Los Angeles (1224)

When you flip a light switch, turn on the water or start your car, you expect reliability every time. For employees, it’s just as mandatory that they be reliable, by showing up on time, completing the tasks at hand and basically doing their jobs time and time again.

By the same token, your employees expect you, as their leader, to be reliable. This means when you say you’ll do something, you do it, when they need direction, you provide it, and when the chips are down, you’ll be there for them.

Being reliable is good, but being too predictable — not always. In fact, being too conventional can make your company a “me, too” organization that only reacts to what the competition does, rather than taking the lead. It can be a bit more daring to set the trend, but if managed and controlled correctly, the rewards dramatically outweigh the risks.

Warning signs that your leadership has become too predictable occur when your subordinates begin finishing your sentences and know what you will think and say before you utter that first word on just about every topic. Compounding the problem is when your employees begin to perpetuate the negative effect of you being so darn predicable by believing it themselves and telling others, “Don’t even think about that; there’s no point bringing up your idea about X, Y or Z because the boss will shoot you down before you take your next breath.” This bridles creativity and stifles people’s thinking and stretching for new ideas.

It’s human nature for subordinates to want to please the chief. Under the right circumstances, that can be good, particularly if you are the chief. But it can be a very bad thing if you are looking for fresh concepts that have never before been run up the flagpole.

Uniqueness is the foundation of innovation and the catalyst for breaking new ground. George Bernard Shaw, the noted Irish playwright and co-founder of the London School of Economics, characterized innovation best when he wrote: “Some look at things that are and ask why. I dream of things that never were and ask why not?”

The “why not” portion of this quote is the lifeblood of every organization. A status quo attitude can ultimately do a company in, as it will just be a matter of time until somebody finds a better way.

As a leader, the first step in motivating people to reach higher is to dispel the image that you’re exclusively a predictable, same-old, same-old type of executive who wants things a certain way every time. There are dozens of signals that a boss can give to alter a long-standing image and dispel entrenched mindsets. You can always have a midlife crisis and show up at work in a Porsche or Ferrari instead of your unremarkable Buick. This flash of flamboyance will certainly get people questioning what they thought was sacrosanct about you. The cool car might also be a lot of fun; however, the theatrics might be a bit over the top for some, not to mention a costly stage prop just to send a message.

A better solution is to begin modifying how you interface with your team, how you answer inquiries from them and, most importantly, how to ask open-ended questions that are not your typical, “How do we do this or that?”

Another technique is when somebody begins to answer your question, before you’ve finished asking, particularly in a meeting, abruptly interrupt the person. Next, throw him off guard by stating, “don’t tell us what we already know.” Instead, assert that you’re looking for ideas about how to reinvent whatever it is you want reinvented or improved in giant steps as opposed to evolutionary baby steps. If you’re feeling particularly bold, for emphasis, try abruptly just getting up and walking out of the meeting. In short order, your associates will start thinking differently. They’ll cease providing you with the answers they think you want. Some players will hate the new you, but the good ones will rise to the occasion and sharpen their games.

If you want reliability, flip the light switch. To jump-start innovation, you could begin driving that head-turning sports car. Better yet, get your team thinking by how you ask and answer questions and by not always being 100 percent predictable but always reliable.

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. Reach him with comments at mfeuer@max-wellness.com.

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Roger Andelin believes in the power of storytelling — so much that even an e-commerce business composed of people from the impersonal sales and technology fields can benefit from the skills of a good storyteller.

Andelin had served as the CIO of Internet retailer Buy.com for six years before leaving to take the same position with The Washington Post, one of the most famous and influential newspapers in the country. It was during his stint with the newspaper that Andelin, an executive with a commerce and technology background, discovered how to take good storytelling and apply it in the world of commerce.

“I became a lot more aware of the power of storytelling and the power that can have in a business, especially on the commerce side,” Andelin says. “Commerce was missing that.”

When the opportunity arose for Andelin to return to what had, in the interim, been renamed Rakuten Buy.com, he felt he could utilize the sum total of his experience as an executive, splicing together his e-commerce background with a newfound knowledge and appreciation of storytelling to open new doors for the company.

“When I sat down for the first time and heard about our chairman’s vision, it resonated through and through,” Andelin says. “The idea was [that] we want to give merchants a voice in our marketplace. Let’s connect our merchants with their customers; let’s bring a new shopping experience to the table.

“It was very different from the typical model in our space, which is you come in and search for a product, put it in your cart and check out. It really brought back a lot of the nostalgia in the commerce business, which was missing on the Internet and electronic side. We had a chance to bring that back to the whole process.”

After accepting the president’s role at Rakuten Buy.com — which was rebranded as Rakuten.com Shopping in January — Andelin set out to tell the story of the company’s new vision and how it would be realized. He wanted to get every executive, manager and associate in the Rakuten system to believe in the vision and to feel motivated to carry out the plans that would make the vision a reality.

Define your drivers

Any retail business — whether in the e-commerce space or reliant on a bricks-and-mortar network of stores — will always be driven by the numbers. The number of customers you can get to your site or store will convert to a number of sales, which will convert to a number of repeat customers.

But to realize the new vision for Rakuten.com Shopping, Andelin needed to promote something else. He needed to promote loyalty. It’s something that can’t be directly quantified on a balance sheet, but Andelin realized, soon after he took over, that it would be an essential ingredient in the success of the vision. It would be, in short, a primary driver of the business moving forward.

“The business really boils down to the number of visitors that come to our site and our conversion rate to how many of those visitors buy from us and what the average value of that order is,” Andelin says. “So once you look at those drivers, those KPIs [key performance indicators], you look into it and see what is it that drives that component. Traffic, or visits, are driven a lot by advertising but also by loyalty.”

As such, Andelin wanted his team at Rakuten.com Shopping to focus on driving customer loyalty and merchant loyalty. Since the staff at the company is, in large part, composed of people with technology backgrounds, it was a different concept.

“What happens is that technology departments often get focused on a feature,” Andelin says. “They’ve been asked to deliver A, B and C, and at the end of the day, they deliver that, but it doesn’t always yield the business value that was expected. So by shifting the emphasis away from the actual feature we’re delivering and getting the teams focused on delivering business value, it fundamentally shifts the whole project pattern in a very meaningful way.”

Andelin and his team began to implement initiatives, such as a reward points program, as a formalized way of building merchant and customer loyalty. But he also wanted to see his team deliver value in more fundamental forms.

“One of our objectives, for instance, is to increase the voice of our merchants online, to help them connect more with their customer base,” he says. “That is one of the main things that is going to separate us in a meaningful way from our competition. That technology stepping in and facilitating that communication is something that would be pretty unique for a merchant.”

Give people a voice

You can craft a well-thought-out vision that aims the company toward new heights of prosperity, but none of it will matter if you can’t achieve buy-in from everyone in your company.

It’s something that Andelin acknowledged early in his tenure, and it’s why he embraced the role of storyteller from his first day on the job. Employees can hear about the vision, they can learn the drivers, but until they see tangible ways that the vision will lead to a better, more profitable company — and by extension, more earning potential and job stability at their level — they won’t completely buy in.

“Alignment can be challenging,” Andelin says. “But I have found the best way to do it is to very clearly articulate the problem or very clearly articulate the vision and then explain why the solution we’re all working toward will resolve that.

“You start to get individuals to understand the vision or the problem by articulating it very clearly. They see it and recognize what you are doing and why you’re doing it. People generally get that. It’s when the communication isn’t there that the team starts to falter and lose the passion for what they’re doing.”

In order to tell a story, you need a means of communication. Authors have books, journalists have mass media and directors have the cinema. At Rakuten.com Shopping, Andelin has, among other things, weekly “asakai” meetings that utilize technology to bring together people from Rakuten’s U.S. operations and beyond.

During the weekly meetings, senior management reinforces the vision and values of the organization to employees throughout Rakuten’s footprint. The meetings are another way Andelin is using technology for storytelling.

“What we say at the weekly asakai meetings goes all the way down to daily huddles, where each department will get together and talk about their departmental issues,” Andelin says. “The thing to remember is the teams you are leading have to get it. The business leader has to be open enough and accessible enough, to the point where if the team has questions, they feel able to ask those questions.

“If they have concerns, they have to get those concerns out on the table and walk through them.

“One of the most powerful ways to reach consensus is not by reducing the conversation but by increasing it. It is through conversation that leaders and managers are able to convey the vision and get individuals to come on board with the direction of the organization. Communication is absolutely key.”

Show your wins

Every story has a beginning, middle and end. In Rakuten.com Shopping’s case, the story is still in progress. If you don’t have final results to show your people, you need to show them progress and trends. Keeping employees in the loop is another essential way to bring them on board with your vision. You have to demonstrate the wins you are tallying and the progress you are making toward realizing your vision.

“As an example, we ran one of our summer sales at the end of August, right after I started,” Andelin says. “We measured the sale based on year-over-year performance — so, how we did on these days versus the same days the prior year? That event ended up giving us a fairly sizeable increase in our number of orders, in visitors coming to the site, all of the key metrics that we’re looking at. Those wins really help focus the team.”

If you’re going to tell a story that it’s going to serve as a motivator for your people, the story has to inspire. That doesn’t mean your people have to leave the meeting or conference call ready to climb Mount Everest, but it does mean that they leave as believers in what the company is doing.

“It’s a fairly basic idea that winning is contagious,” Andelin says. “It builds confidence; it helps you to solidify a repeatable process. It shows us what we need to do to drive sales during a particular event. If we get really good and learn those things, we can repeat it, and we can grow our business to improve step-by-step, by improving those processes. Everybody gets excited, and it really becomes a companywide initiative, because everybody has a little piece of it. So when you start to achieve your vision, everybody feels good.”

How to reach: Rakuten.com Shopping,

(949) 389-2000 or www.rakuten.com

The Andelin file

Roger Andelin


Rakuten.com Shopping

What is the best business lesson you’ve learned? You want to take accountability for when things don’t go smoothly and perfect. At the end of the day, if you screwed up, take responsibility for it, figure out what happened and move forward. That is one of the most relieving principles in business. It’s a liberating principle for all leaders, as opposed to passing blame and making excuses.

What traits or skills are essential for a leader? Having a vision and being able to communicate it on both an individual and group level. Leaders have to be approachable, accept criticism and be able to defend their positions with logical, rational arguments backed by data and facts. Authoritarian leadership doesn’t fly nowadays. You have to win the minds of intelligent people who are used to thinking for themselves, are well-educated and have fabulous opinions.

What is your definition of success? There is a sense of irony around it, because as soon as you start to define success, you limit yourself. If you define success as you see it, you just cut yourself off from other areas where you could be a success. You have to kind of know success when you see it, just like knowing what art is, or knowing what sounds good in music. So many things drive success, to define it is almost impossible.



Tell a great story.

Communicate it to your people.

Show evidence of success.

The old term “putting lipstick on a pig” refers to prettying up a mediocre asset right before you want to sell it. Prior to marketing, the seller makes changes that cause things to look better than they really are under the surface. There is little difference between a cheap paint job on a used car to hide rust or new carpet in a house to cover cracks in the foundation and short-term cosmetic changes at a company justified as “preparing for sale.”

Here are four key mistakes business owners often make when trying to prepare their companies for sale:

?  Shallow bench: Sellers often hold off hiring personnel in key management positions such as senior vice president of sales, controller and manager of procurement. They do this to minimize administrative costs in hopes of increasing sale value. Most buyers will evaluate the leadership team and make purchase price adjustments to account for those vacant positions.

The leadership team (both the C-suite and upper management) is a critical value-driver for buyers of businesses. As such, business owners should always maintain the strongest, most complete team whether the business is for sale or intends to remain independent.

?  As-is, where-is: Often, sellers neglect making necessary investments in machinery, facilities or IT systems to preserve cash and/or pad the bottom line. Any sophisticated purchaser of your business will take into account the need to remedy inappropriately deferred capital expenditures and a buyer’s perception of these deferred costs could be greater than those if the business had been maintained all along.

Well-run, growing businesses require ongoing investment. Machinery wears out, IT systems require updating and facilities need refurbishment. While every capital expenditure should be highly scrutinized based on cost and overall contribution to efficiency, deferring critical investment in hopes of increasing sale value is a mistake.

?  Pump-up the balance sheet: Another mistake sellers make is in the area of working capital. Balance sheet cash can be increased by more aggressively collecting receivables and extending payables in ways that are inconsistent with historical practices.

To detect this, buyers of businesses often include a “working capital adjustment” in their purchase consideration. If the company has been pulling cash out by collecting accounts receivable and/or extending payables, there will likely be a negative working capital adjustment.

Strong businesses have consistent working capital and cash-conversion cycles, and temporarily changing best practices can irreversibly impact vendor and customer relationships. Maintaining consistency will preserve these relationships and be rewarded in the purchase multiple offered by a discerning buyer.

?  Run on a shoestring: Some sellers try to operate their businesses with the bare minimum of liquidity in order to increase perceived working capital. This is more difficult to identify, since there is a fine line between capital efficiency and too little operating cushion.

Buyers will again employ a working capital test and closely evaluate the historical monthly fluctuations in receivables and payables. If there are certain months where larger fluctuations necessitate an operating cushion, this will be factored into the purchase value.

Once lost, liquidity can be difficult to regain. It is better to always operate the business leanly but with enough liquidity to provide cushion for seasonal working capital variances and to support ongoing growth.

While the decision to sell your business requires a new perspective, it doesn’t necessitate changes in fundamental operating principles. Making short-term cosmetic changes in an attempt to “prepare the company for sale” will ultimately be visible to the buyer, can create lasting customer and vendor challenges, and won’t be rewarded in increased sale value.

Focus on fundamental operating principles and maximize the value of your business — no lipstick required.

Craig Dupper is managing partner at Solis Capital Partners (www.soliscapital.com), a private equity firm in Newport Beach, Calif., focused exclusively on lower-middle-market companies.

The Patient Protection and Accountable Care Act (PPACA) has a number of employer provisions that all seem to fall, generally speaking, under an umbrella called “employer shared responsibility.”

Briefly, the PPACA mandates that large employers, those more than 50 employees including full-time equivalents, offer affordable coverage, which is that the lowest cost option for an employee is less than 9.5 percent of income. The coverage also must carry a minimum robustness — an actuarial value of at least 60 percent — to all eligible employees. If the employer doesn’t follow this, it must pay some kind of penalty.

Smart Business spoke with Tobias Kennedy, vice president of Sales and Service at Montage Insurance Solutions, about how these penalties are triggered, in the first of a three-part series on the employer shared responsibility provision.

How can the employer shared responsibility penalties be triggered?

The penalties are only triggered by an employee of yours receiving a subsidy to purchase an individual policy through the coming exchanges. And, employees are only eligible for a subsidy if they earn less than 400 percent of the federal poverty level and are not eligible for another qualifying coverage like Medicare, Medicaid (Medi-Cal) or a qualified employer plan.

How does the penalty for not offering enough coverage impact employers?

The way this fine is triggered is you, the employer, do not offer insurance coverage to at least 95 percent of your staff. The key words are ‘offer’ and ‘95 percent.’ If they decline, you are not at fault, and at 95 percent there is some minimal leeway. So if you fail to offer coverage to at least 95 percent of your people, and one of them goes to the exchange and gets a subsidy, you are fined. It’s important to note this penalty, like all PPACA penalties, is a non-deductible tax penalty — so finance teams really need to factor that in when evaluating costs.

This penalty’s costs are — pro-rated monthly for each violating month — $2,000 per year multiplied by every single full-time employee you have, which obviously can add up. The bill has a provision where you can, for the purposes of calculating the penalty dollar amount, deduct 30 employees from your full-time equivalent count. In other words, if you have 530 full-time employees, you’re fined on only 500 at $2,000 per person, per year for an annual fine of $1 million.

How does the affordability penalty work?

The second penalty, also non-deductible, centers on affordability. In this case, while you are still fined an annual amount that is pro-rated monthly, the fine is actually $3,000 annually but only assessed on people affected. It also is only up to a maximum of what you would have paid for not offering coverage at all.

It’s important to note that the employer is only going to be penalized on the people for which coverage is unaffordable. In other words, there are going to be times where you want to be strategic about this. You may have a situation where your employee/employer premium split is in compliance for most of your staff — where the dollar amount you ask the employees to pay for premium is less than 9.5 percent of most employees’ incomes. But, a couple of employees actually earn a smaller salary, so they are outside of the 9.5 percent. In this case, the employer needs to know it has a choice: Either raise your employer contribution or pay a fine on those couple of employees. Again, the penalty is only $3,000 per person affected, so it may be less expensive to pay those couple of fines than to completely restructure the way you split premiums.

Next, we’ll address how you know which employees qualify for coverage. A lot of employers have part timers, variable-hour people and project-based staff. So with all of these fines, it’s important to know exactly how you find the safe harbor of which employees qualify and don’t qualify for benefits.

Tobias Kennedy is vice president of Sales and Service at Montage Insurance Solutions. Reach him at (818) 676-0044 or toby@montageinsurance.com.

Insights Business Insurance is brought to you by Montage Insurance Solutions

"Not a day goes by where I don’t read a headline talking about ‘the cloud,’” says Zack Schuler, founder and CEO of Cal Net Technology Group. “The current, overused definition of the cloud is ‘anything that happens on the Web,’ but in the business world, the more accurate definition of cloud computing is leveraging someone else’s hardware/software and services to complete a business task.”

Smart Business spoke with Schuler about the role that cloud computing has played for businesses during the past two decades, and in what ways it can benefit their operations today and in the future.

How are companies using cloud computing?

When I started Cal Net Technology Group 15 years ago, we didn’t host our own email server. We used an outside company (Earthlink) to host our email, which, in essence, meant that Earthlink was providing ‘cloud services’ for us.

We also have been using an online payroll service for eight years now, whereby we enter our payroll data into a website, and our employee paychecks are processed. Many other businesses might be doing the same. This is truly a ‘cloud service’ that has been around for close to a decade.

Some companies use an Internet-based product called Postini, which has been around since 1999, to scrub their email for spam. I bring this up to point out that all of us have been leveraging the cloud for quite some time, and we probably didn’t even think about it; in actuality, it really isn’t a very new phenomenon.

What are some examples of how businesses can move functions to the cloud?

There is a definite shift in moving some computing resources into another company’s data center in order to save you some headaches and, in some cases, time and money. I use the word some with emphasis here, because if you think that your entire business is moving to the cloud anytime soon, you are probably mistaken — unless your business consists of only a handful of computer users.

The most prominent shift to cloud computing is the migration of email back into the hands of hosted providers, similar to how it was 15 years ago. Microsoft is now in the hosting business with its Office 365 product. It consists of Microsoft Exchange (email server), SharePoint (an intranet product), and Microsoft Lync (instant messaging) in the cloud, with the ability to ‘rent’ Microsoft Office on a per-user, per-month basis, with Office still being installed locally on your desktop.

In moving from an on-premise email solution, such as Microsoft’s Exchange Server, over to Exchange Online, the migration has been very time-consuming, and thus very costly. These migrations have proven to be more costly than moving from one on-premise solution to another. That being said, there can be some significant savings in hardware and software costs, reducing capital expenditure spending for many companies. Additionally, after the solution is running, the ongoing maintenance of on-premise solutions will be gone, which should equate to a cost savings in the long run.

Google has made a significant impact in cloud computing with Google Apps software. From what I’ve seen of the software, it is a good solution for individual use, and for the use of ‘micro-businesses,’ but it reminds me of Office 95 from a functionality standpoint. So, I couldn’t recommend this to any business that relies heavily on word processing.

Perhaps the most successful case study, and a company that has truly made its mark by delivering software over the Internet, is Salesforce.com. It has a very robust feature set within its application, and it was remarkable what it was able to do early on in the cloud-based customer relationship management space.

There are some other line-of-business applications that are cloud-based, as well, and truly deliver a rich user experience, but these are few and far between today, but will be the norm in the next five years.

How can businesses determine what to take to the cloud?

The wise approach is to hire an IT firm with expertise in this area to evaluate your systems, determine the applications that may be ready for the cloud and take a hard look at the overall ROI in moving them.

Zack Schuler is founder and CEO of Cal Net Technology Group. Reach him at zschuler@calnettech.com.

Insights Technology is brought to you by Cal Net Technology Group



Tuesday, 30 April 2013 21:07

How to protect your business in a global economy

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A global economy means product manufacturers should take a broader perspective when addressing issues related to product liability.

“They have always had to worry about warnings and product defect issues, but now with a global economy and the Internet, they need to be worried about not only federal and state laws and regulations but also international concerns in countries where their products may be advertised and purchased,” says Lawrence Borys, a partner at Ropers Majeski Kohn & Bentley PC.

“The changing world has expanded the concerns of businesses. Whereas previously manufacturers worried about design and quality control, warranty issues, or their warnings or labels, they often did so from a more provincial perspective. They now need to look at things from a much more global point of view,” Borys says.

Smart Business spoke with Borys about product liability and how businesses can protect themselves from legal judgments.

How has the Internet changed the product liability landscape?

Typically, product liability cases involved whether the product had a design or manufacturing defect, or the nature of the warning label or instructions on how to use the product. Because so much information is available on the Internet, manufacturers and sellers need to be careful about what representations are made online. Online sales raise a concern for manufacturers that simply didn’t exist 30 years ago. There needs to be a balance between marketing and selling a product versus the representations being made. The Internet is so prevalent that in many product liability cases there is an allegation or contention that raises an issue about what was represented online.

How can companies limit product liability?

Whether in product design, manufacturing, marketing or sales, work closely with your staff, experienced counsel and risk management professionals, including insurance representatives. No matter how careful you are, almost by definition success will lead to a greater probability of a product liability lawsuit with more products on the market. Working with strategic advisers reduces the likelihood that an isolated case will impact a successful business.

What types of insurance are available?

Traditionally, businesses get general liability insurance and some type of product liability coverage, but there are newer, advanced products such as patent infringement coverage and cyber liability to protect against hacking. Product recalls, once rare, have become more common, so there also is product recall insurance.

Does documenting the development process help when defending a lawsuit?

Record keeping and documenting how you addressed concerns is important when defending a product. California has separate product liability areas — there is a negligence aspect, which is focused on whether you acted as a reasonable manufacturer. Records of what was done to make the product safe are critical in the analysis of whether you acted reasonably in the process or recklessly in putting a product out into the marketplace. The other area of product liability, whether the product contains a defect, usually focuses on if the product functions the way most consumers think it would. Again, good record keeping is essential to show you considered foreseeable and anticipated uses.

It’s been said that you can manufacture the most effective mousetrap in the world, but that’s just a start. You have to determine whether your product may have violated patent or other forms of intellectual property protection, here and abroad; how to ensure every subsequent mousetrap gets built the same way as that first one; how you’re going to market and sell it; what your website will say; and how you want to label it with warnings provided on how to use the mousetrap. And you need to do all of that remembering that you may have to defend your product in a much broader geographic area than anticipated. Good documentation will help in every jurisdiction.

Also, if you’re going to sell your product online, either directly or through an intermediary, you have the same concerns, as well as ones related to the specifics of many jurisdictions. Working with your in-house team and legal and insurance consultants, you might not be able to stop product liability exposure, but you can help limit it.

Lawrence Borys is a partner at Ropers Majeski Kohn & Bentley PC. Reach him at (213) 312-2026 or lborys@rmkb.com.

Insights Legal Affairs is brought to you by Ropers Majeski Kohn & Bentley PC


California small business owners rely on banks for traditional financial services, of course, but also for valuable knowledge and advice on navigating today’s challenging economy.

That’s why California Bank & Trust periodically conducts surveys of small business owners as part of the bank’s commitment to understanding small business owners’ challenges and needs.

“Knowledgeable banking professionals who take the time to understand your business objectives and your industry will often provide valuable suggestions on how to significantly improve your finances,” says Tory Nixon, Executive vice president at California Bank & Trust.

In support of Small Business Month, Smart Business spoke with Nixon about the most recent survey the bank conducted and what it revealed about the challenges small business owners face as the state’s economy continues to recover.

What challenges do California small business owners face?

Laws and regulations seem to be the biggest hurdle for business owners, with nearly 38 percent of survey responders citing that as a major issue. There’s also concern over cash flow and money management, access to capital and finding top quality employees.

Nearly half of those who responded describe California’s economic climate as worsening. While that might appear bleak, about half of all respondents also cited a need for additional capital in 2013 to expand or increase staffing.

What tools can owners use to overcome these challenges and succeed?

As noted, access to capital continues to be a challenge for smaller businesses, but small businesses can and do get financing — especially when maintaining a good working relationship with their business banker, who can help in arranging loans and lines of credit.

One key advantage that small business owners have over their larger counterparts is access to Small Business Administration financing. Look for a bank that’s a preferred SBA lender. That’s a sign that there are knowledgeable bankers who can help you navigate the complexities of both SBA 504 and SBA 7(a) loans, or provide you with traditional small business financing options.

Small business owners also should stay focused on their cash flow. Your business banker can provide expertise in cash management and access to accounts and technologies that can keep idle cash working as hard as possible.

How do business owners feel about their banking relationship?

Again, small business owners seem to be extremely concerned with cash flow management and access to capital, but a significant number are also looking for more expert knowledge and advice from bankers.

The bank’s survey found that about 80 percent of business owners feel their bank doesn’t do enough to inform them of state, federal or local programs that could help their business. That’s why many local and community banks are extending services to provide access to highly informative resource centers, digital magazines and newsletters, which provide exactly that kind of information and are easily accessible online. Banks also are providing valuable information through social media channels and via email marketing programs.

How can you improve your banking relationship and increase business growth?

In most cases, all you have to do is ask for help — and your business banker will follow up as often as necessary. Knowledgeable banking professionals who take the time to understand your business objectives and industry will often provide valuable suggestions for improving your finances.

Getting the most from your banking relationship means keeping the lines of communication open and scheduling regular meetings. Don’t be shy about sharing your business vision; it will inspire your banker to suggest the best solutions, technologies and financing to help your business grow in the months and years ahead.

Tory Nixon is executive vice president at California Bank & Trust.

Website: May is Small Business Month in California. Learn more.

Insights Banking & Finance is brought to you by California Bank & Trust


U.S. Marine Corps Capt. Juan E. Rose III lets his military experience provide perspective when considering the task of balancing work, school and family life.

A student in the Executive MBA program at the UCLA Anderson School of Management, Rose’s leadership qualities earned him a John Wooden Global Leadership Award Fellowship. At the award ceremony, he was asked how he manages his busy schedule.

“When I met Pepsi CEO Indra Nooyi, she said, ‘You’re a Marine on active duty in San Diego, you go to an Executive MBA program in Los Angeles and you have a family in Murrieta, Calif. How do you do this?’ I commute 40,000 miles a year and I’m working hard and learning every single minute. But my Marines and I are not getting shot at, so it’s OK,” Rose says.

Smart Business spoke with Rose about the MBA program and how it’s helped prepare him for entering the business world when he leaves military service.

Why did you enter the MBA program?

After 10 years of active duty, I’m looking to transition to the private sector and I’m using the MBA program to couple the leadership experience I have with more technical knowledge.

I’m a financial management officer in the Marine Corps; however, finance in the private sector is for-profit, levering debt, and managing, maintaining and acquiring assets. As a government-certified defense financial manager (CDFM), I’m more preoccupied with safeguarding and disbursing public funds, while accomplishing the mission with minimal resources. Profit is never a conversation we have.

How does the profit motive change things?

Profit stresses people in completely different ways. I’ve been afforded the opportunity to work as a consultant recently, and I’ve been working with a couple of clients as a student. I am learning every day that people manage risk in order to maximize profit; Marines manage risk in order to save lives. It still seems to me that if you focus on your employees — an invaluable asset — while managing risk, profit maximization will be a result.

To me, profit just changes the perspective. When you’re managing life or death situations, losing money is not as important. As a leader you can then focus on learning from the mistakes to ensure you and your team don’t allow that to happen again. The complexity of defense financial management in the military comes from the environment and the mission, not the application of financial assets.

When you start using debt and trying to maximize profit at all costs, there are a lot of strategies and different ways to do that. That’s what I am trying to obtain from the MBA program and so far it’s exceeding all of my initial expectations.

What type of job will you seek after graduation?

I’m leaning toward management consulting. It will give me the opportunity to work in teams and continue to learn about industry as a whole in several different arenas.

It’s important for me to bring value to a company that values its people and affords them the opportunity to be intellectually challenged. My No. 1 priority is to work in a company that gives back somehow.

My long-term goal is to be a professor and to continue to coach, mentor and inspire people. The most important part of what I’ve accomplished over the past 10 years is coaching, mentoring and inspiring Marines to exceed their own expectations.

I look at some of our professors who sacrifice and take time to do that for us. They are able to manage their professional aspirations and personal lives, while also continuing to educate us. That’s what I’m passionate about — paying forward what was done for me.

Juan E. Rose III is a MBA candidate at UCLA Anderson School of Management. Reach him at (760) 458-7408 or juan.rose.2013@anderson.ucla.edu.

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All employers face a potential loss because of the hiring, employment and potential firing of employees. Therefore, employers should purchase employment practices liability (EPL) insurance to protect themselves against damages from workplace events and allegations of wrongdoing by employees.

Today, claims are increasing, the market is hardening and premiums are going up for this type of coverage, says Stephen Stromsborg, assistant vice president at Momentous Insurance Brokerage, Inc.

“It’s important for businesses and homeowners with domestic staff to partner with a broker who can represent them well to insurance companies and get them as many options as possible,” he says.

Smart Business spoke with Stromsborg about how EPL policies work and the market trends that make this type of coverage advantageous.

What claims does EPL insurance cover?

It covers such things as wrongful termination, harassment, discrimination, defamation, unfair hiring and firing practices, failure to promote, emotional distress, retaliation and invasion of privacy.

Who should consider EPL coverage?

Both businesses and households that employ domestic staff should strongly consider purchasing the coverage.

Businesses’ general liability policies either specifically exclude employment-related claims or are very restrictive and not adequate enough to respond to EPL matters. In particular, companies with large employee headcounts and high turnover are more susceptible.

As for households employing domestic staff, a homeowner’s policy won’t protect against allegations of wrongful termination or sexual harassment by domestic employees like nannies, gardeners and estate managers.

Any employee can allege he or she was wrongly terminated or harassed while employed, and an employer has a legal duty to respond, regardless of the claim’s merit. Even if it’s dismissed, not litigated or doesn’t go to trial, the high-cost of defense and/or settlement can have a significant impact on a company’s or family’s financial stability and reputation, especially without insurance.

What is impacting this coverage today?

Employment-related charges in 2012 were 20 percent higher than in 2007, according to the Equal Employment Opportunity Commission (EEOC). Many employment practices claims go straight to lawsuits and are not reported to the EEOC, so this number could be even higher. Unemployment rates are one contributing factor; California is tied now for the highest unemployment rate at 9.8 percent. With rising unemployment comes the decision to layoff employees or risk being put out of business. Unfortunately, workforce cuts can lead to disgruntled former employees suing for allegations of wrongful termination.

With the increased claim volume, insurance companies have been paying out more for both defense and settlements in the EPL arena. This results in most insurance companies transferring additional renewal and new business premium costs to employers. Companies are also increasing EPL policyholders’ retentions and deductibles. Several EPL coverages have been restricted, so it’s important to have an open dialog. The broker needs to articulate what is and is not covered in these policies for clear understanding on both ends.

What can be done to mitigate EPL losses?

Important preventative measures are:

• Maintaining adequate compliance with employment laws in the workplace.

• Establishing formal harassment training with employees.

Employers also can reduce turnover, which has a direct impact on claims.

Implementing compliance and harassment training will convey a proactive risk management work environment to underwriters, and working with a broker who can articulate those measures can lead to insurance companies being more comfortable in providing coverage.

Who can help with coverage decisions?

EPL is a very tough market. With premium increases on the rise, employers should partner with a broker who has the expertise and marketplace relationships to place the appropriate coverage.

Stephen Stromsborg is assistant vice president at Momentous Insurance Brokerage, Inc. Reach him at (818) 933-2722 or sstromsborg@mmibi.com.

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Insights Business Insurance is brought to you by Momentous Insurance Brokerage, Inc.


When your company sells a luxury product or service, it changes how you should approach the sale. Selling these items is less about price and more about the experience surrounding a luxury purchase.

“Customers at the highest luxury levels are more interested in having fun and enjoying spending their money while acquiring something they want, something that serves their own passion,” says Llewyn Jobe, Sales Manager at Bentley Beverly Hills. “We don’t sell anything anyone needs — basic transportation can be purchased anywhere. It’s about an experience.”

Smart Business spoke with Jobe about lessons he’s learned selling Bentley motor cars that apply to other luxury products and brands.

What are some challenges that come with selling luxury items?

It’s a challenge to make everything an indulgent, luxurious experience. Customers want to connect and feel at ease when they come in to spend a substantial amount of money, so the transaction needs to go seamlessly without too much anxiety over pricing and negotiating.

How can you produce good customer service, which is so central to success?

Without good customer service, there are no referrals or repeat business. The people selling the product drive the customer service experience. The sales staff needs to show passion and be informative when selling to clients; it should be fun and exciting for everyone involved. Stay in touch with your customers, or potential customers, and build a relationship by following up and staying current. Maintaining good customer follow-up comes from the productive use of a customer management database. Work through your database and keep clients and prospective clients up-to-date about upcoming new model premieres or special leasing promotions. That’s the best way to stay in touch — you’re not bothering people but informing them about something they’ve already expressed interest in. Additionally, giving appropriately branded gifts is a good marketing tactic and shows appreciation to the people spending their time with you, whether they buy or not.

What are some best practices?

Use marketing that’s clever and tasteful to both new and existing customers. It’s easy to reach out to previous customers, but how do you expand beyond your existing client base? The initial customer contact, whether through marketing or customer service, is critical. For us, part of our success derives from our location in Beverly Hills, where luxury is part of the community. However, you cannot take success for granted; you have to ask yourself, ‘How can we become better to surpass our own performance?’

Customers want to feel welcome in a comfortable setting. It’s an art to take people through the numbers of any particular transaction and get them to understand, without being too pushy. Then, it becomes more about sharing the experience and building the relationship.

If a customer asks, ‘Why should I pay so much money for X?’ What do you say?

Customers will say, ‘I can get this same car with similar miles for less.’ Well, yes, that’s commerce. But, here you get a relationship with your purchase that enhances your ownership experience. You may be able to buy this product for less somewhere else, but you’re not getting us with it.

And, that’s only comparing apples to apples. If you’re trying to bring in a new client from a lesser luxury brand, you can tell them, ‘You’re spending this kind of money because you want to be distinguished; you’re looking for an experience that’s above all experiences you’ve ever had.’

The relationship becomes more important the higher a luxury item is priced. People expect it.

How can businesses overcome post-recession hesitancy to spend money?

In 2009 and 2010, people were worried what others thought. There was caution about spending money and about what that stood for while so many had been hit by the recession. However, we’re pushing past that.

When it does come up, it’s important to let the customer know that it’s OK to spend the money, take action and enjoy their life. There’s nothing bad about it — that’s what luxury is all about.

Llewyn Jobe is sales manager at Bentley Beverly Hills, O’Gara Coach Company. Reach him at (310) 967-7124 or ljobe@ogaracoach.com.

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