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Friday, 30 June 2006 06:58

IT as a strategic tool

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As computers become integrated into our everyday business lives, large islands of data emerge that require a well planned and implemented information technology (IT) strategy in order to efficiently retrieve information when, where and how it is needed to make an impact on your business.

“It’s an evolution,” says Robert C. Rhodes, CEO of Systems Evolution. “In the 1980s, business users were able to start entering and storing data in spreadsheets and lists — islands of data with specific uses, stored in diverse locations. The early 1990s saw deployment of these islands of data into departments and smaller business units (client/server) and a new emphasis on drill-down reporting capabilities. The late 1990s saw the ubiquitous deployment of information and shared data on the Internet, which has brought the 2000s focus on open standards and the need for better security.”

Smart Business talked to Rhodes about this evolution from islands of data to information available anywhere, any time, over the Internet.

How do you start to implement a new IT system?
Integration of these islands of data requires business professionals with an eye on business requirements — what data, where is it, how you got it, the business process, and how users need to view the aggregated information. Many IT professionals adhere to the oft repeated mantra, ‘You get started programming, and I’ll figure out what the client needs.’ This is a surefire recipe for disaster, and — believe it or not — this still reigns as a business practice.

To be successful in implementing a new system, put a plan together for what your business needs, set short milestones for its implementation, and document your progress.

Creating the applications that capture your data and report on the information is becoming easier, as most applications are available off the shelf. The leading software vendors — such as Microsoft, IBM and Oracle — provide 75 percent or more of required functionality for most businesses; it’s that last 25 percent that requires the IT professional to bridge the gap between provided functionality and customization.

How do you tie it together?
Systems integration costs as much or more than the off-the-shelf software itself, but this is where the true payoff is. Today’s custom solution development is much easier than in the past. With IBM Rational and Microsoft or IBM graphical development business requirement suites, purchased software and custom-developed software provide excellent documentation for future customization and business process re-engineering.

What do these solutions look like?
For the end user, they look like one system available 24-7. In the back end, the application may tie together hundreds of interactions with diverse applications running on mainframes, Microsoft Windows servers or UNIX boxes all over the world. The application might take the view of an ‘executive dashboard’ — management’s pertinent daily financial indicators updated in real time (such as backlog, works in progress, or what manufacturing machines are down) available via HTML in a custom-designed portal like Yahoo! or deployed to your Blackberry.

What can outside service providers do for a company?
Knowing your business requirements and having a solution integrating your diverse data and systems only helps you if you can access it when you need it, and if others are kept out.

Most businesses aren’t equipped to handle the constant tide of attacks, constant security monitoring, nor software patches coming out on a daily basis for your operating systems, hardware, servers and communication infrastructure. Using outside service providers that specialize in the ‘managed care’ of your computing resources allows business executives to be sure that their computing resources are being proactively reviewed and managed, as opposed to allowing those resources to break and then fix them.

These managed service providers can totally outsource your computer servers offsite, or they can provide a level or monitoring interacting with your internal IT employees.

So how do you use IT as a strategic tool?
In business today, every employee, client and machine in your organization are generating data in real time, which causes information overload. Start with your business requirements, integrate your systems, and pro-actively manage your infrastructure. In other words, let your business drive IT not IT drive your business.

Listen and act with the highest levels of integrity and only commit to what you can deliver and deliver what you commit to. Assure your clients that you meet your commitments by following consistent and repeatable processes — whether it’s in the way you manage projects, develop software or maintain your client’s information technology. Follow well-documented methodologies that help assure that you deliver your projects on time and within budget.

ROBERT C. RHODES is CEO of Systems Evolution in Houston. Reach him at (713) 979-1600, ext. 105 or Robert.Rhodes@systemsevolution.com.

Friday, 30 June 2006 06:46

Peter Shaper

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Peter Shaper enjoys swimming upstream. When everyone was diving out of the telecom market a few years ago, Shaper was fighting his way in. He used Genesis Park, a private equity group of which he is a founding partner, to purchase CapRock Communications out of its parent company’s bankruptcy. Four years later, as the telecom market comes back into favor, Shaper is CEO of CapRock, a private satellite communications company with revenue exceeding $100 million. Shaper spoke with Smart Business about how he recognizes solid business opportunities and finds the best employees to grow his business.

Understand your business’s personality.
Every company is like a person — they all have a personality. They have a strategy they use in the market, they have a reputation and a brand, and that’s how they’re recognized by customers.

All of those aspects have to come together to be successful. The ones where I’ve been successful are where that personality came together — that combination of strategy, customer satisfaction, brand recognition, management team, people who really came together and really liked the business and were excited about building it.

That personality and gut feel has been a better indicator of which of all the businesses that have a strong financial model will be successful.

Once the numbers make sense, follow your gut feeling.
In general, the cold, hard figures are the hurdles. If you don’t get through those numbers, just walk away.

Once you do get sets of numbers that will work for an investment decision, then you have to spend enough time understanding what are you really trying to do. It’s all about the people.

Spend enough time with people and find out how excited they are, and then let your gut tell you, ‘OK, the numbers work, and not only do the numbers work, but it really is something that makes sense.’

I use my gut a lot, but never without the numbers. You have to use the numbers to get through the hurdles first.

You will never get every hire right every time.
I wish I could tell you I’ve got a 100 percent hit rate on hiring the right people. I’m far from it, unfortunately. The interview processes are so inexact, and I’ve had my share of wrong hires.

For me, you have to spend as much time as you can with the candidate to make a decision. You’ve got to get as many people in the organization as you can afford to take the time to really spend time with the candidate, because then you get a lot of perspectives. In the end, you have to go with your gut. And unfortunately you don’t always get it right.

People don’t always come across as they really are in the interview process. I’m always trying to find ways to improve our hit rate of getting the right people the first time.

If there is potential, work with a new hire.
Our hit rate in finding the best person to fill a spot is probably 75 or 80 percent. There’s a flip side to that: How many times have you picked the wrong person and you need to push them out the door?

That’s probably only 10 percent of the time. That other 15 percent or so is when, after a year or so, you say, ‘We may not have hired the best candidate, but they’re not so bad we have to push them out the door.’

There’s that middle ground that’s a little more tricky. The ones you have to push them out the door, bite the bullet and make the call as fast as you can so you can get someone better suited in the role. That doesn’t happen that often.

Be prepared to coach and train.
It could be something as simple as in the interview process, you thought someone had a lot of experience doing a certain aspect of their job, then after they got here, you realize maybe they don’t have quite as much experience or maybe they did it totally different and you need to train them how we would like to do it.

Maybe it’s someone who is hard on people and they’re in a management role, so you have to coach them on better ways to manage people and lead people and get good production and keep people happy. There will be some aspect where we missed something in the process, but they’re still a good person to have, so they might need some coaching or training to get them where we want them to be.

Hear other perspectives before making decisions.
It starts by doing all the analytics and crunching the numbers to make sure you understand those hurdle issues. Take as much time as you can and talk about it as thoroughly as you can with as many people in your management team as you can.

Go find people with a totally different perspective who are likely to come at it very differently. I happen to be very collaborative because I think having a lot more input is a lot better than having me sit around trying to make a big decision. Typically, if it’s a big decision, you have a lot of input from people wanting to go in different directions.

You go through the data, make the call and say, ‘OK, we’re going to walk out of this room, and even though some of us thought another way was a better way to go, we’re going to stand behind this decision and give it our all, and if we’re wrong, we’ll change our minds later. But let’s get together and make this successful.’

Establish your vision.
When you’re talking vision, there’s no hard data or facts. You need credibility that comes from just a few things. Have you been right and successful in the past? Can you articulate it in a way that is convincing?

You can take someone’s objections and say, ‘Yes I understand those objections, yes, they’re good points, and here is why I think we can overcome that or why we should go this way anyway.’ And the last one is honestly just success.

If you have not been successful, it will be very difficult to get people to buy into your vision. The more successful we are, the more that vision becomes contagious.

Provide the best possible service.
I define success as first and foremost continuing to provide the best service to our customers, to continue to add value to them beyond what they’re paying us.

If we keep doing that, we should be able to grow, which provides opportunities for growth to our employees — opportunities to move up in the organization, opportunities for more responsibilities, opportunities to learn new things and see new challenges, and the opportunity for financial reward. That’s what I consider successful.

We’re protecting the core of who we are, we’re serving our customers and we are growing our business to provide opportunities for everybody. To me, that’s what’s exciting. That’s what gives me personal reward.

How to reach: CapRock Communications, (832) 668-2300 or www.caprock.com

With a new year upon us, many people approach both their business and personal finances with renewed vigor. Whether the goal is to better track expenses, pay off debt, or to grow savings, there are a few questions individuals and business owners should ask to get their finances in order for 2011.

Smart Business spoke to Tracie Gusola and Theresa Bazan of Comerica Bank about how to organize your finances, get the most out of your banking institution and reach your financial goals in 2011.

What is the first step in getting your business and personal finances in line?

Tracie: I believe that in today’s digital world, face time with your banker is extremely important. Get to know your banker and make sure his or her financial viewpoints align with yours. Ask plenty of questions and make sure your banker is explaining their recommendations to you clearly. It is important to tell them about your business or personal needs and goals so they can help you develop a customized financial plan. Building a good rapport with a banker will not only help them better understand your business or personal financial situation, but can also give you the peace of mind that you have a trusted financial adviser and partner.

How can you make sure you’re getting the most out of your money in 2011?

Theresa: The best way to make sure you’re getting the biggest bang for your buck is to be proactive with your account and work with your banker to identify opportunities to make the most of the money you already have or expect to earn.

For example, research different types of business or personal checking accounts to see which one is right for you. Popular checking accounts for individuals include basic, interest-bearing, joint and senior or student checking accounts. And most banks offer a variety of business checking accounts, too, based on your cash flow and deposit levels. Discuss with your banker what types of accounts will make the most of your money.

What are some easy ways to keep track of what you’re spending?

Tracie: One of the best and easiest ways to know what you’re spending is to develop a budget. Developing a budget allows you to see exactly what you have, what you spend and where there is room for saving. Having a budget also allows you to get out of debt by developing a payment plan that aligns with what you can afford each month.

Another way to keep track of your spending is to keep an accurate register in your checkbook. Always remember when you write a check to keep a record of it and to balance your checkbook each month.

Most banks now offer online banking and a great benefit of it is you can instantly see any charges to your account and your account balance. By regularly checking your account, you can keep track of your spending and how much money is in your account, which can ultimately help you avoid unnecessary overdraft fees.

What institution should you be using?

Theresa: Every banking institution offers an array of financial products and services so it’s important to find one that best meets your needs. If you own a business, then you may need special banking products and services like small business loans, business checking accounts and cash management products. If you have a large amount of money to invest, you should look for a bank that has a dedicated wealth management team that can help you with everything from portfolio management to asset management accounts. Before you put your money into any bank make sure the services they offer align with your financial needs.

What other services do banks typically offer?

Tracie: Very often banks offer more products and services than you think. Many institutions offer online bill pay services, allowing you to save money on postage stamps and envelopes. You can also find insurance and business services at banks, as well as financial planning tools, loans and investing services. Comerica has a team of financial planners that can help you with retirement planning, education funding and estate planning. We also offer personal insurance services like life and estate planning, disability and long-term care, and business insurance like business succession plan funding.

Tracie Gusola is a senior vice president and North Texas retail regional manager for Comerica Bank. Theresa Bazan is a senior vice president and South Texas retail regional manager for Comerica Bank. Comerica Bank is the commercial banking subsidiary of Comerica Incorporated (NYSE: CMA), the largest banking company headquartered in Texas, and strategically aligned by three business segments: The Business Bank, The Retail Bank, and Wealth & Institutional Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Dallas, Houston and Austin, Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. Comerica reported total assets of $55.0 billion at September 30, 2010. To receive e-mail alerts of breaking Comerica news, go to www.comerica.com/newsalerts.

As businesses evolve, the capabilities of reliable and secure communications network systems evolve along with it. Since businesses are turning to the Internet to extend their networks, significant advantages emerge as a result of the real-time connectivity created by virtual private networks (VPN).

A VPN is a method of hiding such connections from the outside world while giving employees 24-7 worldwide access to internal business network resources. Users are set up on a server and connected to a router. An established host assigns a recyclable security identifier. Each PC then becomes a remote extension connected through the Internet. Data, once encrypted and tunneled, is verified and decoded so only the intended recipient can access the authorized information.

Smart Business spoke to Ray Hernandez, president of ATW Management Inc., about how a VPN can transform a business’s communications, operations, customer service and productivity.

Once a VPN is established to connect remote employees and offices, what can it accomplish for businesses?

Typical email usage, access to pertinent records and phone call capabilities are always ‘on’ anytime and anywhere, deploying employees to the front lines. Here they are armed with vital information to quickly respond to and address the specific needs of their clients across all sectors of the economy.

In the service industry, real-time connectivity through a VPN can convert a field technician into a front-line sales and customer service representative. When a service order is entered into a dispatch application, the technician instantly has access to it as well as customer information such as site contact, materials required and other specific customer requests. Customer pay history, or past due invoices requiring collection prior to providing service, may also be accessed.

A GPS application may be integrated to not only assist the field technician in finding the customer location but also to report that tech’s location back to the home office. Once an authorized signature is obtained it is instantly submitted to the billing department, and that signature also verifies that the customer agrees all work has been completed to his or her satisfaction.

When a customer requests additional services, the field technician can update customer data and create new service orders as well as access pre-determined price schedules to instantly provide a quote to the customer. Better communication between the customer and the service industry leads to future business.

How can a VPN streamline the supply chain?

As for manufacturers and suppliers, a VPN, when utilized in cooperation between the two businesses, can create a unique streamlined system. Just-in-time manufacturing reduces costs all along the supply chain. Both businesses work in consensus to eliminate the costs involved in expediting, excessive stock inventory and material waste to optimize order scheduling. Shortages can be avoided by both businesses sharing

market information all via the VPN. Suppliers can place an order and have it shipped directly from the manufacturer to their customers, reducing the costs of storage, transportation, handling, etc. Instant communication between the supplier’s customers and manufacturer provides feedback the manufacturer can respond to resulting in a better product.

What are some industry-specific examples of the benefits of a VPN?

For the professional service provider, the VPN has created the stability a client expects of that professional being constantly ‘in the office.’ They can improve services to clients by offering concise solutions accurately and expeditiously.

Physicians require many sorts of accurate up-to-the-minute research data in order to correctly diagnose and respond to situations regarding their patients. Utilizing tablet PCs, physicians can instantaneously obtain patient medical records from multiple offices or hospitals, lab results,

prescription orders, note dictations and x-ray interpretations in mere seconds. Armed with this information, a physician is able to make more accurate decisions. Consent for treatment documents, authorization to submit insurance claims and authorization for specialist referrals can be submitted through a dedicated VPN, ensuring patient privacy and security of data.

Attorneys require access to network resources for various documents, precedents and references regarding cases pending or actively in session. Should a judge change a court date or newly discovered evidence be submitted to the court, changes can be accessed and addressed immediately. Voice wave files recorded via the attorney’s laptop can be downloaded and saved in the network as legal depositions. Signature recognition laptops now replace settlement or court documents.

The insurance industry benefits from its agents having access to network resources for front-line sales support. Again, voicemail wave files can be saved as legal documentation when a customer purchases a policy, processes a claim or makes coverage change requests. Accident forms are completed and submitted at the scene, which allows adjusters to instantly begin the claims process.

Manufacturers and suppliers reduce costs utilizing just-in-time manufacturing, and the cost reductions create a leaner competitive market to the service companies purchasing the material. The service companies can then be more competitive in their marketplace. Across the sectors, internal operations staff assists the accounting staff with accurate documentation of orders for accurate billing. The accounting staff creates a productive cash flow resulting in an overall profitable return on investment.

The ability to create a front-line customer service advantage is conceivable when a virtual private network is fully deployed. That advantage lies in every business tactic that drives the outcome of the endeavor.

Ray Hernandez is the president of ATW Management Inc. Reach him at (281) 931-8400 or info@atwonline.net.

Thursday, 25 November 2010 19:00

John Allen leads G&A Partners toward its purpose

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In the early days of G&A Partners, John W. Allen worked really, really hard. But he wasn’t always necessarily working smart.

“I would advise people to look at how they spend their time,” says Allen, the president and chief operating officer who co-founded the firm with Chairman and CEO Tony Grijalva. “Don’t just spend a lot of time, but instead spend time very, very wisely on the things that mean and matter the most.”

With the professional employer organization in its 15th year, Allen has learned how to align passion and purpose so the firm can focus on its sweet spots to achieve its goals. G&A Partners hones the services that contribute to its mission instead of getting distracted by demands outside its realm.

Based on his observation that his passions sprouted successes, Allen realized that it’s more fruitful to pursue the things your company stands for than to reach beyond your core.

“Of our five operating companies, the biggest is the one that I have the most passion for,” he says. “So there’s a correlation between passion and then the amount of time and energy and creativity you put into a particular business, and I think it ends up manifesting itself in your financial results. If I try to do something that I just don’t feel strongly about, then I’m just faking it and it becomes apparent pretty quickly.”

By keeping G&A Partners focused on the services that will fulfill its purpose, Allen rallies the organization around its passion. The company grew through the recession, reporting 2009 revenue of $362.4 million. With 145 employees of his own and another 10,000 co-employees through outsourcing, it’s all the more important that Allen keeps everyone focused on the path to success.

Here’s how he does it.

Express your mission

Before Allen and Grijalva founded G&A Partners, they had an accounting and consulting firm with the tagline, “Making a difference.” Then they came across a business model that would help small business owners be successful with their support. So they joined forces to outsource human resources and administrative issues, freeing leaders to focus on growing their companies.

By building a focus around his passion and setting a goal to strive toward, Allen helps his own company grow, as well.

“In terms of how we’ve gotten to where we are today, I think it starts with having a vision of what you want your company to be and what purpose that company has to fulfill,” he says. “If you don’t have a purpose, it’s hard to have passion for what you do.”

When defining your focus, look at your goals from a couple of perspectives. That will give you both a purpose statement and a mission statement.

“One has to do with what we’re trying to accomplish as a firm, and the other one has to do with what we’re trying to do for the people that we serve,” Allen says. “So our purpose statement, for example, is to help small business owners find time to grow their businesses, take better care of their employees and enjoy a higher quality of life.”

Your purpose statement defines what you do for customers, but you still have to narrow that down. Allen did that by asking what his company could do to achieve its purpose for clients. By working backward from your goal to address what steps will achieve it, you set your strategy.

“What kinds of things can we do to free up a business owner’s time to focus on the most important things that ensure the success of his business?” Allen asked. “What can we do to help a business owner take better care of his or her employees? What can we do to not only provide them more time to grow their business but also more time to enjoy the wealth that hopefully they accumulate? So it’s the purpose that then drives the strategy.”

When you’re setting the strategy to achieve your purpose, you’re also on track to accomplish your mission.

“Our mission statement is what we as an organization are trying to accomplish — and that’s to be the pre-eminent privately held professional employer organization,” Allen says.

These two ways of expressing different goals for different parties are actually closely intertwined.

“If we believe in our purpose statement and we develop sound strategy and we implement that strategy effectively, then we ought to become one of the pre-eminent PEOs in the country,” Allen says. “If we don’t have a deep purpose statement and a strategic plan that dovetails with that and the ability to effectively implement the plan, then the mission statement never gets accomplished.

“One drives the other. The mission statement then becomes how we measure the success of implementing our purpose statement.”

Get customer feedback

Implementing your purpose statement can be the hardest part. Even if you know where you’re trying to go, the biggest challenge is knowing how to get there.

You can get strategic hints by reading the latest trade publications to see what your competitors are doing. But your customers know best when it comes to what they need, so they’re your best source for determining what you should deliver.

Allen and his team meet regularly with clients through focus groups, conferences and advisory boards.

Customers will come if it’s convenient and there’s something in it for them. G&A’s annual client conference, for example, offers a weekend mix of educational classes and feedback sessions. G&A covers the cost of hotel rooms, registration fees and meals at destination resorts in Texas. All their clients have to do is arrive.

While setups differ, the feedback you want from customers is the same.

“We’ve assembled a group of clients and prospects together and we talk about what’s important to them, which of our services do they value, which of our services don’t they value, what else they’d like to see us do for them, what other needs they have,” Allen says. “That’s probably been the most valuable way of really getting a feel for what we ought to be doing to address the needs of our small business clients.”

To get clients to open up, all G&A employees are excused from the room before the questioning begins. An outside facilitator, like the company’s external public relations representative, takes over.

Creating an open environment is also about setting clear explanations of what input you’re seeking and why.

“People are willing to open up if you give them permission to be brutally honest and if they think that their candor will make a difference,” Allen says. “We let our clients know that we are always trying to improve and that we need their help in that effort.”

G&A invites all clients to certain events, but inclusiveness has implications. When you involve more people, you lose the intimate environment that makes them open up. That’s why some companies focus on feedback from their largest customers. But G&A compensates with semiannual online surveys where clients can be frank.

“We try to limit the number of questions so it’s fairly straightforward and simple for them to respond, not too time-consuming,” Allen says.

You shouldn’t just get customer feedback one or two times a year, though. Make those interactions routine. Share the responsibility by letting the employees who contact customers also collect their input. Because the manager of the customer care center has already built trusting relationships with a lot of clients, for example, Allen often calls on her to solicit feedback. Because salespeople initially set expectations with clients, he counts on them to revisit each account and gauge satisfaction.

It seems simple, but feedback from clients can help situate you to meet their needs. Those interactions can keep you on track to achieve your purpose — which is why you serve customers in the first place.

“As they share things with us that fall in line with the purpose statement, then we can develop strategies to provide products and services that address those needs,” Allen says.

Analyze ideas

So now you have a goal and a bunch of ideas about how to get there. Your job is to align the two so you can set a strategy that will fulfill your purpose and your mission.

After a client conference or focus group, Allen’s biweekly operations meeting turns from its normal tactical agenda to a strategic one.

“We talk about, ‘Here’s what our clients are telling us. What does it mean, and what should we do about it?’” he says.

Usually, clients first respond to their personal experience with your company, so you have to first address the specific instances that stick in their mind.

When you look at examples that closely, you can determine where you’re not meeting their needs — and whether people, processes or products are causing the gap.

“If the client has been critical of our performance, we identify the players involved to see if there is a pattern that needs to be addressed,” Allen says. “We quickly provide training that, hopefully, will correct the problem going forward. We report back to the client to let them know that we have addressed the problem.

“If the client has made a suggestion or complained about something with broader implications, we get the operations team together to focus on the issues rather than the people. We lay out the problem, give everyone a chance to weigh in [and] try to narrow the discussion down to specific action items.”

Addressing issues individually is pretty basic customer service. It becomes strategy, though, when you weigh all of those individual encounters together to make bigger moves that affect more customers.

Look at how many clients are saying the same things and how one person’s suggestion may benefit someone else. But remember, high demand alone doesn’t dictate what you should do.

“Some of the feedback we get is isolated,” Allen says. “It’s really particular to a certain client. We may address it at that client level but don’t necessarily adopt it for everything we do for all of our clients. … We look at the soundness and practicality of an idea and client profitability when determining what to roll out widely or on a case-by-case basis.”

First, ideas should pass through the filter of your purpose. Because it sets the framework of what your company does best and what you consider success, your purpose also defines which ideas you should pursue.

“If we’re asked by a client or even lots of clients to do something and it makes sense, it’s a legitimate business need, but we determine that we’re not good at it, then we won’t do it,” Allen says. “Or if there’s things that we may be good at, but there’s other things that we like to emphasize because they’re really more core to our product offering, then we’ll put those things on the back burner and focus initially on doing what we currently do better. We don’t want to start providing additional services that stretch our resources and our talent until we’re doing a phenomenal job with what we’re already tasked to do.”

For example, G&A is striving for a consistent customer service score of 9 or 10 to prove it has mastered its core area before tackling more. The company is at an 8.9 — and still focusing on its core services.

But client ideas also have to pass the test of your mission statement.

“People have made suggestions that perhaps we ought to help businesses borrow money so that they can grow their business,” Allen says. “That fits into the purpose statement, because one of the things we’re trying to do is help small businesses grow their business, and of course, it takes capital to do that.

“But helping people borrow money is a little different than our core HR focus. While it’s consistent with our purpose, it’s not consistent with our core product offering. Anything that we do to fulfill our purpose also has to fit within our mission statement, and our mission statement says that we’re going to be a professional employer organization, not a lending institution.”

Running ideas through that wringer helps Allen match his clients’ needs with his company’s capacity, making both sides successful.

“We know what we’re good at. We know what we’re not good at,” he says. “If there’s a suggestion made that doesn’t fit within that three-pronged purpose statement, we just won’t embrace it.”

How to reach: G&A Partners, (713) 784-1181 or www.gnapartners.com

When it’s time to expand, upgrade or just keep business running smoothly, having the right equipment financing strategy can affect your overall financial position. Financing is available for all sizes of equipment acquisitions, from smaller technology upgrades to large-ticket items, such as heavy earth-moving equipment or aircraft. If the equipment has a model number and serial number, chances are it can be financed or leased.

When approaching an equipment financing source, it’s important for businesses to be prepared.

“A business plan is an important tool when looking to finance equipment,” says Danny Scullion, senior business relationship manager with Wells Fargo. “The business plan will explain why the equipment is needed and important to your business. It will show how the equipment will be used and how it will provide value and revenue to the company.”

Smart Business spoke to Scullion about how businesses can finance the equipment that keeps them up and running.

What are the first things to consider when financing equipment?

Look at your company’s capital position to determine what the right financing option is. Future cash flow should also be a consideration, as financing may affect the cash flow of the company both in terms of the productivity the equipment may provide and the required payments. It is also a good idea to consult with your company’s accountant to help determine the best option available for the business.

Before acquiring equipment, evaluate the value that the equipment is likely to bring your business. Business leaders then need to decide what financing product makes the most sense for the company, whether it is to lease the equipment, obtain a loan or use cash to purchase. Each option has its benefits.

A lease, for example, typically has little to no out-of-pocket expense up front, whereas a loan may require a down payment or equity injection into the equipment. Business leaders should also consider what impact a lease or loan will have on the company’s balance sheet. Some leases are off-balance-sheet financing, so the lease payment shows as an expense on the income statement rather than a liability on the balance sheet. If leased, the asset is not carried on the balance sheet either. This can be helpful for a company that has to comply with leverage or debt covenants because these ratios remain unaffected with a lease. Leases can also provide a company with more flexibility regarding the equipment. Some lease structures can include options to return the equipment at the end of the lease, upgrade the equipment, purchase the equipment, or renegotiate the lease. This can allow a company to keep up to date with changes in technology and may provide a competitive advantage in the market.

Companies should also consider the long-term impact of the equipment. A loan may be the best option for equipment that will likely remain useful beyond the initial financing term.

Can multiple pieces of equipment be financed?

Many business owners want the convenience of a single transaction covering multiple items instead of having separate transactions for various pieces of equipment. Equipment can be combined into a single transaction based on the equipment types, reasonable usefulness, or life. For example, if two pieces of equipment are being acquired, one with a useful period of 10 years and the other a useful period of five years, financing may be structured for seven years to combine the equipment and provide the convenience of one note to the borrower.

When should companies apply for equipment financing?

You should begin to explore financing options as soon as you think that you may need to acquire any new or used equipment. For a company that is expecting to grow and is forecasting an equipment need at a later point and time, equipment lines of credit may be a smart option to have in place in order to provide flexibility to purchase the equipment more efficiently on your own schedule.

Are there special interest rates or payment plans available for equipment financing?

In some cases, a company may obtain financing with no payment due for a period of time, designed to allow the company to get the new equipment up and running and producing revenue before a payment is due. Other seasonal businesses may opt for structured, or skip, payments, which allow the company to match payments to the seasonality of its business and can improve cash flow.

Do certain types of equipment financing offer tax advantages?

When a company purchases equipment, it may be able to take depreciation deductions over a period of time, which lowers its taxable income. Many companies over the last several years have also been able to take advantage of government stimulus programs that allow for accelerated depreciation of equipment or an increase in the Section 179 expense allowance. The interest payments of an equipment loan, and the entire lease payment for some lease structures, are also expensed on the income statement, which can lower taxable income. Before making a purchase, talk to your accountant or tax adviser to learn how specific tax incentives can work for your business.

Danny Scullion is a senior business relationship manager with Wells Fargo. Reach him at danny.m.scullion@wellsfargo.com or (713) 577-2544.

Saturday, 25 September 2010 20:00

The Berthelsen file

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Born: Minneapolis

Education: Bachelor of arts in biology from Rice University, medical degree from Southwestern Medical School in Dallas, residency in internal medicine at the University of California at San Diego

Why did you get into the medical field?

I had an interest in science, and it’s a profession where science and personal values intersect. You have the opportunity to take interaction with personal value and patients and, to some extent, the physician — and do that in the scientific field. That was an attractive combination to me.

What was your very first job, and what did you learn from it?

My very first job was as an usher at the General Cinema here in Houston. I learned that it’s hard work to be an usher. A lot of standing on your feet.

Whom do you admire most and why?

I admire Stan Fisher, who is a former chairman of the Kelsey-Seybold Medical Group. He showed me how to inspire people to do their best work. And then secondly, but not necessarily in order, I admire my father, who taught me the motivating power of recognizing the contribution of those around you.

What’s your definition of success?

In our case at Kelsey-Seybold, my definition of success, boiled down into five words, is solving our patients’ problems efficiently.

What’s the best business advice you’ve ever received?

That came from Mavis Kelsey, our founder. Mavis Kelsey always taught us to take good care of your patients and success will follow, and that’s been true for 61 years.

Your workday is off to a bad start. How do you turn it around?

It’s important to understand that it’s just one day and that the same consistent approach to problem-solving will eventually improve the situation.

With the vast array of telecommunications choices and unproven technologies available to businesses, how can they determine which solutions will work to meet their unique operational needs and be the most cost-effective?

“The variety of options available to large companies only adds to the complexity. There are too many competing carriers and technologies,” says Shane Heise, president of Simplify Inc., a firm that helps large multi-location corporations simplify and optimize their communications lifecycle management. “It makes for a world where companies are forced into being reactionary and devoting too many resources to deal with the chaos. This is the opposite of any best-practices approach; but it’s the norm that the industry creates.”

Smart Business spoke with Heise about how to make the right choices that fit your telecommunications needs.

What telecommunications challenges are companies facing right now?

There is a lot of uncertainty in the marketplace right now when it comes to telecommunications. Much of that is due to consolidation in the industry. Additionally, the traditional way of buying telecommunications (local, long distance and data products) has changed because of different technologies available today, some to which people have never before had access.

Most companies today hear buzzwords like VoIP and SIP, but they don’t have anybody on staff with the expertise to even know if those are the best strategies for them. Are they going to save you money long-term? What is the return on investment? Could going to one of these new technologies increase productivity?

Can you really rely on your carrier for these answers? They aren’t going to give you an honest appraisal of their products compared to those of their competitors. The key is opening your mind and saying, ‘I do have those challenges and I know there are a lot of technologies out there, but I don’t know how to uncover what’s best for me.’

How are companies dealing with these challenges?

The traditional telecommunications provider’s tactic is to lock you up in a long-term contract, or try to consolidate all your spend with them as a single provider. They tell you that the more you spend, the better your price points.

However, that’s not necessarily true. You don’t have to give everything to one carrier to get the best price. You don’t have to sign high-commitment, long-term contracts with a single provider. You can consolidate everything into a handful of companies and still get the best solution at the best price, while still doing what is right for your business instead of just doing things the way they’ve always been done.

How can this be done?

Instead of working with an account representative that proposes the same old contract renewal with a few minor changes, consider using a dashboard that identifies trends and assesses your current situation. Then take action to improve technology, reduce cost, etc. You can proactively identify, assess and take action, or reactively work within the constraints of a traditional contract renewal. Which would you rather do? We recommend using a strategic solution process that puts together short- and long-term technical, cost-effective solutions.

How does an executive team ensure that they are optimized?

Great question. You need a collaborative process that leads to a strategic solution. The telcos are not invested in your business. They aren’t meeting as a team and brainstorming new solutions for you. They are proposing options that benefit them but not necessarily you. They may cooperate, but they can’t collaborate. Instead of being in reactionary mode, renegotiating and renewing each contract, companies can ensure optimization by peeling back the layers, assessing all of the telecom spend and bringing an objective voice into the conversation. It’s about collaboration. Ultimately, contract negotiation is part of the process and some renewals may be appropriate. The question is whether you arrive at your strategy based on objective input from a collaborative partner or merely a price quote from a cooperative vendor. The difference is vast. We’re trying to open the eyes of executives to what a collaborative relationship looks like and can mean to the bottom line.

How can you be sure the approach you are taking is truly strategic?

The heart of it is having the right analytics, the right insight into the provider world, and a commitment to an over- arching, specific direction. The dynamics of the industry are continuing to evolve and new technologies are available, but who has time to test all the options? Ultimately, you need to know players in the industry who have both the insight to provide guidance and the accountability to be responsible for the direction they suggest. This goes beyond the average consultant. Companies need a trusted adviser. Most successful executives wouldn’t dare go through life without a trusted wealth manager. Why would they allow the business to go without a trusted adviser for such a critical service as communications? Executives don’t just need a consultant. They need someone whose neck is on the line for any solution they suggest. They need a trusted adviser.

Shane Heise is the president of Simplify Inc. Reach him at (281) 465-6001 or shane.heise@simplifycorp.com, or visit www.AreYouTelecomplex.com.

Thursday, 26 August 2010 20:00

The Boone file

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Born: Louisville


Education: Graduated magna cum laude from the University of Louisville and completed post-graduate studies at Harvard Business School’s Executive Management Program


Whom do you admire most and why?

Rather than admiring a specific person, I’ve honed in on human interest stories of people who suffered tragedy or setbacks and how they overcame those. For instance, I saw a report on the news about a Marine who lost his arms and legs in Iraq. He’s recovering and he just got engaged. He’s excited about getting new arms and legs. That’s inspirational. That puts in context my tribulations compared to people with insurmountable difficulties.

Your workday is off to a bad start. How do you turn it around?

I wouldn’t look to turn a bad start around; I would live through it and know you’ve got to have trying periods to appreciate life cycles. When I first got into the executive search business, I went to my boss and said, ‘I don’t think I’m going to make it. One day, I’m high because I found a great candidate and the client was thrilled. The next day, the client is upset because the candidate didn’t live up to their expectations.’ The boss smiled and said, ‘Clip your highs. Clip your lows. Don’t get overly excited or depressed.’

What’s the best business advice you’ve ever received?

From Cecil Dye, district manager at Digital Equipment Corp.: ‘When you’re at a critical decision, sit down at your desk and write down all the positive things that can be derived from a yes answer to the decision that’s before you. After you’ve written down virtually all the wonderful things that can happen by a yes decision, take that piece of paper, wad it up and throw it in the trash. Now, write down all the worst things that can happen [from] a yes decision. If you can live with the worst negative, do it. If you can’t, then you shouldn’t do it.’

What’s your definition of success?

Success is when you’re passionate and you’re focused and you’re committed to what you’re doing, that you are totally engaged and you really believe that you’re making a difference. It’s that sense of mission mentality — that you are where you need to be and you are doing what you’re supposed to be doing to experience fulfillment.


What’s your favorite part of your job?

My favorite part of my job is really sitting down with my leadership team — or, for that matter, any of the people in the company — and listening to them work through an issue or a challenge that they have and being the sounding board to them. You kind of see that aha moment where they light up because they figured out what they’re going to do on their own. It’s watching those managers grow and develop in their skills and abilities as they’re making these critical decisions that certainly will affect the outcome of many people’s lives.

Monday, 26 July 2010 20:00

The Miller file

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Born: Prairie Village, Kan., a suburb of Kansas City

Education: I went to Kansas State University on a football scholarship. I started out in architecture and then switched to construction science in my sophomore year and ended up with a degree in construction science.

What was your first job, and what did you learn from it?

My first real job was working in the summers with a highway contractor as a laborer. I did that for three summers while I was going to college. I worked hard, worked long hours, learned a lot about construction — at least on the highway side as a laborer. My first job out of college was JE Dunn and I’ve been with Dunn almost 30 years now.

Whom do you admire most and why?

Generally, the people that I admire most are those that create things, people that take vision and turn that into reality. People that aren’t scared to try new ideas or methods.

What’s your definition of success?

Success is really being at peace with yourself, if you’ve exceeded your own expectations and others’ expectations and you’re at peace with that. In the construction industry, it’s really a service business, and success is pleasing clients. It’s a client being satisfied with the project you provide; that’s another way to measure success.

What’s your favorite part of your job?

Seeing a project used in the form that it’s created for. What thrills me is to go out and see a project — like a children’s hospital, for example — and you see how people benefit. I can go and I can see how a new environment can help a kid feel better or a family member feels more comfortable. Seeing that you were part of creating something like that is probably my favorite part of what I do.