If you were to assemble some of the world’s outstanding business leaders in one place and ask them their secret to sleeping well at night amid the pressures of running a successful business, you might think you’d collect the best tips to handling anxiety in the business world.
The truth is that top business leaders often don’t have a secret to reveal — they rely on the strength and confidence they’ve developed over the years.
At the EY World Entrepreneur Of The Year conference, held earlier this year in Monaco, EY Entrepreneur Of The Year country winners assembled to compete for the World Entrepreneur Of The Year title.
We took the opportunity to collect the thoughts of the world’s most accomplished entrepreneurs — innovators, futurists, turnaround specialists and problem solvers — about dealing with worries. ●
“There’s nothing that keeps me up at night. I sleep very well. The challenge we have as a company is to keep delivering the culture we have created and expand it, keep evolving at the speed our customers expect us to evolve and keep creating value for them as we have for the past 10 years.”
Entrepreneur Of The Year 2012 Argentina
“The main thing is to make sure that we are always looking for new, creative ideas that keep our business updated with new technology and creativity. The other thing is making sure we are working faster than before.”
Lorenzo Barrera Segovia
founder and CEO
Entrepreneur Of The Year 2012 Mexico
“Business has its highs and lows, because let’s face it, it’s not easy. It has its challenges. They asked Steve Jobs what was the most important thing in business and he said, ‘Passion.’ If you don’t have passion you would give up when things get difficult. We have so much passion and love for what we do that it becomes a part of our life.”
founder, president and CEO
Entrepreneur Of The Year 2012 United States
2013 World Entrepreneur Of The Year
“What if the stock market crashes? What if there is some unknown thing that happens? What if there’s another 9/11 type of situation? Companies need to carry on, but maybe they don’t need to do events. Maybe they cut back on entertainment and speakers. The worry is what happens if something happens that I can’t control.”
President and founder
SME Entertainment Group
“We are in recovering times. I feel very positive about the economy in general, but I’m still very worried about Europe. And while we are recovering, it’s still choppy and choppy times are times when there are more needs out there.”
Retired global chairman and CEO
"I guess there is a point in my life where I thought it is all about me, and I am going to be the guy that guides everything and controls everything. What I have learned is that the best thing that I have done for our business is learn to let go and learn to get people who are better equipped to manage specific areas, do their thing and not get in the way."
Dr. Alan Ulsifer
CEO, president and chair
Entrepreneur Of The Year 2012 Canada
“Nothing keeps me awake at night becase my work is solid.
My father married at 60 and my mother was 23. They had four children. Then he died, and we quickly had to start thinking about what to do. There was no money — nothing. We had to leave the little town we lived in because of violence there. Thanks to that, I am where I am right now because I still could be on the streets of my village selling tobacco. There is no wrong that can do good. That's what I have to teach people.”
founder and president
Entrepreneur Of The Year 2012 Colombia
The idea of driving aimlessly seems glamorous in movies and songs. In reality, few of us get in a car without knowing how to reach our destination. We’ve created smartphone apps, GPS devices and satellite mapping to make our trips as efficient as possible and to avoid what we know to be an inconvenient, expensive outcome — getting lost.
I bring up this idea because many companies using social media have inadvertently become lost drivers. They start using social platforms with the goal of reaching some number of likes, retweets or shares, but as they embark on their social media strategies, many experience a disconnect between the content they post, blog and tweet and their progress on measurable business goals. These companies are driving without a roadmap; they just don’t know it.
Sound familiar? If social media isn’t working for you, your social media approaches may be missing a fundamental component: an effective content strategy. Here are three ways a solid content strategy will enhance your company’s social media success.
A like is just a like
All social media engagement is not created equally. To be successful, the social media activity that you generate needs to support your marketing goals — whether you want to improve employee engagement, boost customer conversions or build interest in a new product.
Creating a content strategy before you engage in social media will help your business clarify the specific marketing goals you want to achieve through content, as well as what messages you need to communicate to reach those goals. This process will ensure you get the right likes, shares and retweets from social interactions.
Social is a vehicle
Social media is a vehicle for sharing compelling content with your audience, and it doesn’t work if you don’t know what issues, topics and trends your audience finds compelling. Part of developing a content strategy involves learning how those you are trying to reach want to be talked to. Where do they go for information? How much time do they spend online? What kind of content are they looking for from your industry?
By getting to know the interests and pain points of your audience (customers, employees, shareholders, etc.), you can develop tactics to reach your online audience more effectively, saving you time and enhancing your company’s social influence.
Relevant content is meaningful
Kings of social content don’t become that way by luck. They use strategic tactics to connect with their audience through the right channels at the right times. More importantly, they make these connections meaningful and memorable by posting and sharing strategic, relevant content that their audiences desire.
When you deliver social content that your audience members find valuable or interesting, they’ll reward you by sharing your content, engaging with your business and, ideally, helping to promote your reputation as a thought leader in your business or industry. A content strategy allows you to do that by providing a roadmap for what kinds of informative, helpful, educational or creative content you need to make meaningful interactions.
As a recent Huffington Post article put it, the golden rule of the web is clear: “To know us better is to sell us better.” Ultimately, being successful in the social media space means taking the time to map out what success looks like. In this sense, a solid content strategy is not only an important component of any social media strategy, it’s the key to driving the results your business wants.
Michael Marzec is chief strategy officer of Smart Business and SBN Interactive. Reach him at email@example.com or (440) 250-7078.
When Albert “Chainsaw Al” Dunlap was the CEO at Sunbeam in the late ’90s, he had a reputation for ruthlessness. Besides massively downsizing the company, he was also known to intimidate everyone around him and resort to yelling and fist pounding.
While extreme, Dunlap’s behavior is an example of the type of “dictator” leadership that used to be fairly common in the C-suite. Rules were rules, there were no exceptions for anything and people were just a line item on a budget. Need to cut thousands of jobs? Don’t think twice about it.
On the other end of the spectrum is the Christ-like leader. This leader focuses more on building people up rather than tearing them down. This type of leader understands that there are rules, but sometimes to do the right thing, the rules need to be broken. For example, during the economic downturn, some Christ-like leaders went well beyond what was called for to make sure laid-off employees were taken care of.
They made sure they had the use of office resources to look for a new job and did everything they could to lessen the hardships. They weren’t required to do this; it was just the right thing to do. They saw employees as human, not just numbers on a spreadsheet.
Does it cost money to take the more humane route with your leadership? Yes and no. From a short-term, bottom-line perspective, it probably does cost a few more dollars to help people through a hardship. But long term, it can pay dividends. By treating people with respect and doing the right thing, it helps eliminate animosity toward you and your company from both the ex-employees and current ones. Maybe there are some good employees who you wanted to keep, but couldn’t afford. By showing compassion, when the economy turned around, they were far more likely to consider coming back than if they had just been shown the door with little regard to their well-being.
And what happens when these ex-employees end up in key positions in companies that could be customers? Do you think an ex-employee who you mistreated is going to buy anything from you or recommend your company to someone? It’s a small world, and what goes around often comes around, so it’s always best to treat people as best you can.
You can lead like a dictator and still get results. But do the ends justify the means? Will you conquer all, only to find yourself alone with no friends, the equivalent of Ebenezer Scrooge in “A Christmas Carol?” Or will you have an epiphany and realize there’s a better way to do things?
During this holiday season, think about your leadership style and the long-term effect it has on people’s lives. If this exercise makes you uncomfortable, then maybe it’s time to change how you lead. ●
What would it take for a company to succeed if its leader could effectively do only one of the following: innovate, instigate or administrate? We all know that an innovator is the one who sees things that aren’t and asks why not? The instigator sees things that are and asks why? The administrator doesn’t necessarily ask profound questions but, instead, is dogged about crossing the “t’s,” dotting the “i’s” and making sure that whatever is supposed to happen happens.
Ideally, a top leader combines all three traits while being charismatic, intellectual, pragmatic and able to make decisions faster than a speeding bullet. Although some of us might fantasize that we are Superman or Superwoman, with a sense of exaggerated omnipotence, the bubble usually bursts when we’re confronted simultaneously with multiple situations that require the versatility of a Swiss army knife.
Business leaders come in all shapes and sizes with various skill sets and styles that are invaluable, depending on the priorities of a company at any given point in time.
Every business needs an innovator to differentiate the company. Without a unique something or other, there isn’t a compelling reason to exist. Once those special products or services that distinguish the business from others are discovered and in place, it takes an instigator to continuously re-examine and challenge every aspect of the business that leads to continued improvements, both functionally and economically. It also takes an administrator — someone who can keep all the balls in the air, ensuring that everyone in the organization is in sync and delivering the finished products as promised to keep customers coming back.
As politicians and pundits of all types have pounded into our heads in recent years, “It takes a village to raise a child.” All who practice the art and science of business have learned that, instead of a village, it takes a diverse team working together to make one plus one equal three.
On the ideal team, each member possesses different strengths, contributing to the greater good. The exceptional leader is best when he or she is an effective chef who knows how to mix the different skills together to create a winning recipe.
In many companies, however, leaders tend to surround themselves with clones who share similar abilities, interests and backgrounds. As an example, a manufacturer may have a management team comprised solely of engineers, or a marketing organization could have salespeople who came up through the ranks calling all the shots.
If everyone in an organization comes from the same mold, what tends to happen is, figuratively, one lies and the others swear to it. This builds to a crescendo of complacency and perpetual mediocrity.
There is a better way. Good leaders surround themselves with others who complement their capabilities, and savvy leaders select those with dramatically different backgrounds who will challenge their thinking because they’re not carbon copies of the boss. This opens new horizons, forges breakthroughs and leads to optimal daily performance.
Strange bedfellows can stimulate, nudge and keep each other moving toward the previously unexplored.
To have a sustainable and effective organization, you can’t have one type without all the others. While everyone on the team may not always agree, each player must always be committed to making the whole greater than the sum of the parts.
The single most important skill of the leader who has to pull all the pieces and parts together is to have the versatility of that Swiss army knife — selecting the precise tool to accomplish the objective at hand. ●
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at firstname.lastname@example.org.
More than 800 years ago, medieval philosopher Maimonides outlined eight levels of charity, the greatest of which was supporting an individual in such a way that he or she becomes independent. In Maimonides’ view, support was defined as a gift or loan, entering into a partnership or simply helping that person find employment.
Few things are more powerful than philanthropy — especially when its end goal is to better the lives of others. These days, philanthropy, and corporate philanthropy specifically, has assumed a broader role in society.
Today, companies give back more strategically than ever before. They align themselves with nonprofits that foster missions they believe in. The wealthiest people on the planet have even coordinated the Giving Pledge (www.givingpledge.org), where they’ve committed to dedicate the majority of their wealth to philanthropy.
At last count, more than 115 people had taken the pledge. Warren Buffett and Bill Gates may be the most prominent names on the list, but others include Spanx Founder Sara Blakely, Cavs Owner Dan Gilbert, Progressive’s Peter Lewis and Netflix Founder Reed Hastings.
Last month, one member, David Rubenstein, CEO and co-founder of The Carlyle Group, discussed the importance of philanthropy during a presentation at EY’s 2013 Strategic Growth Forum.
In his pledge letter, Rubenstein explains why: “I recognize to have any significant impact on an organization or cause, one must concentrate resources, and make transformative gifts — and to be involved in making certain those gifts actually transform in a positive way.”
One way Rubenstein is being transformative is through “Patriotic Philanthropy.” He has given $10 million to help restore President Thomas Jefferson’s Monticello home and underwrote renovations to the historic Washington Monument. Yet Rubenstein’s most noteworthy initiative is the whopping $23 million to acquire a rare copy of the Magna Carta, ensuring it remained in the United States. After its purchase, Rubenstein gifted it to the National Archives.
Not everyone has Rubenstein’s vast resources. But every organization and any individual can make their own impact.
In the workplace, for example, organizations that give back elevate their status perception-wise among competitors and peers. It doesn’t take much. But by being a company that cares, prospective employees want to work for you. For your existing team, deliberate and well-organized corporate philanthropy programs quickly take on a life of their own, becoming a rallying point.
Think strategically and get started by finding your cause. We all have them. They exist at our very core, forming the belief system we live by every day. So why shouldn’t our philanthropy follow that same course? Consider aligning your giving or volunteerism with something you personally believe in or care about; something that fits with what your company does or something that is close to your employees’ hearts.
Most important, get involved and just make a difference. It really comes down to that. One initiative that has always impressed me has been the annual CreateAthon event undertaken by WhiteSpace Creative, a member of the Pillar Award class of 2005. You can read a first-hand account of this year’s program here.
Being a good corporate citizen goes well beyond making good business sense. When you align yourself with causes you care about, whether big or small, you make a difference in someone’s life. And the bottom line is this: It is all of our duties to get involved. It’s no longer a question of if, but rather of what, when and how. ●
Dustin S. Klein is publisher and vice president of operations for Smart Business. Reach him at email@example.com or (440) 250-7026.
One of the key challenges for wellness participation today is for employers to find ways to motivate behavior change. We hear far too often to “just do it.” Yet as anyone who has ever tried to lose weight, or start an exercise program knows, catchy phrases are rarely enough to get and keep healthy lifestyle efforts going.
The problem is that many of us have developed unhealthy habits over time that have become sources of comfort to cope with the stress of juggling jobs, families and children in a struggling economy, often with limited resources. For some employees, psychological issues may also be standing in the way.
Those are difficult issues for an employer to address. With an effective and comprehensive wellness programs, however, even these challenges can be overcome.
Incentives are an important tool to encourage change. To have any chance of success, though, incentives must have meaning — they must be perceived as having equal value to the effort that is being requested.
Currently, most wellness programs offer financial incentives, with the average amount ranging from $200 to $300 per person. How the employer chooses to provide the incentive varies, whether it’s via premium, deductible discounts or cash. What’s important is that employers make that decision based on corporate culture. There is no one size fits all when it comes to incentives.
Culture must support change
Employers must also actively support healthy behavior. If employers offer behavior change programs but continue to serve doughnuts and pastries at meetings, or if healthier food is more expensive than the pizza or burger in the office cafeteria, it will be harder for employees to change.
Employees are also more likely to feel inspired if they see others engaging in wellness, especially the leaders of the company. If employees see their senior and middle managers eating salads instead of nachos in the company cafeteria, taking walks with other associates on the company grounds or working out in the gym, they realize that leaders are fully committed to efforts to improve the health of all employees.
People are also strongly encouraged by their colleagues and peers. The development of a strong network of wellness champions who work alongside employees can help to create a culture in which healthy behavior is the cultural norm.
Finding ways to encourage wellness participation is critical for employers today. Components of a successful program include, but are not limited to the following:
- An employer who shows he or she truly cares about employee health and not just cost.
- A program that promotes and encourages empowerment — so that when an employee has become open to change and is ready to take that first step, he or she is self-motivated and ready to do so.
- A wide range of wellness programs that address a multitude of needs, issues and personal preferences.
By focusing on helping employees take the first step to change behavior and by looking at how successful employers achieve results, any organization can improve the health of its employees and that of their business.
Eric Samaniego is vice president of health promotions for Alere Health in Dallas. The company works with large employers and health plans nationwide. For more information, visit www.alere.com.
Link Up With Eric Samaniego on LinkedIn http://linkd.in/1eEsvts
Check Out Eric Samaniego on Alere Health’s blog, http://healthyworklifeblog.com/
How Stephen Mooney transformed the back office operations of Tenet Healthcare into Conifer Health SolutionsWritten by Leslie Stevens-Huffman
Cost center managers tend to lay low during times of change, but not Stephen Mooney. The latent entrepreneur in 2008 proposed the idea of splitting off the patient financial services division of Tenet Health care into a stand-alone company to take advantage of an opportunity he saw in the marketplace and to capitalize on the strong relationships already in place with Tenet's partners.
To understand what Mooney faced getting this idea off the ground, consider Tenet’s situation: The organization was in the midst of selling more than half of its 110 hospitals when he floated his idea by Tenet’s CEO. That meant significant change, and during a time when organizations typically are hesitant to champion new start-up initiatives.
“My idea didn’t have a lot of fans at first, but it did get our executives thinking about the future instead of our current dilemma,” says Mooney, who serves as president and CEO of Conifer Health Solutions LLC, a wholly owned subsidiary of Fortune 100 company Tenet Healthcare.
Mooney was convinced that health care organizations would jump at the chance to boost revenue cycle performance and focus on patient care instead of billing and collections. So Mooney sold his vision to everyone he encountered, turning a $200 million cost center into an outsourcing success story, adding some 7,000 employees and 600 clients in just five years. Here’s how he did it.
Build a strong foundation
Providing revenue management to non-Tenet hospitals and health systems would require a hefty investment in technology, a cultural shift as well as the development of a sales and marketing arm. Still, Tenet execs were intrigued by the idea and pledged their support if Mooney could find some way to fund his revolutionary venture.
“My initial forecast had us losing money for the first two years,” he says. “Under the circumstances, the company couldn’t afford to lose a single dime. And since venture funding wasn’t an option, I had to find the cash in our operating budget.”
With the executive team behind him, Mooney set out to achieve buy-in from other constituents. He alleviated any concerns by sharing his vision and offering each group a customized slate of benefits. Servant leadership and creating vested partnerships was his goal.
For example, he grandfathered existing rates during the initial transition period. And, he lowered the cost of processing rudimentary transactions by offshoring selective technology and call center services, using the savings to build a robust technology platform.
“We’re not a tech company, we’re a tech-enabled company,” Mooney says. “I needed to enhance our IT platform so we could drive more volume through our machine and offer our clients greater efficiency and value.”
Next, he approached Tenet’s suppliers and asked them to partner with the company. Could they make near-term concessions by thinking long term?
“I shared my business plan with our suppliers,” he says. “I wanted them to see that they had the opportunity to grow with us if they were willing to reduce their fees. Plus, you need to establish strategic alliances from the outset because you’ll need them to manage growth.”
Tenet’s suppliers recognized the opportunity and jumped on board. But after several years of change, Mooney knew his larger task would be with his own team members.
“Getting this thing off the ground would take a lot of work, so I absolutely needed our employees’ support,” Mooney says. “You need to make sure that everyone’s behind you before you start approaching customers.”
Mooney emphasized the benefits of growth to garner support from workers. Having the opportunity to control their own destiny and career opportunities were his main selling points.
“You have to do a lot of selling to get everyone to believe in your vision,” he says. “I had to get our employees excited so they’d be willing to change and make sacrifices to satisfy the needs of external clients as we expanded.”
Mooney credits his team’s enthusiasm and willingness to embrace change with Conifer’s early financial success.
“We were supposed to lose $10 million the first year and to everyone’s surprise, we actually broke even,” he says. “I credit employee engagement for allowing us to achieve a budget-neutral position in our very first year.”
Hit a home run
Convincing a prospect to relinquish operational control of vital functions like billing and patient communications isn’t easy.
Mooney and his sales team made ends meet by selling point solutions while devising a strategy to close their first billion dollar end-to-end outsourcing deal.
“We bought time in the first year by hitting a few singles and doubles, but we needed to land a big fish to prove our concept,” Mooney says.
“Our executives were wondering if this was going to work, but health care organizations were wary of turning over their entire business office to an outsider from Mars.”
The sales team set its sights on landing a major deal with a member of a faith-based, not-for-profit system. Mooney knew that signing a member of this prestigious fraternity would encourage others to follow. But he and his team would have to sway a host of skeptical attorneys, consultants and stakeholders to ink their illusive inaugural deal. They emphasized their industry experience, their servant leadership model, and cultural alignment.
The looming impact of the Affordable Care Act finally proved to be the tipping point, as Conifer signed a number of major deals including a 10-year agreement with Catholic Health Initiatives to provide revenue cycle services for 56 hospitals across the nation.
“Even their consultants had to agree that their current model was unsustainable given the changes under health care reform,” Mooney says. “The market was aligning with partners and we finally convinced our prospects that they couldn’t wait to act.
“All I can say is don’t give up,” he says. “Our first deal died more than once, but I remained involved, and we continued to push the benefits that mattered to our prospects like improving the patient experience and the revenue cycle until the timing was right.”
Close service gaps and accelerate growth
Mooney worried that Conifer might lose its competitive edge given the massive changes imposed by health care reform. He hired experienced leaders, invested $200 million in the firm’s technical infrastructure and paid another visit to Tenet’s CEO where he presented a plan to leapfrog Conifer past its competitors.
“The market was in a state of flux due to health care reform,” he says. “Clients wanted turnkey solutions, and we needed to close a few service gaps to help them transition from a fee-for-service to a fee-for-value environment. The question became, ‘Should we build or buy these capabilities?’”
Mooney proposed a series of strategic acquisitions, and this time he not only garnered support, but funding from Tenet’s executive team and board.
In recent months, Conifer has added new services like clinical integration, population health management and financial risk management to its arsenal as well as data modeling and analytics. In the process, the firm has acquired a host of new clients and employees.
While acquisitions can boost revenues and a firm’s capabilities overnight, assimilating an outside organization can be tricky. Depending on whose research you believe, mergers have a failure rate of anywhere between 50 and 85 percent primarily due to a lack of cultural compatibility and the hasty departure of key employees who possess critical institutional knowledge.
Mooney has been successful in assimilating acquisitions by getting executives from Tenet and Conifer’s acquired companies to embrace his unique philosophy and methodology.
First, he doesn’t plan to make money for at least 18 months following an acquisition, which gives him time to assess the staff.
“We try to retain or find other opportunities within Tenet for everyone we acquire,” he says. “If we do lay someone off, we give them severance and outplacement assistance because everyone deserves the right to leave with dignity.”
He’s created new business units within Conifer to help him retain key leaders and staff from an acquired firm. He’s also bolstered retention by allowing employees to telecommute as Conifer expanded its footprint to 43 states.
“The key is empowering people to make decisions so they can serve the client,” Mooney says. “We’ve expanded what we offer our clients, and they’ve increased their reliance on us. I keep our staff engaged by relaying our success stories. It works like a charm every single time.” ●
- Build a strong foundation before you approach customers.
- Prove your concept by hitting a home run.
- Close service gaps and accelerate growth.
The Mooney File:
NAME: Stephen Mooney
TITLE: President and CEO
COMPANY: Conifer Health Solutions LLC
Birthplace: Margate, N.J.
Education: Bachelor’s degree in accounting from Stockton State College in New Jersey and a master’s degree in business administration with an emphasis in accounting from Pepperdine University.
What was your first job and what did you learn from it? I restocked the ice cream vendor on the boardwalk of the Jersey Shore. I learned that every person is important because the business couldn’t operate without a runner. Plus, it taught me responsibility because I couldn’t take a day off unless I found someone to take my place.
What’s the best advice you ever received? Put people first because it increases their engagement. In turn, they’ll take care of your customers and the bottom line. For example, we let people go home when an ice storm is approaching and they make up for it the next day. They respond because we trust them to do the right thing.
Who do you admire most in business and why? Jack Welch, former chairman and CEO of General Electric, because he was incredibly focused and a great developer of people and leaders.
What is your definition of business success? Your business is successful when it’s turning on all cylinders, and it’s sustainable. In other words, you could walk away, and it would just keep going. We’re not there yet because we’re only a five-year-old company, but I believe that we’re on the path to sustainability.
Conifer Health Solutions Social Media Links:
How to reach: Conifer Health Solutions LLC (877) 266-4337 or www.coniferhealth.com
In 2012, the energy sector spent $17.9 billion on global research and development, more than $6.6 billion of which was conducted in the U.S. Assuming small and midsize businesses perform 20 percent of the U.S. energy sector’s R&D, these companies could incur up to $1.3 billion in R&D expenditures, the benefits of which may not be fully realized because they underutilize the R&D tax credit, says Robert Henry, a partner in Tax and Strategic Business Services at Weaver.
In addition, the R&D tax credit represents a permanent tax benefit; it reduces the overall effective tax rate as presented in generally accepted accounting principles basis financial statements.
Smart Business spoke with Henry about new ways to utilize R&D tax credits.
What is the R&D credit?
The federal R&D tax credit is a mechanism to spur technological advances and hiring in R&D fields. It has expired and been extended multiple times, but has most recently been extended through 2013. With support in both political parties, it is likely to be continued.
In addition, many states offer R&D tax incentives in the form of state income, franchise, or sales and use tax credits and exemptions. Texas’s R&D credit will come back into law effective Jan. 1, 2014. Texas HB 800 provides a sales and use tax exemption or a franchise tax credit related to qualified R&D activities taking place within Texas. This will greatly increase the potential tax benefit available to taxpayers conducting their R&D within Texas.
How is qualifying R&D activity defined?
Internal Revenue Code section 174 describes research and experimental expenditures as activities intended to discover information that will eliminate uncertainty concerning the development or improvement of a product. The activity must:
- Be related to the development or improvement of a product, inclusive of a technique, invention, formula or process.
- Address uncertainty regarding the appropriate method or design for the product.
Activities deemed eligible by section 174 qualify for immediate tax deduction. They also may qualify under section 41, where they must:
- Be technological in nature, based in hard sciences, such as geology or engineering.
- Contain a sufficient degree of development uncertainty.
- Contain the process of experimentation.
- Have a permitted purpose that improves a business component, which includes a product, process, software, technique, formula or invention.
What oil and gas activities may qualify?
‘Wildcat’ exploration, the drilling of a well, the development of logistical infrastructure — really the entire exploration and production process — may qualify for the R&D credit. That also includes improved analytics and software that enables more accurate interpretation of reservoir studies. A pipeline company in the industry’s midstream sector may be more efficiently monitoring flows of oil and natural gas or overcoming adverse field conditions in placing a pipeline. Downstream companies may benefit from improved processes for purifying or refining natural gas or oil.
What costs are eligible for the credit?
Wages for employees engaging in qualified research, directly supervising qualified research or supporting it are eligible. A company may also deduct 65 percent of contract labor costs associated with qualifying R&D activities.
Tangible property costs used in the R&D process or in the construction of a prototype can be qualifying expenditures. Supply expenses, though, cannot include land or land improvements, or property subject to depreciation. Expenses for royalties, shipping or travel also cannot be included. In addition, special considerations apply for internal-use software.
In order to capture all eligible credit when R&D activities are identified, companies must track and record labor costs of internal employees, contractor and vendor expenses, and supplies or materials costs. A business that is aware of the manner in which these costs are tracked and accounted for will more accurately define what it can claim for an R&D tax credit. ●
Insights Accounting is brought to you by Weaver
Cloud computing has grown in popularity because it can help boost productivity and reduce costs by allowing organizations and employees to work collaboratively over the Internet from the office and remote locations.
But that ease of access to your business applications and data brings increased risk.
“Cloud computing presents a number of risks, ranging from data leakage to cyberattacks on cloud computing vendors and their customers,” says Jim Stempak, a principal at Crowe Horwath LLP.
Smart Business spoke with Stempak about a methodology to periodically assess cloud computing IT security risks.
What risks are associated with cloud computing?
Whether you sign up for software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS) or some combination of service models, your organization is exposed to risk because security is applied differently than in traditional noncloud IT environments. Additionally, your vendor might not have security standards on par with your own.
Some areas of risk are:
- Cloud governance risk. Cloud governance refers to controls and processes for cloud planning and strategy, vendor selection, contract negotiation, implementation, operation and possible termination of service. Some companies rush into cloud computing and don’t properly assess risks and implement controls to mitigate them.
- Weak identity and access management controls. Moving to the cloud can drastically change how customers control access to accounts and computing resources, thus introducing new security risks.
- Unsecured data connections. With the cloud, much of the data communication takes place outside of your IT environment. It’s important to understand where your data is and assess vendor protection of data in transport and storage.
- Workforce security risk. Often employees use personal cloud storage services such as Dropbox, Evernote, Google Apps, SkyDrive and iCloud to transfer and store work-related files without authorization or oversight from IT management. A recent Nasuni Corp. survey of 1,300 corporate IT users found one in five respondents put work files in personal Dropbox accounts. Personal cloud storage services lack enterprise-class security protection, and, in turn, could put sensitive data at risk and increase the chance your organization is noncompliant with industry and government standards.
How should a company assess its cloud security risks?
Companies should review all layers of risk associated with the specific use of cloud services in their IT environment. Start with a review of common controls, including cloud governance, identity and access management, and transmission security. A corporate cloud security assessment typically focuses on controls affecting cloud governance, such as cloud planning and strategy, vendor selection, implementation, termination and transition of cloud services; identity and access management, such as account setup, level of access and single sign-on; and secure connectivity, such as encryption, backup plans, logging and monitoring.
You also need to conduct a workforce assessment to identify unauthorized use of personal cloud services, which includes:
- Network scanning — special software applications scan networks for the most popular services for storing and transferring data in the cloud.
- Passive monitoring — applications track network traffic to uncover connections with website addresses associated with personal cloud services.
- Log analysis — servers have log files that capture useful data about network activity to help pinpoint cloud services traffic.
- Workforce survey — ask if employees are using personal cloud services for work and why. This can help you understand cloud service needs and identify potential risks.
Cloud computing changes the way people work and is here to stay. Organizations need to completely understand how they are using cloud services — in both known and unknown ways — before valuable data winds up in the wrong hands. ●
Insights Accounting is brought to you by Crowe Horwath LLP
Twelve years ago, EY decided to go global with its Entrepreneur Of The Year awards and establish the World Entrepreneur Of The Year program — and the results have been, shall we say, an international success. The conference, held annually in Monaco, features Entrepreneur Of The Year country winners competing for the World Entrepreneur Of The Year title.
Assembling business leaders from around the world in one place to be honored is a huge accomplishment — the wealth of experience, as well as the variety of successful leadership styles, is outstanding.
Here are some thoughts from the collection of the world’s most accomplished entrepreneurs — innovators, futurists, turnaround specialists and problem-solvers — about leadership styles. ●
“I built the company based on people, not on experience from before. They were willing to learn and try anything. We had a bunch of people who had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”
founder, president and CEO
Entrepreneur Of The Year 2012 United States
2013 Entrepreneur Of The World
“Early on, the business was centered on me, and I had to make all the decisions alone. Now I share those decisions with my 10 main directors. If there are differences in opinion, I make the last decision.
The other thing is that I have had to ensure that the people who are invited to work here are people with principles, values, integrity, responsibility and passion. If I don’t see a person with passion, they don’t hang around the company very long.”
Lorenzo Barrera Segovia
founder and CEO
Entrepreneur Of The Year 2012 Mexico
“I’m a very passionate person, which will never change. When you grow, you gain more experience and the kind of problems you face change. As you grow, you need to grow with your organization.”
Entrepreneur Of The Year 2012 Argentina
“In the startup days, you have to be very innovative, hire and retain talent, refine your business as you deploy in the marketplace, and you learn things from it. Today, with a solid track record of business success, I can focus on what’s next and think more strategic and long-term than you’re allowed to in the early days. My style has evolved as the business has matured.”
Chevron Energy Solutions
“Entrepreneurship and leadership is about always having ideas, knowing that it is possible even though everyone says it is too difficult. Maintain the positive and always have new ideas.”
Mario Hernandez, founder and president, Marroquinera
Entrepreneur Of The Year 2012 Colombia
“To keep the entrepreneurial spirit and entrepreneurship alive once you've got past the startup base, I think it is making sure people understand why they are there. There are always things you can do to improve your business. You should be rethinking and retooling it every chance you get. The key thing is to make sure everybody in the organization understands the story, where are you going — how are you going to get there? And the belief that you are doing the right thing —people want to know their purpose. Keep the energy going, keep a strong sense of purpose.”
Dr. Alan Ulsifer
CEO, president and chair
Entrepreneur Of The Year 2012 Canada
“The skill sets of an entrepreneur involve understanding how to create business. Why not work with kids who need it the most and actually teach them and help them to be entrepreneurs? That’s what is going to grow our economy and create stability where otherwise we’re going to have a lot of social unrest.”
President and CEO
Network for Teaching Entrepreneurship
“I like to be involved. I want to know everything that is going on. But I have to delegate to my team. That was the biggest adjustment for me, and it’s not an easy thing to do. It’s that delegating to others, trusting them and reinventing yourself. Now that we’ve grown, I put more responsibility on my team and rely on my team more than I once did.”
President and founder
SME Entertainment Group
“If someone makes a mistake, what do you do? You laugh with them. You don’t yell at them. You laugh. It just keeps things light and lively and people want to do their very best. You let them know they screwed up, but you also let them know it’s OK.”
National Heritage Academies