Twelve years ago, EY decided to go global with its Entrepreneur Of The Year awards and establish the World Entrepreneur Of The Year program — and the results have been, shall we say, an international success. The conference, held annually in Monaco, features Entrepreneur Of The Year country winners competing for the World Entrepreneur Of The Year title.
Assembling business leaders from around the world in one place to be honored is a huge accomplishment — the wealth of experience, as well as the variety of successful leadership styles, is outstanding.
Here are some thoughts from the collection of the world’s most accomplished entrepreneurs — innovators, futurists, turnaround specialists and problem-solvers — about leadership styles. ●
“I built the company based on people, not on experience from before. They were willing to learn and try anything. We had a bunch of people who had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”
founder, president and CEO
Entrepreneur Of The Year 2012 United States
2013 Entrepreneur Of The World
“Early on, the business was centered on me, and I had to make all the decisions alone. Now I share those decisions with my 10 main directors. If there are differences in opinion, I make the last decision.
The other thing is that I have had to ensure that the people who are invited to work here are people with principles, values, integrity, responsibility and passion. If I don’t see a person with passion, they don’t hang around the company very long.”
Lorenzo Barrera Segovia
founder and CEO
Entrepreneur Of The Year 2012 Mexico
“I’m a very passionate person, which will never change. When you grow, you gain more experience and the kind of problems you face change. As you grow, you need to grow with your organization.”
Entrepreneur Of The Year 2012 Argentina
“In the startup days, you have to be very innovative, hire and retain talent, refine your business as you deploy in the marketplace, and you learn things from it. Today, with a solid track record of business success, I can focus on what’s next and think more strategic and long-term than you’re allowed to in the early days. My style has evolved as the business has matured.”
Chevron Energy Solutions
“Entrepreneurship and leadership is about always having ideas, knowing that it is possible even though everyone says it is too difficult. Maintain the positive and always have new ideas.”
Mario Hernandez, founder and president, Marroquinera
Entrepreneur Of The Year 2012 Colombia
“To keep the entrepreneurial spirit and entrepreneurship alive once you've got past the startup base, I think it is making sure people understand why they are there. There are always things you can do to improve your business. You should be rethinking and retooling it every chance you get. The key thing is to make sure everybody in the organization understands the story, where are you going — how are you going to get there? And the belief that you are doing the right thing —people want to know their purpose. Keep the energy going, keep a strong sense of purpose.”
Dr. Alan Ulsifer
CEO, president and chair
Entrepreneur Of The Year 2012 Canada
“The skill sets of an entrepreneur involve understanding how to create business. Why not work with kids who need it the most and actually teach them and help them to be entrepreneurs? That’s what is going to grow our economy and create stability where otherwise we’re going to have a lot of social unrest.”
President and CEO
Network for Teaching Entrepreneurship
“I like to be involved. I want to know everything that is going on. But I have to delegate to my team. That was the biggest adjustment for me, and it’s not an easy thing to do. It’s that delegating to others, trusting them and reinventing yourself. Now that we’ve grown, I put more responsibility on my team and rely on my team more than I once did.”
President and founder
SME Entertainment Group
“If someone makes a mistake, what do you do? You laugh with them. You don’t yell at them. You laugh. It just keeps things light and lively and people want to do their very best. You let them know they screwed up, but you also let them know it’s OK.”
National Heritage Academies
Leaders often talk about how the traits of accountability and transparency helped make them who they are, but to retired Navy Adm. Mike Mullen, who served as the chairman of the Joint Chiefs of Staff for four years under President George W. Bush and President Barack Obama, leadership is quite simply how you listen, learn and lead.
It’s not just a coincidence that communication is as important in the war zone as it is in an organization — and that’s where Mullen emphasizes listening to what his team members have on their minds.
Smart Business talked with Mullen about the challenges of being in command:
Q. What do you see as the most important trait that any leader must possess?
A. Integrity. Be true to yourself, and obviously true to your values. The value of integrity intrinsically has been a driver for me since I was a midshipman at the U.S. Naval Academy. It has served me exceptionally well.
Integrity encompasses being honest, truthful and consistent — both publicly and privately in leadership positions — and representing that in every situation. It is most evident in the toughest decisions you have to make.
Q. And how can you ensure integrity is present in leadership?
A. What I loved about command was the responsibility and authority that came with it. But more than anything else, the other piece was accountability — accountable leadership. That is not just having someone hold you accountable, but having enough strength yourself as a leader to hold yourself accountable.
I just found that even with those decisions that can be very unpopular, if you are true to that value of integrity, even if it may not seem to some to be the best decision, it [integrity] holds you in the best stead as a leader over the long term. And because of that, it becomes incredibly supportive of those very, very tough decisions.
Q. So what can help a leader make those tough decisions more effectively?
A. As a more senior leader, I learned to keep a diversity of views around me. The more senior I got, the more diverse the people, the recommendations and the discussions had to be in order for me to make the right decision.
I had people around me who were willing to say, ‘Hey, this is when you got it wrong,’ as opposed to the opposite, which is isolation, where nobody will tell the emperor [he] doesn’t have any clothes on.
Q. You’ve mentioned the importance of listening to others in order to help you become a better leader. How did you do that?
A. Everywhere I went, whether we had a town hall meeting or we could call an all-hands meeting, I would take questions from the audience. So, for example, when a young enlisted man would give me a question of which I didn’t know the answer, I said, “I don’t know the answer, but give me your email address. I will go research it and get back to you.”
I did that. I went back and looked at whatever their concern was. And some of those concerns generated significant changes in the military, or in the particular service they were in. For me, as chairman, that was a vital part of trying to understand what I was asking them to do, and then taking that feedback and trying to fix the problem that they raised — if it made sense to do it.
A good leader can make such a difference, and create something out of nothing, whereas a bad leader is unable to do that. The ingredient that makes a difference is leadership. ●
Retired Navy Adm. Mike Mullen served more than 43 years in the Navy, having served as the chairman of the Joint Chiefs of Staff from 2007 to 2011, and as chief of naval operations from 2005 to 2007. He will be the keynote speaker at the Dec. 5 American Red Cross Hero Awards. Learn more about the Hero Awards at www.clevelandheroes.com.
Consider this business scenario: You’ve landed a big account for your company by converting a highly prized prospect into a valuable client. The new client has hired you to handle a specific scope of work and is counting on your team’s ability to deliver work that goes above and beyond.
While nothing is more important than delivering great customer service to satisfy the client, you may not realize that you’re probably overlooking unrealized opportunities to forge a stronger relationship with your customer.
In today’s business landscape, most large companies offer an array of products and services. More often than not, however, your clients use you for a specific service or skill set. And unfortunately, in this scenario, most companies focus solely on the task at hand — delivering what they’ve been contracted to deliver — failing to take ample time to think about the bond they’re creating with the client and what could be next.
In more simple terms, it is one thing to provide service that keeps a customer; it is another to keep that customer and expand the relationship to become a trusted partner.
Provide value in a deliberate way
The good news is that this is an easy fix. Establish a content marketing program that allows you to distribute thought leadership to your clients.
A content marketing program will help you provide value that other service providers may not, and when clients see you as an informational resource and partner, it will be easier to expand the relationship.
Take this example into consideration: You are an insurance provider and your main product is life insurance, therefore most of the communication you have with your clients surrounds that topic.
With a comprehensive content marketing program in place, however, you can educate your clients on the recent trends in the insurance industry and how that affects the individual. At the same time, you can give them an overview of your company’s wellness program and let them know that if they joined, they could reduce their monthly premiums.
As you can see, you’re not just providing your client with the original service, you’re also providing them with both your thought leadership — aka value — and additional offerings.
Personal connections payoff
Aside from providing value to the client with the content you distribute, a strong content marketing program allows you to showcase your brand’s personality. Clients will be able to connect with your brand on a more personal level.
Providing continually updated content through the right channels to the right clients enhances your day-to-day communications. Clients start seeing you as thought leaders and partners instead of just service providers.
It will help you expand relationships and, as a result, generate new business through more products and services.
Show them more than just what they see on the surface — show them how active you are in the community, or how much fun you had during a recent company outing. If may sound trivial, but your clients do similar things, and seeing you connect with the community and/or employees will help forge a more personal connection. You never know; you and your client may support the same charity, organization or team.
Open communication also will help strengthen relationships to the point where you can capture a premium price and eliminate price-jumping clients. Clients will pay more for a valuable relationship than simply look to get the lowest price elsewhere. ●
David Fazekas is vice president of marketing services for SBN Interactive. Reach him at email@example.com or (440) 250-7056.
You would think someone like Douglas Merrill would be a heavy multitasker, with multiple devices in hand, fielding several conversations — both real and virtual — simultaneously.
But you would be wrong.
Merrill, who was the CIO at Google until 2008, doesn’t like to multitask. He says that when you do it, you aren’t using your brain’s full capacity and aren’t as effective. He recommends focusing on one thing at a time.
Billionaire Mark Cuban has his own time management strategy. Cuban, owner of the NBA’s Dallas Mavericks, says you should completely avoid meetings unless you are closing a deal. Otherwise, he says, they are a waste of time.
Both of these proven leaders have learned that how you manage your time is paramount to your effectiveness.
As a CEO, you are swamped every day with calls and emails from people wanting a piece of your time. Some are internal, some are charity requests, some are from friends or family members and others are from service providers.
To help wade through this sea of information, it’s important to have a system in place to help you free up time to think about your business and the things that matter most in life. These open times are what author Richard Swenson refers to as “margin.” They are the spaces between ourselves and our limits that are reserved for emergencies.
But for many business leaders, there are no spaces left.
The way out of this trap is to set clear goals and values for yourself and your organization. Once you do that, you will have a filter through which to evaluate everything. Everything will have an immediate yes or no answer, eliminating the “let me think about it” category completely.
The key is to establish what your goals are first and then prioritize what is important. With your priorities straight, you will find more time to put toward important things on your goals list, but don’t forget to leave time on your daily schedule. There is no way to foresee all emergencies, so by leaving yourself some margin, when something unexpected happens, you already have time built in to deal with it.
Once you have margin built into your life, you have to have the discipline to stick to it. There will always be the temptation to take every meeting or answer every email. But if you use your goals and priorities as a filter, those requests are easily either accepted or declined based on where they fall on your priority list.
If you want a life where you can experience more peace and joy and less anxiety, start looking at your priorities and establish some margin in your daily schedule. ●
Deny, deny, deny; fall, tuck and roll; or put your head in the sand?
The quick answer to this headline is none of the above. A leader, by definition, must do exactly that — lead, which means being in front of a variety of audiences, including employees, investors and customers. Not everyone is going to be a gung-ho supporter. Sooner or later you’ll encounter a naysayer who either has a point to prove or is on a mission to make you and your company look bad.
Many of these verbal confrontations come out of nowhere and when least expected. As the representative of your organization, it is your responsibility to manage these situations and recognize that sometimes a “win” can simply minimize the damage.
When under siege, it’s human instinct to fight, flee or freeze. Typically these behavioral responses aren’t particularly productive in a war of words. Engaging in verbal fisticuffs could simply escalate the encounter, giving more credence to the matter than deserved.
If you flee by ignoring the negative assertions, you’ll immediately be presumed guilty as charged. It’s hard to make your side of the story known if you put your head in the sand.
By freezing, you’ll appear intellectually impotent. Worse yet, pooh-poohing a question will only fuel the aggressor’s determination to disrupt the proceedings. You could use a SWAT-type police and military technique to elude a confronter by falling, tucking and rolling to safety, but that usually only works on the silver screen.
Perhaps the best method to manage unwelcome adversaries is to be prepared prior to taking center stage. This applies to live audiences or a virtual gathering when you’re speaking to multiple participants, which is common practice for public company CEOs during quarterly analyst conference calls.
Most gatherings of this nature include a Q&A segment where the tables are turned on the speaker who must be prepared to respond to inquiries both positive and negative.
Before any such meeting, it is critical to contemplate and rehearse how you would respond to thorny or adverse statements or questions.
A good practice is to put the possible questions in writing and then craft your responses, hoping, of course, that they won’t be needed. This is no different from what the President of the United States or the head of any city council does prior to a press conference or presentation. The advantage of this exercise is that it tends to sharpen your thinking and causes you to explore issues from the other perspective.
In some cases you’ll find yourself in an awkward or difficult situation where there is no suitable yes or no answer, or when the subject of the interrogatory is so specific it is applicable to only a very few.
The one-off question is easiest to handle by stating that you or your representative will answer the question following the session rather than squander the remaining time on something that does not interest or affect the majority.
The more difficult question is one that will take further investigation and deliberation, in which case the best course of action is to say exactly that. Answer by asserting that rather than giving a less-than-thoughtful response to a question that deserves more research, you or your vicar will get back with the appropriate response in short order. This helps to protect you from shooting from the hip only to later regret something that can come back to haunt you.
Effective speakers and leaders have learned that the best way to counter antagonism is through diplomacy. It’s much more difficult for the antagonist to continue to fight with a polite, unwilling opponent.
Finally, when being challenged, never personalize your response against your questioner; always control your temper; and don’t linger on a negative. Keep the proceedings moving forward and at the conclusion keep your promise to follow up with an answer. This will build your credibility and allow you to do what you do best, lead. ●
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at firstname.lastname@example.org.
My 7-year-old son Cole recently gave me a Rainbow Loom bracelet, which is made of linked rubber bands. It is today’s school-age children’s craze, and Novi, Michigan-based Choon’s Design LLC is churning out the kits at a record pace.
With more than 1 million units sold in the last 24 months, Rainbow Loom is the brainchild of Choon Ng, a former Nissan crash safety engineer who invented it while working on a craft project for his daughters.
And Rainbow Loom, it turns out, isn’t its original name. When it was created, it was called Twistz Bandz.
Timing is everything, and Twistz Bandz may have sounded a bit too much like Silly Bandz — the last “wrist” craze that swept the nation. Between November 2008 and early 2011, every school-age child in sight was wearing layer upon layer of Silly Bandz on their wrists. It was as hot a product as anything since Beanie Babies.
Twistz Bandz’s arrival, it seems, happened just as Silly Bandz ran into what every hot new product eventually faces: competition. Look-a-likes with similar-sounding names began flooding the market. They were cheaper, and you could buy them more readily at more retail locations. The core brand quickly diluted. So Ng did what any smart businessperson would: He changed the dynamics of the situation.
Thus, Rainbow Loom was born.
Enter social media
Within a few months, the product — which allows its young owners to custom-create bracelets — was gaining attention. Much of this was due to a full-tilt social media blitz, including videos on YouTube and an engaging Facebook page, where users could share their designs.
More recently, Ng has become vigilant in protecting his patent and U.S. trademark — battling all wannabe competitors from launching similar-sounding products and flooding the market to dilute his own brand.
His success — or failure — is yet-to-be determined. But his efforts will prove fruitless if he’s not already looking ahead to the next product. This is the dirty little secret to any hot toy craze and the core dilemma every business leaders faces: How do you remain relevant as consumers’ wants, needs and desires ebb and flow — sometimes as swiftly as the wind changes direction.
Get beyond being a fad
Success in business relies upon building a sustainable operation that will outlast any cyclical “must have” product explosion.
There needs to be the creation of an idea continuum — an innovation factory, if you will. Innovative leaders must review, measure and adapt a company’s products, services and solutions to the changing whims of the marketplace. You need to talk to customers, vendors and prospects. And you need to regularly take the pulse of the market.
If you haven’t taken at least some of the gains from today’s success and invested it into research and development for tomorrow, you’re already losing ground. Today is today, and just like the disclaimers for financial investing warn — past performance does not indicate future results.
In the end, the only thing that matters is this: Is your next big thing built to last? Or, like every other craze that’s every hit the market, will your opportunities to remain relevant long into the future fade away after the competition creeps in and dilutes your market? ●
Dustin S. Klein is publisher and vice president of operations for Smart Business. Reach him at email@example.com or (440) 250-7026.
We had a client recently ask that we send out our daily wellness tip and goal later in the morning. This email is designed so that when you wake up, you can see your wellness goals for the day. Of course, I am always trying to be responsive to our customers, so I started to look into it from the technology side.
Then, I realized the real issue: She was sleeping with her phone! The client got a beep for every new message received. The email we send goes out at 5 a.m. EDT and she lives in Colorado! Our helpful hint turned out to be an annoying 3 a.m. wake-up notice.
As with most wellness issues, a behavior change was needed.
Recharge and see the benefits
Sleep should be sleep. Unless you are on call to save lives, save your own. Get eight hours of rest. Recharge yourself while your smartphone does the same — in another room.
As the CEO, you can take the first step to help. If employees are on vacation and they email back immediately to a group email, let them know that you would prefer they relax and enjoy their vacation.
And, before you send a text message to the person on vacation, ask yourself if it’s really necessary. Create a culture that respects a person’s time off and have the rest of your senior team follow suit.
Go to most any meeting and at least 50 percent of people in the room are checking their smartphones while the speaker is talking. As leaders, we need to set a tone and manage expectations. If the senior team isn’t paying attention, the rest of the workforce won’t either.
“Presenteeism” (employees being at work but distracted) is a huge part of the billions lost each year in productivity due to health and wellness issues.
Here are five ways we can change this problem:
- Have a wellness program that engages people in all aspects of their health.
- Offer “mindfulness” classes to help employees learn to focus on the present.
- At meetings, consider checking smartphones at the door.
- Let vacations be vacations.
- Create a standard expectation for responsiveness in your corporate culture. This starts with you and your leadership team.
Why is this important?
The dollars lost from employees not being “present” is huge. But, you also need to help employees find balance in their lives. If you don’t, the good ones will leave. And, the not so good ones will hang on and go online to shop, tweet and do whatever while they should be working. There is also the somber side. You don’t want an accident on your hands due to an employee texting while driving or using company equipment.
Feel free to reach out to me with your questions. I can be reached at firstname.lastname@example.org. Since my iPhone recharges downstairs while I sleep upstairs, I will respond to you in the morning.
Sue Parks, a former top-level executive with USWest, Gateway and Kinkos, is a corporate wellness expert. She is the founder and chief executive officer of WalkStyles Inc., based in Irvine, Calif., and co-author of “iCount, 10 Simple Steps to a Healthy Life.” For more information, visit www.walkstyles.com.
Lisa Sachs wasn’t afraid to give up a little control and partner with Cumming Corp. to build an even stronger business than the one she’d startedWritten by Mark G Scott
It didn’t seem like the best time for Lisa Sachs to start her own business. It was the early 1990s and the recession that would ultimately cost President George H.W. Bush his job had taken hold of the U.S. economy.
Sachs didn’t see it that way, however. In her eyes, this was a great time to start a business.
“That was an opportunity for me because the company I was working for went out of business,” Sachs says. “The clients I was servicing bought me out and wanted to know what I was going to do about it. So that became an opportunity to start my own business.”
And so Construction Controls Group Inc. was born. As a registered architect and certified construction manager, Sachs launched her business and things began to take off. But soon, she was faced with another challenge. The business was growing too fast.
“What I quickly learned was when you grow quickly, which started to occur in the late ’90s and early 2000s, in order to sustain that growth, you have to continue to grow and that’s another challenge,” Sachs says. “I needed to either seek a partnership or consider an acquisition or merger.”
Anyone who has built a business of his or her own has a high level of confidence in the ability to make things happen. But the best leader is rarely the one with the biggest ego.
“Servicing clients was what I could do very well,” Sachs says. “But sales and marketing was going to be my downfall downstream. Knowing in the back of my mind what that weakness was, I went in with a very strong opinion of either a strong partner that would have that strength or a strong firm that would have that capability. I knew if I didn’t do something, I was going to be in worse shape. But it’s still a tough decision.”
Think before you jump
As you begin searching for a partner to either merge or sell your business, you need to make sure you’re clear in your own mind as to why you’re taking this step.
“If you’re doing it just for the money, it’s not going to be successful,” Sachs says. “Maybe it’s successful for you, but it’s not successful for the team you’re leaving behind. You have to stay involved and have skin in the game to really make a transition successful.”
When Sachs began searching for a partner for her business, she set some clear parameters to guide the process.
“You need to figure out what company is the right fit for your organization, your vision and your culture,” Sachs says. “I’ve seen companies get swallowed up by larger firms and they lose themselves.”
Sachs was proud of what she had built at CCG, and she didn’t want to just throw all that away. But she recognized that it would be useful to have a third party that could help steer her toward a partner that matched her desires.
“Don’t go after something like this on your own,” Sachs says. “Get a consultant. It’s very important to have a third party that knows how to do the research and investigate what types of firms to go after. More importantly, in the negotiations, they know how to negotiate on your behalf better than you could on your own.”
The consultant Sachs hired gave her insight on marketing her company and the kind of information that potential partners would want to know before making a deal. A consultant can provide a lot of support, but they can’t make the final decision for you.
“You definitely have to trust your instincts and read people,” Sachs says. “If you’re not just selling and jumping ship and you’re going to stay involved in the business and sign an agreement for a period of time, it’s a marriage. You want to make sure you like who you are getting in bed with. You have to trust them, but you also want to like them.”
Sachs and her team built a list that grew to 20 potential partners and was eventually whittled down to four to six firms. But one of the names that had always been high on the list for Sachs was Finlay Cumming and Cumming Corp.
“I had known Finlay Cumming for many years before that,” Sachs says. “I knew what he was made of, I knew his culture and beliefs, and I really felt a connection to him.”
Sachs acknowledges that doing business with friends often isn’t a good idea. But in this case, the relationship between Sachs and Cumming was professional.
“I never had worked with him or for him,” Sachs says. “If we had worked closely, it’s like going into business with family. There is always a danger that you have expectations and once you work with someone, you’ll be sorely disappointed.”
Lead with integrity
As negotiations moved along between Sachs and Cumming, she wanted to make sure her people were not left in the dark about what was going on. She couldn’t tell them exactly what was happening, but she didn’t want to mislead them either.
“What we did was we explained we were doing an internal audit process, which was the truth,” Sachs says. “Never lie. So that worked out very well. We also had a Christmas party that December, and I announced that there were some exciting new changes ahead in the coming year. I didn’t expand on what that would be, but I wanted to give them a heads-up that something was in the works.”
When the deal was finalized in January 2008, Sachs immediately set up site visits to her company’s two locations in Los Angeles and Orange County.
“We made a breakfast, a lunch and an evening cocktail time,” Sachs says. “We gave people the option of going to any one of those three, depending on where they lived. We presented what was going on and made sure to have the leadership of the new organization as well as myself at these meetings.”
As much as you talk about the benefits of a merger or the great things that can happen now that your company has been acquired, it’s going to create some nervous moments for your employees. The best thing you can do is keep the best interests of your people in mind and find ways during the negotiating process to make the transition as seamless as possible.
“Cumming was very open to letting us operate the way we had been operating for quite some time and with very little interference,” Sachs says. “The biggest impact was the benefit changes because there are obviously bigger plans when you’re part of a larger organization. That was the part where we had to show you were getting apples to apples. It took a lot of work to structure that for people so they understood. You have to make people feel whole during this process.”
Set the right tone
In the interest of making the transition easier, Sachs and her group kept the CCG name for a while after the deal had been completed.
“We gradually transitioned it to CCG, a division of Cumming Group and then within two years, I realized we just needed to be called Cumming,” says Sachs, who is now a managing principal at the $50 million company, which has about 250 employees. “It’s better not to confuse people and to move forward to complete the transition.”
That doesn’t mean it was easy when Sachs saw the legacy she had built begin to fade away.
“I’ll never forget my first meeting with the marketing director,” Sachs says. “It was, ‘OK, now we’re going to change your letterhead and everything else to Cumming.’ It was like a slap in the face. I don’t think of myself as a person with an ego, so I can imagine a person with a huge ego and how that would have hit them. It really hit me hard and took two years before I was really willing to let go of the name.”
When you’re becoming part of another organization, you have to find your place initially to become part of the new team without forgetting certain things that you think are good principles with which to run a business.
“If you bring up every little thing that bothers you and you’re a negative person, it’s like the little boy who cried wolf,” Sachs says. “They’ll start to ignore you and not pay attention. If you bring some valuable ideas to the table and you prioritize what’s really important and approach it in a positive, constructive manner, you can be very successful.”
Sachs is pleased with the organization she and the team at Cumming Corp. have built together and has high hopes for the future.
“Bring value and you will be respected and appreciated,” Sachs says. “Most of all, have a sense of humor and never take yourself too seriously. That goes a long way toward gaining acceptance.” •
- Think before you act.
- Remember your team.
- Pick your battles.
The Sachs File
Name: Lisa Sachs
Title: Managing principal
Company: Cumming Corp.
Born: Melrose, Mass.
Education: Rhode Island School of Design
How did your life change at 10 years of age? My mother at a very young age had breast cancer and was basically told she had four years to live. So my father sold his business, sold the house in a day and because she knew some French, we decided to go to France. As it turned out, my mother only died a few years ago, so there’s a good story to this. It brought our family very close together to go on a Robinson Caruso adventure.
What was it like going through that at that age? It definitely influences you as an adult having to learn to cope with new situations, languages and cultures at an early age. It probably helped me be the strong individual I am and someone who doesn’t hold a chip on their shoulder because I know how to communicate with people and have empathy for the differences. So what could be a negative turned out to be a positive. Some people in those changing situations don’t adapt well. But being a positive person, I think I was able to benefit from it.
What one person would you like to have met? Golda Meir. When I was in Israel, I believe she was the prime minister or maybe it was before I was there. She was such a strong woman who had so much integrity and had a family and did everything she set out to do, but was so important and relevant in history. What an amazing experience that would be to sit down and talk to her.
How to reach: Cumming Corp., (888) 676-3211 or www.ccorpusa.com
Saving money on insurance sounds good to any business, particularly one that may be struggling. But going with a policy that includes a self-insurance retention (SIR) can be risky, especially if you become involved in a lawsuit.
“Companies that are struggling to stay in business and accept a larger SIR than they probably should can be put in a very bad position because they may be without insurance protection if they are not able to satisfy the SIR,” says Michael T. Ohira, a partner at Ropers Majeski Kohn & Bentley PC.
Smart Business spoke with Ohira, whose practice includes advising insurers in construction defect lawsuits, about how SIRs work and when they make sense for businesses.
What are the key differences between SIRs and deductibles?
The differences are pretty profound. SIRs and deductibles are both forms of risk assumption by the policyholder and are traditionally for a set amount, generally referred to as the retained limit. The policyholder basically agrees to be responsible for paying losses or claims within the retained limit, although there are differences regarding when the insurance company’s duties begin.
With an SIR, the insurance company essentially has no duties unless and until the retained limit is paid. Many times SIR endorsements provide that only the insured can satisfy the SIR, and the payment obligation is not excused by the insured’s insolvency or bankruptcy. So an insured is at its peril — if it cannot satisfy the condition of paying the SIR, it is not entitled to the benefits provided under the insurance policy.
SIRs are common in construction. Many insurers have left the market because of the proliferation and cost of defending construction defect lawsuits. Subcontractors can be in a difficult situation because general contractors require their subcontractors to have liability insurance and to add the general contractors as additional insureds under the subcontractor’s liability policy.
Typically, the reasons to have an SIR are about cost and the availability of insurance. A large corporation that is financially strong can reduce its insurance costs by electing to purchase a policy with an SIR, which commands a lower premium.
What are the benefits of deductibles over SIRs?
The biggest benefit of a deductible is that, unlike an SIR, the deductible does not need to be paid upfront and is not a condition to receiving insurance benefits. That’s important when you have a liability policy, get sued and need a lawyer. With a deductible, the insurance company will provide a lawyer and provide a defense immediately, as opposed to requiring the insured to pay its own attorneys’ fees until the amount of the retained limit is satisfied.
Where do companies make mistakes in deciding which route to go?
Some companies will assume an imprudently large SIR. If the business is in decline and gets hit with a liability claim, then paying for a defense lawyer on top of normal operating expenses can push the company into a precarious financial condition. I’ve seen retained limits as high as $250,000. Businesses that assume a large SIR, that they cannot later pay, can find themselves without insurance coverage.
That can be an issue for general contractors. If a subcontractor has an SIR that allows only the subcontractor to pay the SIR, then the general contractor would be without coverage as an additional insured under that subcontractor’s policy, if the subcontractor fails or is unable to pay the SIR. This is because the insurance company’s obligations are not triggered until the subcontractor pays. So, general contractors and developers need to carefully review the insurance policies of the subcontractors they hire to ensure that the subcontractor either doesn’t have an SIR or that the policy allows the developer or general contractor to pay the retention if the subcontractor is unable.
When deciding whether to have an SIR, take a hard look at your financial situation. Do you have the financial wherewithal to comfortably absorb that initial share of risk? It’s a business decision — weigh the cost savings against the benefit of being able to get insurance benefits more immediately, and from dollar one. ●
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Merchant services affect the majority of companies — more than 90 percent of online purchases use credit cards.
“If you’re not sure if merchant services is the right fit for your company, think about what your competitors are doing. If you don’t accept cards today, then prospective customers may be going to other businesses,” says Jan Mitrovich, manager for Treasury Management and Merchant Services at California Bank & Trust.
Smart Business spoke with Mitrovich about how to understand merchant processing services and costs, and when to talk to your banker about new solutions.
How do you know if your company is using merchant services correctly?
Every company should consider where it’s doing business and how it’s transacting with customers. Examine whether you are effectively leveraging all your channels for sales opportunities. You may have a storefront that does terminal credit card processing. However, other payment options, including Web-based and e-commerce, may be worth considering.
How much of you sales efforts need to be in the field, such as industry shows? A mobile solution can extend your customer outreach while providing convenience to your customers.
The merchant services environment is continually changing. There are varying degrees of complexity, from processing basic transactions through a card reader, to merchants that need multiple payment channels, gift and loyalty card programs, check verification services and more. Your merchant partner can help you better understand your options and select the right solutions for your business.
What’s important to know when getting a merchant account?
The processing transaction fee can turn off businesses, but they must consider the value proposition of expanding their customer base by accepting more transactions.
Depending upon the transaction type and how it is processed, fees will vary, which gets confusing. Merchant processors also don’t always present the statement information and pricing in the same fashion. It’s common for business owners to think a quoted rate is the all-in cost.
Be aware of hidden fees. For example, only some organizations do pass through pricing for the interchange fees. A discount rate doesn’t necessarily compare apples-to-apples, so a more important question is, ‘What is the cost of the service?’
You also need to understand and educate your employees on the associated responsibilities and risks as a merchant processor, such as protecting customers’ sensitive data. Validation of payment card industry compliance is an important step to ensure credit card data is being protected. Data breach coverage can protect merchants from the cost associated with a data breach, which can easily run $35,000 or more.
What additional factors help determine which provider is the best fit?
One differentiator is customer service. Banks typically have a higher level of customer service, like 24/7 call support, than independent sales organizations.
You also need to consider whether to lease or buy equipment. The industry is moving toward chip-enabled cards that will require companies to change equipment during the next few years. Take the time to understand your options and pricing structure, as well as if any equipment is proprietary.
Finally, cut-off times for transactions and settlements can be a game changer. Settlement time frames differ, anywhere from next day to 30 days, depending upon the vendor. If you want to improve cash flow, in some cases, you can process transactions up to midnight with next-day availability of those funds.
How should you review current services?
Take the time to review your merchant statements and pricing. If your business model or activity levels have changed, talk with your merchant representative. New services or tools may be available that can create processing efficiencies for your business. For example, card-present transactions are generally lower risk and thus cost less to process, while manually keyed transactions cost more. You could make internal changes to reduce the volume of keyed entry transactions or possibly process transactions through a lower-cost channel. ●
Jan Mitrovich is manager of Treasury Management and Merchant Services at California Bank & Trust.
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