Salespeople always have goals they need to meet. Giving them a road map on how to achieve these goals can help increase accountability and boost sales.
“We developed something to make salespeople a little more responsible. We put a program together that not only sets goals, but helps them achieve their goals,” says Rick Voigt, president of Today’s Business Products.
Smart Business spoke with Voigt about setting sales goals and how businesses can get better results by making employees part of the process.
Where did the idea originate and how does the program work?
The program came out of a sales management group; another company had great success with it, and we tweaked it to suit our needs.
We call it ‘Stand and Deliver.’ Salespeople were given quotas, which were broken down by quarters. Then they were asked how they intended to reach these goals. That included things like what customers they were going to get, their top 10 prospects and leads they were working on.
It makes someone more accountable than just giving them a goal of $1 million and letting them figure out how to accomplish it. We’ve given salespeople quarterly quotas, but never asked them to come up with a plan for how those sales would be achieved. This way they take more ownership of their goals.
It’s a road map to success. By making it very detailed, it’s easier to follow through on the results. If someone says they are going to call on these 15 customers and try to expand their categories — try to get them to add janitorial products, for example — a manager can follow up on that and see the outcome.
How was the plan presented to employees?
They were provided with an outline and a template to work with, as well as examples of how to create a road map. A spreadsheet was provided that had different tabs to be filled out, including a section on what salespeople needed from the management team to be successful.
There also was a SWOT analysis — they were asked to identify strengths, weaknesses, opportunities and threats, both internally and externally. That provided us with a chance to evaluate their opinions of the company and our customers.
Where there any surprises?
No, but there were things mentioned that are needed and we’re working on those, such as a new software program that will provide them with a mobile app to access customer information.
The process was very positive; they did a great job making their presentations and were well prepared.
The intent of doing the road map is to eliminate excuses. At the end of the quarter, if all steps of the process are followed, then everyone should meet his or her goals. We made sure goals were manageable, although there also are stretch goals for employees who go above and beyond.
What if a salesperson follows through on the plan and doesn’t get the desired results?
Quarterly goals are set, but there are still monthly meetings to go over sales and see where assistance is needed. It could be a matter of sending out another salesperson, manager or even the owner to help the salesperson.
If someone hits 95 or 97 percent of the goal, but is really working and giving everything, you work with them. You can also tell, however, if someone is falling short because of attitude or work ethic. If they’re calling in sick frequently, coming in late or are never around, if they’re not asking questions of clients, that’s a different situation.
If you train employees well and they help each other out, there’s no reason why someone would fail. Some salespeople liked the road map because they wanted that direction and structure. They thought it would help them improve sales.
This helps employees understand what they need to do. Some were doing something similar already. This program just creates a more defined process. ●
Rick Voigt is president of Today’s Business Products. Reach him at (216) 267-5000 or email@example.com.
Insights Customer Service is brought to you by Today’s Business Products
Companies are getting away from the old IT model of purchasing an on-site solution and having an internal staff working to solve problems. Instead, many companies are utilizing a professional service provider to handle tasks that are not directly related to core company business.
“That allows staff IT to focus exclusively on their lines of business — specific applications and training programs rather than a phone not working, a locked password, or more extreme, the data center/network being down,” says Karl Seiler, president of DataServ.
Smart Business spoke with Seiler about why companies are taking this approach and how professional IT service providers work as partners with businesses.
What IT services should be contracted to service providers outside of a company?
Things that are common to every organization: support, infrastructure, network, wireless, smart devices, collaboration architecture, security, help desk and inventory.
These needs are common across almost any organization and can be done from a professional service provider perspective rather than at an internal level. It allows for higher efficiencies and lets your team focus on its core business rather than solving remedial issues.
How does partnering for IT differ from building IT?
Building IT is the old approach. It’s slow to move and internal people may not have the skills to do a proper evaluation of return on investment or assess the real business fit within the environment. IT is often based on a person with a single mindset who provides the only view. And because CEOs and CFOs are often not the technology experts, that leaves critical decisions to one person who might not always have the knowledge or passionate team around them to proceed down the best path.
With IT as a service, a team of experts complete a comprehensive assessment for the organization. There are engineers who specifically understand infrastructure, applications, networks or collaboration. All that information is reviewed and analyzed to determine the best solution.
A professional IT provider knows how to partner with an organization and learns and develops an understanding of the company’s objectives, allowing them to build appropriate solutions. They become a trusted partner — not a vendor.
How can you tell if an IT service provider would make a good partner?
That’s part of the due diligence process. Vet companies and get a sense of how they work. Talk to references. Visit their workplace, talk with the leadership and see how they utilize the collaboration tools and other technology in their environment to grow their business.
Studies show huge challenges for businesses in terms of collaboration tools in the workplace. Millennials coming into the workforce are naturally collaborative and organizations are not structured effectively for that. Webconferencing, video technology and other services allow you to conduct business in real time. We provide a dashboard interface that shows who is available in our organization so we can connect with that person, see them on video, and effectively share information and data.
The workplace is everywhere now and technology needs to allow for collaboration whether someone’s at home, school, work or Starbucks. You have to build the architecture for your organization so that team members can collaborate from anywhere. Most businesses don’t understand how to architect a network — it’s just not their area of expertise. They have obsolete phone systems that do not work efficiently and are not connected to other company communication tools.
Another area of importance is your data. How do you organize the data (analytics) and build business intelligence tools in real time so you can make informed decisions and implement them faster? Applications have to allow for that level of integration.
Everything starts with finding a trusted partner and beginning the journey of unifying your technology. Effectively building a collaboration architecture begins with equal parts of culture, process and technology. That’s the most important area to address when growing your organization and business. ●
Insights Accounting & Consulting is brought to you by Skoda Minotti
The Internal Revenue Service defines the depreciable life of a building as 27.5 to 39 years. But that doesn’t mean that all assets grouped with the building have to be on the same depreciation schedule.
A cost segregation study can identify personal property assets that can be reclassified to allow for a shorter depreciable life.
“By accelerating depreciation deductions, you’re deferring taxes, which creates a cash flow benefit.” says Robert W. Haggerty, CPA, Partner, Tax Services at Brown Smith Wallace.
Smart Business spoke with Haggerty about what assets might qualify and the potential benefit to businesses.
How does a cost segregation study work?
Typically, blueprints or architectural drawings are used to identify what went into the building. Engineers analyze the drawings and perform site visits to identify qualifying property. Information from the general contractor or estimating manuals is used to determine the cost. A tax analysis is performed, which involves reviewing court cases and rulings that address which particular assets qualify for a shorter life.
Cost segregation studies can be performed anytime you build, acquire or expand. If the cost is $1 million or more, it is worth looking at.
The IRS also allows you to do a ‘catch-up adjustment.’ For example, if you bought or built a building five years ago and didn’t do a cost segregation study, you could still do one today and take the benefit on your current tax return.
With certain income tax rates rising, it’s a nice time to consider a catch-up adjustment.
What types of assets typically qualify for shorter depreciation?
Generally, property that is unique to a particular trade or business qualifies for a shorter life. An example I often use is the lights used to showcase merchandise in a retail store. Those lights are considered five-year property even though, by definition, lighting is part of the building. Not only do the light fixtures qualify, but so does the wiring and the portion of the electrical system supporting the fixtures.
Manufacturing facilities benefit the most from cost segregation studies because they typically have a lot of specialty systems or design inherent in the building that function as part of the manufacturing process. A large portion of the plumbing, electrical and HVAC systems qualify for a shorter life. Even the concrete floors can qualify. Hospitals and medical facilities are another industry with big benefits from cost segregation. Think about all of the specialty systems in a medical setting.
What are the tax benefits?
The benefit is the deferral of income taxes by accelerating depreciation expense. Moving costs from a 39 year building life to a five or seven year life can significantly increase depreciation expense for the building. Cost segregation studies can provide a permanent, time-value-of-money benefit of 10 to 50 times the cost of the study, which typically runs $5,000 to $10,000. Studies for larger projects can be much more costly, but the benefit usually increases with the cost of the project.
Any new developments of interest to businesses?
Yes, businesses can also take advantage of new final ‘Repair Regulations’ and proposed ‘Partial Disposition Regulations,’ which were issued in September 2013.
Under the old rules, you could not retire a portion of a building, so taxpayers who had a roof replaced, for example, could have two layers of roofs depreciating on their books. The new rules allow you to write-off the old roof.
In situations where it may be difficult to quantify the portion of the building that relates to the old roof — there might be only one asset on the books called ‘building’ — we are helping clients quantify the amount of the partial disposition.
Windows, interior build-outs and elevator replacements are other examples of items that may be eligible for partial disposition.
The Repair Regulations offer some safe harbors for small businesses and include de minimis rules that can apply to all taxpayers. So, there are even opportunities for businesses to take some tax deductions with very little effort. ●
Insights Accounting is brought to you by Brown Smith Wallace
There are myriad programs available to commercial and industrial real estate users that provide low cost capital and incentives for new investment. In addition to conventional financing, there are nontraditional sources of financing, tax deferral and tax mitigation strategies that can stretch your equity dollar.
Smart Business spoke with Bob Brehmer, CCIM, SIOR, principal at NAI Daus, about financial aid programs that can benefit commercial and industrial real estate users.
What are port authority conduit financing and construction savings programs?
If you are considering an acquisition of property, new construction or redevelopment of an existing structure, you should visit your port authority. It can direct you to financing and other programs that may be of benefit. For instance, one of its programs provides for state and local sales tax exemptions on materials for new construction and expansion projects. This can offer considerable tax savings that can be used to fund equity or be reserved for other investments.
Your port authority can arrange financing at higher loan-to-value ratios and can accommodate other structures such as conventional loans, grants, capital leases and operating leases. Bond fund programs allow borrowers to access capital markets and secure long-term fixed interest rates.
There is an ability to integrate other sources of financing such as those available through state, city and county programs, and other conventional financing methods. Eligible business can be industrial or commercial as well as 501(c)(3) and governmental entities. Funds can be used to acquire and renovate existing buildings or for land acquisition and new construction. The programs have been used to fund student housing, manufacturing facilities and redevelopment projects.
What is PACE and what is it used for?
The acronym PACE stands for Property Assessed Clean Energy. It is a method to finance energy-efficient and renewable energy upgrades to buildings by using special assessments. Cities, villages and townships are authorized to participate with property owners who want to install energy efficient improvements and upgrades.
A special assessment district is formed to finance eligible projects with special tax assessments. The assessments are placed on the property owner’s tax bill and are collected over five or more years.
If you are considering a solar, solar-thermal, geothermal or other customer-generated energy project, this may be a program to consider.
What other programs would you recommend?
The EB-5 program, for example, which allows foreign nationals to receive a permanent U.S. green card by investing in new or troubled U.S. businesses and New Market Tax Credits, can be utilized to help fund new and redevelopment projects. These programs are complicated, but have been used in this area for various high profile projects. Fortunately, we have a number of excellent sources and service providers in the area to assist firms using these programs.
One of the more dynamic, but lesser known, programs is the U.S. Foreign Trade Zone Act (FTZ). Created by Congress in 1934, the program is used as an incentive to encourage companies to keep jobs and investments in the U.S. A FTZ removes certain costs and barriers that do not exist in foreign locations.
FTZs also create a designated area that is considered to be outside the stream of international commerce. This allows certain types of merchandise to be admitted to the FTZ without being subject to customs, duties or some excise taxes. The benefits are numerous, including but not limited to the deferral, reduction or elimination of duties. An FTZ also permits activities such as testing, assembly, relabeling, repackaging and storage of goods. Northeast Ohio has two: FTZ 40 in Cleveland and FTZ 181 located in Summit County.
Your next project may be financed by your traditional lender relationship. You should, however, investigate the nontraditional sources of capital and financing available to business. You may end up receiving more flexible terms while retaining more of your hard-won capital for other investments. ●
Insights Real Estate is brought to you by NAI Daus
It’s important to know the desired outcome before entering into a marketing program, says Ryan Barringer, senior vice president of marketing and brand strategy at Bridge Bank.
“Too often a manager invests in a campaign without having first identified the appropriate criteria to evaluate its performance. The output might be obvious — a TV spot, a sponsorship, or a viral video aimed at delivering impressions. The question then becomes, ‘What is the outcome of those impressions and how will they affect revenue, if at all?’” Barringer says.
Smart Business spoke with Barringer about ways to determine if marketing campaigns meet goals and the differences in marketing to businesses as opposed to consumers.
What are the desired outcomes of typical marketing programs?
With any campaign, the ultimate goal is to somehow match the benefits of your product or service with an interested buyer who is willing to pay for those benefits. But there are different paths toward that goal. The marketing effort could be about educating the audience about a product feature, or simply to build awareness of a new or unknown brand. Or maybe the goal is to enhance the credibility of a brand by association with another well-known brand, thereby leveraging the equity of a complementary brand.
These goals all help enable an eventual sale, but the ultimate measurement of them is not necessarily the sale itself — it could be an increase in awareness or trust in the brand, or visits to your website.
Do you determine what would increase sales, and design a campaign to reach that goal?
The marketer or business owner should put themselves in the buyer’s shoes, maybe sit down with a customer and learn about the journey they took in making a purchase. Tracing the steps to a sale helps in figuring out where you can have an influence.
Also, there are nuances depending on your sector; business to business marketing is a bit different than consumer marketing in that purchases are usually at higher price points — you’re selling servers, buildings or vehicles as opposed to meals or sundries, so the risks of a poor buying decision are different — and there is usually more than one buyer that needs to be educated. It’s not just me making a purchase on behalf of my company, my manager is also involved.
That makes the role of brand more important — the old adage that no one was ever fired for buying IBM computer equipment. IBM had done great work building trust and credibility in its brand, thereby making it easier (and safer) to buy their products.
So how is the effectiveness of a marketing program measured?
It depends. Some say that sales might be the ultimate metric, but that obscures other important drivers like corporate reputation or convenience. It’s up to the buyer of a campaign to decide the metrics, which may or may not come at a cost. Marketing research can reveal answers to goals, such as whether the audience has a better understanding of your product, or increased awareness or perceived value of your brand. An initial survey can create a baseline to measure against to determine if the campaign had an impact. Digital campaigns are far easier to analyze, and can offer many different opportunities to sustain engagement with a potential customer.
Where do businesses make mistakes with marketing efforts?
One is not understanding what a campaign will deliver. As mentioned, it’s not always about revenue; it could be awareness or increasing the attractiveness of the brand, or even correcting a misconception.
Business owners often overlook the importance of things such as the use of modern graphic design. If you’re presenting an outdated visual representation of your company or offering, that could actually create suspicion among buyers that your business might be outdated or irrelevant.
Buyers consume information differently and it’s important to reach them through the proper channel, whether it’s a video, website or social media. Technologies are changing ways consumers enter into that buyer’s journey. If you’re not attuned to those changes, you’re going to miss out on an opportunity because your competitors will beat you to the punch. ●
Insights Banking & Finance is brought to you by Bridge Bank
As technology continues to make the world seem smaller, more U.S.-based companies are looking overseas for untapped opportunities. International expansion has traditionally been undertaken primarily by large, multi-national companies. Today, small, private companies are increasingly venturing outside the U.S. But seeking overseas opportunities comes with a different rulebook. What are the hazards and pitfalls that companies may encounter when expanding internationally?
Smart Business spoke with Greg Brown, tax partner at Sensiba San Filippo LLP, to discuss why more businesses are considering overseas expansion and what they need to know before investing in international markets.
Why are more and more companies looking overseas for opportunity?
In recent years, we’ve seen locally based companies looking into international expansion for two primary reasons: increased sales opportunities and access to new talent pools. Consumer markets are expanding across the globe, while Bay Area technology companies are increasingly looking to India, the U.K. and Asia for specialized talent. In both cases, in order to increase their probability of success, company decision-makers need to educate themselves or partner with those who know about the geographies they are entering.
What’s the first thing a company should do prior to opening a foreign operation?
Most businesses considering foreign expansion already have a good idea where they want to go and why they are going there, but their certainty isn’t always the result of thorough planning. It is not unusual for a business to make a snap decision about entering into a contract with a foreign customer or to hire a talented foreign employee without doing its homework. While the business decision may make sense, the company may not know the operational or cultural challenges and the tax implications of the decision.
Companies venturing out should use qualified advisers who have local connections and experience in the country where they are considering doing business. These advisers can navigate through the applicable laws and provide valuable advisory services to the stateside leaders. Many law and accounting firms have international resources and can often connect their clients with these advisers through global professional affiliations.
How can culture affect the outcome of an overseas venture?
Cultural differences are often overlooked during international expansion. Without prior experience in a specific location or the luxury of a local partner, it’s easy to miss cultural differences that could significantly impact the success of a venture. An understanding of proper manners and etiquette are important and should be valued. A local adviser or business partner can help you understand cultural differences ahead of time and potentially avoid embarrassing faux pas.
How important are the tax ramifications of international business?
The tax ramifications of operating in a foreign country are an important aspect of the overall business decision. Businesses should consider what level of activity would cause them to come under the laws of another country, and what they’ll need to do to ensure compliance. Even having a few employees in a foreign country may require the company to file tax returns and possibly pay tax. Establishing a subsidiary comes with additional requirements, such as transfer pricing agreements.
Moving existing employees to another country or having them work overseas will more than likely require them to pay foreign and U.S. taxes. It is normal for companies to enter into agreements with these employees in order to equalize the financial tax burden and benefits that result from overseas employment.
Any other advice you want to share?
Have a clear vision of what you want to do, educate yourself and your team, and use competent legal, tax and business advisers. Start by talking with your lawyer and accountant. Many professional advisory firms have experience in foreign operations and very useful contacts in other countries that can help ensure that your venture has the greatest possibility for success. ●
Insights Accounting is brought to you by Sensiba San Filippo LLP
Many businesses assume that employment at-will means the employer can terminate the relationship at any time. While the default assumption is that employment is at-will, some actions taken by employers can create an implied-in-fact contract.
“That’s where employers can often get into trouble with a disgruntled employee. At-will employment allows the employer to fire an employee at any time without having to show good cause, as long as it’s not for a discriminatory or punitive reason. But an employee, if they’re upset about getting fired, can claim they had an implied-in-fact contract and can only be dismissed for good cause,” says Stacy Monahan Tucker, a partner at Ropers Majeski Kohn & Bentley PC.
Smart Business spoke with Tucker about what at-will employment means and how businesses unknowingly create an implied-in-fact contract.
What types of interactions can be interpreted as an implied-in-fact contract?
Courts will look at the totality of an employer’s relationship with its employee when determining if an implied-in-fact contract exists. The key question is whether an employee had a reasonable expectation of an implied-in-fact employment contract. A court will consider many factors, including the written and verbal policies and procedures used by the company, the employment manuals, any employment-related agreements such as confidentiality agreements or noncompete agreements, and the interactions between the employer and the employee, as well as the employer and other employees. While many factors will not create an implied-in-fact contract alone, combined they can weigh heavily in favor of such a finding.
Factors considered by courts include the length of employment, the use of progressive discipline to make its termination decisions, statements made to an employee that he or she doesn’t have to worry about losing his job unless a mistake is made, and a requirement of signing a noncompete agreement or confidentiality agreement as part of the employment arrangement.
An employer might have written policies or employment documents in place that it thinks make it clear employment is at-will. Many handbooks state the employment arrangement is at-will. But frequently those handbooks also state that nothing in them is intended to create a contractual relationship. That can inadvertently invalidate all previous statements supporting the at-will relationship, as the document specifically states it does not define the contractual relationship. Moreover, the requirement that an employee sign a noncompete or confidentiality agreement can support the argument that the employee paid consideration by signing such an agreement and thus entered into an implied-in-fact contract. Many employers do not realize the importance of having employment documents reviewed for consistency.
How should companies approach handbooks and policies?
Companies should have their employment documents drafted by an employment attorney rather than just a human resources person, who often has cobbled together information from previous handbooks without fully understanding the legal ramifications. An employment attorney can ensure that the documents are clear and work well together.
A best practice is to have a written employment agreement that every employee signs. It should clearly state that the arrangement is at-will employment and the agreement is integrated, which means that if a provision is found to be ambiguous or unenforceable, the rest remains in full force. That reduces the chance of an employer being able to invalidate the entire agreement.
Many of these employment issues can be avoided by careful review of internal policies and documents before problems arise. That’s why it’s important to develop an employment contract and a cohesive body of employment documents that work as a unit. Then you can cover issues you want to address and minimize any surprises down the line. ●
Insights Legal Affairs is brought to you by Ropers Majeski Kohn & Bentley PC
Historically, private business owners overestimate what their comprehensive general liability (CGL) policy covers, and therefore don’t buy the additional insurance they need.
According to the Chubb 2013 Private Company Risk Survey, 44 percent of private companies have experienced at least one claim in directors and officers (D&O), employment practices, fiduciary liability, employee fraud, workplace violence and cyber liability in the past three years. More than half of the executives interviewed mistakenly believed they had some form of coverage under their CGL policy.
As business owners run into a wide range of costly lawsuits, government fees, data theft, criminal activity and employment claims, they must deal with these disruptive issues, which tax their administrative capabilities and put a financial drain on the institution. Until a company experiences an event that isn’t covered by CGL, however, a business owner may not realize where the coverage gaps are.
“They are starting to understand that they have a problem but very few of them actually buy the extra insurance,” says James A. Misselwitz, CPCU, vice president at ECBM.
Smart Business spoke with Misselwitz about where CGL falls short and what to do about it.
What do private business owners need to know about CGL coverage?
- Cover legal liability arising out of bodily injury and property damage, and also advertising injury and personal injury (libel and slander).
- Defend the company from lawsuits rising out of their operations.
- Defend against infringement on a trademark or copyright.
- Defend and litigate publications that involve liable and slander.
However, it doesn’t protect against:
- Wrongdoings of a director or officer of the company.
- Employment-related lawsuits, such as retaliation, harassment or sexual bias.
- The personal liabilities arising out of mismanagement of a pension or 401(k) plan.
- Professional liability risk arising out of services rendered for a fee, such as charging for estimates and quotes.
With D&O liability, why would a privately owned company be affected?
It only takes a marriage, divorce and/or another generation to get involved for a company to become vulnerable. Let’s say a second-generation heir is going through a divorce that isn’t amiable. Now, their spouse may feel like they have a right to an asset that they think is being mismanaged.
Almost all CGL forms exclude cyber liability arising out of social networking and social media, even as defamation and copyright infringement lawsuits increase in this arena. With social media, nothing is as simple as it seems and the ramifications of doing something wrong can be devastating.
In addition, business owners may believe their required ERISA bond covers fiduciary liability. An ERISA bond only protects a retirement plan’s assets from theft. It doesn’t protect the personal assets of fiduciaries who are found in breach of duty, such as making poor investment decisions. For that, you need to buy fiduciary liability insurance.
What’s your advice for business owners who may not have enough coverage?
You need to examine the activities of your company closely, while comparing current insurance policies, so that large holes in coverage don’t crop up. Basically, business owners need to discuss with a knowledgeable insurance broker what risk they can effectively transfer to an insurance company.
But as business owners start becoming aware of areas where coverage is a concern, some still fail to pull the trigger on an up-to-date insurance program. Many think this kind of additional coverage is expensive. However, the marketplace has already responded with insurance companies forming management liability packages that combine risks and lower costs.
The other problem is that some insurance brokers are unable to have an in-depth discussion about these types of coverage. Interview your broker to assess your risks,
and whether or not those risks have been transferred. If you feel your broker is not knowledgeable, then it may be time to call another broker. ●
Insights Risk Management is brought to you by ECBM
Business became more personal for Neil Grimmer when his first daughter was born. After seven years working as a design leader at IDEO and coming up with health and wellness innovations for food products, he saw a need to take the same approach to make better baby food.
“I starting taking that innovation methodology and coming up with concoctions in our own kitchen,” says Grimmer, president, co-founder and “chief daddy-O” at Plum Organics. “That was really the impetus for starting the company.”
The company’s early days consisted of a small group of parents who wanted what they couldn’t find — healthy and convenient food choices for their children.
“We started out doing a line of healthy lunchbox snacks, and very quickly moved into the baby food space with the spouted pouch,” Grimmer says.
Here’s how Grimmer capitalized on his personal experiences as a parent to drive Plum Organics to see significant growth year after year.
Designing an identity
Once Grimmer launched the flexible spouted pouch with its large cap, it helped Plum Organics stand out in the grocery aisles with packaging that was different, eco-friendly, portable and convenient.
Inside the packaging, parents discovered an eclectic mix of ingredients that were relatively new to the baby food marketplace.
“We brought culinary-inspired recipes that weren’t commonly found in baby food — putting things together like raspberry, spinach and Greek yogurt, using ingredients like purple carrots, quinoa and amaranth,” Grimmer says. “We took the superfoods that are out there and brought them into the baby food category.”
One final element that set the stage for success was the mindset the company’s founders brought to the brand as young parents themselves.
“It’s by parents, for parents,” Grimmer says. “It had a sense of humor, but we also took the job of feeding our little ones the very best food very seriously. So it was a very approachable brand which deeply connected with parents around the country.”
Whether they had children or not, company leaders developed a personal connection with parents through a shared focus to bring better food to kids.
“That was one thing that really drove us through some of those tough early years to success in our later years. We catalyzed a movement. The idea of making it a mission to get better food to children took it outside the core objective of running a business and gave us a higher order of purpose and passion,” Grimmer says.
Finding a purpose
At the heart of the company’s mission was a belief that you should “walk in the shoes of those you serve.”
“That’s at the heart of our innovation process,” Grimmer says. “In the early days, we were all young parents. Living through those moments from zero to 1, from 1 to 3, you understand those phases deeply. As your little one grows through all of these different stages, their needs, wants and desires change pretty dramatically.”
The business was organized around the unique needs and requirements of each age phase, addressing solutions to help parents by understanding their concerns and needs. Grimmer says adopting a similar philosophical approach would serve companies well, no matter the industry.
“Give purpose and passion to the work that can deeply connect with you,” he says. “People who work for companies are hungry for that sense of purpose and passion. For companies, and CEOs specifically, to focus on that makes a lot of sense.”
Plum Organics has expanded that sense of purpose to help needy families with the creation of a program called Full Effect.
“Now that we’ve reached a certain scale and have a good, solid foundation, we’re able to expand the work we do beyond just getting better food to kids in their homes to starting to address the nutritional needs of little ones around the country who go hungry,” Grimmer says. “We had the privilege of working with the filmmakers who released ‘A Place at the Table,’ which really articulated the issue of hunger in America.”
About 16 million children in the United States go hungry every day and chronically miss meals.
“As a company that’s in the business of bringing better food to kids, we felt we had to play a role in helping ease that pain,” Grimmer says.
With Full Effect, Plum Organics worked with nonprofit partners Conscious Alliance, Convoy of Hope, Homeless Prenatal Program and Baby Buggy to supply families with 500,000 Super Smoothies in 2013. The goal for 2014 is to up the donation to 1 million.
“Our employees are really excited about being engaged in the program,” Grimmer says. “It’s a way we can start to help really expand the impact we have in the world.”
The past year saw another significant development for Plum Organics in a June 2013 partnership with Campbell’s, which will allow the company to continue to operate as a standalone entity.
Setting the table for growth
With its acquisition by Campbell’s, the company heads toward a new phase with a powerful food industry player able to support its growth.
“But we are continuing to run the company around the values and beliefs that we created in the early days,” Grimmer says. “They are quite frankly one of the few partners we’ve found that would give us that kind of operating freedom.”
Keeping up with product demand has been a problem from the beginning. In 2013, the company grew more than 50 percent. Plum Organics had a four-year compound annual growth rate of 99 percent.
“That kind of year-over-year growth is difficult for any business to keep up with,” Grimmer says. “That is one of our key challenges, like it is for any business going through scale and growth.”
Three growth levers have led the way, the first one being the consumers served by Plum Organics. By segmenting products into three different portfolios, the company centered offerings on the needs of babies, toddlers and children. Moms can find healthy foods that grow with their families as children progress from birth all the way to age 10.
“We wanted to be a solution for her and her family,” Grimmer says.
A second growth lever was derived within each of those three consumer segments by looking at the various eating occasions in which the availability of healthier options would make parents’ lives easier.
The final area of growth was geographical — expanding into Canada, opening a business in the United Kingdom and creating a distributor-based business in Asia.
“We realized that this idea of healthy food for little ones isn’t an exclusive concept to the United States,” Grimmer says. “Parents around the world are time starved, but want the best for their babies and kids.”
Keeping up with demand has meant entering into partnerships with manufacturers and bringing in Italian machinery to increase production capacity.
“The machinery would sputter and hiccup, but we became very experienced in how to modify and tune those machines to be very reliable workhorses,” Grimmer says. “We’ve also put a lot of focus on securing an organic supply of our fruits and vegetables, which obviously fluctuates with the seasons.”
Growth has not only created challenges from a production standpoint, but from a staffing perspective as well. Plum Organics expects to add about 20 more employees to reach a total of 90.
Despite the pressure to add personnel quickly, Plum Organics is cautious about ensuring new hires are a good fit.
“One of the pitfalls that any fast-growing company runs into is wanting to fill the seats that are available and fill roles as quickly as they can,” Grimmer says. “If you become impatient with your hiring process, you can end up filling a role with someone who fits the box on talent, but not on culture.
“What we’ve found is that spending the time to hire the right people, giving time to do the process effectively, has allowed us to find people who not only fit the technical requirements but also added to the culture.”
Part of that culture means being willing to do whatever it takes to get the job done.
“That’s one of our core truths. As CEO of the company, if I need to wash windows or take out the trash I’ll do it at a moment’s notice if that’s what it takes to move the needle on our business. We require everyone at all levels to have that same attitude,” Grimmer says.
A winning culture has been a critical part of the Plum Organics success story, according to Grimmer, and one that has set the business apart from its competition.
“What made us different as a brand was that first we made it personal, the idea that it is a brand and company by parents, for parents,” he says. “It’s a fun, stylish brand that also brought health to the home. It’s not just about making healthier products that are ho-hum. It’s about bringing those two things together — engagement and health.” ●
- Walk in the shoes of those you serve.
- Find your purpose and passion.
- Hire for culture as well as talent.
The Grimmer File:
Name: Neil Grimmer
Title: President, co-founder and “chief daddy-O”
Company: Plum Organics
Born: Ipswich, Mass.
Education: He received a master’s of fine arts in product design from Stanford University, and a bachelor’s of fine arts in conceptual art/sculpture from the California College of the Arts.
What was your first job and what did you learn from it? I worked flipping burgers in a fast food restaurant for a summer. I became a vegetarian by the end of the summer.
Who is someone you admire in business? Jed Smith, the founder of Drugstore.com and executive director of Catamount Ventures. He funded my company based on our mission to bring better food to kids from the very first bite. I admire his vision to see the possibilities of a business at its earliest stage and his entrepreneurial spirit to weather the storms of a startup.
Do you have a favorite Plum product? What products do your children enjoy? I personally love our organic baby food pouches, which are purees of superfoods like organic fruits and veggies mixed together with ingredients like ancient grains such as quinoa, amaranth, Greek yogurt, beans, and herbs and spices. My favorite variety is our Raspberry, Spinach & Greek Yogurt.
My girls love our Mashups organic squeezable purees for kids, as well as the organic Fruit & Veggie Shredz.
If you weren’t president of Plum Organics, what would you like to be doing instead? There is nothing I’d rather be doing. If I weren’t president of Plum, I’d be trying to get a shot at running Plum Organics.
Learn more about Plum Organics at:
How to reach: Plum Organics, (877) 914-7586 or www.plumorganics.com
The increased use of web-based cloud accounting applications has provided users many advantages related to efficiencies and cost savings but conversely it adds certain risk factors, says Roman Leshak, a director in Audit & Accounting at Kreischer Miller.
Smart Business spoke with Leshak about ways to reduce risks associated with accounting in the cloud.
How do accounting firms use the cloud?
Accounting applications utilized through cloud computing include bill management and payment, customer relationship management, document management, enterprise resource planning systems, financial statements preparation, payroll, sales and use tax, tax return preparation and work flow resources.
Advances in technology have helped expedite the use of cloud applications, as many companies are seeing significant cost savings compared to developing and maintaining these applications internally.
Cloud computing can be a very attractive option for saving costs; it also lends itself to quicker software implementation and updates, portability of data enabling remote access among multiple users and locations and significant reduction and possible elimination of capital outlays for hardware.
What are the main risks involved with web-based accounting?
Despite the advantages of cloud computing, there are several risks that need to be considered and addressed prior to making the decision to move from the traditional accounting applications as information maintained within these applications is often confidential, or even entrepreneurial, and is very valuable to the user. These risks include security and data privacy, reliability and availability of the data and data processing, loss of integrity and overall data ownership and transfer of data.
During the vendor selection process the user should verify that the service provider utilizes a data center and that the vendor has received an AICPA Service Organization Controls Report on those controls in place at the data center related to infrastructure, software, personnel, procedures and data. These reports are crucial to understanding the vendor’s oversight of the data management, internal controls and risk management and in verifying that the proper safeguards are in place. Some accounting firms provide assurance services related to cloud strategy, integration and migration and will assist with corporate governance issues, vendor selection and system integration.
Security of the data transmitted and stored within the cloud is of the utmost importance as this data is no longer stored on local servers. Data should be encrypted during the transfer and storage stages and needs to be protected from access by other users that may be using the shared data center. Availability of the data and the reliability of cloud applications are just as important as the security of the data. Vendors must limit unscheduled downtime of cloud applications in our global 24/7 business environment.
In addition, the number of applications that a company houses in the cloud environment increases the requirement for the bandwidth needed for uninterrupted access to that data. Companies have used secondary internet providers as a backup option as well as engaged services with both telephone and cable internet providers to ensure constant and reliable connectivity. Risks related to the ownership and migration of data upon a change or termination in service providers also need to be considered. It is important to discuss the data transfer procedures with potential vendors as well as exit costs and strategies.
What do businesses need to do before proceeding with accounting in the cloud?
The most important thing you can do as a protector of information is to understand the potential risks associated with accounting within the cloud environment. Users should consider establishing a process of mandatory contractual agreements with potential cloud application service providers and verification that the service provider has the proper controls in place to help mitigate these risks of accounting in the cloud environment.
Accounting in the cloud has many advantages, but considering the risks and protecting your data should be your focus when entering into this environment. ●
Insights Accounting & Consulting is brought to you by Kreischer Miller