even in employment at-will states like California, problems come up when employers do not adhere to their own policies. If you have a course for disciplinary action that outlines specific steps, that process must be followed. For example, most companies build in language for serious offenses ‘up to and including termination.’

Retaliation has become the EEOC’s top claim. If someone files a compliant against a supervisor and that’s the only reason he or she is terminated, you’ve got a problem.

Sticking to your policies regarding employee issues will mitigate a lot of legal risk. Your state may have employment at-will, but there are laws that trump that and provide the potential basis for a lawsuit.

When it comes to effectively managing talent, consistency is key. Have a process and treat people how you would want to be treated. That is one way to brand yourself and become an employer of choice.

Carin Zubillaga, SPHR, is a principal human capital consultant at TriNet, Inc. Reach her at (813) 379-4552 or

Learn all you need to know about human capital management at the TriNet Hub.

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All banks will tell prospective clients they can serve every need. But proper preparation and key questions will reveal whether a bank is the right one for your business.

“Banks say they do everything, but you have to find the institution that shares your priorities, and focuses resources in areas important to you,” says Matt Christensen, senior vice president and regional manager at Bridge Bank.

Smart Business spoke with Christensen about the process of choosing a bank.

Why is it important that a bank knows your industry?

It’s particularly important if your industry has unique risks. An early-stage company in the technology space will have challenges that are not common in other sectors. After a round of seed funding, it has to show proof of concept. Then it needs to show the ability to generate revenues. Most lenders look for companies that have two or three years of profitability, are steady and have products that are not prone to obsolescence. Technology companies are an entirely different breed. Unless the prospective bank has a business unit dedicated to meeting the unique needs of tech companies, there are probably other options to consider.

Health care is another industry with similar concerns. Businesses might be receiving payments from federal agencies, and they’re facing a regulatory environment that’s ever changing. Industry knowledge can even be useful to something like a car dealership, where certain banks are set up specifically to work with them.  

These examples might be extreme, but as you get closer to the extremes it becomes increasingly important for businesses to carefully consider what bank to use.

How can you verify that the bank has the necessary experience?

When interviewing bankers, ask for representative examples of companies they’ve worked with in the industry. Inquire about challenges they perceive within the industry. If they can provide a list of businesses they’ve worked with and intelligently discuss industry challenges, it’s probably a good fit.

During the process, it’s important to go up the line and ensure that the credit apparatus understands lending into the technology space, for example.

Trade organizations also are good sources of information. Find out which banks are active and check their reputations within the industry.

How can you get the most out of interviews with prospective bankers?

First, ensure that the conversation doesn’t default to the banker asking questions about your company. Bankers are trained to formulate questions and can monopolize the discussion by conducting their due diligence and uncovering sales opportunities.

Prepare for the interview by developing questions that will reveal the bank’s priorities. Make sure they prioritize your type of company and products. If your business model includes aggressive growth and relies heavily on debt, ensure the bank does that routinely. Some banks prefer to collect deposits and lend out conservatively.

Banks, especially the large ones, offer every service you might need. However, they have areas of emphasis. They prioritize certain markets in which they’re eager to expand. Find a marriage between your needs and the bank’s priorities. They will not say your industry isn’t emphasized, but you can look at the bank’s financial statements to check its assets and where loans are concentrated.

Does having access to decision-makers matter?

It’s an indication that the bank values you as a client and you are a priority. Also, you want to know the sensitivities of the people making decisions. When you face a challenging situation or have an opportunity, will they be open-minded or are they going to quote policy? If you’re considering an acquisition to double your size, how would they structure a credit facility to accomplish that goal? Ask how they’ve worked with other companies and check references to determine how they’ll work with you.

Banks say they do everything. It’s important to find the people with the experience and skill sets that fit your priorities — a relationship manager and banking team that will advocate for you when you need their assistance.

Matt Christensen is a senior vice president and regional manager at Bridge Bank. Reach him at (415) 508-2505 or

Insights Banking & Finance is brought to you by Bridge Bank

Business owners tend to put off succession planning if they don’t intend to exit in the near future. But circumstances can change quickly, and not having a plan in place could be a costly mistake.

“Every business, large or small, will reach a point where a decision needs to be made as to the next step regarding ownership,” says Corinne Baughman, a partner at Moss Adams LLP. “Whether the transition is one year or 10 years away, it needs to be part of the overall plan for any company.”

Smart Business spoke to Baughman about the process of succession planning and how it provides benefits before a transition occurs.

Do most businesses have succession plans?

The main problem with companies’ succession plans is that they don’t exist. Owners have plans to increase sales or add personnel, but they don’t have a strategic plan as it relates to a successor because it’s something they can kick down the road. It takes most companies years to implement a succession plan, and delaying limits options.

Every business should have a succession plan. You might think you’re going to pass the business on to management, sell to a strategic buyer or gift it to your children. That can change, but you need a plan in place to start addressing the issues that arise no matter which way you’re going to exit the business.

What is involved in succession planning?

The first step is to consider your long-term goals. Is it to grow larger, or expand the product or client base? Whether it’s a single owner or a private equity group, what are their business goals? Do they want to retain a certain amount of ownership, pass it on to family members or step away completely?

Once you’ve answered those questions and determined what everyone wants, it’s time to get into specifics and identify your way of getting to liquidity, whether it’s a sale, private equity backing, going public or whatever.

Then you need the right people in place to move the plan in that direction. That’s where many companies fail; one person calls the shots and succession drops to the bottom of his or her priority list. It’s important to spread the wealth of responsibility internally and develop the right support group of attorneys and CPAs. Everyone on the team needs to understand how to grow the value of the company — until you have good strategic financial and business plans, you’re not going to be ready for succession. You’re looking to get the most value out of a transition, but you should be doing that on a daily basis anyway and working on ways to increase the value of the business.

What are the most common mistakes companies make?

The biggest one is timing — the tendency is to put off succession, but fewer opportunities are available the closer you get to a transaction. You might be in the wrong legal structure or find out you should have had additional training for management personnel.

This becomes crucial when something unexpected occurs, such as a death or someone leaving the company. A key component of the succession plan may be gone, and without a strong team you may not have a backup plan.

Another mistake is that owners think a certain dollar amount is a home run that will set them up for life, and don’t plan for the net impact. It can be eye opening to owners when they realize what they end up with after taxes isn’t what they were expecting. You need to forecast future needs and assume whatever cash you receive on the day papers are signed will be the only cash you’ll receive. Many clients had deals with earn-out provisions and didn’t get another penny. Just as you do for your business, you need to create a financial model and budget for your personal needs.

Some people don’t like to think about succession and hang on too long, especially when they built the business themselves. But at some point you’re going to have to step down, and you should have a plan with goals and a time frame for that transition.

Corinne Baughman is a partner at Moss Adams LLP. Reach her at (949) 221-4048 or

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Celebrating a century of service with the history and milestones of the 100 years of Moss Adams.


Monday, 02 September 2013 17:31

Why all business values are not created equal

How can a business be worth both $1 million and $700,000? It depends on what type of value is being determined.

“A business owner may think that if a business has a value of $1 million, it means that he would have $1 million in his pocket upon a sale. One must look deeper, however, and determine what type of value the $1 million represents. A number alone isn’t enough, you need to define what value you are trying to determine because there are different definitions of value,” says Robert A. Ranallo, CPA/ABV, JD, CVA, CFF, a partner at Skoda Minotti.

Smart Business spoke with Ranallo and Sean Saari, CPA/ABV, CVA, MBA, a principal at Skoda Minotti, about the various ways of determining the value of a business.

What different types of value are there?

The value most commonly determined is equity value, which represents someone’s equity ownership interest in a company, whether it’s 1 or 100 percent.

Another value that may be determined is enterprise value, which is equal to the equity value plus debt, minus cash. Alternatively, an enterprise value can be converted into an equity value by subtracting debt and adding cash. Investment bankers often discuss enterprise value because they’re concerned about the company’s total value, regardless of how it is financed (debt vs. equity).

Let’s assume in the example that the $1 million represents enterprise value and the company has $400,000 in debt and $100,000 in cash. An investment banker would likely say that the company’s value is $1 million, but the owner’s equity value (the net amount that the owner would receive before taxes) is only $700,000 ($1 million enterprise value - $400,000 debt + $100,000 cash).

Misunderstandings result because people often talk about values in terms of multiples — ‘A company in my industry sold for five times EBITDA (earnings before interest, taxes, depreciation and amortization).’ Because EBITDA is before interest, it doesn’t take into account the impact of debt, so the resulting value is an enterprise value (which includes debt), not an equity value.

What are standards of value?

There are several. The most frequently used is ‘fair market value,’ which is required for valuations prepared for the IRS, divorce courts or other situations where the parties need to determine the value at which an ownership interest would transfer between a willing buyer and a willing seller.

Another standard of value is ‘fair value’ for financial reporting purposes. Fair value is often synonymous with fair market value, although there are some definitional differences.

There is actually another fair value standard that arises in a legal context in cases involving dissenting shareholders. The difference between legal fair value and financial reporting fair value is that legal fair value typically does not include adjustments for factors such as lack of control and marketability, although this can vary by state.

There also is a strategic, or investment, value. This standard of value is typically used in connection with transactions when a buyer is purchasing a company in its industry. Under this standard, adjustments are made in the analysis that is specific to the particular buyer, such as the elimination of duplicative expenses after the transaction.

What does ‘level of value’ mean?

Level of value relates to the control and marketability characteristics of an ownership interest. Controlling interests in privately held businesses are more valuable than minority interests. A controlling owner can unilaterally dictate the operation of the business, sometimes to their benefit and the detriment of the minority shareholders, including controlling the sale of the business and distributions of cash flow. Absent agreements with minority owner protections, a non-controlling owner is just along for the ride, which makes these ownership interests less valuable.

As for marketability, privately held businesses do not have a ready market for sale like publicly traded ones, so certain discounts are applied to reflect this impairment on value.

With different valuation considerations, remember that when you talk about valuing a business, all parties need a clear understanding of the value they are seeking. This will eliminate misunderstandings and hard feelings down the road. 

Robert A. Ranallo, CPA/ABV, JD, CVA, CFF, is a partner at Skoda Minotti. Reach him at (440) 449-6800 or

Sean Saari, CPA/ABV, CVA, MBA, is a principal at Skoda Minotti. Reach him at (440) 449-6800 or

Insights Accounting & Consulting is brought to you by Skoda Minotti


Customers can tell when an employee doesn’t like his or her job.

“Even if it’s over the phone, you can sense if the person is smiling and the energy they have,” says Rick Voigt, president of Today’s Business Products. “Morale is what it’s all about. You can have the greatest company and greatest product, but employees will not be happy and will not stay if morale is low.”

Smart Business spoke with Voigt about ways to improve morale and how happy employees help businesses grow.

Can you quantify the effect morale has on customer service?

Morale goes hand-in-hand with the success of a company and its growth. People can sense if the customer service person on the other end of the phone is smiling; they pick up on that energy and want to talk.

There’s nothing worse than calling a company and the person answering doesn’t have any energy and doesn’t want to talk — you feel like you’re interrupting what they’re doing and you’re a second-class citizen. That attitude has a direct impact on sales. Customers will look for another company to do business with when they have contact with employees who are disinterested.

Customer service is what differentiates companies. There are other businesses that sell office furniture and office products, for example. When you don’t make the product and it can be bought anywhere, it all boils down to customer service.

If you go to a restaurant and the waiter doesn’t treat you well, you will not go back, even if they have great food.

Does customer service extend to all areas of a business?

Absolutely. Drivers are the face of the company when the product is delivered. They need to have a positive attitude when entering a business. Salespeople are the ones engaging customers and bringing them on as accounts. Customer service representatives also engage customers, answering questions with smiles on their faces so that people want to call back and do business with the company.

How do you ensure that employees are happy?

It starts at the top by making sure everyone feels included and part of the team. It’s important for upper management to listen to employees’ opinions. And when they have opinions, you need to be willing to implement their ideas or explain why their idea wasn’t adopted: ‘That’s a great idea, we tried it and it didn’t work. But it’s good that you thought of it.’ When someone comes up with a good idea that is used, make sure that employee gets the recognition.

Are there training sessions or programs that help boost morale and/or customer service?

You should have fun at work. We had a six-month promotion called ‘Get your A game on.’ When employees took an extra step to help a co-worker, they were given an ‘A game dollar’ for a Chinese auction with thousands of dollars worth of prizes. For instance, a driver could earn a dollar for taking a few stops from another driver who was busier, or a salesperson could earn a dollar for turning a lead over to a colleague. People were coming to the management team to make them aware of what co-workers did for them. That promotion worked extremely well. You can tell it was successful because employees are still exhibiting behaviors to receive dollars, even though the dollars no longer exist.

The difference between that and other recognition programs is that it encouraged a team atmosphere instead of competition. It’s good to recognize employees with individual awards, but there could be employees wondering why someone else was picked instead of them.

What else can be done to improve morale?

When a customer sends an email or tells you about a positive interaction with an employee, mention it at a company meeting. People appreciate that recognition and try their best to treat customers in a way that would compel them to write a thank you note.

It’s also important to give employees a nice, clean and safe work environment. Give employees a nice place with a pleasant atmosphere, and they will work harder for you and be much happier.

Rick Voigt is the president of Today’s Business Products. Reach him at (216) 898-4242 or

Work got you down? Check out some videos that will give you a quick laugh and make ordering office supplies more fun.

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Auto insurance premiums are based on several factors relating to risk. Companies with strong fleet safety programs reduce their risk level, resulting in lower insurance rates.

“Depending on what steps you take, the savings could be substantial,” says Derek M. Hoch, president of Leverity Insurance Group.

Smart Business spoke with Hoch about what companies can do to improve the safety of employees who drive while working.

How are auto insurance rates calculated?

They are based on several factors, including frequency and severity of crashes, auto repair costs, medical and hospital costs, lawsuits and court judgments, insurance fraud, vehicle type and deductibles.

One of the best things you can do to reduce insurance premiums is to decrease the frequency of accidents. A U.S. Department of Transportation study indicated that 90 percent of collisions were because of driver action, attitude and behavior. Keeping your drivers safe will lead to fewer and less severe accidents.

Some steps to implement are:

  • Buying newer model vehicles that are in better condition.
  • Hiring drivers that have good motor vehicle records.
  • Providing driver safety programs that include incentives for positive performance.


All of these factors can have an impact on lowering your insurance premiums.

How can you determine if drivers are being safe?

Constantly supervise and monitor drivers’ motor vehicle records. Many companies have implemented GPS tracking that shows how fast drivers are going, where they are going — if it’s the best route, and if fuel is being used efficiently.

Maintenance of the vehicle also can produce telltale signs someone is driving too fast. For example, there will be more wear on tires, brakes and other equipment than there would be for someone operating it in a safe or proper manner.

Companies that are really dedicated to safety have installed electronic onboard recorders to monitor how drivers are doing.

What should be done about cellphone use?

Almost everyone talks on the phone while driving at some point — a nationwide poll found 81 percent of cellphone owners admitted to talking while driving. Distracted driving also resulted in about 3,000 fatal traffic accidents in 2012, according to the National Highway Traffic Safety Administration.

If employees are driving on company time, you need to establish a policy with clear-cut rules restricting cellphone use while driving, and offering suggestions such as pulling over to either place or answer an important call.

Even with a comprehensive cellphone use policy that employees sign off on, courts may still hold employers responsible for harm caused by employees while conducting company business; so it’s important that your policy is upheld and enforced.

What are essential elements of a good fleet safety program?

There are five main components:

  • Management support and ongoing supervision.
  • Driver prequalification.
  • Driver training and ongoing education.
  • Vehicle maintenance.
  • Accident investigation.


Safety starts with the culture of the business owner and the management team; they need to create a solid plan and hire the right people. Next comes driver selection and qualification. That involves checking motor vehicle reports, conducting criminal background checks and contacting former employers about work history.

Once a program is in place, continuously remind employees about safety and provide ongoing training courses. Even seasoned drivers can get complacent as it becomes routine; don’t let them forget their training.

Fleet safety programs aren’t just for companies that employ drivers, they are for any company with employees driving anything from a private passenger vehicle to an extra-heavy truck while on the job.

A true insurance professional or adviser can help your company develop a comprehensive driver safety program. That way you can create a safer culture that not only enhances the well-being of employees but also decreases insurance premiums.

Derek M. Hoch is the president of Leverity Insurance Group. Reach him at (216) 861-2727 or

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