Marcia Passos Duffy

Tuesday, 29 August 2006 20:00

Surviving the global talent war

Whether you are a business in New York, Bangalore or Beijing, you probably are vying for the same resources. Having the right talent at the right time makes all difference between companies that achieve their goals and companies that don’t.

With an acute and skewed labor shortage and no near term solutions, a full-blown global talent war is imminent, if not already ongoing, says Sunita Iyengar, vice president of the clinical division of Devon Consulting, a professional staffing firm. “A global talent pool is no longer a promise of the future. It is a current reality, here to stay.”

Smart Business spoke with Iyengar about the foreseeable ramifications of a global talent war and how companies would need to prepare for the same.

What is the global talent pool, and who does this impact?
To understand the emerging force of the global talent pool, we have to study the following three shifts in business environment:

First, significant advancements in technology, communication and mobility have created a boundaryless world and virtual workplace. Time, knowledge and resource barriers have disappeared.

Second, demographics play a key role in the size, shape and fabric of this talent pool. With declining birth rates and an aging workforce in developed countries, the size of the labor force is shrinking. In addition, by 2050, for every American in the workforce, there will be six nonAmericans, mostly from the populous nations, up from the current 4:1 ratio.

And third, education and skill gaps around the world and fewer sources of qualified local knowledge workers complicate the situation. These shifts drastically change the number and composition of the available workforce for businesses just as it impacts radically an individual looking for a job.

What do all these shifts and trends mean?
In one word: hypercompetition. Companies now have to compete on cost, time and resource all at the same time, and most importantly, with the right people.

Fewer trade barriers have accelerated growth and interdependence among economies, allowing for work and customers to cross borders freely. Burgeoning growth around the world is causing greater need for resources everywhere. This in turn will create global talent wars and is resulting in workers crossing boundaries.

Irrespective of their size, companies have to fish for talent in the same pool. Hence, as the workforce population becomes more diverse, companies need to change their culture and become more open and flexible to adapt to talent coming in from different countries.

What can small companies do?
Build and grow leadership — The shortage of talent is not just for the technically skilled, but also for people with leadership skills, and especially leaders who can understand and manage the dynamics of this global talent pool. Leaders now have to energize and engage the talent through effective communication of their vision. To make that vision meaningful, it has to be translated to personal growth and enhancement of the individual. In survey after survey, employees have rated ‘ability to grow and to contribute’ as a significant motivator, much higher than money or flexibility. This will also positively impact retention of resources.

  • Source and hire the right people — Hire the best person for the job. Geography is insignificant. Companies should worry less about where a person is located or about his or her origin. Rather, they should focus on the capabilities he or she may add to the team. Talent and skills come first and then attitude. I look for ‘learnability’ as a critical competence when I am hiring. When you are preparing for performance in an unseen future, ‘learnability’ is vital to survive.


  • Break down barriers — Your internal environment is a good litmus test to evaluate your readiness and capability to integrate new cultures and businesses. Survey employees regarding their perception of collaboration and teamwork. Reward teamwork and encourage knowledge sharing among people and departments. Cross training is a good way to help employees create synergies and generate empathy for each other’s roles.


  • Innovate — New customers want things better, quicker and in their way. Innovation can be about a product, service or process. I believe innovation is driven by culture. And culture is what leadership believes in and what it tolerates. Once you have the right people, give them the liberty to excel. Persuade people to take risks and do not penalize for mistakes. Promote curiosity; encourage challenging the status quo and creating new ways of doing things.

SUNITA IYENGAR is vice president of the Clinical Division at Devon Consulting (, a professional staffing firm serving the IT and clinical trial industries. Reach Iyengar at (610) 964-5749 or

Tuesday, 29 August 2006 12:44

Avoiding ‘Club Fed’

It is no secret that the United States is a highly litigious society. The U.S. comprises only two percent of the world’s population, yet more than 25 percent of all civil liability lawsuits originate in this country. Put in another way, every man, woman and child in this country could be sued five times each without an increase in the number of lawsuits currently on file. As a result, more health care providers and executives are seeking ways to protect their hard-earned assets from lawsuits — frivolous claims in particular.

“There is sufficient anecdotal evidence that civil liability lawsuits will play an increasing role in retirement planning of unscrupulous individuals who perceive their best chance to secure a comfortable retirement is to sue someone with deep pockets,” says John Stewart, branch manager and Chartered Wealth Advisor for J.J.B. Hilliard, W.L. Lyons, Inc., a full-service investment firm based in Dublin, Ohio.

Smart Business spoke with Stewart about how businesses and individuals can safeguard themselves and their businesses through prudent asset protection planning before the inevitable liability lawsuit does happen.

What are some steps businesses and individuals can take to protect their assets from a liability lawsuit?
For hundreds of years, business owners have sought to limit their exposure to unplanned litigation risks by forming business entities designed to limit liability. The formation of corporations, partnerships, and the more recent forms of entities such as Limited Liability Partnerships (LLPs) and Limited Liability Companies (LLCs), is universally understood to be prudent business planning that is both ethical and legal.

It is now considered commonplace to arrange one’s financial affairs for the purpose of limiting unnecessary risks, including risks of loss through acts of third parties and employees, as well as unnecessary loss to the government resulting from the efforts of the taxing authorities. This arrangement is called ‘asset protection planning.’

What is asset protection planning and how does it help?
Asset protection planning is associated exclusively with preventing or minimizing the interruption of a client’s business and personal affairs when there is an assertion of questionable claims and nuisance litigation.

Although businesses and individuals have very little control over someone filing a civil lawsuit against them, an asset protection plan puts up barriers for questionable lawsuit settlements that can quickly spiral out of control to unacceptable levels. Asset protection planning is not to create an impassable roadblock to a lawsuit by a claimant, but it is rather a process by which legitimate claims are paid in due course while questionable claims are negotiated to a reasonable settlement amount.

This kind of plan seems very different than what is typically thought of as asset protection planning, which is often referred to secretive offshore tax shelters.

Contrary to popular myths surrounding asset protection planning, in reality good planning is not primarily based on tax-driven client motivation. Other than contributions to ERISA (Employee Retirement Income Security Act) plans, asset protection planning is both income- and estate-tax neutral.

Clients who insist on using exotic structures, many of which involve offshore jurisdictions or convoluted constitutional arguments to do their asset protection planning, are likely to have been exposed to one of the myriad of questionable public seminars on asset and tax protection planning. Using these techniques is an open invitation to an extended retreat at ‘Club Fed,’ that is, scrutiny and prosecution by the U.S. Federal Government.

What are some of the myths surrounding asset protection that are simply untrue?
Despite its image in display ads found in the back of in-flight magazines, asset protection planning is not about tax havens, nor is it necessarily about secrecy. Americans have a strong national sense that matters pertaining to personal and business finance should be kept private and confidential. This natural sense of privacy can, at times, be confused with a desire for secrecy.

Secrecy, to some, may imply a license to defraud creditors and possibly evade tax. An ill-conceived asset protection plan that is found, after the fact, to have violated the Uniform Fraudulent Transfers Act my well subject the client to civil liability and may also result in bar association claims against the adviser for violation of applicable ethical standards.

Defrauding creditors and evading tax are not part of proper asset protection planning. In fact, good asset protection plans are the opposite of secrecy — they are about disclosing the plan. This disclosure can very well convince a potential or actual questionable litigant that even a successful trial may not mean a good settlement because of the layers of built into the client’s overall business and estate plan.

JOHN STEWART is a branch manager and Chartered Wealth Advisor for J.J.B. Hilliard, W.L. Lyons, Inc./Member NYSE, SIPC, a full-service investment firm based in Dublin, Ohio. Hilliard Lyons does not provide tax or legal advice. Reach Stewart at (614) 210-6285, (800) 285-9667 or

More than 17,000 companies are registered with the Securities & Exchange Commission (SEC), and more than 20 million are privately held.

For decades, there has been discussion and debate about the impact and benefits of applying the same set of accounting standards to publicly and privately owned companies. Many have suggested the needs of the people who refer to financial statements for say, Microsoft, are significantly different than the needs of those who must refer to a much smaller company’s statements.

After years of debate, the accounting profession is tackling the issue of creating two separate generally accepted accounting principles (GAAP) head on. Two months ago, the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA) issued a joint proposal to evaluate the creation of two standards, nicknamed “big GAAP” for publicly held companies, and “little GAAP” for private companies.

“This is a controversial issue that has the accounting world divided,” says Stephen W. Christian, managing director for Kreischer Miller, an accounting and consulting firm based in Horsham, Pa. “Proponents argue that it will save money and eliminate needless complexity in financial statements for private companies. On the other side, people question the practicality of such a plan that could render the financial statements of private companies ‘second class.’”

Smart Business spoke with Christian about the implications of creating two different accounting principles for companies, and, if the proposal is adopted, what a different GAAP could mean for privately held companies.


What have been the biggest issues facing issuers of private company financial statements?
Two areas of concern confront issuers of private company financial statements.

First is the applicability of many of today’s standards. As financial instruments and transactions get more complex in the public company arena, the accounting standards-setters are promulgating more pronouncements to deal with the proper accounting for such transactions. Many of these pronouncements have unintended consequences that often render private company financial statements less meaningful. One example would be the recent standards surrounding the consolidation of variable interest entities.

Second is the cost/benefit of adopting certain standards. Some standards, such as the new guidance on share-based compensation, are of little value to users of private company financial statements but require significant time and effort by issuers to comply.


What are the benefits of a ‘little GAAP’ for nonpublic companies?
If differential accounting standards are adopted, the time and effort that go into preparing private company financial statements will be reduced significantly. In any case, we won’t be any worse off than we are now.


Will differential accounting standards be accepted by users of the financial statements?
Good question. The AICPA established a task force in 2004 to assess the views of GAAP among private company financial reporting constituents and to see whether benefits justified the cost. They surveyed external stakeholders and found that more than 50 percent of creditors and investors expressed support for standards specific to private companies. Many users found statements insufficiently useful or relevant. Currently, many lenders would rather see a qualified opinion on the financial statements to GAAP conformity than a set of financial statements that conform to GAAP but portray a less-than-useful picture.


What is the next step in adopting differential standards?
The FASB and the AICPA issued a joint proposal in June intended to improve the financial reporting process for private company constituents. Under the proposal, the FASB would implement certain improvements to enhance its standards-setting process for private companies and consider input from private company financial statement issuers and users. Where it will end up is anybody’s guess, but there seems to be significant agreement and momentum to address this issue.


Do you think the proposed change is a good thing for business?
It is a controversial topic. Each accountant or financial adviser will have a different opinion.

The major argument against the proposal is the perception that a separate set of standards for private companies would be viewed as a lower, second-class set of standards; that business is business and what is good for public companies is also good for private companies.

My feeling is that many of the standards today are not relevant to private companies; it is confusing for the users of financial statements and thereby less meaningful. These standards are met at a significant cost to the private company. Creating differential accounting standards makes sense and will be an important move toward simplifying financial reporting for private companies.


STEPHEN W. CHRISTIAN is the managing director at Kreischer Miller, (, an accounting and consulting firm based in Horsham, Pa. Reach him at (215) 441-4600 or

Thursday, 29 June 2006 20:00

Know your rights

With the rise of urban redevelopment and public infrastructure projects in Southern California, more businesses are facing eminent domain acquisitions and the hurdles of claiming compensation for business losses.

There are specific preventive steps business owners can take to avoid locating their business where eminent domain is likely to occur, says Charles S. Krolikowski, a land use and eminent domain attorney, who is a partner with Newmeyer Dillion, a full-service business law firm.

Smart Business spoke with Krolikowski about how a business can investigate if a particular location is at risk for future eminent domain, and steps to take if your business is acquired and forced to relocate.


How can a business owner know for sure that these areas will be ‘taken’ in the future
Checking with the local planning office is a good place to start. In the case of redevelopment, a business owner can check with the city or county and examine land use maps, which will identify redevelopment areas. Once an area has been identified as a redevelopment area, the government will enter into an agreement with a private developer to construct new shopping centers, apartments or other businesses. The designation of a redevelopment area requires public hearing and the redevelopment contracts are public documents.

Another more common occurrence is when land and buildings are taken to expand roads and highways. In this regard, a business owner can avoid locating their business where the streets are in poor shape, or where there is traffic congestion because the streets are too narrow. Streets which are designated for expansion are often identified in city documents such as a circulation element. In these documents, you can check the ultimate right-of-way or capacity of a given street and you can ask local planners if the government intends on widening that street in the near future. It often takes years to commence such a project, due to design and funding delays.


What can a business do if it needs to be in a high-risk eminent domain area?
If you rent, read the lease conditions carefully, since there will likely be a ‘condemnation provision’ in the lease concerning the business owner’s right to claim and recover compensation in an eminent domain action. Most tenants do not pay attention to this provision of the lease, but it can have devastating effects if it is written to give the landlord all of the condemnation compensation, including leasehold value. Notwithstanding the lease provision, business owners are still entitled to seek relocation and business losses resulting from the taking.


What happens when a business owner’s property is slated for eminent domain?
Before the eminent domain action begins, the property and business owner will be visited by at least two consultants hired by the government. The first is a right-of-way agent, who will inform you that a government entity will be taking your property and provide you with an appraisal for the real estate only. The government is not required to offer any compensation to the business owner before the condemnation begins. The second person to visit the business will be a relocation consultant. In California, businesses displaced by eminent domain are entitled to recover relocation benefits.


Do you have any suggestions that will help a business owner’s case in getting the most compensation, both for the property and for the loss of business goodwill?
First, business owners must be very wary about their initial communications with the public agency’s agents who visit the property because anything an owner says can be used against them later, particularly if the business owner makes a claim for the loss of business goodwill.

Second, it is imperative that the property or business owner retain the services of professional appraisers to assess the value of their property or business so that they can decide whether to spend the money to litigate. Here, property owners should be aware that an early settlement can often be negotiated from 10 percent to 15 percent higher than the first offer without incurring too many expenses.


What could a business owner say that could hurt chances for a claim for business goodwill?
For example, if the business owner says, even in an offhand way, to the relocation consultant that he does not wish to be relocated because he was planning to close his business anyway. The public entity may attempt to use this information when fighting a business goodwill claim. The best advice for the business owner is to obtain as much information as possible about the proposed acquisition but try not to disclose information about the business’ finances or the future intentions of the business owner.


CHARLES S. KROLIKOWSKI is an attorney and partner with Newmeyer & Dillion (, a full-service business law firm with offices in Newport Beach and Walnut Creek, Calif. Reach Krolikowski at (949) 271-7233 or

Thursday, 29 June 2006 20:00

More than a will

What are you doing to preserve your family business and its wealth for the next generation? You may have a will, but does that document really fulfill all your desires and wishes for your estate and business once you’re gone? Most wills do not, says Michael Donahue, tax director for Kreischer Miller, an accounting firm based in Horsham, Pa. “A will is a terminal document that disposes of someone’s property upon their death. A wealth management plan is about how to pass on and manage your wealth while you are alive. It is a living document that deals with your assets throughout your entire lifetime.”

Smart Business spoke with Donahue about the concept of a wealth management plan and how business owners can create a plan, use it to effectively pass on their assets while alive to minimize the tax burden and, more importantly, to make wishes known and carried on by the next generation.


Could you explain the differences between a will and a wealth management plan?
Most people have a will, which is simply about the distribution of property and assets upon the death of a person. But a wealth management plan is much more comprehensive.

Each wealth management plan is unique: it can include a succession plan for the business, a gifting strategy for children, a plan for favorite charities to continue receiving funds after an individual has died, and a system of equalizing the proceeds of the estate among the various heirs.


Could you explain the difference between equal and equalizing the assets of an estate?
In a family with three children, an equal distribution is taking all the assets — liquid or otherwise — and dividing their ownership in thirds.

Equalizing, on the other hand, takes the assets and makes value judgments. ‘Who would better enjoy the vacation house?’ or ‘Which of my children is best suited for taking over the business?’ or ‘Who will be the beneficiary of my life insurance policy?’ The actual dollar amount of the distribution is equal, but it is divided in ways that best suit each heir. This can be one of the best benefits of creating a wealth management plan.


What are the consequences of not having a wealth management plan in place?
The biggest consequence that comes to mind for most people is the tax implication. But, more serious, is that the person’s wishes for how the wealth will be divided and enjoyed among the heirs will never be met.

Without a plan, you are, in essence, leaving someone else to make decisions on your behalf.

If this is okay with you, then a will is fine. But if you have specific wishes you want met, then you must have a wealth management plan in order to make sure that what you want to happen will actually take place.


What is the first step to setting up a wealth management plan?
Create and consult with a team of your trusted advisers: your attorney, accountant and other consultants. It is important that these people understand your business, the various wealth planning techniques availabl, and the tax consequences of each technique. This will also be the time to start setting up the gradual gifting of wealth to the next generation.


What are some things that should be included in a wealth management plan?
An attorney or an accountant can best look down these avenues, but they can include succession plans, provisions for medical decisions, who will control the finances in the event that the owner becomes incapacitated, and the gradual transfer of wealth to heirs by creating trusts.

I’d like to point out that transferring wealth does not necessarily mean transferring control. For example, owners can transfer nonvoting stock rather than voting stock. There will be a point, of course, when a business owner wants to start transferring control, but this can be gradual over the course of many years.

The succession plan is a major part of the wealth management plan, and these issues are best discussed while the owner is alive.


How often does the plan need to be updated?
You should meet with these advisers on a regular basis — once a year around tax time or even twice a year — to take a look at the plan, see if it is still valid, and to re-examine goals. The best plans are ones that can be amended in response to the changes in one’s life.


MICHAEL DONAHUE is the tax director at Kreischer Miller, (, an accounting and consulting firm based in Horsham, P.A. Reach Donahue at or (215) 441-4600, ext. 148.



Wednesday, 28 June 2006 20:00

The buy or lease dilemma

Your lease may be expiring, or you have outgrown your office space, or you are just weary of dishing out rent money every month. Whatever the case, the decision to purchase a building or to keep leasing space is a common dilemma among business owners. While it may seem that owning a building is the ideal option for your business, that may not be the right decision, says Rick Robertson, executive vice president for retail banking at View Point Bank.

“Reaching that decision to buy is very exciting, because it signals that the business is growing and is healthy,” says Robertson. “However, the decision to buy has to be a good one or it can hinder — or even harm — future business growth.”

Smart Business spoke with Robertson about the advantages and disadvantages of buying versus leasing and some common mistakes businesses make when purchasing a commercial property.


What are the advantages of purchasing a commercial property for a growing business?
Buying a building gives a company the opportunity to reap the benefits of real estate appreciation, building equity, and cash and funding for the future. When there is a long-term mortgage, a business can pretty much count on that cost being fixed and forget about rising lease costs. There is also an opportunity for income if the building is large enough and space can be leased out to other businesses.


While these are very compelling advantages, what are the disadvantages?
Many business owners don’t realize this, but purchasing a building throws you into another business: real estate. Real estate is a business venture that requires working capital, such as the down payment for starters, and it requires a lot of time and effort as well. The money, the time, the focus it takes to complete a real estate transaction can take a business owner away from the primary business. After the transaction is completed, the upkeep, maintenance and regulatory requirements can be quite intense in the 12 to 18 months of ownership. This intensity is minimized over time, but business owners need to be prepared to shift their focus from their primary business to this real estate business during this time.


Is there anything a business owner can do to prepare for entering the real estate business that will minimize the impact on the primary business?
Yes. The business owner needs to ask the following fundamental questions, and answer them honestly.


  • Am I ready to put in the money, time and specialized knowledge to buy a commercial property?


  • Do I have the current working capital to support not only the down payment, but unexpected costs such as a new roof, new furnace or code changes?


  • Will my primary business suffer because of the time and money that I, or staff members, will devote to this real estate venture? For example, if I devote 60 days to purchasing this property, will my business miss customers, sales and opportunities?


What are the biggest mistakes business owners make when entering into a real estate transaction?
The No. 1 mistake is stretching working capital too thinly. Business owners will often use most of the businesses’ cash in the real estate deal, and while most think that the money will be recouped, it is often difficult. When too much working capital gets tied up in the building, or the business owner’s time gets taken away from the primary business enough to harm sales, it can ultimately sink the business. Cash flow and financial reserves have to come before the building purchase.

Business owners need to be careful that they will have working capital to support the fundamental business; that is, the money to buy a building needs to be over and above the working capital needed to support the primary business. The goal is to preserve the cash flow and the profitability of the primary business at all cost, and real estate acquisition is secondary.

More often than not, business owners find that buying their building is one of the best investments they can make for their business. But, we also like to see businesses do this wisely.


RICK ROBERTSON is the executive vice president for retail banking at ViewPoint Bank, Plano, TX ( Reach him at (972) 578-5000 or

Performance reviews can be seen as a hated necessity of business. Whichever side of the desk you happen to be sitting on, the annual performance evaluation is bound to be uncomfortable. As the manager, you feel like a judge handing down a sentence; as an employee, you are automatically put on the defensive. To make matters worse, salary increases are handled at this time, even though the increase may have little — if anything — to do with an employee’s work performance.

“The traditional performance review is demoralizing and doesn’t work to improve performance,” says Joel Adams, CEO and founder of Devon Consulting, a professional temporary staffing firm based in Wayne, Pa. “A review ought to be more like a coaching process on how employees can best reach their goals.”

Smart Business spoke with Adams about how businesses can use the performance review to benefit both the employee and the company.


What is wrong with performance reviews?
Performance reviews are supposed to improve performance. But, in reality, they are an attempt to justify a salary increase. A salary review shouldn’t be a performance review — or vice versa. Salaries, and therefore salary increases, are primarily set by the marketplace. For example, a company may set a percentage range for salary increases based on how the company is doing and its view of the economy and marketplace. Then a manager looks at where an individual is in the salary range for his or her particular job. A senior person could be at the top of the salary range already. So a particular individual’s percentage increase is not tied to his or her recent performance.


But why doesn’t the review improve performance?
When people believe that their review determines their salary, they want to argue that their performance is already great. Managers feel they need to point out the individual’s weaknesses or faults to justify a less-than-expected increase. No one is listening. Then salary increases almost always fall short of expectations. Employees are rarely satisfied with them. So, instead of motivating the employee to perform better, the review is demoralizing.


What’s the alternative?
I’m not advocating doing away with performance reviews. I am saying that performance reviews should be about improving performance, not about salary. Traditional reviews look in the wrong direction: the past. We’re trying to improve performance in the future. Performance improves when we set goals and the manager and employee work together to achieve those goals. What needs to happen is performance planning.


What about the salary review?
Salary adjustments need to be detached from performance planning in concept, timing and communication. At a salary review, there should be an explanation of the company’s current salary policy and clarity about where the individual currently falls in the salary range for his or her job.


So you don’t believe in pay for performance?
We expect good performance for earning a fair salary. And bonuses are a good way to recognize exceeding goals. But for most professional positions, a fair guaranteed salary is a great compensation system.


What would a performance planning meeting look like?
It would look more like coaching than a review of an employee’s past performance. This coaching needs to start with the goals of the employee. If you understand what your employee wants out of a job, you are in a better position to help that employee achieve those goals.

For example, you have three engineers working at the same level with the same salary. But all of these employees have different goals for working at your company. Engineer No. 1 is only interested in the income to get her kids through college. When done with that, she plans to pursue her lifelong dream of being a professional musician. Engineer No. 2 loves his job. He grew up wanting to be an engineer, and wants to become the lead engineer in the company. Engineer No. 3 aims to eventually be promoted to senior management. Those three people need to be coached very differently.

When coaching, emphasize the employee’s strengths and make specific recommendations to help the employee to reach his or her goals while addressing the needs of the company. It becomes a positive experience, and ultimately encourages the employee to work at top performance. And that, after all, is what everyone is aiming for.


JOEL ADAMS is the CEO and founder of Devon Consulting (, a professional staffing firm serving the IT and Clinical Trial industries. Reach Adams at (610) 964-5703 or


Monday, 22 May 2006 20:00

Theory of the 3-legged stool

Lenders are justifiably cautious about lending money to small companies because of the high failure rate of small businesses. To help ensure that you have the best chance of getting a loan, as well as favorable terms, the loan process should be considered a three-legged stool, says John Heck, Director of Accounting and Auditing at Kreischer Miller, a Horsham, Pa.-based accounting and consulting firm.

“The critical three questions every business owner needs to ask — and answer — before applying for a loan are: Why do I need the money? How much do I need? And how am I going to repay it?”

Smart Business spoke with Heck about how this three-legged process will help business owners create a loan application that will stand up to the scrutiny of a lender.


What does a business need to do even before considering applying for a loan?
We all know the old line: you can always get a loan if you don’t really need it. The wise thing to do is to get your house in order before you need the money; strengthen your balance sheet, increase earnings and generally build up the value of your company.


What is the first leg of the loan application process, and why is it important?
The first step is to articulate why you need the money. Is it to open up a new office or plant? Buy new equipment? Expand product lines or open a new sales territory? The reason needs to be compelling and the investment compelling, i.e., profitable. Lenders normally don’t like to fund losses, so your reason for the loan should be to grow — through expansion, new equipment, new opportunities — your already strong business. If they understand your plans for growth, lenders will take your loan application seriously. Some companies borrow money just because they can and buy new equipment without understanding the cost benefit. This first step, when the company should internally justify the investment, is an important reality check.


Once a business owner is clear about what the money will be used for, how can the owner determine how much will be enough?
This is a very important step in the process, because the loan is not open-ended.

Determining how much to borrow requires more thought and analysis than is generally given to the question. Surprisingly, many business owners request too little. They underestimate the cost of, for example, launching a new product line, which will increase marketing expenses; or moving to a bigger location, which will require capital to move and perhaps require the purchase of new equipment. In order to establish credibility with the lender, you need to think of all costs associated with your project.

Many business owners under estimate their financing needs because they are concerned about borrowing too much or they believe they may not be eligible for a higher amount. But even if you don’t run the numbers correctly, it is likely your lender will. If there is a substantial discrepancy, your chance of getting the loan is significantly reduced.


The third leg is for the business owner to ask, ‘How will I pay it back?’ How can business owners accurately make their projections?
Lenders generally require two to three years of financial history, plus three to five years of projected earnings. These projections should show the incremental benefit of the investment and how that will flow back into the repayment of the borrowings. The projections must have clear and credible assumptions presented in a logical format. A sensitivity analysis should also be prepared as part of the projections. Such an analysis will show the impact if some key assumptions vary from the basic projections.


Once these three elements are in place, what else can a business owner do?
Discuss your proposal with at least three lenders. If it is acceptable to several institutions, you are in an excellent position to negotiate the terms. Don’t think just interest rates because, while rates are important, there are many other important terms that could be negotiated to your businesses’ benefit: the length of the loan, guarantees and financial covenants, to name a few.


JOHN HECK is a director with the Accounting and Auditing Group at Kreischer Miller,, an accounting and consulting firm based in Horsham, Pa. Reach him at or (215) 441-4600, ext. 112.


Wednesday, 26 April 2006 20:00

Distance learning

Whether sharpening skills in preparation for a promotion or exploring options for a career change, a growing number of working professionals are returning to the classroom. Still, workers have a strong commitment to maintaining a healthy work/life balance.

Distance learning fits the bill, allowing many employees to work and live and learn, says Elden Monday, state vice president for University of Phoenix’s local campuses in Pennsylvania. These days, nearly all education institutions offer some form of distance learning, and the student population is burgeoning.

Smart Business spoke with Monday about how distance learning programs help working individuals reach their educational and professional goals, and what a potential student should consider before entering a virtual classroom.


What is distance learning?
For those who are not directly affiliated with the world of higher education, the concept of distance learning may be vague — especially because this type of education can take so many forms.

Simply put, distance learning is any learning that happens outside the classroom setting. Although some distance learning programs incorporate the option to engage in some learning in person, the majority of coursework is completed independently, away from a college or university campus. These days, distance learning is most commonly conducted online, in which lectures, assignments and even group discussions occur through an Internet portal.


What are the advantages of distance learning?
Beyond the obvious benefits of flexibility and convenience, there are numerous distinct advantages. For example, because the information is presented in text form, students never miss an important point. In addition, most colleges and universities that offer distance learning programs have also established a full range of online research libraries and services, which provide immediate access to all the tools a student needs.

Further, distance learning preserves all the important aspects of a traditional learning environment. Skills such as written communication are even more pronounced through distance learning, because the majority of interaction takes place through e-mails, chat sessions and other forms of written dialogue.


What are some of the reasons why a student would enroll in distance learning, rather than in a course at a local college or university?
For many working individuals, the desire to excel in the workplace is strong — but not at the expense of family and other personal commitments away from the office. Distance learning allows students to gain knowledge that will be instrumental for career growth in a convenient setting and on their own schedules. Many online classes are conducted asynchronously, rather than in real time, so coursework can be completed when and where it is convenient for the student.


Is technology sufficiently developed to allow for a user-friendly distance learning experience?
Absolutely. Although the specific method of access varies among colleges and universities, most distance learning programs are very simple to interact with. In most cases, all a student needs is a computer, a phone connection, an Internet Service Provider and some simple software provided by the school.

Of course, as technology continues to evolve and improve, its application in the education world will continue to develop as well, and distance learning will likely become even more user-friendly in the coming months and years.


What are the most important factors potential students should consider in selecting a distance learning program?
While the benefits of convenience and flexibility are unsurpassable, distance learning does require a high level of discipline. A potential student should thoroughly investigate the course format to be sure the time commitment, work volume and general program demands will realistically fit into an existing schedule.

In addition, students should review the school’s accreditation to ensure quality standards have been applied and earned credits will transfer to other reputable schools. Different types of accrediting bodies accredit different types of schools, but regional accreditation is the most common when it comes to large public or private universities.


How long does it take to earn a degree through a distance learning program?
The time commitment varies greatly, depending on factors such as the school, the number of credits required and the specific degree program or content area. However, enrollment counselors can help potential students evaluate previously earned transfer credits to determine what additional coursework will be required to earn a degree, and determine how long it will take to complete those requirements. It is worth noting, though, that the fastest option is not always the best option. A quality education that fits an individual’s lifestyle and long-term career goals will always be the best choice.


ELDEN MONDAY is the state vice president for the Pennsylvania campuses of University of Phoenix, a national leader in higher education for working adults, offering both on campus and online programs. Reach Monday at or by phone at (610) 989-0880, x1131.



Wednesday, 29 March 2006 19:00

Flexibility in education

Working people — whether returning to the classroom or taking their first foray into higher learning - have a unique set of expectations and needs. They have more complex responsibilities than traditional students. Jobs, families, mortgages and a range of personal and social obligations all affect their ability to achieve higher education goals.

In response, colleges and universities have developed more flexible education systems that let students pursue higher learning without putting their work and personal lives on hold, says Elden Monday, state vice president for University of Phoenix local campuses in Pennsylvania.

Smart Business spoke with Monday about how businesses and educational institutions can work together to create a flexible environment that helps working people maximize success in both the classroom and the boardroom.


How has the higher education community begun to accommodate students who work while attending college?


Colleges and universities have become more aware that students and their employers need to have programs available that allow workers to stop and start the learning process when their personal or professional life demands it, and to continue with course work despite travel schedules or transfers to new locations.

Today there are more programs offered in the evenings and on weekends, but the biggest change has been the broad acceptance of online learning. Many programs combine classroom and online learning, offering the best of both worlds to accommodate a wider range of learning styles and schedules. This is a positive evolution, placing the focus on what students need rather than what is convenient or traditional for the institution.


What other measures are schools taking to make higher education more attainable for working people?


Flexible scheduling is a key factor, but this means more than offering a smattering of evening classes. Truly flexible course schedules allow students to choose the time of day and even day of the week they’ll dedicate to class time, whether they’re attending courses at a university campus, or working from their computer at home once the kids are in bed.

Simulations are being incorporated into curriculum to appeal to visual learners, and a wide range of electronic tools and resources are becoming available as well, such as e-books, virtual libraries and online tutorial programs.


Have employers caught on to the increasing flexibility that is available?


Not all corporate executives realize the extent to which the higher education environment is evolving. But most understand the importance of lifelong learning, and they do encourage their employees to further their education. It’s probably the best investment a person can make in terms of earning power, job satisfaction and upward mobility.

Simply having choices and flexibility in how workers accomplish their classes is far less stressful. And while less stress can result in higher productivity, the most obvious benefit for employers is the knowledge and skills their employees will be bringing back to the workplace while they are in school. A better-educated staff is a staff that has better problem-solving skills and a better quality of production.


What factors should you consider before choosing a school that offers flexible learning options?


Most educational institutions are savvy to the needs of adult learners and offer various options to fit a range of lifestyles. That said, it is wise to thoroughly research a college or university before enrolling.

First and foremost, you should review the school’s accreditation to ensure quality standards have been applied and the credits you are earning will transfer to other reputable schools in the future. Different types of accrediting bodies accredit different types of schools, but regional accreditation is the most common when it comes to large public or private universities. The accrediting body should also be approved by the Department of Education.

Make sure you verify that the method of course delivery (e.g., in the classroom, online) and the schedule you select will be available for the duration of your program. Some programs may appear to be flexible, but require certain courses to be taken on campus during traditional business hours. It is also important to find out when faculty are available for office hours. The more flexible programs are offering 24-hour access through e-mail, chat forums or other media.

Finally, talk to your employer, your family and your peers to get their feedback and to ask for their support. Also talk to students who are enrolled where you want to attend, to get a first-hand perspective from others with similar career goals and lifestyle demands. These discussions will give you a good idea of whether your own expectations are realistic, and how well the institution is representing itself.


ELDEN MONDAY is the state vice president for the Pennsylvania campuses of University of Phoenix, a national leader in higher education for working adults, offering both on campus and online programs. Reach Monday at or by phone at (610) 989-0880, ext. 1131.