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Friday, 30 November 2012 20:04

How to plan for year-end tax changes

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Tax planning is even more uncertain and complex this year because of the number of tax changes scheduled to take place when the calendar flips to 2013.

“The expiration of the Bush-era tax cuts, the imposition of the Medicare surtax in 2013, whether or not certain tax provisions will be extended and President Obama’s proposed extension of the 36 percent tax bracket to married couples earning more than $250,000 adds a level of uncertainty to year-end tax planning not seen in years,” says Tom Tyler, partner with Crowe Horwath LLP.

Smart Business spoke with Tyler about potential tax changes and what business owners should do in preparation.

What are the Bush-era tax cuts, and what would be the effect of their expiration?

President George W. Bush cut individual tax rates to 10 percent, 15 percent, 28 percent, 33 percent and 35 percent, depending on a taxpayer’s taxable income, and reduced to 15 percent the rates for qualified dividends and capital gains. Taxpayers in the 10 percent and 15 percent brackets pay zero percent on qualified dividends and capital gains.

If Congress does not extend these rates beyond 2012, the new tax rates beginning in 2013 would be 15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent. Dividends would no longer receive preferential tax treatment; instead, they would be taxed at ordinary income rates. Capital gains would be taxed at 20 percent — 10 percent for taxpayers in the 15 percent tax bracket.

In addition, President Obama has proposed extending the 36 percent tax bracket to adjusted gross incomes greater than $200,000 and $250,000 for single filers and joint filers, respectively. Note that adjusted gross income is determined before personal exemptions and itemized deductions; taxable income is determined after personal exemptions and itemized deductions. Absent the Obama changes, the 36 percent bracket would start at taxable income of $183,250 and $223,050, for single and joint filers, respectively.

What other tax changes are on the way in 2013?

The Patient Protection and Affordable Care Act added a 3.8 percent Medicare surtax beginning in 2013 for higher-income taxpayers. The tax applies to the lesser of a taxpayer’s net investment income or the amount by which the taxpayer’s modified adjusted gross income — adjusted gross income with foreign income added back — exceeds $200,000 in the case of a single filer or $250,000 in the case of a joint filer. Net investment income includes interest, dividends, royalties, rents, capital gains and passive income from trade or business activities. Higher income individuals with wages or self-employment income exceeding $200,000 for single filers and $250,000 for joint filers will see an increase in their Medicare tax rate from 1.45 percent to 2.35 percent.

For the past two years, the employee share of Old Age, Survivors, and Disability Insurance (OASDI) has been reduced from 6.2 percent to 4.2 percent. This rate reduction is scheduled to expire at year-end and will return to 6.2 percent. Employers that typically pay bonuses after year-end should consider accelerating the payment of those bonuses into 2012 for those employees below the Social Security wage base of $110,100.

Any other steps people should take before the tax rates change?

With respect to the tax rate increases and Medicare surtax, individuals might want to consider selling in 2012 appreciated capital assets that would generate long-term capital gains to take advantage of the 15 percent tax rate — zero percent for those in the 10 percent or 15 percent bracket. Loss assets could be held and sold in 2013 when the loss could be deducted at higher rates and result in increased savings.

If an individual controls a C corporation, consider distributing dividends from the corporation in 2012 instead of 2013, when the maximum rate on dividends is 15 percent instead of a potential rate of 43.4 percent — 39.6 percent plus 3.8 percent Medicare surtax. An S corporation that was formerly a C corporation and is considering distributing former C corporation earnings and profits could do so in 2012 to take advantage of the 15 percent tax rate on dividends.

Taxpayers also might want to consider repositioning their investment portfolios in light of these changes. Higher tax rates make tax-exempt investments more appealing. A shift away from dividend-paying stocks to nondividend paying stocks makes tax sense given the expiration of the favorable tax rate on dividends and the application of the 3.8 percent Medicare surtax to dividend income in 2013.

These tax saving ideas should be considered just one tenet of an individual’s overall investment plan.

Are deductions and exemptions going to change as well?

Unless extended by Congress, personal exemptions and itemized deductions will be subject to a phase-out beginning in 2013. Personal exemptions will begin to phase out at $267,200 of adjusted gross income for joint filers and $178,150 for single filers. Itemized deductions will be reduced by 3 percent of the amount adjusted gross income exceeds a threshold, projected at $178,150 for 2013.

Another uncertainty is the alternative minimum tax (AMT) exemption. Without congressional action, the exemption for 2012 would be $45,000 for joint filers and $33,750 for single filers. However, we are hopeful that an AMT ‘patch’ will be passed prior to year-end and increase the exemption. Last year’s exemption for joint filers was $74,450.

Tom Tyler is a partner with Crowe Horwath LLP. Reach him at (214) 777-5250 or tom.tyler@crowe.horwath.com.

Insights Accounting is brought to you by Crowe Horwath LLP

Service providers are touting the benefits of cloud computing, and more and more businesses are moving to the cloud. But beyond the benefits, there are also dangers, and companies should consult with an attorney to ensure that the language in the contract will protect them, says Bill Cramer, senior counsel at Dykema Gossett PLLC.

“Service providers like to emphasize the potential financial benefits by saying that inside every cloud is a silver lining,” says Cramer. “However, inside some clouds, there is golf-ball-sized hail. When you give up your computing needs to a third party, you give up control and expose yourself to potential liability.”

Smart Business spoke with Cramer about contractual issues to resolve before moving to the cloud.

What legal issues do companies need to be concerned about when moving to the cloud?

You need to protect yourself in contracts with your service provider. With your own network, you control your security. But if you move your computing needs to a third party, you lose that control.

The contract should address how the hardware is protected from both outside and inside intruders. Does it require security guards or alarms? Does it limit access, require background checks, and have entry and exit logs? How does it protect data from electronic intruders? Does it have passwords to access systems? Does it encrypt data when it is stored and transferred to and from the Internet?

The contract should require segregation of  your data from other companies’ data, because you don’t want your data mingled with that of another company. And if you are subject to regulations such as HIPAA or PCI, make sure the provider is contractually obligated to meet those standards.

Further, how often does the provider update system software? If it doesn’t keep its software up to date, your information may be at risk. You should expect your information to be at least as secure off site as it is in your own building, and your contract needs to set out what the provider is doing to protect it.

How can a company address uptime requirements and remedies?

While with your own network, you don’t have control over unexpected failures, you do have control over how you respond. But once you move into the cloud, you lose that control. Specify in your contract how information is stored online: At a minimum, there should be some level of redundancy, and preferably some level of error correction such that failure of a hard drive doesn’t take your system offline.

Second, where is online information stored? Are there multiple copies at multiple locations, so if there is a catastrophic failure at one site, is there a secondary site where service will continue so you can maintain your business?

Third, if the cloud becomes inaccessible for a short period, is there any definition of ‘short period?’ A service provider may promise 99.9 percent accessibility, but over a year, that’s more than eight hours of unscheduled down time. Further, some providers don’t start counting such interruptions as down time unless the interruption lasts more than five minutes.

Fourth, does the provider make periodic backups of data and have an applicable transaction log so it can recover data if there is a software problem? Fifth,  the provider should have a cluster of computers with multiple redundancies so if one is taken down for maintenance, it doesn’t affect service.

Finally, your contract should specify what level of support you can expect when there are problems.

What should the contract cover regarding liabilities to third parties?

You may become liable as a result of a breach in security, resulting in notification requirements, which can be expensive. You may be accused of patent infringement because of the provider’s services. It’s important to spell out in the contract that the provider is on the hook to indemnify you for your costs, as well as to provide for your defense if you are sued.

How should the contract address remedies?

The contract is empty unless it ultimately provides a remedy. Typically, contracts have limits of remedies, for example, if service fails, you don’t have to pay for that service. But you need to put a dollar value on what it means to your business to be offline for a minute, an hour, or a day. The provider may offer credit for down time, however, that credit has to be enough to incentivize the provider not to fail. For example, an hour of unplanned availability should result in more than an hour of credit, so that the provider has an incentive to get it right.

What if the move to the cloud fails?

You need to have a graceful retreat. Even with a competent service provider, a good internal team and a solid migration path, it still may not work as you expected. Start slowly, preferably with a pilot project that won’t cause too many headaches if it fails.

The contract needs to have a migration path to retreat, to recover data and software from the provider and bring your information back to your facility. This can be difficult if you didn’t expect it. It may take weeks to retrieve your data and software from the cloud, and during that time, how do you conduct your regular business?

To ensure all your bases are covered, look to a law firm that has experience dealing with the specifications, technology and provisions of service that can examine the contract for missing but essential terms and terms that carve out big exceptions in the provider’s obligations.

Bill Cramer is senior counsel at Dykema Gossett PLLC. Reach him at (214) 462-6418 or wcramer@dykema.com.

Insights Legal Affairs is brought to you by Dykema Gossett PLLC

Friday, 30 November 2012 20:48

How remote data security can benefit your business

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As technology continues to move forward exponentially, end users are flocking to the latest versions of notebooks, tablets, smartphones and other mobile devices.

Against this backdrop, remote data security (RDS) is becoming increasingly important for businesses. Having an appropriate data protection strategy across the board in any organization can help ensure that the company protects its end users, shields its intellectual property and protects its rights.

However, many businesses fail to do so, as convenience tends to trump security, says Steve Carter, president and CEO of ii2P.

“We try to make small and medium-sized businesses aware that it’s a mistake to only focus on convenience,” he says. “Security should never be a subordinate element when transitioning toward remote data platforms.”

Smart Business spoke with Carter about what businesses need to know about RDS to keep their data safe.

What are the challenges associated with RDS?

First, it’s important to understand how the concern of RDS came to be: We, the users, created it. The introduction and proliferation of mobile computing devices put business-centric technology in the hands of an increasingly mobile work force.

In recent years, laptops, notebooks, tablet PCs, iPads, smartphones and other devices have become instruments of the business enterprise. In other words, they became information interchange enablers.

One thing that has remained constant is that data is still the end user’s primary concern. As such, access to and exchange of corporate data — now through remote devices — has surfaced as one of the most pressing needs of businesses.

Safeguarding the transfer of corporate data across remote devices requires controls. However, to an end user, controls mean inconvenience. And inconvenience often translates to, ‘I won’t take the necessary precautions to protecting my data.’

As a result, data is now being transmitted across more open or mobile platforms by users who are sidestepping security in favor of convenience.

Hasn’t technology adapted to address the needs of exchanging corporate data?

Absolutely. In fact, every generation of new mobile technology devices is amazingly more capable of delivering and exchanging data remotely. But that’s not the problem. The problem is that the ability to exchange information is much more effective than our ability to control data security remotely.

Having data secured in a mobile environment is the essential ingredient. It’s not enough just to have it delivered. We are all in support of making data convenient, but it has to be secure, as well. There has to be a balanced strategy.

What is the weakest link with RDS?

In some regards, this is a real paradox.  Remote data access was designed for the end user, but the end user is, without a doubt, the weakest link. Something as simple as password management provides a great example of how end users tend to overlook security measures. Users will write down their passwords, tape them underneath the keyboard, use the same one for everything, or store them in the cloud.

The increase in the loss of information, malware intrusion and identity theft is due to the nature of the end user who is unaware of the importance of secure protection in their environment, and has difficulty seeing the value when technology serves as an inhibitor of their convenience. The bottom line is that end users will always default to convenience over security. It will take a behavior change at the end user level to correct this.

Bring your own device, or BYOD, is becoming more commonplace at businesses. How will this affect RDS?

It’s important to keep a close eye on this development. The market initially said, ‘Mobile devices are opening up the dynamics of enabling global business. There is no need to stay confined in the office any longer. This is more convenient for the user.’

Next, the market said, ‘It’s more effective and efficient to allow end users to pick their own technology platform. So let them bring their own device to work. Just make sure they can access their data. This is more convenient for the user.’ Then the market said, ‘Store your data in the cloud, where it’s easier and faster to access and stockpile. This is more convenient for the user.’

Put this all together and there is an accelerating adoption of every mobile computing technology — each calling for faster remote access to business-critical corporate data — residing in virtual data repositories. And if you ask end users which is more important to them, convenience or security, the answer you’re most likely to receive is convenience.

How should small to medium-sized businesses approach the RDS challenge?

The market is calling for a robust solution that secures the end user from a variety of different functionality levels, from remote identity and access management to a secure, portable computing environment on managed and unmanaged workstations or devices. However, because convenience is trumping security at the end user level, businesses should investigate those products that make it easy for the end user to embrace RDS.

Steve Carter is president and CEO of ii2P. Reach him at (817) 442-9292 or scarter@ii2p.com.

Insights Technology is brought to you by ii2P

Texas offers specific sales tax exemptions that can benefit the energy and manufacturing industries.

“These two industries are considered ‘tent poles’ for the Texas economy,” says Chris Wallace, senior manager in Weaver’s state and local tax practice. “Even in the information age, a large percentage of the state’s economy is directly or indirectly tied to energy companies and manufacturers. The state wants to encourage businesses to stay in Texas, expand in Texas and locate to Texas.”

Smart Business spoke with Wallace about how energy companies and manufacturers can fully take advantage of the available tax incentives and exemptions.

What should energy and manufacturing companies know about Texas sales tax exemptions?

It’s a good news, bad news scenario. The good news is that Texas offers numerous exemptions to the energy and manufacturing industries related to equipment, supplies and other operational purchases. The bad news is that the exemptions can be complicated, subject to change and difficult to track when you consider how many vendor invoices companies have to process. The bottom line is that companies need to be proactive if they want to benefit from the exemptions that the Texas legislature has granted to them.

What are examples of specific exemptions that lead to refunds? 

Exemptions for exploration and production companies are all over the board — well services, lease equipment, chemicals, etc. One simple exemption many businesses miss out on is oil-soluble chemicals. Since these chemicals become part of the oil and gas stream and are later resold, clients can purchase them tax free. However, vendors are required to charge tax on these chemicals unless they receive an exemption form from the purchaser.

As for manufacturing, operations obviously vary greatly from company to company. Let’s use an example everyone is familiar with — restaurants. A restaurant can issue an exemption certificate in lieu of tax when purchasing cooking equipment such as a microwave. Since the microwave causes a physical change to the product that is being sold, it qualifies as exempt manufacturing equipment. Again, it is the purchaser who is ultimately responsible for issuing the appropriate exemption form when making the purchase to ensure they take advantage of the exemption.

How can energy and manufacturing companies take advantage of sales tax exemptions in Texas?

It’s a three-step process. First, companies need to understand the exemptions that the legislature has granted to them. Next, they need to identify the vendors from which they make exempt purchases and that may have erroneously charged sales tax on exempt purchases. The last step is to communicate with the vendors, provide any needed exemption forms and then monitor them to minimize or eliminate future tax overpayments.

Are Texas sales tax exemptions significantly different than other states?

Not surprisingly, it is difficult to find a state with sales tax exemptions for the energy industry that are as generous as those in Texas. Most states do not offer any specific exemptions for the energy industry. Many states offer some exemptions related to manufacturing. However, with a high sales tax rate and many useful exemptions, Texas manufacturers stand to benefit more than most others.

What are some mistakes companies might be making regarding tax incentives, and how can they mitigate them? 

All companies take steps to ensure that they are charging tax correctly to their customers. However, most companies do not make the same effort with regard to the taxes they pay to suppliers. The most common mistake, which leads to tax exemptions being wasted, is when companies assume their vendors are charging tax correctly without proactively addressing the issue. Reviewing all vendors that make a material amount of sales to your company is the best way to improve your sales tax compliance and reduce both overpayments and underpayments. Comptroller regulations require that a vendor charge tax on a purchase even if an exemption can be applied if the vendor does not receive the required exemption forms from the purchaser.

If a company is audited for sales tax by the Comptroller, won’t the auditor explain the exemptions that apply to that business?

Unfortunately, it is exceedingly rare for an auditor to be forthcoming with information about exemptions and potential refunds when conducting an audit. Their audit procedures are specifically designed to focus solely on underpayments. Offhand, I can only remember one audit in my entire career where an auditor voluntarily scheduled refunds related to these kinds of operational exemptions.

How can businesses ensure they’re utilizing all of the exemptions available to them?

One option is to engage a service provider to do a sales tax refund review. This consists of a detailed review of a company’s purchases to identify vendors who charge tax on exempt items. The adviser would communicate its findings to management and review specific vendors and invoices where tax was charged in error to help reduce future overpayments.

The service provider can tailor reviews to require minimal assistance from the company’s personnel. It’s not uncommon to only need five to 10 hours of a company’s time to complete a sales tax refund review. Saving money by taking advantage of available exemptions is much more ‘knowledge intensive’ than

labor intensive.

Chris Wallace is a senior manager in state and local tax services at Weaver. Reach him at (972) 448-9294 or

Chris.Wallace@WeaverLLP.com.

Insights Accounting is brought to you by Weaver

Friday, 16 November 2012 16:09

The importance of empathy in the workplace

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Empathy is the ability to experience and relate to the thoughts, emotions or experience of others. Empathy is more than simple sympathy, which is being able to understand and support others with compassion or sensitivity.

Simply put, empathy is the ability to step into someone else's shoes, be aware of their feelings and understand their needs.

In the workplace, empathy can show a deep respect for co-workers and show that you care, as opposed to just going by rules and regulations. An empathic leadership style can make everyone feel like a team and increase productivity, morale and loyalty. Empathy is a powerful tool in the leadership belt of a well-liked and respected executive.

We could all take a lesson from nurses about being empathetic. Time and again, nurses rate as the most trusted profession. Why? Because they use proper empathy to make patients feel cared for and safe.

Over the years I have discovered that most people who score high on assessments for empathy have no idea why. They do not completely understand what it is they actually do that makes others see them as empathetic. They can only express that they:

 

 

  • Like people.

 

 

  • Enjoy working with and helping others.

 

 

  • Value people as individuals.

 

 

In order to facilitate a deeper understanding of the importance of empathy in the workplace, I will pose four questions regarding the nature, role and benefits of empathy.

1.    Why does it matter for us to understand the needs of others?

By understanding others we develop closer relationships.

The radar of every good executive just went off when they read the word “relationships.” This is not a bad thing since most people understand the problems that happen when improper relationships are developed in the workplace.

This being said, the baby cannot be thrown out with the bath water. In order for a team of workers and their leaders to work powerfully together, proper relationships must be built and deepened.

When this happens through empathy, trust is built in the team. When trust is built, good things begin to happen.

2.    What traits/behaviors distinguish someone as empathetic?

Empathy requires three things: listening, openness and understanding.

Empathetic people listen attentively to what you’re telling them, putting their complete focus on the person in front of them and not getting easily distracted. They spend more time listening than talking because they want to understand the difficulties others face, all of which helps to give those around them the feeling of being heard and recognized.

Empathetic executives and managers realize that the bottom line of any business is only reached through and with people. Therefore, they have an attitude of openness towards and understanding of the feelings and emotions of their team members.

3.    What role does empathy play in the workplace? Why does it matter?

When we understand our team, we have a better idea of the challenges ahead of us.

To drive home the above point, further consider these:

 

 

  • Empathy allows us to feel safe with our failures because we won’t simply be blamed for them.

 

 

  • It encourages leaders to understand the root cause behind poor performance.

 

 

  • Being empathetic allows leaders to help struggling employees improve and excel.

 

 

Empathy plays a major role in the workplace for every organization that will deal with failures, poor performance and employees who truly want to succeed. As leaders, our role is simple—deal empathetically with our team and watch them build a strong and prosperous organization.

4.    So why aren’t we being more empathetic at work?

Empathy takes work.

 

 

  • Demonstrating empathy takes time and effort to show awareness and understanding.

 

 

  • It’s not always easy to understand why an employee thinks or feels the way they do about a situation.

 

 

  • It means putting others ahead of yourself, which can be a challenge in today’s competitive workplace.

 

 

  • Many organizations are focused on achieving goals no matter what the cost to employees.

 

 

Each of these reasons can be seen as true.

Let me ask a question though: What distinguishes average to mediocre leaders from those who excel?

In my opinion, the distinction comes through the ability of the leader who actively works against all the so-called “reasons” and incorporates an attitude of empathy throughout his or her organization. That type of leader will excel.

By spending more time learning about the needs of their employees, leaders can set the tone and approach taken by their employees to achieve their organization’s goals.

When writing about empathy I am reminded of the famous quote from Theodore Roosevelt:

“Nobody cares how much you know until they know how much you care.”

This is a truth that has long stood the test of time. It is true for our relationships in and out of the workplace.

DeLores Pressleymotivational speaker and personal power expert, is one of the most respected and sought-after experts on success, motivation, confidence and personal power. She is an international keynote speaker, author, life coach and the founder of the Born Successful Institute and DeLores Pressley Worldwide. She helps individuals utilize personal power, increase confidence and live a life of significance. Her story has been touted in The Washington Post, Black Enterprise, First for Women, Essence, New York Daily News, Ebony and Marie Claire. She is a frequent media guest and has been interviewed on every major network – ABC, NBC, CBS and FOX – including America’s top rated shows OPRAH and Entertainment Tonight.

She is the author of “Oh Yes You Can,” “Clean Out the Closet of Your Life” and “Believe in the Power of You.” To book her as a speaker or coach, contact her office at 330.649.9809 or via email atinfo@delorespressley.com or visit her website at www.delorespressley.com.

Roadblocks abound in business. Most business owners have been told, “No, we won’t fund your great invention.” Most executives have been told, “We’re not ready yet” to enter that wide-open, new market. But how they respond to those obstacles, the “no”s that are inevitable, is often a good indicator of who will ultimately succeed.

The first step is to step back and assess the causes of the opposition. That likely requires asking probing questions to get insight about the reasons and reasoning behind the rejection. The banker who rejected your idea may have valuable insight into your industry sector, information that could affect how you choose to proceed.

While data gathering, also probe for guidance on how to make your proposal stronger, when to re-pitch your proposal and who else may have decision-making or decision-influencing authority.  The goal should be to identify possible avenues for future appeals.

Armed with the new information, it’s useful to then take a look back at where you are in relation to your goals for the project. Review and celebrate your successes. It will give you the energy to continue onward. But measuring your results, as well as who helped you accomplish the past results, also may shed light on who may be able to guide or assist you in your next steps.

Now, modify your strategy. Every rejection should be viewed as an opportunity to improve. Your planned adjustments should be listed and scheduled. Then, as you progress in making changes, you will be able to see your accomplishments and have a record of how you responded to different scenarios for future reference. It also will give you a clear return on investment in time and energy spent and keep you centered on progress.

Patricia Adams is the CEO of Zeitgeist Expressions and the author of “ABCs of Change: Three Building Blocks to Happy Relationships.” In 2011, she was named one of Ernst & Young LLP’s Entrepreneurial Winning Women, one of Enterprising Women Magazine’s Enterprising Women of the Year Award and the SBA’s Small Business Person of the Year for Region VI. Her company, Zeitgeist Wellness Group, offers a full-service Employee Assistance Program to businesses in the San Antonio region. For more information, visit www.zwgroup.net.

There are many pressures on organizations to make the most out of every customer interaction and maximize the return on investment on marketing and sales spend. However, businesses often don’t have the work force necessary to handle these functions as timely and effectively as they would like or the tools and processes in place to measure and track success. Companies that are able to track interaction, engagement, investments and customer patterns and behaviors often enlist the help of a customer relationship management (CRM) tool.

“A CRM tool helps businesses manage sales, marketing and customer service operations without significantly expanding their work force,” says Gina Rosen, a consultant at Columbus. “CRM, in the past, may have been nice to have — a luxury technology, but in today’s marketplace, it’s a must have to stay competitive.”

Smart Business spoke with Rosen about CRM, its applications and how it has helped businesses improve processes to better engage customers, target sales and gauge marketing effectiveness.

What are the typical features offered by a CRM system?

The features offered by CRM are very diverse. It’s primary applications are contact management; marketing automation; sales force automation; sales and lead management; reporting and analytics; call center and case management, particularly with respect to customer inquiries or complaints; workflow automation, or automating manual processes; and social media integrations. Businesses have the option for on-premise solutions where the software is hosted at the business on its servers, or they can utilize a Web-based or cloud option, which involves less initial financial investment. The software can also be customized to meet the particular needs of a business.

Is CRM cost prohibitive for businesses?

No it is not, however, had this question been asked six or seven years ago the answer would have been yes. Previously, enterprise-ready CRM software required significant funds to get the software and hardware in place. But with the advent of cloud-based solutions, even businesses run by a sole proprietor can afford CRM and leverage its applications to optimize processes. The cloud-based model allows business owners to pay through subscriptions that charge per user. The pay per user cloud-based model offers a low-cost opportunity to implement CRM, experience the value and see the return on investment (ROI).

What are the most compelling reasons an organization would implement CRM technology?

A recent survey of 200 top-performing small and medium-sized businesses showed that the number one reason businesses implement CRM software is to establish data-based metrics for sales and marketing. It also provides the ability to show ROI and quantitative key marketing metrics that mean a lot to businesses.

The second reason CRM is implemented is to proactively communicate with customers. Customers expect a lot these days, and one of those expectations is that businesses, whether small or large, interact with them. To stay in front of your customers and offer personal interaction is critical.

Within that same vein, the third reason companies take advantage of this software is for custom-targeted sales and marketing. With CRM you can customize that end user experience, which makes your sales force more effective. Customers can interact directly with your CRM custom solution through your existing website and experience a tailored visit based on previous interactions, or your sales force can utilize the standard feature when interacting with customers and have all of a customer’s history available in one spot.

What are the most important value drivers for CRM?

The top value for a business is the software’s ability to help manage marketing and sales campaigns. CRM can help businesses test marketing and distribution strategies and gauge customer reactions. This information can be applied to future marketing efforts.

Another important value driver is that the software serves as a customer data repository, allowing you to consolidate customer knowledge within the organization in CRM. This includes far more than just contact details, but also customer behaviors and attitudes and price sensitivity. This, combined with personal data, can allow businesses to build more effective and predictive sales models and marketing campaigns that result in higher sales.

Further, CRM systems can help demonstrate ROI. With CRM you can quantitatively show increases in sales, customer referrals and participation in promotions.

What is the most common challenge a business faces when implementing CRM?

Typically the challenge is user adoption — getting your sales force and front line users to embrace CRM. They often see populating the fields as double entry, an extra step, or another way for management to check in on them. But once the sales force sees that using the software results in more sales, they can easily overcome that hurdle.

What are the most common performance metrics?

The top one, hands down, is revenue growth. The faster you can show ROI the better.

Second is growth in a business’s customer base, which means adding new customers or converting leads into paying customers.

The third most common performance metric is aggregating customer data. Many companies have customer data spread out over disparate systems. CRM gives businesses a one-stop shop for their records.

Can you give us some examples of companies that have benefited from implementing CRM?

The Toledo Mud Hens baseball team, which works within the media and entertainment industry, had ticket sales go up 88 percent in one year and their internal operations couldn’t keep up with demand. Adopting CRM allowed them to automate and streamline inefficient processes, which translated into more ticket sales. A customer testimonial is available with more information.

Another example is the human resources consulting firm Findley Davies. Implementing CRM in their call center has given them the ability to manage daily responsibilities and track productivity. It has dramatically changed and improved day-to-day operations within their Benefits Administration department.

Gina Rosen is a consultant at Columbus. Contact her at (248) 850-2195 or mva@columbusglobal.com.

With more than 20 years in the market and 6,000 successful business implementations, Columbus is a preferred Microsoft Dynamics business partner for ambitious companies. Columbus’ key deliverables include flexible and future-safe ERP, CRM, BI and related business applications that deliver competitive advantage and immediate impact.

 

Polly LaBarre is the co-author (with Bill Taylor) of “Mavericks at Work: Why the Most Original Minds in Business Win.” The strategies, tactics and advice in “Mavericks at Work” grew out of in-depth access to a collection of forward-looking companies. These maverick companies are attracting millions of customers, creating thousands of jobs and generating billions of dollars of wealth.

Here is a portion of my interview with LaBarre about the book, which covers forming strategies, unleashing ideas, connecting with customers and enabling employees to achieve great results.

Q: Describe what you mean by “maverick.”

A: Mavericks are different, edgy and independent of spirit. Their personal style or message may not appeal to everyone. But that’s precisely the point. Mavericks are defined by the power and originality of their ideas. They stand out from the crowd because they stand for something truly unique. What’s more, they take stands against the status quo, in defiance of the industry elite and offer compelling alternatives to business as usual. Mavericks may be fighters, but they’re not rebels without a cause. Their sense of purpose is not only powerfully distinct (Think: Southwest Airline’s quest to democratize the skies); it’s provocative and disruptive (Think: HBO’s declaration of originality, “It’s not TV. It’s HBO”).

Don’t confuse mavericks’ unswerving commitment to a cause and their lack of patience for the status quo with the egotism, monomania and power mongering modeled by too many celebrity CEOs and moguls. Mavericks, in fact, have a sense of humility.

Q: Are mavericks born or made?

A: It’s probably a little bit nature, a little bit nurture. We wrote this book to nurture the maverick in all businesspeople. What red-blooded working person wakes up in the morning, looks in the mirror and says, ‘I think I’ll stand for business as usual today’? We all want to make a mark, forge our own path and express ourselves in the world. It’s just that some of us need more of a nudge down that path than others.

Hopefully, the maverick individuals and ideas we present are inspiring and instructive enough to move people. The 32 companies we feature have vastly different histories, cultures and business models. We examined glamorous fields like fashion, advertising and Hollywood, as well as old-line industries like construction, mining and household products. The maverick leaders of these organizations are young, old, women, men, Americans, Europeans, charismatic and preacher-like, retiring and almost reticent. They just don’t fit any one mold.

Q: How does a maverick survive within a traditional company?

A: We encountered a bunch of mavericks inside big traditional companies. They all seemed to have a couple of survival strategies in common: They unleashed tough questions and critiques of their organization without losing their sense of loyalty to it. They’re the kind of questions every CEO should be asking. For example, Jane Harper asked of IBM, ‘Why would great people want to work here?’ And Larry Huston, now vice president of innovation at Procter & Gamble, argued, ‘The current business model for R&D is broken. How can P&G possibly build all of the scientific capabilities we need by ourselves?’

Mavericks don’t just ask questions, they act. We saw this again and again: They just got started, usually without a budget or formal permission, by designing an experiment around their question. Jane Harper launched an experimental Extreme Blue lab in Cambridge and spent a couple of years begging and borrowing resources until the program’s impact became clear.

Mavericks look for peers and fellow travelers outside the boundaries of their company. Not surprisingly, mavericks tend to click when they meet other mavericks. They’re great networkers and learners and are always looking for kindred spirits for support and ideas.

Q: Who is the quintessential maverick in American business?

A: Herb Kelleher and the team at Southwest Airlines. In the midst of the financial carnage and heartaches of the airline business, there’s one company that keeps growing, keeps creating jobs and keeps generating wealth. And that, of course, is Southwest. Southwest didn’t achieve these results because its fares were a little lower than Delta’s or its service was a little friendlier than United’s. It achieved those results because it reimagined what it meant to be an airline. If you ask Herb Kelleher what business he’s in, he won’t say the airline business or the transportation business. He’ll say that Southwest is in the freedom business. The purpose of Southwest is to democratize the skies, to make it as easy and affordable for rank-and-file Americans to travel as it is for the well-to-do. That’s a pretty commonplace idea today but largely because Southwest fought the entrenched conventions of the industry so doggedly in pursuit of that purpose. Its unrivaled success is based on its unique sense of mission rather than any breakthrough technology or unprecedented business insight.

Guy Kawasaki is the co-founder of Alltop.com, an “online magazine rack” of popular topics on the web, and a founding partner at Garage Technology Ventures. Previously, he was the chief evangelist of Apple. Kawasaki is the author of ten books including Enchantment, Reality Check, and The Art of the Start. He appears courtesy of a partnership with HVACR Business, where this column was originally published. Reach Kawasaki through www.guykawasaki.com or at kawasaki@garage.com.

It seems that every other week there’s a major story in the media about a company claiming that one of its competitors has purloined a cherished secret that provided an unfair competitive advantage. This is all part of running a business in today’s fishbowl environment, where sensitive information is too abundant and can be obtained by almost anyone and everyone who is so inclined.

In this era of heightened visibility, some of the best companies, especially high-tech firms, play everything incredibly close to the vest, particularly when it comes to providing information about current sales trends, new products and projects that they are exploring or developing. This is because such information is a coveted company asset. In today’s “victory at almost any cost” world, too many are looking for that edge to leverage whatever they can to stack the odds in their favor.

We also read too frequently about how easily these secrets have somehow wound up in the wrong hands. Sometimes a loose-lipped employee simply talks too much to too many people in the wrong places. Occasionally, someone simply leaves a briefcase or smartphone, jam-packed with confidential information, in a bar, at a restaurant or on a plane.

What’s not talked about much is the frequent practice of competitors simply asking what appear to be innocuous questions of lower-level personnel in a company in order to garner nuggets of “inside information” usually without risking the perils of violating any legal statutes. It’s also common practice for Wall Street security analysts to simply walk into a retail store, as an example, and begin asking questions about trends, what products are selling and which aren’t. It all gets down to the reality that it never hurts to ask a question because one never knows when a valuable tidbit will be revealed.

Like it or not, this is just the way it is, and there will always be people who ask and others who tell. What can you do to protect your coveted information? The answer is basic: mandate that providing revealing responses to specific questions is a violation of company policy and could result in draconian consequences for anyone who spills the beans, no matter if well-intended. Once your employees and suppliers know the ground rules and the consequences, you’re one step closer to closing the possibility of vital information inadvertently slipping through the sieve.

The best way to accomplish this is to establish, enforce and continually reiterate a “one voice, one company” policy. This translates into all hands within your organization knowing what can be told to outsiders and, more importantly, what can’t. This policy must be in writing and must state what types of questions are off limits. It must also explain how the questioner is to be handled when the interrogatory is posed. In my retail chain experience, we often had competitors, vendors and industry analysts visit stores and ask all types of questions. Candidly, I don’t blame them, but with a clearly understood policy, employees know how to respond by referring the questions to headquarters and a specific department or individual. Ninety-nine percent of the time the person asking the question never follows up with the corporate office because he or she knows the desired answers will not be forthcoming.

Most employees want to please their employer and most want others to think they are in the know. When you create an ironclad policy, it takes the pressure off of your people and adds another layer of security about things no outsider needs to know. For your suppliers, require that each sign a confidentiality agreement and specify that you have a simple “one strike and you’re out” policy. Also use your own secret shoppers to test your vulnerability by having them ask the forbidden, just to verify that the company veil is not being lifted by the unauthorized.

This protocol is certainly not foolproof, and periodically, there will be lapses — the most frightening of which are the ones you’ll never learn about. It all gets down to a numbers game. Confidential information, just like the cash, equipment and other assets on your balance sheet, can never be taken for granted and must be protected. Anyone can look in your fishbowl in this day and age, but it is your job to make sure that what they think they might find is not what they get.

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. Reach him with comments at mfeuer@max-wellness.com.

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Also available wherever books and eBooks are sold, and from Smart Business Magazine and www.SBNOnline.com. Contact Dustin S. Klein of Smart Business at (800) 988-4726 for bulk order special pricing.

Friday, 02 November 2012 14:29

A matter of perspective: Focus on what matters most

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Are we grateful for the things we have? Are we grateful that we live in a country where the government can’t seize our businesses, where there’s no threat of rebellion and where we can go home to the comforts of our modern homes?

Many people in the world don’t have any of those luxuries. Some can’t even look forward to a good meal or clean drinking water. Most of us here in the United States don’t have to worry about such problems because the people that came before us worked hard to create a nation that has an amazing standard of living. The generation before us rose from the troubles of the Great Depression, led the fight against Nazi aggression that killed millions and returned home to finish making America into a superpower, but do we ever pause to think about the contributions our mothers and fathers made to make things easier for us today? They lived in small houses, often sheltering multiple generations, and worked long hours to make a better life for their children and grandchildren and selflessly went off to war to protect our freedom.

Do we ever think about any of that? The answer for many is no. Gratitude is in danger of becoming a lost art as we focus on accumulating money and possessions, always looking to be better or richer than the next person.

How many times have you read about or talked to someone who had everything you could ever ask for — nice home, nice car and no money problems — lamenting the fact that he or she doesn’t have as much as or more than someone else? We sometimes catch ourselves comparing who has more instead of who has less.

As business leaders, we should have some sense of moral obligation to help those within our sphere of influence, whether it’s our peers, employees or the person who lives down the street. We should be doing our best to look out for those around us, but too often, our days are consumed with the details of business.

Our world may be built on information, but wisdom is lacking. Business has been boiled down to statistical analysis and quarterly earnings reports while people are just another line on the ledger. There is often little room for gratitude in corporate America, and that’s a shame.

When our focus is on accumulating things, we can never enjoy it, because we don’t know how. How can we enjoy something when we’ve already raced off to try to get more? Like a kid tearing through a pile of Christmas presents, we never really take the time to appreciate each gift.

In this season of giving thanks, we should take a moment to think about those who came before us and who helped us get to where we are. Let’s thank those around us for a job well done and consider reaching out to someone who could use a helping hand. But most importantly, let’s consider putting our lives in perspective by thinking about those who are less fortunate.

When we focus more on gratitude, we’ll make a difference that’s far more effective than any business plan. It will allow us to take the time to celebrate success and enjoy the fruits of our labor. Gratitude doesn’t require a giant donation or a huge event; sometimes the little things are more effective.

In the end, we’ll find that the only things truly worth accumulating are good will and happiness. It’s in our control to start helping everyone around us get their fair share, and that’s something all of us can be thankful for.

Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or fkoury@sbnonline.com.