Carolyn LaWell

Saturday, 26 December 2009 19:00

Building personal relationships

When Jerry Campbell thinks of prime examples of customer service, he can’t stop the famed Cheers’ lyrics, “Where everybody knows your name,” from running through his head.

“If you go into your favorite restaurant on Friday night, and you walk in, and they know who you are, you feel good,” says Campbell, chairman, president and CEO of HomeBanc N.A. “That’s the experience we try to create.”

When Campbell founded the bank in 2007, he instituted a company philosophy revolving around personal service. Features include personal bankers, meaning no teller lines, and a Sunset Commitment, which guarantees an employee will get back to you before the day ends.

But in order to have a successful customer service program, you need to be able to train employees in the aspects of delivering that service, says Campbell, who has about 100 employees.

Smart Business spoke with Campbell about how to develop a customer service training program for employees.

Commit to training your employees in customer service. If you don’t have any customers, you don’t have anything. We always say that nothing happens until there’s a sale, i.e., a customer. But I think to have a successful customer service program, it starts with the training of your staff. We have about 40 hours of classroom training for all of our staff who deal with customers.

We train our people to be close to our customers (and to be) relationship-oriented.

Determine the best training for your employees. You have to figure out what business you’re in. Are you in a sales business, a service business, a technical assistance business or what?

If you’re in a service business, you need to do service techniques all the way from how to answer the phone, stand up and introduce yourself, give your card to someone, all of those things.

I’m sure you’ve gone into a business where someone doesn’t stand up, they don’t introduce themselves, they don’t give you a card, and in some cases, they might even act like you’re a disruption of their process for whatever they’re doing.

Our training is sort of equally divided between sales and technical issues like compliance and regulations and so forth. We’ve gone to a lot of online training for some of the items, some of which we get through the regulators and some we buy from third parties. Then we have classroom training, which is more sales-oriented, specific to our business and our products and how we operate.

So I think it’s a function of you’ve got to decide what business you’re in and what are your niches. Then, how do you train for that.

Show employees what you mean. You almost have to switch roles and get your employee to stand in the shoes of the customer. If you look at it as if you were looking in the mirror, that you’re delivering services to yourself, what is it that you like and expect as a customer?

We all make choices every day from where to send our dry cleaning to where to have a fast-food lunch or whatever, and it’s usually related to our expectation of customer satisfaction. So that’s how we focus our training. We do a lot of sort of classroom case modeling where we have one of the persons be a customer and one be an employee, and we sometimes film that and play it back.

You can learn a lot about watching yourself and listening to yourself. We try to get our employees to be in the role of being a customer.

The other thing is the classroom sessions cannot be too long. People lose their concentration rather quickly. We don’t think the class can be more than an hour.

We also think it needs to be fun, there’s got to be some fun element in it. Some of the role-playing, we even encourage some of our employees to be difficult customers and sometimes that’s pretty humorous.

Use your own employees to train others. We’ve found that some of our best trainers are our people who have been very successful, and we have them teach others what they know and what they’ve learned. They’re actually, in many cases, better teachers than bringing in outside, third-party teachers.

The No. 1 criteria (for trainers) would be attitude. No. 2 would obviously be experience and knowledge of the subject. But if you don’t have the right attitude, it doesn’t work.

They say attitude is a little word that makes a big difference. I believe that’s true in life. If people are infectious or enthused about what they do, then they tend to transmit that to others. If they don’t like what they’re doing, they also transmit that to others.

Offer training in different forms to allow flexibility. The actual classroom classes are during the workday, the Internet Web classes are after hours at people’s leisure, and it’s a combination of those two together that constitutes our training.

On a regular quarterly basis we can schedule classroom training, but let’s say a new employee came to work a week following the classroom training, we couldn’t do another classroom training for one employee because it would be cost-prohibitive. So if we could take that one employee online for whatever specific class it was, you can do them as a one off. It’s much more efficient and that employee doesn’t have to wait three months to receive vital training.

With the Internet training, some people like to do it on their own time, in the evenings, on weekends or whenever they choose. There’s some advantage to that because sometimes it’s difficult for people to be away at training an hour or two at a time.

How to reach: HomeBanc N.A., (813) 228-8300 or www.homebanc.com

Saturday, 26 December 2009 19:00

Looking ahead

Eduardo Bottger understands that explosive growth or a turn for the worse can happen literally overnight. It’s one of his industry’s challenges, and it’s one of the reasons he is always prepared.

Bottger forecasted the recession, but alPunto Advertising Inc. was at first immune to the economy, posting a record year in 2008 with $45.5 million in billings. The company predicted work and revenue would slip in 2009, so it hired employees on short-term contracts during its growth, leading them to not have to lay off full-time staff when things slowed.

“It’s looking into the crystal ball,” says the founder, principal, president and executive creative director of the Hispanic agency. “But to look into the crystal ball you have to have all the information you can get, all the information you can gather.”

In order to truly be prepared for fluctuations, you must research and predict trends, use that information to devise a plan and share your findings with employees.

Smart Business spoke with Bottger about how to predict and prepare for business fluctuations.

Research the possibilities. We do what we do for our clients — we look at trends, we look at research. The management team is always looking at the different areas of their specialty that might have an impact not only on our business but, most importantly, in our clients’ businesses. When we look at all the trends, and trends is a synonym for future, we get an idea for what can happen.

There’s a lot of research available, published research, and I think anybody who wants to find research in their particular area of expertise will find it virtually at no cost. If they have a good network or if they belong to associations that are pertinent to their industries, they should be able to find it there without having to pay any additional monies.

Apply the information you’ve found. The next step is how it applies to your particular industry and specifically to your company. That is where you need to rely on the top talent on your team. In our case, we bring people from seven different areas. They bring their expertise and their talent and their instinct in trying to figure out what we think could happen, how everything that has happened on a micro level will affect our particular business and our clients’ businesses.

There’s a lot of instinct that goes there, but instinct is based on facts and information we collect and the information that we share internally.

One of the secrets is there’s so much information out there maybe the first step is to figure out what is the information you want to consider and which is the one you don’t. That is by putting together a team of experts that will give the right perspective and will work as a filter of what is relevant to our business and our clients’ business. What is the information that we think is reliable, what is the information that we think is looking ahead, not telling us what happened but what could happen.

Create a physical plan. The power of a written plan is just priceless. In other words, if there’s a plan, even though everybody agrees on the plan and it’s only been shared verbally, it is not as powerful as putting any of this vision or power of goals in writing.

It makes for some mysterious reasons putting things on paper in a very simple way — it has to be a very simple document and it has to be a living document that people can relate to and have access to — all of a sudden it’s real. All of a sudden it’s a live objective, as opposed to a PowerPoint document that sits on people’s desks.

In our case, it always tells (us) the health of our clients’ businesses. We do believe that if our clients do well, we will do well.

We do bimonthly projections. Our business is so ever-changing for the better or for the worse that we have to keep a close eye on our projections. So we’re always projecting, we’re always figuring out what if. What if we were to do this project, what if this project was canceled, what if instead of getting this project we get this other one? There’s always looking at the business and the workload at least two weeks in advance.

At the end of the day, it has to be a simple plan. I do believe in simplicity, especially if the company is not a large corporation, but even for large corporations, the plan has to be simple because otherwise it will not be properly executed.

I have found that the most complicated the process — the most complicated the plan for us or for our client — the (fewer) chances it will be executed properly. And without proper execution even the best plans can fail.

Share the plan. As you grow and as more people are involved, it’s harder and harder to share the vision or share the goals with the rest of the team. You have to share it, hopefully there’s buy-in, hopefully there’s commitment from the team at all levels of execution.

The fact is it most likely won’t happen at all levels. But people have to be informed, people have to understand why things are done in a certain fashion, and people have to understand what the goals are — that’s where things in many ways become magical. All of a sudden everybody is working in the same direction; everybody is pulling for the same things. People understand your mission and the big picture, not just what they’re suppose to do at a particular time on a particular day, but they understand how they fit within the bigger goals of the organization.

You share the plan with everybody. It might not be the full plan, you might not share all of the reasons or all the thinking that went into it, but yes, you share.

Personally, I take time to share that with all the managers and with every new employee that we hire. Everybody else gets a summary and the actual plan.

How to reach: alPunto Advertising Inc., (714) 544-0888 or www.alpunto.com

Monday, 26 October 2009 20:00

All for one and one for all

Paul Franks knows what it’s like to work with a crazed micromanager.

“We had sold our company a number of years ago and the president and CEO of that company had the complete opposite culture,” Franks says. “I worked around a complete micromanaging freak that changed his mind on a whim and just saw the chaos and the people that were afraid to make a decision.”

When Franks, the president and CEO of Sports Construction Group LLC, repurchased the names and assets of his family’s business and rebranded the operations to focus on installing sports fields, notably for the Cleveland Browns and Cleveland Indians, he also restructured the company culture.

In doing so, he convinced his employees — a number that fluctuates seasonally between 65 and 200 — that he would turn the finger-pointing, colleague-blaming culture around if they stayed.

Franks’ approach is to create a team mentality where discussion is rampant and each player takes responsibility for his or her actions, whatever the outcome.

Smart Business spoke with Franks about how to promote team and individual decision-making processes.

Set expectations right away. You tell (employees) what your culture is, and you tell them how you run your business and what you expect. Then it’s up to them to start proving it to you. If you start seeing things change, that’s when you know you have a problem.

It’s an extremely fast-paced business, so we can see positive or negative signs within a couple of weeks. And then, if you see the negative signs, you address them right upfront and give that person the opportunity to grow into your culture.

I think it’s a matter of communicating with your people or your employees and building trust and an honest relationship. When you start having people that are placing blame on others instead of taking responsibility themselves, I think that’s where you’ve got a problem.

I’ve been involved with a number of different businesses where people will never take (or) admit to any failure, all they want to do is claim success. When you have a culture where people can come in and start saying, ‘I made a mistake. I need your help. How do I correct this or that?’ — when you know if you have honest people working for you that aren’t afraid to say that they make mistakes or not afraid to celebrate in the glory and not pointing fingers at other people, that it’s not their responsibility it’s somebody else’s, then you have that culture.

It goes back to seeing how the people perform. If they have that kind of culture and we can adapt that to them, that they can grow with that ability to be honest, then you have a successful business.

Work together. We still promote decision-making processes individually. And, as a team does, we all sit down and discuss the pros and cons and different means and methods. Each day is a learning experience.

We have project review meetings weekly that discuss every project: where we are in the project, how it is on schedule, where the costs are on the job, if there’s difficult obstacles going through. On a particular job, we might have three people involved in that one project, but when we sit down in the meeting, there’s a dozen of us.

People that aren’t quite familiar with the project, when they’re hearing different things everybody is open to suggestions. So we just talk out different challenges and how we can continue to keep the project on a profitable basis.

We build a trust with each other. It goes back to the point of are you always placing the blame on somebody else for failures or are you taking the responsibility of that and also taking the responsibility of the wins. If you have that culture, no one is afraid to open up and say things.

Promote responsible decision-making. I think when you let the employees (get) involved in all facets of that particular project or that particular task that they’re doing — on a management level — they need to be aware of what the costs are, they need to be aware of what the ultimate goal is, so that they’re aware of are we hitting that or are we missing. It’s all about money. Are you making it or are you losing it?

I think you certainly will suggest that you ought to look at it going from this way or approaching this, take this way, and you’re talking through different things like that. But the bottom line is when your monitoring the job costs, the profitability of whatever the task you’re doing, you can see some pretty instant results if you’re successful or not.

It’s not an immediate thing. It’s a time of working together and doing it and respecting their trust and so forth, it doesn’t happen over night.

Monitor when you need to step in and when you need to back off. It’s a gradual process. When like a project manager is making recommendations to move in a certain direction or change the path that they’re going down, you know when they’re making the right decisions.

Once you’re seeing them make the right decisions, you don’t need to interact as much.

If they aren’t making the (right) decisions — I guess in our company we have different levels of management and I’ve got people like (our) chief operating officer, they’re having the daily contact. Then that individual will come to me, and he’ll say we have a problem here, you need to step in and take a look at this.

It’s just communication. Every day you’re communicating with people. These people are our friends and partners; they’re part of the business. It’s a family; that’s how we run it.

How to reach: Sports Construction Group LLC, (216) 241-9900 or www.sportscongroup.com

Friday, 25 September 2009 20:00

Space exploration

Savvy CEOs are taking advantage of the slumping commercial real estate market by evaluating whether their space meets their needs while the cost to buy or lease is low.

Commercial real estate prices fell again in the second quarter, showing an 18 percent national decrease compared to the previous quarter, according to Massachusetts Institute of Technology Center for Real Estate’s index. The drop placed the price index 39.2 percent below its 2007 second-quarter peak.

Clearly, the market is experiencing volatility, but opportunities are present.

“If you need to lease space, it’s a wonderful time to be a tenant; I think you can lock in long-term low rates,” says John Carter, executive vice president and principal, Carter. “If you’re a buyer, I think there’s an increasing number of distressed acquisition opportunities, which allow you to buy significantly below replacement cost at prices kind of pre-2000 levels.”

Whether you’re searching for a new property or hoping to reconfigure space for efficiency’s sake, cost savings can be yours. The first course of action is to connect with an experienced commercial real estate broker to weigh your options because there are plenty of them.

Debate to buy versus lease

The decision to buy or lease property has less to do with the current state of the market and more to do with each company’s individual circumstances.

Think about your industry, your strategic plan, your company culture and what those will look like five or 10 years from now; then add the amount of capital you have for discretionary spending. Most companies lease to stay adaptable.

One of the bigger challenges facing the market today is that the capital markets are at a standstill, leaving few lending opportunities. The loan-to-value ratio has changed dramatically. Once, you were putting 10 percent to 30 percent down for a loan; today, it might be as much as 50 percent.

“I think the biggest challenge out there right now is financing,” says John Burpee, chairman and lead apartment broker of NAI Tampa Bay. “Lenders have just crawled into a hole somewhere, and we can’t find them.”

It’s important to work with your broker to analyze your options and ensure the best deal, especially because prices and volatility vary by market and even within markets. Renting sublease space may even be the way to go because it’s cheap, but be sure to investigate the leaser’s financial standing before signing anything.

No matter what your decision, you’ll more than likely see savings because sales prices have fallen and landlords are becoming more and more creative with incentives to retain and attract tenants.

Renegotiate your lease

If your lease has been tucked away, dust it off and read the fine print. Renegotiating your lease can lead to immediate savings and even allow you to get better use out of your space. Again, the returns may vary based on your landlord’s willingness to bargain, but your market insight can be used as leverage.

Before you go to your landlord, there are a few questions to ask yourself. First, how much time do you have left on your lease?

“Five years is difficult; two years is easy,” Carter says. “What happens is if it’s five years away, landlords will think the market will turn before then, and it’s really kind of a long way away.”

Second, how much time do you commit? If you discuss the popular blend-and-extend deal, where you sign a lease extension in exchange for reduced rent, you have to think about whether the space will continue to meet your needs for that length of time.

Third, can you give back or add space? If you’re cash-strapped or your company has reconfigured its employee base, maybe you can work the renegotiation in a way that better uses your space, such as adding or subtracting square footage.

Fourth, use your broker to research your landlord’s financial position, such as insight on how large the mortgage is and whether your landlord has good credit.

“If I were a tenant, I would make sure I had good representation, not only legal but also real estate, and I would make sure that my real estate expert or the person I engaged is getting those answers for me,” Carter says.

Fifth, research your options in the marketplace. Even if staying makes the most sense, at least you can present your landlord with the possibilities that wait should you leave. Some landlord’s are offering free rent, moving allowances and increased tenant improvement dollars.

“If you’re a company that is leasing office space or leasing retail space, you should be renegotiating your lease today,” Burpee says. “We’re repositioning some Fortune 500 clients in today’s market that are saving themselves on average 25 (percent) to 30 percent in leasing costs, simply by going back to their landlord and saying we’re getting ready to move.”

Consider more than just costs

Before you sign next to the X, take into consideration more than just the monthly dollar amount you’ll be paying. The general checklist for picking property once emphasized location, employee driving time and amenities. Those concerns remain important, but the current state of the economy has also brought to light the need for efficiency, flexibility and sound deals.

Working with a broker will allow you to receive the best bang for your buck, meaning fair market value, tax breaks, relocation incentives, landlord concessions and operational costs, while making sure it’s a strong deal.

The real estate crisis has left landlords hurting. Work with your broker to determine whether your landlord is currently facing or could face financial distress and how that affects the tenant improvements or possible free rent he or she promised.

Nonetheless, you should take the time to work agreements into your lease that protect your rights as a tenant if your landlord forecloses on the property and the lender takes over.

“If you don’t have a good nondisturbance agreement in place and the landlord loses the building to the lender or gives it back, the lender has the right to rewrite your lease terms,” Carter says.

Time and savings might also be found in the long run with contraction, addition and termination agreements for flexibility.

Flexibility is key for surviving this economy — and that includes your real estate. Your broker will have a space planner who can help you efficiently design the space you’re in or determine which space best suits your company. Companies are saving money by going to open floor plans, narrowing cubical sizes and hoteling, which supports employees working outside the office and sharing desk space.

“We’re seeing people shorten up their cubical sizes,” Burpee says. “Where it use to be an 8- to 10-foot-wide cubical was pretty normal, we’re now seeing companies drop back to 6- and 8-foot-wide cubical space, so maximizing the amount of people they can put in a given amount of square feet and shutting down outlying operations and centralizing their operations.”

Whether you’re planning to buy, lease, move or stay, make sure you give yourself ample time — at least a year but probably longer depending on size — to ensure you’ve settled on the best choice for your company.

Friday, 25 September 2009 20:00

Space exploration

Savvy CEOs are taking advantage of the slumping commercial real estate market by evaluating whether their space meets their needs while the cost to buy or lease is low.

Commercial real estate prices fell again in the second quarter, showing an 18 percent national decrease compared to the previous quarter, according to Massachusetts Institute of Technology Center for Real Estate’s index. The drop placed the price index 39.2 percent below its 2007 second-quarter peak.

Clearly, the market is experiencing volatility, but opportunities are present.

“Lease rates are down significantly in the Bay Area, so this is an outstanding time to be a tenant,” says Mark Geisreiter, executive vice president and regional managing director, San Francisco Bay Area, Grubb & Ellis Co. “Prices to purchase buildings have dropped significantly, as well, so it is a buyer’s market right now and savvy tenants [and] savvy owners are lined up and getting ready to take advantage of that.”

Whether you’re searching for a new property or hoping to reconfigure space for efficiency’s sake, cost savings can be yours. The first course of action is to connect with an experienced commercial real estate broker to weigh your options because there are plenty of them.

Debate to buy versus lease

The decision to buy or lease property has less to do with the current state of the market and more to do with each company’s individual circumstances.

Think about your industry, your strategic plan, your company culture and what those will look like five or 10 years from now; then add the amount of capital you have for discretionary spending. Most companies lease to stay adaptable.

“There’s a tremendous amount of positives to owning real estate, and there’s a tremendous amount of positives to leasing or renting real estate,” Geisreiter says “But I think really the most important question that you need to answer is what is the right decision for your business, and that’s not always driven just by price.”

One of the bigger challenges facing the market today is that the capital markets are at a standstill, leaving few lending opportunities. The loan-to-value ratio has changed dramatically. Once, you were putting 10 percent to 30 percent down for a loan; today, it might be as much as 50 percent.

“I think with the tight credit markets you’re seeing that lease opportunities are obviously more plentiful,” says Bryan Courson, managing partner, office division, NAI BT Commercial. “I think, at the end of the day, you can probably get more favorable terms on a lease overall just by virtue of the competitive landscape.”

It’s important to work with your broker to analyze your options and ensure the best deal, especially because prices and volatility vary by market and even within markets. Renting sublease space may even be the way to go because it’s cheap, but be sure to investigate the leaser’s financial standing before signing anything.

No matter what your decision, you’ll more than likely see savings because sales prices have fallen and landlords are becoming more and more creative with incentives to retain and attract tenants.

Renegotiate your lease

If your lease has been tucked away, dust it off and read the fine print. Renegotiating your lease can lead to immediate savings and even allow you to get better use out of your space. Again, the returns may vary based on your landlord’s willingness to bargain, but your market insight can be used as leverage.

Before you go to your landlord, there are a few questions to ask yourself. First, how much time do you have left on your lease?

“I’d say the environment today is the typical landlord is very receptive to renegotiation particularly as you get within 12 to 18 months of your lease expiration,” Geisreiter says.

Second, how much time do you commit? If you discuss the popular blend-and-extend deal, where you sign a lease extension in exchange for reduced rent, you have to think about whether the space will continue to meet your needs for that length of time.

Third, can you give back or add space? If you’re cash-strapped or your company has reconfigured its employee base, maybe you can work the renegotiation in a way that better uses your space, such as adding or subtracting square footage.

Fourth, use your broker to research your landlord’s financial position, such as insight on how large the mortgage is and whether your landlord has good credit. The information can be critical in determining whether your landlord is financially sound and a safe bet for the future.

Fifth, research your options in the marketplace. Even if staying makes the most sense, at least you can present your landlord with the possibilities that wait should you leave. Some landlords are offering free rent, moving allowances and increased improvement dollars to attract new tenants.

“You want to create and orchestrate a competition, and that brings multiple landlords into play, including your existing landlord,” Courson says.

Consider more than just costs

Before you sign next to the X, take into consideration more than just the monthly dollar amount you’ll be paying. The general checklist for picking property once emphasized location, employee driving time and amenities. Those concerns remain important, but the current state of the economy has also brought to light the need for efficiency, flexibility and sound deals.

Working with a broker will allow you to receive the best bang for your buck, meaning fair market value, tax breaks, relocation incentives, landlord concessions and operational costs, while making sure it’s a strong deal.

The real estate crisis has left landlords hurting. Work with your broker to determine whether your landlord is currently facing or could face financial distress and how that affects the tenant improvements or possible free rent he or she promised.

Nonetheless, you should take the time to work agreements into your lease that protect your rights as a tenant if your landlord forecloses on the property and the lender takes over. Time and savings might also be found in the long run with contraction, addition and termination agreements for flexibility.

Flexibility is key for surviving this economy — and that includes your real estate. Your broker will have a space planner who can help you efficiently design the space you’re in or determine which space best suits your company.

“They can look at your space in ways in which you can maximize your head count,” Courson says.

Companies are saving money by going to open floor plans, narrowing cubical sizes and hoteling, which supports employees working outside the office and sharing desk space.

Whether you’re planning to buy, lease, move or stay, make sure you give yourself ample time — at least a year but probably longer depending on size — to ensure you’ve settled on the best choice for your company. And make sure you’ve explored every option because there are ways everyone can save.

“If you’re going to go out to the market and negotiate, hire an adviser and orchestrate a competition,” Courson says. “If you’re going to do something internally and you’re not out to lease new space or your lease isn’t up, there’s ways in which you can be more efficient inside your own walls.”

Wednesday, 26 August 2009 20:00

Risky business

This economy probably has your company facing heightened risks — risks that you might not be prepared for and that could ultimately cripple your business.

The global economy is the No. 1 risk businesses say they face today, according to the Aon 2009 Global Risk Management Survey. But the survey points out that less than 66 percent of respondents have formally reviewed their major risks or have plans in place to deal with them, including the economic downturn.

Now is a crucial time to have a detailed risk management program in place. After all, budgets are tight, you’re looking for savings and managing risk can directly influence your bottom line.

“A company who manages risk will in two ways affect their bottom line,” says Ric Peña, regional executive, North Central region, Zurich North America. “One, they will retain losses if a company has a large deductible and they manage the risk. … On the other side of it is, if a company manages risk (and) is able to control their losses over the long term, their insurance premiums will be better than as opposed to if they don’t manage their risk.”

Hiring an in-house executive to focus on risk may financially be out of the question. But a good insurance broker can help you put the puzzle pieces in place, starting with the questions that will lead to true solutions.

Identify potential exposure

Like anything in business, a true commitment to risk management starts with the company’s leadership. Set aside time for your organization’s key players to sit and outline the different risks you might face, such as financial, property and casualty, and legal.

There are a number of assessments you can do — such as risk mapping or enterprise risk management — depending on the amount of detail and commitment you want your program to include. Regardless of what direction you are going, you should include your insurance broker in the conversation. Odds are his or her experience, benchmarking data and outside eye will lead to valuable questions. A good broker has dedicated risk management and claims services and will go through a checklist that will bring your risks to light.

Once your risks have been identified, your broker can help you develop a strategy to quantify your risks and determine whether you should mitigate or transfer the risk.

“All companies should have a risk management process,” Peña says. “When they come to an insurance company to control the risk or hedge against the risk, that’s where I come into play. So I basically offer one of many solutions that they can purchase or, basically, solutions that they can put into place to manage that risk; insurance is just one of many.”

The process is fairly systematic, but it’s also continuous. A true risk management plan involves constant monitoring. It’s worth the effort to work with your broker to match a timeline of monthly musts with your plan. Especially in volatile times like today, your company could face different risks than it did six months ago.

Review risks

Your risk analysis is a great guideline for your specific needs, but there are a few areas of coverage the economy has made more relevant.

“There’s always increased risk when the economy isn’t performing as well as it could,” says Nicole Latimer, agency field executive, Northeast St. Louis, State Farm Insurance. “Beyond the usual risk of business downturn, business owners also need to be aware of any special hazards posed by their specific geographic area or their specific political environment.”

Business interruption and trade credit insurance are two areas to review. If a client can’t pay or your operations are halted, how will those scenarios affect your balance sheet if you’re already strapped for cash?

Insurance executives are warning that desperate times produce desperate people. If you’ve decreased your work force or plan to, keep in mind workers’ compensation and employee discrimination claims tend to rise in a down economy, as do employee crime and cyber theft. Now might be a good time to evaluate directors and officers coverage, employment practices liability insurance, crime insurance, cyber insurance and workers’ compensation coverage.

“We know that the current condition of the economy is causing people and businesses to reconsider spending in an effort to identify areas where they can limit their expense and perhaps reduce costs,” Latimer says. “Business leaders should understand that failure to properly and adequately protect their full range of assets poses great risks to the organization’s odds of successfully rebounding from an unexpected financial crisis.”

Find cost-saving solutions

Insurance is one line item that hasn’t been immune to budget cuts. But before you start scaling back coverage, keep this in mind: We’re still in a soft commercial insurance market — meaning insurance is a cheap form of risk capital.

A 2009 benchmark survey by the Risk and Insurance Management Society Inc. shows a lower average in premiums contributed to a 9.4 percent drop in the average total cost of risk per $1,000 of revenue.

If you’re worried about the size of your insurance allotment, call your broker now, review your contracts and review your risks. You don’t have to wait until your renewal in order to find savings or renegotiate your contract. Just remember, before you can responsibly lower costs, you need the details of what you are and aren’t covered under.

“What we like to do is we like to sit down with our clients, and if they’re trying to reduce premiums as opposed to not buying insurance, we talk to them about restructuring their program so they can buy higher deductibles in order to get those costs down,” Peña says. “It means they’re retaining more risk and hopefully they’re doing the right things from a risk management perspective.”

Immediate savings can be found by passing risk to others, such as tenants or vendors. You also can play around with increasing deductibles to lower premiums or scaling back nonmandatory insurance. If the latter two are options, first weigh whether you can financially assume the risk or if the cost of managing the risk is cheaper.

One of the only ways to decrease the costs you can control is by reviewing your claims. You should have regular claims review meetings with your broker to see where prevention methods can be put into place. Your insurance carrier can help with loss control, such as safety training. Some brokers say clients recently have seen cost savings of 20 percent.

Part of the answer is building a long-term relationship with your broker and even carrier. Share with them details of your operations. Invite them to tour your facility. The more your broker understands your business, the better he or she will be able to provide holistic advice. And a lasting relationship with an insurance carrier can mean more flexibility and negotiation.

“In building a relationship with one solid agent, that agent will know and understand your business, and as your business changes, your relationship with that person can continue to grow,” Latimer says. “There’s also an advantage that as the marketplace changes and the agent knows of those changes, they can be proactive in getting in front of the client with things that the client may not know about, but they can be concerned with.”

Wednesday, 26 August 2009 20:00

Risky business

This economy probably has your company facing heightened risks — risks that you might not be prepared for and that could ultimately cripple your business.

The global economy is the No. 1 risk businesses say they face today, according to the Aon 2009 Global Risk Management Survey. But the survey points out that less than 66 percent of respondents have formally reviewed their major risks or have plans in place to deal with them, including the economic downturn.

Now is a crucial time to have a detailed risk management program in place. After all, budgets are tight, you’re looking for savings and managing risk can directly influence your bottom line.

“First and foremost, it lowers your cost of uninsured losses,” says Matthew H. Davis, resident managing director, San Francisco, Aon Risk Insurance Services West Inc. “Second it lowers your cost of insurance premiums. … And third it minimizes the impact of financial disruptions to your business.”

Hiring an in-house executive to focus on risk may financially be out of the question. But a good insurance broker can help you put the puzzle pieces in place, starting with the questions that will lead to true solutions.

Identify potential exposure

Like anything in business, a true commitment to risk management starts with the company’s leadership. Set aside time for your organization’s key players to sit and outline the different risks you might face, such as financial, property and casualty, and legal.

“We recommend starting off by just sitting down and identifying the top five or six, or could be more, risks that could truly threaten the viability of the company,” says Brian Murphy, vice president, Heffernan Insurance Brokers. “These aren’t necessarily insurable risks; they can be any risk facing the company.”

There are a number of assessments you can do — such as risk mapping or enterprise risk management — depending on the amount of detail and commitment you want your program to include. Regardless of what direction you are going, you should include your insurance broker in the conversation. Odds are his or her experience, benchmarking data and outside eye will lead to valuable questions. A good broker has dedicated risk management and claims services and will go through a checklist that will bring your risks to light.

Once your risks have been identified, your broker can help you develop a strategy to quantify your risks and determine whether you should mitigate or transfer the risk.

The process is fairly systematic, but it’s also continuous. A true risk management plan involves constant monitoring. It’s worth the effort to work with your broker to match a timeline of monthly musts with your plan. Especially in volatile times like today, your company could face different risks than it did six months ago.

“Business is very dynamic; the way our business runs today is not (going to) be how it runs six months from now,” says Trish Drew, vice president of marketing, Jenkins Insurance Group. “Things change and so the closer that relationship is and the more the broker knows the intricacies of how that business is run, the better poised they will be to make recommendations about change or suggesting new ways of mitigating risk.”

Review risks

Your risk analysis is a great guideline for your specific needs, but there are a few areas of coverage the economy has made more relevant. And today’s evolving risks can be enhanced by geography and industry.

“The poor economy hasn’t created new risk, but it has greatly enhanced and complicated risk that organizations already face,” Davis says.

Business interruption and trade credit insurance are two areas to review. If a client can’t pay or your operations are halted, how will those scenarios affect your balance sheet if you’re already strapped for cash?

Insurance executives are warning that desperate times produce desperate people. If you’ve decreased your work force or plan to, keep in mind workers’ compensation and employee discrimination claims tend to rise in a down economy, as do employee crime and cyber theft. Now might be a good time to evaluate directors and officers coverage, employment practices liability insurance, crime insurance, cyber insurance and workers’ compensation coverage.

“We don’t think that the types of insurance have necessarily changed, it’s just a matter of taking a look at all of those insurances given the economic climate,” Murphy says.

Find cost-saving solutions

Insurance is one line item that hasn’t been immune to budget cuts. But before you start scaling back coverage, keep this in mind: We’re still in a soft commercial insurance market — meaning insurance is a cheap form of risk capital.

A 2009 benchmark survey by the Risk and Insurance Management Society Inc. shows a lower average in premiums contributed to a 9.4 percent drop in the average total cost of risk per $1,000 of revenue.

If you’re worried about the size of your insurance allotment, call your broker now, review your contracts and review your risks. You don’t have to wait until your renewal in order to find savings or renegotiate your contract. Just remember, before you can responsibly lower costs, you need the details of what you are and aren’t covered under.

“Many companies are going through cost-reduction measures, so in the risk management space, we have had several clients that are being forced to reduce their overall spend,” says Tane Abbott, managing director of the San Francisco office of Marsh Inc. “We generally don’t recommend they stop buying insurance, but what a lot of companies are doing is looking at their retention levels, deductibles, so essentially what they’re retaining of every loss and perhaps increasing them in exchange for lower premium.”

Immediate savings can be found by passing risk to others, such as tenants or vendors. You also can play around with increasing deductibles to lower premiums or scaling back nonmandatory insurance. If the latter two are options, first weigh whether you can financially assume the risk or if the cost of managing the risk is cheaper.

One of the only ways to decrease the costs you can control is by reviewing your claims. You should have regular claims review meetings with your broker to see where prevention methods can be put into place. Your insurance carrier can help with loss control, such as safety training.

“Roughly 65 to 70 percent of the risk management cost comes out of the loss side,” Abbott says. “While many companies focus on the premium, helping to reduce that loss component, ultimately, over the long run is the best place to focus because that will save you money directly on retentions and will help lower your premiums in the long run.”

Some brokers say clients recently have seen cost savings of 20 percent.

Part of the answer is building a long-term relationship with your broker and even carrier. Share with them details of your operations. Invite them to tour your facility. The more your broker understands your business, the better he or she will be able to provide holistic advice. And a lasting relationship with an insurance carrier can mean more flexibility and negotiation.

“I think probably the most important thing is the continuity that you have in that relationship,” Drew says. “By building a history with a broker, they become almost a part of your organization.”

Northern California

Special Report

Sunday, 26 July 2009 20:00

Balance of power

You’ve probably met with your executive team and members of your staff to devise ways to weather this economic cycle on sound financial footing. But you may have forgotten to invite a key player to the table: your banker.

Whether you’re seeing red or thriving during this volatile time, it’s always helpful to ask for input from an outsider. Now is the time you should be thinking beyond just the products your bank offers and see your banker in the role that he or she aspires to be — your trusted adviser.

“Our objective is to become a trusted adviser to our clients, and our clients need a trusted adviser more than ever during these vulnerable economic periods,” says Daniel K. Fitzpatrick, president and CEO for Citizens Bank, Eastern Pennsylvania, New Jersey and Delaware. “What does a trusted adviser do? They provide information. We have a tremendous amount of economic research that we do continuously.

“Then, of course, it’s about staying very close to your client, and communication is the key. The more we can understand our client’s business the better we can provide good advice and counsel to them.”

Many businesses don’t think to communicate with their bank on a regular basis, which means missing out on a valuable, free resource, according to industry experts. Think of your bank for ideas and solutions for efficiency, especially now when you’re probably looking for answers.

To take advantage of your bank’s true role as a consultant, you must start by forming and maintaining a strong relationship around trust and communication.

Introduce yourself and your business

The first step in using your banker as an adviser is allowing time for him or her to get to know you and your business. Even if you’ve been partners for decades, invite your banker to your office or place of operation for a meeting.

“The banker gets to see what the operations are like, he gets to see the efficiencies and the sophistication of that borrower or that customer, and he can also make recommendations and help,” says Ron Matthew, Greater Philadelphia market president, TD Bank. “But more importantly, it’s really getting to know that customer by seeing him in his business operations, in his business home, and that’s probably the best way that a strong relationship can be truly formed.”

While it’s important for the bank to learn about your operations, over time, it’s necessary for you to return the favor. A good relationship banker will introduce you to managers and key decision-makers in the bank, but if the introductions aren’t offered, take the initiative and ask for a meeting. The more people you know at the bank, the more likely your company will become a household name, the more likely you’ll know who makes the decisions and how they’re made and the more likely a smooth transition will occur if your contact leaves or is promoted.

“I think that you want to have good senior management dialogue, because it’s good for the relationship, it’s good for the banks ability to deliver its full product set to a client as well as for the bank to be as strategic as possible,” Fitzpatrick says.

Once the initial contacts are made, work to maintain those relationships with open and candid communication. Ask your banker how often he or she wants to hear from you. Is it once a month or once a quarter?

If issues arise in the meantime, don’t be afraid or intimidated to call your banker. One thing all bankers will tell you is that they hate surprises — both good and bad. The more they understand your financials, strategic plan and any changes in the company’s overall operations, the better they’ll be able to provide products and solutions to keep you on the right track.

Use your bank for regular counsel

Like your lawyer or accountant, use your banker as a true consultant. Whether you’re trying to stay afloat or even rapidly growing, your bank can help in navigating through this economic downturn and in planning for the future.

Once you’ve established a relationship and your banker understands your business and your industry, ask him or her to review your business plan. It’s one of the best ways to utilize your bank’s resources. And if you don’t have a plan, create one.

“They should go to their bank and present their business plan and ask for (the bank’s) assistance and guidance,” Matthew says. “The bank or their banker sees numerous customers in the same or similar industry, so they have much more exposure than that one customer does. Maybe that customer has experience in his own business line, but the bank has seen, again, numerous customers like that. We have peer group analysis that we can compare his numbers or his projections or assumptions to reality — what the bank has seen over the years, currently or in the past.”

Your banker has a true advantage of having a national, regional and industry-specific perspective on economics.

“I think most clients view running their business plan by their banker as a help to them, so we do want to challenge some of those assumptions.” Fitzpatrick says. “And not just challenge in the negative way, but really (try) to provide additional information.”

There are a number of questions about your plan that you should be able to bounce off of your banker. Are the assumptions of your business plan reasonable for the current economic environment? How does it compare with other companies in the same industry? How can the plan be improved? What type of contingency plan should be in place? And finally, what products and solutions can the bank offer to help meet your company’s needs?

Take advantage of products and services

At least once a year, you should sit down with your banker to review the products you’re using. Perhaps you’re paying fees for a product you rarely use or technology has advanced and greater efficiency can be had.

A relationship review with your bank can help you tackle ways to save money and save time.

One of the main priorities right now is maximizing cash flow. Among popular products today are rapid deposit solutions, a desktop scanner that allows you to automatically deposit checks into your account.

While you might be thinking short term, ask your banker about options that will help you now and in the future. Interest rates have dropped — perhaps you can capitalize on a new loan or refinance. Discuss with your bank how long you’ll need to borrow on a loan and how much money you’ll need to borrow to structure a plan and lock in fixed interest rates while they’re low.

But once again, banks seek to be an adviser. Some banks offer seminars and informational Web sites as additional resources to finding efficiency. And many banks, if you’ve maintained honest communication with them, will honor your need for them to be flexible.

“Probably the key resounding factor that keeps coming up in this down economy that we’re all experiencing is being flexible,” Matthew says. “The bank needs to recognize that and also realize that these customers, our customers, who were here in the good times, will continue to be here in the bad times but just may need a little more flexibility than they had in the past.”

Thursday, 25 June 2009 20:00

Developing employees

Jack Thompson is making sure the economy doesn’t sour his work environment.

“You have to live in a positive environment or try as much as you can,” says Thompson, whose company, TAMCO, saw its strongest month of 2008 in December and posted revenue of $50 million for the year. “Spend time cross-training right now, making sure people know what other people do and have appreciation for what other people do — how all the puzzle pieces come together.”

The idea lends itself to preparing your company for future adjustments, making your employees more valuable in the marketplace or within your own company.

Thompson, founder, chairman and CEO of the financial services and marketing company, says the training helps show appreciation for employees and weeds out the career-oriented staff members from those who are there simply for a paycheck.

To pull off a training program, you have to design a plan, involve every employee and monitor your staff’s progress.

Smart Business spoke with Thompson about how to train your employees.

Create a plan. If I was a CEO at another company, I would first design it to try to decide what people you wanted to know [how to] do somebody else’s job. I would schedule this just as important as talking to a customer or doing anything else.

It has to be formal, it has to be designed, and it has to be managed.

Decide which employees should go through training. Hypothetically, if a person’s job … slowed down, we take advantage of that time to go sit in another cubicle with somebody else to learn what they’re doing. So that we try to, at the end of the day, all staff members, even board members to that extent, we spend enough time together that we all know what the other person is doing and probably can perform that functional job if you had to.

It helps a lot with growth. When you start to try to grow and you’re building from a platform of cross-trained people, you can do a whole lot more with cross-trained people to take on the first stages of growth than have to go on and take on additional overhead.

Every employee should take part in some form or fashion.

Even if it’s a salesperson learning how to process a transaction. In our business, you have outside sales or inside sales; once they get an application, they turn it over to the customer service department and then they basically operate. Well, it’s important for me, for a salesman, to go sit with one of those people and have empathy for what their job is.

Part of our training process when you first come to work is you’re going to sit — even if you’re a salesman — you’re going to go sit in a cubicle probably for a week with a processor, so that you understand if you don’t get certain pieces of paper or if you don’t ask these questions, you make their job harder.

… (The training can be) a regular staff employee training another person, it could be a manager training another manager, it could be a manager training another person. From time to time, I suggest that all my upper management goes out and sits with their people even if it’s just for an hour or two hours. But they sit out there in the real world and find out what their people are saying, how they’re dealing with their customers, how they’re answering questions. It’s amazing what comes out of good listening skills.

Hand out duties and follow up. I could go to a manager that runs, hypothetically, our customer service department and I will give her a goal and say, ‘At the end of the month, I want these two people to know these two people’s jobs.’

I have to go back at the end of the month and ask if that was accomplished. I set myself up to where I give my people a lot of room to make their own decisions and their own scheduling, but at the end of the day, I am going to expect what I expect about giving her a month to do it.

If I go back at the end of the month, and she says she didn’t get it done, (then it is up to) me to make a judgment on that management person, not to make the judgment on the people.

Make sure the training is done properly. It has to be brought to a cycle that basically is no different than managing raise reviews or whatever cycle of management you’re doing, but it has to be something that you think is important enough that you literally schedule it.

When I say manage it, you have to make sure it’s done, and it’s done properly, and maybe even to the point where you interview the two people. You find out the person that was teaching and you ask them a few questions. You find out from the person that was learning, ask them a few questions and see if they really got it. Or what the other person thought of the other person. What’s their opinion of their ability to absorb the information? Were they really interested in learning or were they just sitting their twiddling their thumbs? That tells me a lot about people.

It gives me a way to spread out who’s here just taking a paycheck and who is here really to further their knowledge base and their understanding of the industry.

How to reach: TAMCO, (813) 472-1600 or www.tamcocorp.com

Thursday, 25 June 2009 20:00

Multiple choice