Matthew LaWell

Wednesday, 25 November 2009 19:00

Dollars and sense

You might not think of your accountant as some sort of bean counter, better suited for the Dark Ages than for this Age of Information. Most folks, after all, recognized the error of that thought years ago.

You also might not think of that same accountant as a trusted business adviser. But you should.

Gone are the days when your accountant would just sit down with the company ledger and crunch numbers. An accountant is able to offer so much more now, especially in this economic state.

Need to evaluate your inventory turnover, to analyze what is selling, what is not and why? An accountant can do that.

What about an examination to make certain that all available credit lines are being used or that capital needs are being met? An accountant can do that, too.

And, of course, there are taxes, an area where there has been so much evolution that one industry expert says he estimates the number of allowable tax incentives and minimization techniques has more than doubled during the quarter of a century since he analyzed his first set of financial reports. Another expert says the number has more than tripled during that period. Whatever the actual amount of exponential growth, there is no doubt that accounting is more complicated, and more important, than ever.

“There is no doubt that our current economy has forced painful decisions and outcomes for many businesses,” says Ted Dickman, regional managing partner, BKD LLP. “But in all cases, a strong adviser should be able to provide you with some benchmarking information about how your company is performing against similar peers.”

Talk with your accountant

The key to bringing your accountant into your proverbial inner circle is communication. Nothing is more important, just ask an accountant.

“Occasionally, there is a fear of meeting too often with your accountant because the ‘meter is running,’” Dickman says. “But if both sides are prepared, the return on investment for these meetings will be well worth the time.”

Without some level of constant and consistent communication, your accountant cannot know the full spectrum of activity within your company and, in turn, might be unable to offer constructive criticism and potentially prosperous ideas and suggestions. The more communication between you and your accountant, the more opportunity and the higher the possibility you will receive a far more favorable result.

Many industry experts recommend you plan to get together with your accountant for at least three or four formal meetings per year, though multiple variables might swing that number higher or lower, including the size of your business, the challenges you are facing now and expect to face during the course of the next year, and the strengths and weaknesses of your internal financial team. Others recommend more casual meetings or phone calls in order to communicate on a regular basis.

Whether you meet around the boardroom table or over beers at your favorite bar, take advantage of that time to ask your accountant important questions, like how can you best utilize your accountant? What should you do internally? Externally? And what are your priorities for the next year?

A high level of communication with your accountant can also lead to you becoming more comfortable around each other. Your accountant should be familiar with many of the folks on your upper management team, and you should be familiar with many of the folks who play top roles for the firm.

“To function most effectively, a professional services provider must have a clear understanding of a company’s strategy, business imperatives and issues,” says Patrick T. Hopkins, assurance partner and Indiana growth markets leader, Ernst & Young LLP. “Executives should meet with their accountants as often as necessary, especially in these volatile times.”

Take advantage of financial opportunities

The reason so many accountants prefer to be so involved is because the more information they know about you and your company, the more areas they will be able to explore in order to save dollars and cents. And saving dollars makes sense.

“The more the accountant knows about the company, the more value they can add on important business issues,” Hopkins says.

But the burden of trimming the budget lies not only with your accountant — you need to do your part, too. So be organized, be prepared, be proactive and be accessible.

Just consider the average audit. If your files are scattered around your office, stacked in piles that are toppling over, an audit performed by your accountant might last far longer than it should. In order to avoid a heftier bill, keep your internal financial team on a schedule to update your books regularly, perhaps even every day. Exorbitant costs for an audit — or even just a review or a compilation financial statement — are normally only incurred when you are not organized and prepared.

“A well-planned audit starts with the accounting firm meeting with the client management team and talking about what’s changed in the business, what’s changed in the industry, what’s changed in the economy,” Dickman says. “Identifying and resolving key issues early is critical to an effective and efficient audit.”

If you are particularly strapped, you might even consider consulting with your accountant and other business advisers to consider altering the end of your fiscal year from the end of the calendar year to the end of another quarter. That would allow your accountant to work with you less during the peak months of January through April and more during the off months, when rates are far less expensive. And though such a shift is filled with internal and federal paperwork, the potential savings of such proactive measures can reach more than 20 to 30 percent.

You might also consider the formation of other internal departments that might provide more savings down the road, though the initial cost might be high.

“You should ask your CPA to help you create a good management information system,” says Howard Cox, director of business consulting, Somerset CPAs. “Management information systems make sure that the right people within your business have the right information at the right time so that they can effectively and proactively manage the parts of your business that matter most.”

There are even extreme situations where you might be able to save hundreds of thousands of dollars because you and your accountant are both accessible and open to conversation.

Several years ago, one industry expert was working with a client who had installed defective materials in a sewer and storm drain system, and the client lost thousands of dollars. Though the client was able to file a claim against the manufacturer, the expert was also able to find a case law that allowed for the property loss to carry back 10 years, a far longer retroactive period than the standard two or three years. The result? The client received $500,000 in large part because the expert had been involved in the situation from the start and because the two sides were accessible to each other.

“We’ve kind of helped clients understand the importance of having someone like that in your organization,” Dickman says. “Not only does it save you money, but from a financial perspective, you’re going to have better information with which you can run your business.”

Wednesday, 25 November 2009 19:00

Dollars and sense

You might not think of your accountant as some sort of bean counter, better suited for the Dark Ages than for the Age of Information. Most folks, after all, recognized the error of that thought years ago.

You also might not think of that same accountant as a trusted business adviser. But you should.

Gone are the days when your accountant would just sit down with the company ledger and crunch numbers. An accountant is able to offer so much more now, especially in this economic state.

Need to evaluate your inventory turnover, to analyze what is selling, what is not and why? An accountant can do that.

What about an examination to make certain that all available credit lines are being used or that capital needs are being met? An accountant can do that, too.

And, of course, there are taxes, an area where there has been so much evolution that one industry expert says he estimates the number of allowable tax incentives and minimization techniques has more than doubled during the quarter of a century since he analyzed his first set of financial reports. Another expert says the number has more than tripled during that period. Whatever the actual amount of exponential growth, there is no doubt that accounting is more complicated, and more important, than ever.

“Your needs may change because of the particular economic situation,” says Jim Berry, managing partner of audit services for North and Central Texas, Deloitte. “But if you have that relationship already, then it does allow for that consistent lens and it does allow that person who brings a certain skill set and a certain ability to look into the organization and help you.

“If you’re just in the middle of the storm, it’s good to have someone you can go to who can look through that additional lens from the outside, that trusted business adviser.”

Talk with your accountant

The key to bringing your accountant into your proverbial inner circle is communication. Nothing is more important, just ask an accountant.

“The worse the economy has become, the quieter our clients have been during times that they normally would have contacted us,” says Chris Pierce, managing partner of assurance services, RSM McGladrey. “Staying in communication and sharing your concerns and issues is the best way to get answers from your professional services firm.”

Without some level of constant and consistent communication, your accountant cannot know the full spectrum of activity within your company and, in turn, might be unable to offer constructive criticism and potentially prosperous ideas and suggestions. The more communication between you and your accountant, the more opportunity and the higher the possibility you will receive a far more favorable result.

Many industry experts recommend you plan to get together with your accountant for at least three or four formal meetings per year, though multiple variables might swing that number higher or lower, including the size of your business, the challenges you are facing now and expect to face during the course of the next year, and the strengths and weaknesses of your internal financial team. Others recommend more casual meetings or phone calls in order to communicate on a regular basis.

Whether you meet around the boardroom table or over beers at your favorite bar, take advantage of that time to ask your accountant important questions, like how can you best utilize your accountant? What should you do internally? Externally? And what are your priorities for the next year?

A high level of communication with your accountant can also lead to you becoming more comfortable around each other. Your accountant should be familiar with many of the folks on your upper management team, and you should be familiar with many of the folks who play top roles for the firm.

“It helps with how we establish their trust and their willingness to seek our counsel and advice in an adviser role in advance,” Pierce says.

Take advantage of financial opportunities

The reason so many accountants prefer to be so involved is because the more information they know about you and your company, the more areas they will be able to explore in order to save dollars and cents. And saving dollars makes sense.

“You’re going to get a lot better service from your professional service adviser if you’re upfront and open to sharing information,” Berry says. “You have to get the information flow on a regular basis, you have to be open about it, you have to take full advantage of the expertise.”

But the burden of trimming the budget lies not only with your accountant — you need to do your part, too. So be organized, be prepared, be proactive and be accessible.

Just consider the average audit. If your files are scattered around your office, stacked in piles that are toppling over, an audit performed by your accountant might last far longer than it should. In order to avoid a heftier bill, keep your internal financial team on a schedule to update your books regularly, perhaps even every day. Exorbitant costs for an audit — or even just a review or a compilation financial statement — are normally only incurred when you are not organized and prepared.

“Share information throughout the year, because there’s no reason to not share that information with your accounting group,” Pierce says. “Whatever information you typically give your board, your management, your oversight group, your investors, give to your accountants. Agree to a time frame upfront and stick to it. Be ready on a monthly basis, not an annual basis, and have good financial information at all time. All of those things help save money.”

If you are particularly strapped, you might even consider consulting with your accountant and other business advisers to consider altering the end of your fiscal year from the end of the calendar year to the end of another quarter. That would allow your accountant to work with you less during the peak months of January through April and more during the off months, when rates are far less expensive. And though such a shift is filled with internal and federal paperwork, the potential savings of such proactive measures can reach more than 20 to 30 percent.

There are even extreme situations where you might be able to save hundreds of thousands of dollars because you and your accountant are both accessible and open to conversation.

Several years ago, one industry expert was working with a client who had installed defective materials in a sewer and storm drain system, and the client lost thousands of dollars. Though the client was able to file a claim against the manufacturer, the expert was also able to find a case law that allowed for the property loss to carry back 10 years, a far longer retroactive period than the standard two or three years. The result? The client received $500,000 in large part because the expert had been involved in the situation from the start and because the two sides were accessible to each other.

“Too often, the common response is just to hunker down and try to figure it out yourself,” Pierce says. “But those people who are best do reach out for a specialist or a sounding board.”

Wednesday, 25 November 2009 19:00

Dollars and sense

You might not think of your accountant as some sort of bean counter, better suited for the Dark Ages than for the Age of Information. Most folks, after all, recognized the error of that thought years ago.

You also might not think of that same accountant as a trusted business adviser. But you should.

Gone are the days when your accountant would just sit down with the company ledger and crunch numbers. An accountant is able to offer so much more now, especially in this economic state.

Need to evaluate your inventory turnover, to analyze what is selling, what is not and why? An accountant can do that.

What about an examination to make certain that all available credit lines are being used or that capital needs are being met? An accountant can do that, too.

And, of course, there are taxes, an area where there has been so much evolution that one industry expert says he estimates the number of allowable tax incentives and minimization techniques has more than doubled during the quarter of a century since he analyzed his first set of financial reports. Another expert says the number has more than tripled during that period. Whatever the actual amount of exponential growth, there is no doubt that accounting is more complicated, and more important, than ever.

“An accountant with a lot of experience can help the company take some of the best practices and apply them to their business,” says Joe Mazza, managing director of Los Angeles offices, RSM McGladrey. “An accountant can help a company prepare financial projections, assist the company with its banking relationships, look at the company’s costs and help them find ways to streamline costs.

“An accountant can just add value in so many different areas.”

Talk with your accountant

The key to bringing your accountant into your proverbial inner circle is communication. Nothing is more important, just ask an accountant.

“You cannot develop a relationship if all you’re doing is meeting with your accountants once a year when it’s time to prepare financial statements or file your tax return or put out a wild, raging fire, metaphorically speaking,” says AndrĂ© Schnabl, managing partner, Atlanta office, Grant Thornton LLP. “A meaningful relationship is built over time because trust is only built over time.”

Without some level of constant and consistent communication, your accountant cannot know the full spectrum of activity within your company and, in turn, might be unable to offer constructive criticism and potentially prosperous ideas and suggestions.

Many industry experts recommend you plan to get together with your accountant for at least three or four formal meetings per year, though multiple variables might swing that number higher or lower, including the size of your business, the challenges you are facing now and expect to face during the course of the next year, and the strengths and weaknesses of your internal financial team. Others recommend more casual meetings or phone calls in order to communicate on a regular basis.

Whether you meet around the boardroom table or over beers at your favorite bar, take advantage of that time to ask your accountant important questions, like how can you best utilize your accountant? What should you do internally? Externally? And what are your priorities for the next year?

A high level of communication with your accountant can also lead to you becoming more comfortable around each other. Your accountant should be familiar with the folks on your upper management team, and you should be familiar with the folks who play top roles for the firm.

“It’s key that the business owner, the CEO, the CFO, is not just in a relationship where the accountant is going through the motions, providing compliance services without giving any kind of feedback,” says John M. Yanak, managing partner, Grossman Yanak & Ford LLP, Pittsburgh. “The accountant should give feedback on things like what the company’s performance is like relative to their peers, what other companies are doing in this environment and what savings opportunities are available.”

Take advantage of financial opportunities

The reason so many accountants prefer to be so involved is because the more information they know about you and your company, the more areas they will be able to explore in order to save dollars and cents. And saving dollars makes sense.

“If CFOs or controllers are in constant contact with their CPAs or their firm, that really provides an avenue for the exchange of information and savings that can be generated,” Yanak says.

But the burden of trimming the budget lies not only with your accountant — you need to do your part, too. So be organized, be prepared, be proactive and be accessible.

Just consider the average audit. If your files are scattered around your office, stacked in piles that are toppling over, an audit performed by your accountant might last far longer than it should. In order to avoid a heftier bill, keep your internal financial team on a schedule to update your books regularly, perhaps even every day. Exorbitant costs for an audit — or even just a review or a compilation financial statement — are normally only incurred when you are not organized and prepared.

“Preparation is important, but planning is just as important,” Schnabl says. “Plan a series of discussions between client and auditor to have a full understanding as to how to build a plan that is efficient and taps into the client’s knowledge of the business and the auditor’s knowledge of auditing. Those conversations drive down the cost of auditing.”

If you are particularly strapped, you might even consider consulting with your accountant and other business advisers to consider altering the end of your fiscal year from the end of the calendar year to the end of another quarter. That would allow your accountant to work with you less during the peak months of January through April and more during the off months, when rates are far less expensive. And though such a shift is filled with internal and federal paperwork, the potential savings of such proactive measures can reach more than 20 to 30 percent.

There are even extreme situations where you might be able to save hundreds of thousands of dollars because you and your accountant are both accessible and open to conversation.

Several years ago, one industry expert was working with a client who had installed defective materials in a sewer and storm drain system, and the client lost thousands of dollars. Though the client was able to file a claim against the manufacturer, the expert was also able to find a case law that allowed for the property loss to carry back 10 years, a far longer retroactive period than the standard two or three years. The result? The client received $500,000 in large part because the expert had been involved in the situation from the start and because the two sides were accessible to each other.

“Accountants need to make themselves available for their clients,” Mazza says. “My wife used to say that there is no such thing as an accounting emergency, that you’re not a brain surgeon. But if there’s a transaction going on and there are millions of dollars at stake, where the client is concerned, it is just as important as brain surgery.”

Wednesday, 25 November 2009 19:00

Dollars and sense

You might not think of your accountant as some sort of bean counter, better suited for the Dark Ages than for the Age of Information. Most folks, after all, recognized the error of that thought years ago.

You also might not think of that same accountant as a trusted business adviser. But you should.

Gone are the days when your accountant would just sit down with the company ledger and crunch numbers. An accountant is able to offer so much more now, especially in this economic state.

Need to evaluate your inventory turnover, to analyze what is selling, what is not and why? An accountant can do that.

What about an examination to make certain that all available credit lines are being used or that capital needs are being met? An accountant can do that, too.

And, of course, there are taxes, an area where there has been so much evolution that one industry expert says he estimates the number of allowable tax incentives and minimization techniques has more than doubled during the quarter of a century since he analyzed his first set of financial reports. Another expert says the number has more than tripled during that period. Whatever the actual amount of exponential growth, there is no doubt that accounting is more complicated, and more important, than ever.

“When there is a change in the environment, it is a great time for the leadership of a business to sit back and reflect on strategic priorities,” says AndrĂ© Schnabl, managing partner, Atlanta office, Grant Thornton LLP. “I think one tends to do that on a fairly regular basis, once a year or once every couple of years, but I do think one should do it whenever there is a shift in the environment.

“As you do that, one looks to business advisers and brings them into that dialogue.”

Talk with your accountant

The key to bringing your accountant into your proverbial inner circle is communication. Nothing is more important, just ask an accountant.

“You cannot develop a relationship if all you’re doing is meeting with your accountants once a year when it’s time to prepare financial statements or it’s time to file your tax return or it’s time to put out a wild, raging fire, metaphorically speaking, in your business,” Schnabl says. “A meaningful relationship is built over time because trust is only built over time. You couldn’t possibly do that if you meet infrequently and only in reaction to crises.”

Without some level of constant and consistent communication, your accountant cannot know the full spectrum of activity within your company and, in turn, might be unable to offer constructive criticism and potentially prosperous ideas and suggestions. The more communication between you and your accountant, the more opportunity and the higher the possibility you will receive a far more favorable result.

Many industry experts recommend you plan to get together with your accountant for at least three or four formal meetings per year, though multiple variables might swing that number higher or lower, including the size of your business, the challenges you are facing now and expect to face during the course of the next year, and the strengths and weaknesses of your internal financial team. Others recommend more casual meetings or phone calls in order to communicate on a regular basis.

Whether you meet around the boardroom table or over beers at your favorite bar, take advantage of that time to ask your accountant important questions, like how can you best utilize your accountant? What should you do internally? Externally? And what are your priorities for the next year?

A high level of communication with your accountant can also lead to you becoming more comfortable around each other. Your accountant should be familiar with many of the folks on your upper management team, and you should be familiar with many of the folks who play top roles for the firm.

“To function most effectively, a professional services provider must have a clear understanding of a company’s strategy, business imperatives and issues,” says Carrie G. Hall, Southeast strategic growth markets leader, Ernst & Young LLP. “Executives should meet with their accountants as often as necessary, especially in these volatile times.”

Take advantage of financial opportunities

The reason so many accountants prefer to be so involved is because the more information they know about you and your company, the more areas they will be able to explore in order to save dollars and cents. And saving dollars makes sense.

“The more the accountant knows about the company, the more value they can add on important business issues,” Hall says.

But the burden of trimming the budget lies not only with your accountant — you need to do your part, too. So be organized, be prepared, be proactive and be accessible.

Just consider the average audit. If your files are scattered around your office, stacked in piles that are toppling over, an audit performed by your accountant might last far longer than it should. In order to avoid a heftier bill, keep your internal financial team on a schedule to update your books regularly, perhaps even every day. Exorbitant costs for an audit — or even just a review or a compilation financial statement — are normally only incurred when you are not organized and prepared.

“Preparation is very important, but planning is just as important,” Schnabl says. “Plan a series of discussions between client and auditor to have a full understanding as to how to build a plan that is efficient and taps into the client’s knowledge of the business and the auditor’s knowledge of auditing. Those conversations drive down the cost of auditing.”

If you are particularly strapped, you might even consider consulting with your accountant and other business advisers to consider altering the end of your fiscal year from the end of the calendar year to the end of another quarter. That would allow your accountant to work with you less during the peak months of January through April and more during the off months, when rates are far less expensive. And though such a shift is filled with internal and federal paperwork, the potential savings of such proactive measures can reach more than 20 to 30 percent.

There are even extreme situations where you might be able to save hundreds of thousands of dollars because you and your accountant are both accessible and open to conversation.

Several years ago, one industry expert was working with a client who had installed defective materials in a sewer and storm drain system, and the client lost thousands of dollars. Though the client was able to file a claim against the manufacturer, the expert was also able to find a case law that allowed for the property loss to carry back 10 years, a far longer retroactive period than the standard two or three years. The result? The client received $500,000, in large part because the expert had been involved in the situation from the start and because the two sides were accessible to each other.

“Accountants have a wonderful perch from which they can observe different experiences in different environments,” Schnabl says. “From that rich experience, they can provide their clients with a lot of interesting views from a general business nature, rather than just accounting.”

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.

Some attorneys are fast and slick and out to make a quick dollar — or a quick couple of thousand dollars — but not many.

And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it were their job because, well, it is.

Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. He or she might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“Clients aren’t going to necessarily tell us what they think is wrong unless we ask them,” says Carl Schuster, president and managing director, Ruden McClosky. “If we ask them, they’ll generally tell us.”

You might be in the midst of not passing along important information to your attorney — perhaps not for the first time — right now, right as you read this sentence. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“The problems have been more severe and there’s been more need for preventative legal work,” says Bowman Brown, partner, and chairman of the executive committee and the financial services practice group, Shutts & Bowen LLP. “Certainly, we’ve been busier in the last couple of years than we’ve ever been, and we’ve had much, much busier years in the last couple of years. This year will be a record year with the way things are going in terms of activity.”

The amount of work and communication required of some attorneys will also likely increase through the rest of 2010 and during the early months of 2011.

“If we turn the corner and things start to get better, I expect there to be a lot more transactional activity, a lot of merger and acquisition activity, a lot of businesses rebuilding or getting back on a growth track,” Brown says. “I think that will create an increase in activity.”

Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — though Miami and the rest of South Florida are expected to lag behind much of the rest of the nation — M&A activity will likely be prevalent by the time the calendar turns.

“Admittedly, there isn’t as much merger and acquisition activity going on now as there was before,” Schuster says. “I think the problem is businesses very often wait too long until they decide it’s time to sell or it’s time to merge. Very often, you see businesses closing down because they’re too deep into it already and they can’t get out, and no one at that point is interested in buying them or merging with them because it’s suffered such a big blow that it’s too late to do anything about it.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor — though every relationship is different.

“You can really build good relationships in two ways,” says Andrew C. Hall, founding and managing partner, Hall, Lamb and Hall P.A. “The first way is to have effective communications. Companies should tell their lawyer not only what the problem is but also where they’d like to end up if they could.

“I need to know as much information as I can when I’m advising. I need to know the things that you don’t want to tell me. [Those are] the things that I probably need to know the most. You need to break down your fear barriers and tell your lawyer all the bad news right up front. The sooner you tell them, the less exp ensive the process is and the better the advice is, the better the performance is. Get the bad information out front, get the realistic goals set as quickly as you can and then communicate effectively with each other.”

And if you’re not pleased with the quality or the nature of the relationship you have with your attorney, for any of a number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.

“But a business should only change firms if it’s dissatisfied with the services being offered by its present law firm,” Schuster says. “I don’t think there would be any other reason to change. There may be certain situations where a firm’s rates are just so high in this economy that a business can’t afford them, and that’s one thing. But if rates really haven’t changed very much, the only reason to change would be that a business is dissatisfied with the services rendered.”

You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“Lawyers should do what we do best, which is not only give legal advice but also give strong recommendations as to how to implement that advice,” Hall says. “We tend to give neutral statements of law and let clients struggle with the decision that should follow from it on the basis that that is a business decision. I think our clients want a little more from us than that. They want the benefits of our years of experience, if we have them, in terms of what solution works best in practical terms.”

Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.

Some attorneys are fast and slick and out to make a quick dollar — or a quick couple of thousand dollars — but not many.

And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it was their job because, well, it is.

Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“The Ohio economy has been adversely affected, perhaps more than other states,” says Russell M. Gertmenian, managing partner, Vorys, Sater, Seymour and Pease LLP. “But the thing I think we can best do is help clients in terms of making sure all their T’s are crossed and there I’s are dotted for corporate structure, their strategies, their tax plans, and the regulatory requirements that are coming out of Washington and Columbus in response to the downturn in terms of helping them get ready to take advantage of the uptick when it comes.

“And at that point, the focus will be on doing new business, as opposed to figuring out how the new regulatory schemes affect you and what you need to do to comply with them.”

You might be in the midst of that right now. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“I don’t know that our clients used us less overall, but they used us differently,” says Steven J. Ellcessor, member, Frost Brown Todd LLC. “Instead of working more with the transactional lawyers who helped them do deals or with securities lawyers who helped raise financing, all of a sudden, we were doing more litigation and bankruptcy. It’s starting to switch back, but it’s not there yet.”

The amount of work and communication required of some attorneys will also likely increase through the rest of 2010 and during the early months of 2011.

“We’re certainly hoping 2011 will provide an uptick in business and legal spend,” Gertmenian says. “Our legal spend is dependent upon the amount of legal activity our clients are engaged in. I think we’re cautiously optimistic that we’ll see our clients engage in more activities, and legal spend will be the byproduct.”

Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — and Columbus and the rest of Ohio aren’t expected to be all that different — M&A activity will likely be prevalent by the time the calendar turns.

“Clients are starting to think again about those transactions and opportunities, particularly in mainstream manufacturing and particularly if there are players in their industry who are coming out of the recession in a weakened state,” Ellcessor says. “There may be some acquisition opportunities, but I don’t think people are ready to jump yet, because they’re just not confident enough yet that the economy is really stabilized and going to continue to grow.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor — though every relationship is different.

“It depends on the relationship and the comfort that a business owner, executive and boards of directors have with their legal counsel,” says Susan Zaunbrecher, partner, chair of the corporate department and chair of the financial institutions practice group, Dinsmore & Shohl LLP. “I have numerous clients where I talk with the CEO and board of directors regularly. I have others that I hear from maybe once a year, just to check whether there are things we should be doing and things we should know.”

And if you are not pleased with the quality or the nature of the relationship you have with your attorney, for any of a number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.

“If you don’t trust that your attorney is with you and working with you for the future, then you should absolutely be looking for new counsel,” Zaunbrecher says.

You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.

“This is an opportune time for business people to really be thinking about their strategy and looking at the economic landscape — because it’s going to be different a year and two years from now,” Ellcessor says. “There are going to be opportunities, even in industries that are slow growth. Looking at the landscape and what’s going on, this is a good time to do that.”

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“I think this new environment is going to create some permanency in terms of how clients view their relationships with professionals and the kind of flexibility and partnering that they want,” Gertmenian says. “That’s probably here to stay — and that will present opportunities for law firms that are able to listen to and understand what clients are saying and adapt the way they do business to be consistent with that.

“We are learning how to best be responsive to clients in this new environment, and I think they can be very successful in the new environment if they’re listening to their clients, even if the legal spend doesn’t explode, because I think we’re going to have opportunities to increase market share and learn how to do work profitably without consistently raising hourly rates.”

Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.

Tuesday, 03 August 2010 11:50

Build and deliver

Joe B. Johnson, partner, BDO Seidman LLP By the time financial markets around the globe started to

tumble in October 2008, so much of the manufacturing industry was already deep

in a recession that had stretched across the better part of a decade. Millions

of workers had been sent home. Thousands of factories had been shuttered. Whole

companies just disappeared. None of it was coming back. It was gone for good.

Manufacturing was not, of course, the only industry hit hard

prior to the start of the larger recession, but perhaps no industry was

affected more since the turn of the millennium. About a quarter of a million

manufacturing jobs were lost over the course of a decade, the large majority of

them prior to 2008. As the recession spread from one industry to another,

manufacturers often still let go of the most employees.

The cycle was vicious, and it continued month after month.

How is it possible, then, that less than two years after the

economy turned, manufacturing is on the rise again? Manufacturing activity

increased again in May, according to the Supply Management’s index, the 10th

straight month of growth. And even though that growth has started to slow a

bit, growth is still growth. Were the 2008 levels just so low that any growth

is significant? Or is the sustained increase in manufacturing a sign for the

rest of the economy? Nothing is certain, but all indicators do point up,

however modest, rather than down.

“In 2009, as a result of 2008, most companies cut employees,”

says Joe B. Johnson, partner, BDO Seidman LLP. “Production lines were cut, the

average workweek went up, and a lot of companies cut capital spending. I think

capital spending is going to go up compared to 2009, and I think most of the

cost-cutting should be finished. You’re starting to see companies hire again,

so I think the indicators for 2010 have shown continued improvement there.”

Prepare for more change

What was normal two years ago will almost certainly not be

normal during the second half of 2010, or even during the first months of 2011.

What was normal then, in fact, might never be normal again. However much it

might be a cliché, change really is the new normal in manufacturing.

Among those changes are the new gaps in the supply chains of

some larger original equipment manufacturers, the result of smaller companies

closing, which might cause delays and problems in receiving supplies in a

timely manner. A number of industry experts say the availability of credit will

also likely change, what with banks starting to somewhat relax their

requirements. But the biggest change might be the addition of manufacturing

jobs.

“Manufacturing is now the only business sector that has been

adding jobs for five months,” says Emily Stover DeRocco, president, The

Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we

call mass customization, as opposed to mass commoditization. This reflects,

again, the industry’s response to globalization, which is that U.S.

manufacturers, in order to maintain their global leadership, have had to move

to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to

more changes in the way manufacturers and so many other companies plan and do

business, the ripple effect across industries.

For example, if you have not already reassessed your vision

and your plan for your company, that should move to the top of your priority

list.

“I think manufacturers need to continue to innovate their

products,” Johnson says. “Some manufacturers haven’t explored all the

after-sell services — are you doing warranty work? Are you outsourcing it? Are

you doing installation or maintenance work? And you can position yourself

better in the marketplace if you have those services to offer.

“From a financial standpoint, it also improves your annuity

base of revenues. If the manufacturer historically outsourced that or let

others do it, those are areas that can help improve both their relationships

with their customers and their bottom line.”

Keep the long term in perspective

Two years ago, few manufacturers were prepared for the

recession. But you can prepare for the ascension, however slow and modest it

might be and whenever it does become more noticeable, by being smart during

these coming months and years.

You might think about diversifying your product lines into

other markets so you aren’t as dependent on single-source customers and, more

generally, diversifying your portfolio. You might also research how to best tap

in to loans, grants or tax credits that are available from various departments

of federal, state and local government. And you will likely want to consider

your risks, especially over the long term.

“I do see companies starting from scratch and asking

themselves, ‘Are we doing everything as efficiently as possible, with the right

number of people, keeping quality in line, keeping all the other factors in

mind? And what is it we can do better?’” Johnson says.

Technology and education, as would be expected, can also play a

role in increasing your business. Several experts discussed how the advantage

of U.S. companies is U.S. technology. Domestic manufacturers continue to be at

the forefront when it comes to utilizing technology in their processes. To

ensure that the technology is operated correctly and efficiently, workers

should be more educated than they were 40, 20, even 10 years ago, and with so many

quality workers still unemployed, there is a deep talent pool from which to

hire.

Most important, though, is to do everything with the long term

— and that refers to years and decades, not just months and quarters — in mind.

Ask questions

As you prepare for 2011, it will be important to keep any

number of questions in mind. What those questions are will depend on your

industry, your goals and your financial standing at the moment, but there are

some questions that all businesses need to be asking right now. And those are: What

is happening in your industry? Is it expanding or contracting? Is your company

expanding or contracting? Where do you see your company in 2015? In 2020? Is

your company in the right market? Is it in the right position in the market?

What are the strengths and expertise that your company has that could be

adapted to another market or product line? Where can you turn to think through

your situation? Will your company be able to receive a large enough line of

credit during the next year? Will you be able to fund your growth? How

sustainable are the current demands? And, the great unknown, how will global

events affect your company?

“You need to make sure you’ve differentiated your products

enough from your competitors,” Johnson says. “Have you considered new and

ancillary products that will continue to push your business forward? Some

manufacturers are doing a good job but not all companies are there yet.”

With all of that in mind, you

will also need to think about innovation as much as ever. How will you move

ideas from the collective mind of your company to the drawing board to the

marketplace? Live in the present but remain focused on the future.

“Eyes on the future,” DeRocco says. “But

remember the volatility of this market.”

By the time financial markets around the globe started to tumble in October 2008, so much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession, but perhaps no industry was affected more since the turn of the millennium. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, manufacturers often still let go of the most employees.

The cycle was vicious, and it continued month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, but all of the indicators do point up, however modest, rather than down.

“Texas was about nine months behind the rest of the country, so we were kind of latecomers to the party, I guess,” says Randy Gregg, assurance partner, BDO USA LLP. “But over the last few months, the recovery appears to have started, although it has been tentative and slow, and there are some mixed signals out there. Many companies appear to be generally optimistic about 2010 — and thinking that it will turn at the end of the year and they will be able to get back to business.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010 or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, what with banks starting to somewhat relax their requirements. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business, the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company, that should move to the top of your priority list.

“Control costs,” Gregg says. “Take a hard look at your business process to make sure you’re as efficient and as lean as possible. Work with your tax advisers and make sure you’re taking advantage of all the tax breaks that are available to you. The (Hiring Incentives to Restore Employment) Act gives some breaks for hiring new employees. Those kinds of things have really helped some companies out. Making sure they are taking advantage of everything that is available to them, I think that is important.”

Keep the long term in perspective

Two years ago, few manufacturers were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be and whenever it does become more noticeable, by being smart during these coming months and years.

You might think about diversifying your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio. You might also research how to best tap in to loans, grants or tax credits that are available from various departments of federal, state and local government. And you will likely want to consider your risks, especially over the long term.

“This is not a time to blink,” Gregg says. “This is a time to really focus on the business and really try to manage as best you can with the best advice you can get.”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of U.S. companies is U.S. technology. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

Ask questions

As you prepare for 2011, it will be important to keep any number of questions in mind. What those questions are will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“Because of raw material increases, I know a lot of companies are trying to spend more resources to try to find the best deal out there, to get good pricing, and then when they do find it, trying to buy in bulk to try and get quantity discounts and so forth,” Gregg says. “And that is helping their costs actually going forward and I think that’s going to pay dividends in the future.”

With all of that in mind, you will also need to think about innovation as much as ever. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future,” DeRocco says. “But remember the volatility of this market.”

By the time financial markets around the globe started to tumble in October 2008, much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home, their labor and their experience no longer needed because of more efficient machines and the rise of globalization. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was all gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession. Publishing and newspapers had been on the decline for years, and the domestic automotive industry, technically under the umbrella of general manufacturing, had been in a slide for a generation. But perhaps no industry was affected more since the turn of the millennium than manufacturing. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, millions of workers were laid off from the collective work force, but manufacturers often still let go of the most employees.

The cycle was vicious, and it continued, month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, not yet, but all of the indicators do point up, however modest, rather than down.

“But what we’re seeing is that manufacturing is coming back, but it’s not back yet to where it was in 2008,” says Daniel E. Berry, president and chief executive officer, MAGNET (Manufacturing Advocacy & Growth Network). “From what we hear, people are back up to 50, maybe 60, percent of their 2008 production levels and they’re feeling pretty confident but are very cautious. Manufacturers still are not calling employees back in big numbers for the most part. We are seeing some hiring again in the auto sector, so all of this is good and will have a ripple effect, but for the most part, everyone is still cautious.

“Manufacturing is recovering. It’s still a little bit wounded, but folks are feeling a little bit better — just not enough to jump in and hire back everyone they laid off.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010 or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing — and plenty of other industries, too.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing during the last couple of years, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, with banks starting to somewhat relax their requirements for the first time in two years. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business. It is the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company — especially in terms of innovation and new opportunities — that should move to the top of your priority list.

“We believe helping companies become more innovative in what they’re doing is an important strategy for avoiding, to some degree, the problems of the past — helping them develop new products that create new markets and growth opportunities is an important strategy,” Berry says. “The market diversification and new product development are areas where we want to be more helpful with companies, with helping them look to the future and avoid the past.”

It can also help you better position yourself and your company for the continuing changes and the eventual uptick in the economy and the industry.

Keep the long term in perspective

Two years ago, few manufacturers — few companies at all, really — were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be, by being smart during these coming months and years.

You might think about researching how to best tap in to loans, grants or tax credits that are available from various levels and departments of federal, state and local government to help increase business during challenging times. You might also consider your risks, especially over the long term. And you will likely want to diversify your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio.

“Company executives really need to come to fundamental recognition that things are really not going to be the way they were,” Berry says. “Facing that reality means they’re going to have to embrace a strategy to changing how they do business. That’s an important first step — recognizing that the ground has shifted and we need to find different ways of doing things. What we’ve been saying is that companies need to be looking seriously at how they take their instinct product lines and adapt them and diversify them to other markets so they’re not so dependent on single-source customers.

“Diversifying their portfolio is an important strategy for avoiding the kind of massive negative impacts we’ve seen over the last year.”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of companies that are owned and operated in the United States is the technology that is developed in the United States. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes, a trend that will only continue. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

How you handle all of that now might be the difference between a quicker return to profitability and increased production, and the far less appealing option of a long struggle back to respectability and some small sense of comfort in the market.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

“One of the big unknown changes that everyone is tracking is what the (oil spill in the Gulf of Mexico) means,” Berry says. “It means that we’re more likely to see some more impetus from the federal government on green initiatives and sustainability and probably some more of a push for alternative energy sources and maybe the price of petroleum will go up and have an effect on the economy, too. There is a little bit of uncertainty around the effects of the Gulf and more manufacturing particularly.”

Ask questions

As you prepare for the last months of 2010 and the first months of 2011, it will be important to keep any number of questions in mind. Write them down. Type them and print them out. Keep a copy on your desk. Distribute copies to your executive team, perhaps even all of your employees. Just keep them in mind. No matter how well you know your business and your industry, that list of questions will be as important now as it has ever been.

And just what questions should make the list? Well, a lot will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“It depends on what happens in global markets, the value of the euro, whether our companies are disadvantaged,” Berry says. “I think we’re going to see a slow, gradual recovery that’s threatened by what’s happening in Europe. Folks are kind of cautiously optimistic.”

With all of that in mind, you will also need to consider whether your supply chain will be able to respond to the innovative approaches required for future growth and success, which means supply chain capabilities and locations become more important. The demographics of your work force are also important, especially with a generation of baby boomers still on the brink of retirement. And innovation is important, too. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future, but remember the volatility of this market,” DeRocco says. “There’s a constant threat to every business sector and there are some very large factors in play right now that will determine manufacturers’ cost structure for continued operations, so they’re keeping an eye on all of those — public policy, the global impacts around the world, certainly the European financial crisis.

“Every one of those issues has an impact and creates new challenges for manufacturers operating in that environment.”

By the time financial markets around the globe started to tumble in October 2008, much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home, their labor and their experience no longer needed because of more efficient machines and the rise of globalization. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was all gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession. Publishing and newspapers had been on the decline for years, and the domestic automotive industry, technically under the umbrella of general manufacturing, had been in a slide for a generation. But perhaps no industry was affected more since the turn of the millennium than manufacturing. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, millions of workers were laid off from the collective work force, but manufacturers often still let go of the most employees.

The cycle was vicious, and it continued, month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, not yet, but all of the indicators do point up, however modest, rather than down.

“But what we’re seeing is that manufacturing is coming back, but it’s not back yet to where it was in 2008,” says Daniel E. Berry, president and chief executive officer, MAGNET (Manufacturing Advocacy & Growth Network). “From what we hear, people are back up to 50, maybe 60 percent of their 2008 production levels and they’re feeling pretty confident but are very cautious. Manufacturers still are not calling employees back in big numbers for the most part. We are seeing some hiring again in the auto sector, so all of this is good and will have a ripple effect, but for the most part, everyone is still cautious.

“Manufacturing is recovering. It’s still a little bit wounded, but folks are feeling a little bit better — just not enough to jump in and hire back everyone they laid off.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010 or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing — and plenty of other industries, too.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing during the last couple of years, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, with banks starting to somewhat relax their requirements for the first time in two years. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business. It is the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company — especially in terms of innovation and new opportunities — that should move to the top of your priority list.

“We believe helping companies become more innovative in what they’re doing is an important strategy for avoiding, to some degree, the problems of the past — helping them develop new products that create new markets and growth opportunities is an important strategy,” Berry says. “The market diversification and new product development are areas where we want to be more helpful with companies, with helping them look to the future and avoid the past.”

It can also help you better position yourself and your company for the continuing changes and the eventual uptick in the economy and the industry.

Keep the long term in perspective

Two years ago, few manufacturers — few companies at all, really — were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be, by being smart during these coming months and years.

You might think about researching how to best tap in to loans, grants or tax credits that are available from various levels and departments of federal, state and local government to help increase business during challenging times. You might also consider your risks, especially over the long term. And you will likely want to diversify your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio.

“Company executives really need to come to fundamental recognition that things are really not going to be the way they were,” Berry says. “Facing that reality means they’re going to have to embrace a strategy to changing how they do business. That’s an important first step — recognizing that the ground has shifted and we need to find different ways of doing things. What we’ve been saying is that companies need to be looking seriously at how they take their instinct product lines and adapt them and diversify them to other markets so they’re not so dependent on single-source customers.

“Diversifying their portfolio is an important strategy for avoiding the kind of massive negative impacts we’ve seen over the last year.”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of companies that are owned and operated in the United States is the technology that is developed in the United States. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes, a trend that will only continue. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

How you handle all of that now might be the difference between a quicker return to profitability and increased production, and the far less appealing option of a long struggle back to respectability and some small sense of comfort in the market.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

“One of the big unknown changes that everyone is tracking is what the (oil spill in the Gulf of Mexico) means,” Berry says. “It means that we’re more likely to see some more impetus from the federal government on green initiatives and sustainability and probably some more of a push for alternative energy sources and maybe the price of petroleum will go up and have an effect on the economy, too. There is a little bit of uncertainty around the effects of the Gulf and more manufacturing particularly.”

Ask questions

As you prepare for the last months of 2010 and the first months of 2011, it will be important to keep any number of questions in mind. Write them down. Type them and print them out. Keep a copy on your desk. Distribute copies to your executive team, perhaps even all of your employees. Just keep them in mind. No matter how well you know your business and your industry, that list of questions will be as important now as it has ever been.

And just what questions should make the list? Well, a lot will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“It depends on what happens in global markets, the value of the euro, whether our companies are disadvantaged,” Berry says. “I think we’re going to see a slow, gradual recovery that’s threatened by what’s happening in Europe. Folks are kind of cautiously optimistic.”

With all of that in mind, you will also need to consider whether your supply chain will be able to respond to the innovative approaches required for future growth and success, which means supply chain capabilities and locations become more important. The demographics of your work force are also important, especially with a generation of baby boomers still on the brink of retirement. And innovation is important, too. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future, but remember the volatility of this market,” DeRocco says. “There’s a constant threat to every business sector and there are some very large factors in play right now that will determine manufacturers’ cost structure for continued operations, so they’re keeping an eye on all of those — public policy, the global impacts around the world, certainly the European financial crisis.

“Every one of those issues has an impact and creates new challenges for manufacturers operating in that environment.”