As a company weighs its options between signing a short-term and a long-term commercial lease, there are many things it must consider.
“Organizations need to weigh the benefits of locking in historically low lease rates long-term (seven to 10 years) or having the flexibility of a short-term lease,” says Steve Kim, a senior associate, Transaction Management, with Plante Moran CRESA. “Each comes with benefits and risks.”
Low real estate costs can help increase your competitive advantage. However, there are potential downsides to entering into a longer contract that need to be realized and hedged against to create maximum flexibility for your company.
Smart Business spoke with Kim about lease terms and how to negotiate the right conditions to suit your business needs, both today and in the future.
What crucial areas should a lessee consider when choosing real estate for a long-term lease?
When considering a long-term lease, a business should first determine whether the real estate is aligned with its strategic business plan. For example, does the space have room to accommodate your long-term growth plans? Does the building fit with your company’s image and brand? Conducting a space program is essential versus adding a percentage to your current square footage. This exercise will categorize and assign a square footage to all of your space, including conference rooms, executive offices, staff work spaces, common areas and storage, as well as account for future growth.
In addition, with building values at historic lows, purchasing real estate may be a viable option to consider, giving you the ability to lease out space until you need it.
What conditions would signal to a business whether a short- or long-term commercial lease is a more favorable option for a business?
Short-term leases offer a company the most flexibility, but they do have a downside. Lessees often don’t have as much room to negotiate terms and conditions in a short-term agreement as they do in a longer-term one. Also, landlords know all too well the cost of moving a business and could raise your rent at renewal, betting that you will not want to relocate. In addition to potential rate increases, there is no guarantee that you will be able to renew a short-term lease, especially if a large or long-term tenant needs your space.
Long-term leases will typically offer higher tenant improvement allowances, while short-term leases may require out-of-pocket costs by the tenant. But long-term leases also carry risks. Business conditions may change while you are locked into a long-term agreement, making it difficult to expand or contract your business based on a change in your strategic direction. However, an early termination option can be negotiated into a long-term lease to offer some flexibility while maintaining the security and extended savings.
What is an early termination option?
An early termination option allows you to opt out of your lease at a certain point in the contract, which reduces some of the risks that can come with being locked into a long-term agreement. It also offers an opportunity to renegotiate with your landlord midway through your agreement.
A company could work out an option to extend a short-term lease to hedge against losing the space or being hit with a rent increase, but the protections are not guaranteed, as those that accompany a long-term agreement would be.
When trying to negotiate a termination right in a lease, it is helpful to understand the landlord’s potential challenges in providing this option. The situation varies from building to building in regard to ownership structure and the debt situation, for example, and investigating these facts prior to the request is mission critical. Furthermore, the ability to terminate a lease may also be less advantageous if the termination fee is equaled to an amount that is perceivably unlikely to be paid.
Termination option fees requested by landlords are typically for the unamortized portion of the costs based on the market value of the transaction made when the lease was signed, along with an interest rate factor and a penalty equal to the value of rent for a few months. However, if the landlord receives adequate notice that a tenant is leaving, it should allow that tenant to lease the space and head off any loss of income. Termination fees require time to negotiate and ultimately should reward the landlord for offering additional concessions in exchange for extending the term.
What else can a company do to mitigate risk and reduce costs in a lease situation?
Another option to consider is subleasing, which can help a company recoup a portion of its rental expenses. However, expect to invest time and money on the front end to find a tenant and adapt the space.
If the necessary tenant improvements are financially viable for a company to pay upfront, the landlord has a greater ability to accept the termination option because the initial investment in the transaction has been reduced. Furthermore, a lease rate associated with an ‘as-is’ deal is usually below market and can protect tenants with renewal options going forward. Finally, some of the tenant improvements may be depreciated, ultimately lowering some of the company’s potential tax
liability for a given year.
Steve Kim is a senior associate, Transaction Management, with Plante Moran CRESA. Reach him at (248) 223-3494 or email@example.com.
Insights Real Estate is brought to you by Plante Moran CRESA
Health care costs are increasing at an alarming pace and many businesses are struggling to maintain the level of health care benefits provided in the past.
While executives are keenly aware that comprehensive benefit programs play a significant role in attracting top-notch talent, many companies have neglected to analyze the effectiveness of their benefit strategy.
Reviewing your employee benefit program regularly offers the opportunity to revisit your carrier’s rates and ensure they are still competitive, says Steve Slaga, chief marketing officer at Total Health Care. Further, it presents an opportunity for employers to ensure their program continues to measure up against others in their industry.
“Health care benefits are important and serve as a very useful tool for employee retention and attracting new recruits,” Slaga says.
Smart Business spoke with Slaga about assessing the needs of your employees, how to determine an appropriate benefit plan and the importance of employee education.
How can a company assess the needs of its employees?
First, examine your health care plan to ensure you’re providing affordable, quality coverage with good service, flexibility and access to care. Make sure your plan isn’t prohibitively priced, so employees can afford to participate, and gauge employees’ satisfaction levels by utilizing surveys to determine which areas of the plan they consider strong and which can be improved upon. Bear in mind all employers are different and operate within circumstances unique to them, so not every health care plan fits every group.
The level of flexibility a health care plan facilitates is also an important consideration. Some plans work through Health Maintenance Organizations, which have a specific provider network, while others offer Preferred Provider Organizations or Point-of-Service plans with which employees have the option to go in or out of a predetermined physician and hospital network of preferred health care providers without fulfilling certain conditions, such as obtaining a referral. When choosing a health care plan, make sure the services fit the needs of your employees and that employees have access to a selection of physicians and specialists in their area.
How can employers determine an appropriate benefits plan for their employees?
Ask your agent or broker to do a comparative analysis among health care plans. That person will review the factors important to your employees, including pricing, access to care and type of benefits. The actual pricing is determined by the health care plan and is dependent on factors including the business, its industry and the average age of employees.
Employers at a minimum should review their benefit plans annually. By comparing your current plan to other plans, you can stay apprised of options in the marketplace, new products and how your premiums compare with other options. By reviewing plans regularly, you can assure employees you have shopped around and are providing them with the best value for their needs.
How can employers best balance the cost of the plan with employee needs?
This is a decision every employer must make on its own, and it hinges on factors including the type of benefit program desired for employees and how much employees will be expected to contribute.
As the cost of providing health care coverage continues to rise, many businesses have scaled back benefits. Among those companies that continue to offer benefits, their employees are more often asked to make higher contributions to offset costs. Other companies pass along a portion of the increased costs through higher deductibles or higher co-insurance; both solutions reflect the challenge of dealing with today’s rising medical costs.
Companies are also coping with escalating health care costs by implementing wellness plans designed to encourage employees to take preventive action to improve their health. The idea is that a healthier pool of insured employees makes fewer claims.
How can employers help employees understand the features of their health care plan?
Education is key. Employees need to have a clear, concise understanding of their benefits from day one. There are numerous ways to make information available to employees, including health plan websites, interactive assessment tools, newsletters and other communications.
It is also important to provide employees with forums where they can ask questions about the plan and provide feedback. In addition, many employers are looking beyond employee communication and implementing multipronged education programs that engage employees throughout the year.
Most employees receive benefit information during open enrollment periods and that’s often the last time they examine the details of the plan. Instead, there should be ongoing education with information distributed regularly to employees so they are fully aware of what their benefits cover. This will allow your employees to utilize and access their plans efficiently and effectively.
What value should a benefit provider bring to the table?
Your benefit provider should present clear and concise information about the health care plan in a timely manner. On a group level, a provider should be able to help you with billing, invoice and claims questions. On the member level, the provider should be able to answer benefits questions. Contact your provider to see what other services are available.
Steve Slaga is chief marketing officer at Total Health Care. Reach him at (313) 871-7810 or SSlaga@thc-online.com.
Insights Health Care is brought to you by Total Health Care
The property tax bill comes in the mail, and you pay it. But do you ever really look at it to determine whether you are paying the right amount?
“Property tax on the real estate and personal property that you own or that you lease is part of the overhead of the operation of your business,” says Carl Rashid Jr., leader of the Property Tax Appeals practice group at Dykema Gossett PLLC. “You want to make sure you are paying your fair share of taxes, but you certainly don’t want to pay more than your fair share.”
Smart Business spoke with Rashid about how to make sure you’re not paying too much, and, if you are, how to return that money to your bottom line.
Why should business owners be concerned about their property tax bill?
Real estate values have declined in the last few years, making it a good time to review the amount of taxes that you are paying. If your property was formerly worth $1 million, and you know for a fact that you could not get $1 million for it now, you should not still be paying property taxes based on a $1 million value. If you are looking at the bottom line, as you should be, you have to look at every item of expense in your overhead, and this can certainly be a major one.
When your next tax assessment comes, consult with an adviser to determine if the amount you are paying could be
How can an adviser help lower the amount of property tax a business pays?
Once you’ve received the assessment — usually in February in Michigan — and want to determine if you may be paying too much, contact an attorney to begin the assessment process. The attorney will look at the assessment, look at what comparable properties are going for in the area where your business is located, and oftentimes consult with an appraiser to determine the value.
To assist the adviser in making an accurate assessment, the business owner should provide the notice of assessment; the previous year’s tax bills; any appraisal reports that they may have; the insurance value of the property, although that is not always indicative of the true value of the property; and, if it’s an income-producing property such as an office building, a shopping center or an apartment building, the financial statements from the previous three years.
From there, the adviser will undertake the appeal seeking to lower the appraised value of the property and file it with the appropriate state authority.
How can business owners identify the right lawyer for their needs?
Look at the years of experience and the adviser’s success rate. That person’s relationships with the taxing units in the state are also critical. If those working at the taxing units respect the adviser, they are going to sit down at the table and try to resolve the issues. If they don’t respect the adviser, or don’t have a previous relationship with him or her, it can significantly lower the chances of success.
How long does the process take?
It could be a very long process, as long as three years, because of the backlog the state is facing. During that time, the taxpayer will continue to pay at the assessed value. And if the value is found to be less than the assessment amount, the portion that was overpaid will be refunded when the case is over.
While the appeal is pending, the lawyer will amend the petition to make sure that subsequent tax years are involved. The attorney will also keep you informed of the progress of the appeal as it goes through the tax tribunal or court system, and of subsequent filings.
Then, once there is a hearing and judgment, or a settlement — and most cases are settled — the revised assessment becomes the taxable value. The taxable value is frozen at that number and can only be increased by what the Consumer Price Index is in Michigan, but not to exceed 5 percent.
Once an appeal is settled, can a taxpayer appeal again the following year?
Yes. If you settled at a lower number, and after that the market drops again, as it has in the past few years, your property may be worth less than the value determined when you filed the appeal. If you feel that is the case, it may be worth it to repeat the process.
How does the taxpayer pay the adviser?
The case can be paid on an hourly basis or on a contingent fee basis. A lot of clients prefer not to receive regular bills and would rather pay a percentage of the amount recovered. Some clients also believe that hiring someone on a contingency basis provides an added incentive for the adviser to get results.
Would you advise that every business hire someone to appeal its property taxes?
No. A business should only appeal if there is enough tax dollars at stake to make it worth the time and effort of both the business and the lawyer involved.
It’s really determined on a case-by-case basis. If the amount in dispute is minimal then it becomes a business decision that each owner has to make based on what he or she is comfortable with and whether it is worth it to engage the services of a lawyer.
Carl Rashid Jr. is leader of the Property Tax Appeals practice group at Dykema Gossett PLLC. Reach him at (313) 568-5422 or firstname.lastname@example.org.
Insights Legal Affairs is brought to you by Dykema Gossett PLLC
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 Pressley, motivational 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 email@example.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 firstname.lastname@example.org.
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 email@example.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 firstname.lastname@example.org.
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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 email@example.com.
Regardless of where you are at in your company’s life cycle, it is prudent to protect your brand by obtaining state or federal registration for your mark or company name. State or federal registration helps ensure that your business and reputation are not tarnished, or that you do not lose clients as a result of others encroaching upon your area by using a name or mark that is confusingly similar to yours.
“There exists common-law rights that take effect from the moment you start your business, but to enhance your protection it is best to obtain federal or state registration for your brand to better enforce your right of ownership,” says Timothy Jordan, a shareholder at Garan Lucow Miller PC. “Registration establishes that you own the mark and anything confusingly similar can be barred from entering the market.”
Smart Business spoke with Jordan about registering a trademark and the consequences of not doing so.
What are common-law rights and what protections do they offer?
As soon as a company uses a name or mark, it’s developing common-law rights of use. However, the protection of that mark under such rights is limited.
Say you have been using your name in the Detroit area for six years without obtaining federal or state registration. Suddenly a businessman from California, independent of you, comes up with the same or similar name and applies for and obtains federal registration. That registration can provide for the blanket use of that name throughout the United States. Your competitor may now be able to stop you from expanding the use of your mark outside of the geographic area in which you are currently operating, if the business appears related. You can still use your name and continue to do business in your geographic area, but you cannot expand your business beyond that point.
In a similar scenario, another company in the same field and state obtains a state registration after you have been using your mark. That company can prevent you from expanding into the other company’s territory within the state.
When should you apply for state and/or federal registration?
A state registration is relatively inexpensive and fairly easy to obtain. If you are a startup that has any realistic hopes of getting your business out of your garage, spend the money to obtain a state registration. If things are taking off within the first year apply for federal registration, a process which can take between eight months to a year and a half.
But first, find out if the name you would like to use is already registered or in use. You do not want to spend the money on a website, materials and advertising only to find out there is another business with the same or similar name doing similar work or selling a similar product.
How do you search for a name?
There is a federal database maintained by the U.S. Patent and Trademark Office that you can access and search to determine if the word or phrase you would like is ‘live,’ in other words is in use as a trademark. You can navigate the site as you would most any Internet search engine.
Trademarks are valid for 10 years but require a notice of renewal be filed in the fifth year to maintain it, and again between the ninth and 10th years for each additional 10 years of protection. If you do not file for renewal after five years, the mark can become part of the public domain and will eventually expire, which means someone else can use that name.
How do you protect a slogan or phrase associated with your business prior to registration?
Companies that have tag lines or a slogan that accompanies their mark often put the initials ‘TM’ or ‘SM’ at the end of it. By doing so the company is using the phrase as if it were a trademark or service mark. While there is no registration in place, the company is putting the world on notice that the phrase is viewed as a trademark or service mark.
The phrase attached to your company name has to develop secondary meaning before registration is possible. Once the word or slogan conjures up a meaning different than the literal words or slogan, such as Levi’s® representing jeans, then your mark has developed secondary meaning and you can seek registration.
Make a note of when your phrase or tag line was posted to your website or used on some other material viewed by the public because it will help establish the date of your initial use, which will be noted by the trademark office.
When is it appropriate to seek registration for a new product or line?
If you are a large, existing business and you are going to expand into a new product line, from the get-go it is worth the time and money to obtain registration on the new product name. It may cost you a few thousand dollars, but it will save you more down the road. However, if you’re only making $10,000 annually, it might be more prudent to use the TM designation because that is free.
You have to look at your market, your perception of your future success and your resources. If you work only in Michigan, and not all over the country, a state registration may be sufficient. If your product takes off, then you have to decide when it is right for you to invest the money to obtain a federal registration. It’s a personal decision to determine when you are successful enough to need to protect your name.
Timothy Jordan is a shareholder at Garan Lucow Miller PC. Reach him at (313) 446-5531 or firstname.lastname@example.org.
Insights Legal Affairs is brought to you by Garan Lucow Miller PC