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For most people, becoming general manager of a $1 billion division of Clorox might be the pinnacle of their career. But for Joy Chen, it was an event that made her see she wanted something more.

With 20 years’ experience in consumer-packaged goods, Chen hoped to work with a smaller, more entrepreneurial, high-growth company. She met with two equity investors, San Francisco Equity Partners and Simon Equity Partners, and really liked the portfolio of companies the firms had in natural products. The two firms saw her as a good fit for a natural beauty products company called Yes To Inc.

“The Yes To brand has been around for close to six years, so it is a very, very young brand,” Chen says. “When this opportunity came up with Yes To, they called me and I started as CEO 3 ½ years ago.”

Yes To is a manufacturer of natural skin and hair care products with annual revenue of more than $50 million. The company had a great mission and a great product, but there were a few matters that Chen saw as obstacles the company would need to overcome if it wanted to be among the top brands on the market.

“I knew that the brand had tons of potential just from looking from the outside,” Chen says.

Here’s how Chen helped open new doors to lift Yes To Inc. into the upper echelon of natural beauty product brands.


Make assessments

When Chen first arrived at Yes To, she wasted no time in creating a plan of attack for the company. She made a conscious choice to get something done quickly.

“During my first 30 days, I assessed the business to see what’s working and what’s not, and assessed the team to see who would add value to what we want to do and who won’t be part of the team,” she says. “It was a lot of assessment of the strengths and opportunities of the business and how we address those in the 30-day plan.”

The thing that was clear to Chen in those first 30 days was a need to focus on product quality. The brand’s products were being manufactured overseas.

“I moved all of our manufacturing to the U.S.,” she says. “This was a U.S. brand and I wanted it to be made in the U.S. and be able to manage the quality a lot better. When I did that I saw it as an opportunity to relaunch the brand under all new positioning.”

Yes To has six different product lines branded under different fruits and vegetables such as Yes To Carrots, Yes To Cucumbers and Yes To Tomatoes. Over the past three years Chen has repositioned and relaunched the entire brand.

“We positioned the product lines to be more benefit-based lines in the brand, whereas in the past they were viewed as flavor and scent differences,” she says. “The cucumber line is now a sensitive line and the tomato line is for acne.

“That repositioning really helped bring a lot of growth to the brand,” she says.

The company also launched new product lines — blueberry, an anti-aging line, and grapefruit, an even-color complexion facial line.

“We repositioned the entire business and launched the blueberry line all within the first nine months I was there,” Chen says. “I coupled that with the manufacturing piece because I thought it was an opportunity to do it all in one big package. From there we were able to get a lot more distribution and our business really grew.”


Growing pains

As Yes To kept climbing the ranks in the natural beauty product segment, the company began to have challenges keeping up with and forecasting growth.

“It was really hard for us to forecast how high is high,” Chen says. “For a small company you can’t just buy all the inventory you need to support that, so we inadvertently had supply issues because our growth was higher than what we projected, and we couldn’t deliver the product as well as we would have liked to some of our retailers.

“That happens when you’re in a small company because you have to manage your cash flow while you’re growing. You really have to balance those trade-offs in a smaller company.”

The second challenge Chen faced was realizing over time that the needs for talent within the team change. What you need sometimes when you first start the company is different from what you need three years later.

“You have to make sure that the people you have on your team a year ago are still the same you need moving forward,” she says. “The skills that you need change as the company changes and grows.”

Aside from tracking talent needs, anyone who runs a small company will undoubtedly get caught up in the day-to-day, but to be successful you must make it a point to look ahead.

“You have to make time to do that and think about what is required to continue to grow the company,” Chen says. “You can’t get complacent.”

With the new positioning, launch of new products and a focus on higher quality, Chen has helped Yes To become the No. 2 natural skin care brand in the U.S. It was previously No. 5. Yes To is also the No. 1 natural facial skin care brand.

“We have opened a lot of doors,” Chen says. “We’ve increased our distribution over the last couple of years with major mass and drug retailers. We’re No. 2 and it’s great, but there’s so much more to do. How do we get to No. 1 or get to be a stronger No. 2?”


Keep innovating

Chen’s goal for Yes To is to double the business in the next two or three years. In the last three years, Yes To has quadrupled the business in size and increased the value of the company by five times.

“Doubling the business sounds easy, but it’s going to be a different kind of growth,” she says. “We opened a lot of doors over the last 3 ½ years, and we still have opportunity to open more doors, but we’re going to be more selective about what doors we open.”

For any small business driving awareness is really important for the brand. It’s important for Yes To that consumers are able to find its product.

“One way to drive a lot of awareness in the beginning is making sure that your consumers can find you in the different channels that they shop in,” Chen says. “The various channels and various doors that we’ve opened allow consumers to be able to find us and have experience with our brand.”

From there the growth relies upon the quality of the product and the continued innovation within the company’s various product lines.

“It’s hard for one set of products to do everything, so that’s why we have built them into families,” she says. “Innovation is really important for us because in beauty people love to try new things. They’re always looking for the next, new, better thing. In beauty people have different skin needs and hair needs, so innovation and bringing new technology to your brand is really important.”

The most important thing that Yes To has done for itself is to clearly define what the brand stands for.

“That is a sandbox that we need to find ourselves,” she says. “That’s something that we need to define as our right to win. I don’t believe in the consumer telling us to go somewhere when we don’t believe the brand should go there. You’re trying to create the brand and the equity behind it and you have to define what that is. From there you innovate within that space.”

Since Yes To is still a small, growing company, it doesn’t have large amounts of research dollars, so it relies on the marketplace.

“We tend to look at larger companies to see what’s successful and we rely on data to show how successful certain products are,” she says. “That’s how we saw a huge void in anti-aging in our product family. Anti-aging was a huge segment we were not playing in and it has seen a tremendous amount of growth year after year.”

Once Yes To defined the segment, it looked at who was already doing it well.

“We look at competitors, we talk to our consumers and then we look at what we want the brand to stand for,” Chen says. “The combination of those things is how we come up with innovation.”

Innovation will continue to be a huge part of Yes To’s growth moving forward, and its innovation will have to differentiate the company from other competitors.

“First-to-market innovations that really matter are really important,” she says. “We know that once people try our product they like it. So our biggest challenge is driving more people to try it.”



  • Find the obstacles holding back your company’s growth.
  • Implement solutions and focus on where to grow next.
  • Find ways to improve your brand and market share.


The Chen File

Name: Joy Chen
Title: CEO
Company: Yes To Inc.

Born: Hong Kong. Chen came to the U.S. when she was 9.

Education: Attended U.C. Berkeley and earned a degree in business administration. She went to Harvard Business School for her master’s in business administration.

What was your first job and what did you learn from that experience? I helped manage five maternity clothing retail stores. I took away the fact that as long as you put your mind to it you can get it done. It was fun to help merchandise the clothing and manage the stores.

Who do you look up to in the business world? Jack Welch. He never settled for complacency, always had really high standards and pushed his leadership team to think outside the box delivering extraordinary performance.

What do you like to do outside of work? My husband and I really enjoy adventure travel. We like to travel to less developed places. We recently went to Bhutan. What we like about going to those places is it brings us back to what really matters in life and away from material things.

Do you have a favorite Yes To product? Blueberry eye cream


How to reach: Yes To Inc., (888) 929-3786 or


When my corporate giveaways company Branders was first getting off the ground, I asked many people, “What would our customers have to believe about Branders for us to get as big as we would like?”

The answer to this question was what I came to think of as our “success statement” — a simple, sentence-length promise that if believed by customers and profitably delivered by us, would keep Branders growing and gaining market share.

Articulate your success

I learned from experience how challenging and valuable articulating such a success statement could be. Why? Because, while grasping the concept of a success statement is simple, actually crafting one is hard. To create ours, we needed an accurate understanding of many variables simultaneously: what drives our customers’ purchase decisions, our customers’ options as they see them and our company’s current and potential capabilities.

But the hard work paid off. When we found the words, it felt like a “eureka” moment. Our success statement — “Whatever line of business you’re in, whatever your occasion, you’ll find the giveaway that excites and delights you here, every time” — gave my Branders team and I strategic clarity. It told us who we were, what made us special and how we could keep getting better.

From that point forward, every decision we made and every action we took was measured against our success statement. Sometimes, developing a credible success statement requires you to change your product, pricing, promotions or distribution. In this way, it can focus your entire organization’s efforts.

For example, think of Visa’s tagline, “Everywhere you want to be.” Behind this tagline is Visa’s success statement. Your Visa card will be accepted everywhere you might want to use it. With that kind of clarity about what the customer needs to believe in order for Visa to be successful, the organization’s strategic priorities become clear.

Thrive in a crowded market

Smart success statements can also help multiple competitors thrive in a crowded market.  Consider toothpaste, especially in the days before fluoridated water. One company’s success statement might have suggested, “When you brush every day with our product, you will have fewer cavities than if you did the same using any other toothpaste.”

Another’s might have been, “When you brush every day with our product, you will have fresher breath and whiter teeth than if you did the same using any other toothpaste.”

Both success statements would orient their respective company’s product development, distribution, pricing and advertising efforts — albeit in different directions. And, over time, each company would become increasingly distinct, which is a good thing on a crowded field. Both success statements could work as brand foundations — and evidently they did. Today we all know that Crest fights cavities and that Close-Up is best for kissing.  

Develop a success statement of your own. It is not easy work, but it pays off both in the insights that come from doing it and in the focus the resulting success statement brings to all your operations. Ask yourself what statement about my product or service, if believed by customers, would cause my business to be more successful? Once you can answer this question, you’ll realize you’ve unlocked the answers to many more as well.

Think of your success statement as your magic words to success. ●


Jerry McLaughlin is CEO of, the world’s largest and lowest-priced online promotional products company. He can be reached at

Albert Einstein once said, “The only real valuable thing is intuition.” While nobody can deny Einstein’s supreme intellect, I must respectfully disagree. Instinct is invaluable in many aspects of life, but I have learned throughout my career that it takes far more than instinct to be successful in sales.

In order to maximize effectiveness and profitability going forward, sales teams must rely less on intangible gut feelings in favor of big data and predictive analytics.

Art and science come together

There are roughly 1.8 million B2B sales people in the United States. Even with the advent of CRM solutions, which track progress against goals and remind salespeople when to call on prospects, many still depend heavily on intuition to negotiate and close deals.

This tactic works for some, but I would argue these sales people leave missed opportunities on the table. Big data and predictive analytics are changing all of this — infusing an art with a healthy dose of hard science.

One could argue that data scientists have been around for a long time to provide this kind of information. But not every company could afford one or had the foresight to employ one. Now, technologies entering the market leverage big data to provide salespeople access to sales history, customer performance, deal metrics and optimal target prices.

Armed with this historical and machine data, sales teams will become much more calculated in their decision-making. They will be able to predict the next product customers will buy, which customers are most likely to defect in the next 60 days, which prospects to call that day and perhaps most importantly, the right price to close a deal for maximum profitability. And, they will be able to do it all dynamically and in real time.

Look at history

We have seen the effect of data and analytics on organizations before. Twenty years ago, supply chain managers would come into warehouses with a pencil and clipboard to mark what supplies were low and then manually order needed stock.

Today, this would be unthinkable; any company that runs its supply chain like this will surely struggle to keep up with competitors. Instead, modern supply chain operations rely on historical data to know what to order and when.

The sales process is in the midst of a similar transformation. In the next five to 10 years sales people will increasingly leverage data in their craft. Customer relationship management and sales performance management tools replaced the briefcase and spreadsheet, bringing this age-old tradition into the 21st century.

Now, it is time for big data and predictive analytics to take us into the future. In addition to making salespeople more efficient and educated on the buying behaviors of their prospects, embracing a more scientific approach will also maximize their ability to close profitable deals and meet their quotas, no matter what industry they find themselves in. ●


Neil Lustig is CEO of Vendavo, the enterprise profitability solution of choice for more than 300 company divisions at some of the world’s biggest names in chemicals and process industries, consumer packaged goods, wholesale distribution, energy and utilities, technology, industrial manufacturing, and medical devices and consumables.

Business banks can provide more to their clients than financial products. With all of their connections, bankers can steer businesses toward resources such as government entities and industry organizations that can help them grow and thrive.

“Their bankers should be introducing them to the people and organizations that know their industry like the back of their hand, and can offer assistance in everything from tax benefits to manufacturing locally,” says Gloria Ferguson, senior vice president and market manager of the Corporate Banking Division at Bridge Bank.

Smart Business spoke with Ferguson about the various resources available to local manufacturers and other businesses.

Why go to a bank for industry resources?

Choosing a bank that has extensive experience in your industry can be the difference between your bank offering you traditional banking services and your bank playing a vital role in the growth and success of your business. Part of the role of a consultative banker is to ensure clients are aware of the various resources available to them. When you become a client with a banker who knows your industry, he or she can help your business thrive. A banker who knows your industry is more likely to have a network of industry professionals and organizations and will also know the ins and outs of government resources available to you. Bankers have connections to a vast network of people from CPAs to lawyers to industry leaders.

As an example, the Bay Area participates in an annual manufacturing week during which people tour manufacturing companies in order to understand those businesses and help them take advantage of resources.

What are some of the local organizations dedicated to helping businesses?

California is a great example of a state with a strong support system for local businesses and manufacturers. Cities and the state of California have worked to attract and retain manufacturing companies by providing resources and benefits, things such as tax incentives and support for their labor force.

Manex has consultants that provide services to small and midsize manufacturers in Northern California. It has an edict to meet with companies to determine their needs and help create efficiencies in their business, whether that’s teaching them lean manufacturing methods or working with companies in foreign trade zones that may enable companies to receive tax advantages.

The East Bay Manufacturing Group seeks to educate manufacturers through sponsoring events with CEOs and CFOs on how to successfully run companies and solve common business problems.
SFMade supports San Francisco start-ups and manufacturers through industry specific education and networking opportunities, while connecting companies to local resources.

Also, there are additional resources provided by coalitions dedicated to innovation. The Bay Area Council, Innovation Tri-Valley Leadership Group and East Bay Leadership Council, and Fremont’s Innovation District and the Fremont Advanced & Sustainable Technology strategy explore common issues for manufacturers and seek solutions.

Why is manufacturing a particular area of focus?

Manufacturing covers such a broad spectrum of companies. It can be anything from semiconductor production to food processing. When you look at the Bay Area it’s very diverse in terms of manufacturing; there is everything from steel fabrication to bio companies, large-scale candymakers to industrial bakeries.

This is an area of focus because of the large amount of manufacturing that has moved overseas because of costs and regulations. In an effort to bring manufacturing back to California, cities and the state have worked to provide incentives and support to these companies. That’s why a lot of these organizations have been created — to attract and keep more manufacturing companies.

Although I’ve focused on manufacturing, it’s equally important to find a banker who knows your industry, no matter what business you’re in. There will be industry organizations, tax incentives and industry professionals that will be able to help your business, and your banker can be the person introducing you to this valuable network.

Gloria Ferguson is a senior vice president and market manager of the Corporate Banking Division at Bridge Bank. Reach her at (408) 556-8652 or

Follow Bridge Bank on Twitter, @BridgeBank, or on Facebook.

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Civil courts, trying to manage busy caseloads with reduced staffs, are pushing litigants to seek alternative means of resolving their differences.

“Alternative dispute resolution (ADR) is the debt that all civil litigants pay. One way or another, everyone has to pass through some form of ADR during the life cycle of his or her litigation,” says Brock R. Lyle, a partner at Ropers Majeski Kohn & Bentley PC. “Everyone has the right to a trial by a jury of their peers, but most cases can be resolved without one. Courts cannot force you to resolve your case through mediation or some other alternative means of resolution, but they can, and will, strongly encourage you by placing settlement stops and incentives along your path to trial.”

Smart Business spoke with Lyle about the various trial alternative methods available.

Do you need to attempt mediation or some form of ADR before a case can go to trial?

There are several nets in place to catch cases before trial. The first is often mediation, a formal negotiation assisted by a neutral professional. At the initial case management conference, the court will inquire whether the parties are willing to go to mediation. If so, the court will set a completion date and follow-up hearing. If one party refuses, the matter is generally set for trial.

There are instances where parties are willing to enter into mediation even before a case is filed, a good way to save money on legal fees. But you run the risk of resolving a case before the parties fully understand it. The parties can conduct as many mediations as they believe would be helpful. Some mediators keep working with the parties after the formal session ends. Certain courts also offer no-cost mediation for simpler cases.

In place of, or sometimes in addition to, mediation, the parties can submit to an early neutral evaluation or an early settlement conference, both of which involve an impartial lawyer or judge evaluating the case and pushing both sides toward a resolution.

The final net is a mandatory settlement conference, where the judge meets with both parties separately to remind them of the costs and uncertainties inherent in trial, and to push them once again to settle. Depending on the type and size of the case, settlement through ADR can help avoid tens of thousands or even hundreds of thousands of dollars in attorney fees.

What other ADR options are available?

Another option is arbitration, which is like a private trial. It can only occur by agreement of the parties or a prior written agreement, because it involves a waiver of the right to a jury trial. Arbitrations can be binding or nonbinding, though the latter is often more informational because one or both parties can disagree with the ruling and disregard it.

At arbitration, a retired judge hears evidence from both sides with exhibits, witnesses and many elements of trial. The arbitrator then issues an award that the prevailing party has confirmed by the court.
Of course, either attorney or party can always discuss settling the case and try for an informal resolution over coffee or lunch.

How do you know what ADR method is best?

In many cases, the contract or agreement at the center of the case will require mediation, arbitration or both. For example, most real estate contracts include mediation provisions. As an added ‘incentive,’ California case law cuts off a party’s entitlement to have attorney fees reimbursed if the party is unwilling to mediate, or starts a case without first offering to mediate. If no ADR process is spelled out in a written agreement, the posture and progress of a case often dictates the best fit.

What are some pitfalls to avoid with ADR?

One concern is going through an ADR process before the case is ready. If essential information needs to come forward in written discovery, depositions or expert testimony, an early mediation may be a waste of time and money.

The ADR process also creates pressure to settle that can force a disadvantageous position. After investing time, money and energy in preparing for and attending the ADR session, parties often feel they should settle. There is no shame in walking away.

Finally, parties can abuse ADR by going through the motions without any intent to settle, delaying the matter and racking up attorney fees. It is useful to see if the other party is ‘in the ballpark’ before the cost and effort of preparing for an ADR session.

Brock R. Lyle is a partner at Ropers Majeski Kohn & Bentley PC. Reach him at (650) 780-1647 or Find out more about Brock R. Lyle.

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If you have three qualified job candidates with equal experience who interviewed well, how do you choose? Ask yourself how the new hire will fit in — will they enhance or disrupt your current team? The culture is critical anytime there is a personnel change, whether hiring, promoting or planning for succession.

“If you put a tiger in a group of lambs, what’s going to happen?” says Ricci M. Victorio, CSP, CPCC, ACC, managing partner at Mosaic Family Business Center. “Tigers need to prowl on their own. They aren’t usually good team players.”

Smart Business spoke with Victorio about the importance of “casting” people in the right roles to magnify their strengths.

What’s key to know about personality traits?

There are five basic traits most personality assessment tools use to define how people naturally perform. Each trait has two opposite styles with a midline where people are more flexible or adaptable. They are:

  • Dominance. Is the person more control-oriented, competitive and ambitious; or a team player who prefers collaboration?
  • Communication. Is the person more persuasive and energized by people; or reserved, preferring one-on-one conversation?
  • Procedural. Is the person more process-driven, organized and a good listener who needs time to make decisions; or flexible, creative and enjoys spontaneity?
  • Organization. Is the person more detail-oriented, wanting things done correctly; or strategic, big picture and concept-oriented?
  • Logic. Is the person more analytical, or intuitive when making decisions?

It’s interesting to note that leadership styles are determined by whichever trait is the highest. Many corporations recast CEOs depending on the stage of growth. A start-up could need an innovative, confident leader to make swift decisions and take calculated risks, while a more mature company might need a road builder or process-oriented leader to maintain the business.

How useful are personality assessments?

The surveys measure self-perception — how people see themselves and how they perceive the expectations of others. When hiring, you can’t rely solely on this feedback; it’s just one part of your vetting process. Also, results are dynamic and change as people evolve and their environment changes.

Personality assessments help create a baseline for understanding who we are and what we are experiencing. For example, in a demanding sales environment, you can increase success by looking for high communicators who are energized by personal interaction and adaptable. They need to be go-getters who can think on their feet and close the deal. Most assessments provide questions that offer greater insight during the interview.

What are signs your workforce isn’t gelling?

If you hire a high-dominant, low-extrovert manager to lead a collaborative team that is accustomed to brainstorming, the indirect ‘teller’ style of the new manager will be perceived as unfriendly and bossy. Team members will feel less valued, become disenfranchised and frustrated, leading to increased tension, absences or resignations. It is important to consider the desired behavioral attributes each position requires for optimum results, such as having outgoing, creative problem-solvers in people-oriented positions, and detail and process-orientated caretakers for more analytical roles.

How can you better understand your own behavior and management style?

Self-awareness is the first step in self-management. If you know you tend to make decisions hastily, never make an important decision without sleeping on it.

You also might struggle without knowing why you are feeling drained, stressed or anxious. In one case, an executive was proud of her open-door policy, but was feeling unsatisfied. She learned that it was causing her significant energy drain. She discovered that as a process-oriented, reserved communicator, it was more energizing to limit open-door interruptions to certain times.

Every personality is valuable and dynamic. It’s a matter of finding the right role that suits who you are and being able to adapt successfully to the world around you.

Ricci M. Victorio, CSP, CPCC, ACC, is a managing partner at Mosaic Family Business Center. Reach her at (415) 788-1952 or

Insights Wealth Management & Finance is brought to you by Mosaic Financial Partners Inc.

Business owners have been watching the slow rollout of the Patient Protection and Affordable Care Act (PPACA) for a while now. But that doesn’t mean they have a firm grasp on the breadth of the challenges, requirements and decisions that are inherent to its wide-reaching health care and insurance changes.

“If you’re like most business owners, you have already spent significant time gathering and processing information,” says Bill Norwalk, tax partner-in-charge at Sensiba San Filippo LLP. “Very soon, you will make vital decisions that will have significant effects on the future success of your organization.”

Norwalk says it’s critical for business owners not to get too caught up in the political maneuvering and analysis that fills the news coverage.

“Regardless of emotion or political leanings, business owners must understand that the PPACA is a reality and needs to be addressed like any other challenge,” he says. “Taking an unbiased, strategic look at the law and its ramifications for your business will allow you to make decisions that aren’t clouded by emotion or outside factors.”

Smart Business spoke with Norwalk about the PPACA, its ramifications and how businesses can adapt to its effects.

How will businesses be affected by health care reform implementation?

The PPACA will have an impact on benefits planning, tax planning and your ability to compete in a challenging labor market. Making the best decisions will require you to understand all of the decisions and consider their varied consequences.

Taking a decision-and-consequences-based approach to your analysis will help you understand the potential effects of your choices. Many businesses are considering the pros and cons of offering qualifying health insurance versus dropping health coverage and allowing employees to utilize newly established insurance exchanges. While the analysis of direct costs may be straightforward, you need to understand how your employees will view a change in coverage. Changes in health care benefits could have a substantial impact on your ability to attract and retain talent.

What are the potential tax effects and what can businesses and individuals do to plan?

Tax implications of the PPACA are wide reaching for both businesses and their shareholders. New taxes were introduced that could result in significant tax increases — especially for business owners and managers who don’t plan ahead.

Corporation shareholders and shareholders of pass-through entities could both be affected by the 3.8 percent tax on net investment income. An additional 0.9 percent Medicare surtax was also introduced by the PPACA. Shifting from investment income to regular income could be an effective strategy, but the analysis is often far more complex. Depending on your wage level, an additional self-employment tax on regular income could more than offset potential savings from decreasing net investment income. Alternative minimum tax considerations can further muddy the waters. The PPACA simply makes tax planning more convoluted. Fortunately, qualified professionals will have the tools and resources needed to help you consider various scenarios and develop a plan to minimize your liability.

Where should business owners turn for guidance?

Decisions related to PPACA implementation will affect human resources, tax strategy and the broader organization. Business owners must first identify the key decisions and then weigh the consequences of each. If your strategic plan related to the PPACA isn’t complete, it’s time for you to speak with someone who can help.

Work with an insurance or benefits adviser. He or she can help you understand your coverage alternatives and the associated costs. An experienced accountant can offer assistance with compliance, tax and organizational planning. The right information, advisers and analysis will allow for decisions that can minimize negative consequences and maybe even provide a competitive advantage.

Bill Norwalk is a tax partner-in-charge at Sensiba San Filippo LLP. Reach him at (925) 271-8700 or

For more health care reform information and tax tips, visit Sensiba San Filippo's blog.

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Private equity firms use capital, usually committed by large institutions, to invest in different companies. Often their investments are riskier companies at the start-up stage, so the returns can be quite large if these businesses become successful.

Recently, a sub-category of private equity, listed private equities (LPEs), traded on the stock exchange, are gaining popularity in the U.S.

“Until now, the whole section of private equity, from a small investor’s point of view, wasn’t accessible. With this emerging trend of LPEs, every investor, including the smaller players or individual investors, can invest a portion of their wealth into private equity and get that exposure,” says Sinan Goktan, Ph.D., assistant professor of finance in the College of Business and Economics at California State University, East Bay.

Smart Business spoke with Goktan about how LPEs work, and the performances of companies backed by LPEs versus traditional private equity firms.

Why are LPEs growing?

When anyone is able to purchase shares in an LPE firm, gaining exposure to the private equity market, investors can further diversify their financial portfolios. This new asset class is drawing capital into the private equity market from a new investor group and the flow of capital is continuous (since the firm is listed), unlike the traditional private equity capital that has a typical investment horizon of eight to 10 years. Eventually, a traditional private equity fund needs to be exited and new capital needs to be raised, which can be costly. The appeal of access to public markets as a continuous source of capital is leading more private equity firms, especially the larger ones, to list themselves. At the same time, LPE investments are more flexible and liquid than unlisted private equity.

Although LPEs are more established in European financial markets, particularly London, some big U.S. firms are Blackstone, KKR and The Carlyle Group.

How are LPEs different than unlisted private equity firms?

Both private equity types function similarly, except in how they raise capital. However, research with my co-authors Volkan Muslu and Erdem Ucar has shown that there’s a difference in how the companies they invest in perform in the long run.

When LPE-backed companies go public, they are more conservative and reliable in how they report earnings before and after the initial public offering (IPO) year. They also are timelier with recognizing losses. LPEs are subject to greater scrutiny by the SEC due to being listed in an exchange. Our results may be attributed to the higher reporting requirements of LPEs spilling over to the companies they are backing.

More reliable numbers mean more control and less risk for the investor. Traditionally, with unlisted private equity, potential new investors didn’t know much about private equity-backed companies’ progress until the IPO. The relatively timely and accurate financial information revealed by LPE firms has an impact in financial markets.

How else does the type of private equity backing affect an IPO?

Looking at the example of Facebook, if there’s lack of information, analysts will come up with wildly different price estimates. Because of their nature and the greater information content with the LPE-backed companies, the first day’s pricing is more accurate, which creates a lower initial return. Since companies revisit the financial markets repeatedly, they need to earn the trust of investors by providing accurate information in a timely manner to generate price stability.

What does your research suggest about increased disclosure requirements?

With passage of the Dodd-Frank Act, even unlisted private equity firms must file information with the SEC. Recent evidence suggests that investigators also are more likely to approach small private equity firms to ask for more information about their investments. Thus, the more opaque the private equity firm, the more information is required. Ultimately, the general trend is that investors are increasingly seeking more financial information before committing capital. Companies will either choose to reveal better quality information themselves, or the SEC will probably require them to reveal more information as needed.

Sinan Goktan, Ph.D., is an assistant professor of finance in the College of Business and Economics at California State University, East Bay. He teaches finance in the MBA Program. Reach him at (510) 885-3797 or

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Gone are the days when companies could simply post openings on job boards and expect responses from a large pool of qualified candidates.

“It’s no longer appropriate to just reactively post on a job board — to post and pray that a correct candidate will submit a resume. You need to have a recruitment strategy,” says Mary Oslin, manager of Talent Acquisition at TriNet, Inc.

“It used to be that managers went to HR about an opening. Now the entire organization needs to be involved in talent acquisition. Managers should be meeting about talent acquisition on a regular basis to determine what recruiters should be pipelining,” Oslin says.

Smart Business spoke with Oslin about how the hiring process has changed, and simple steps to ensure your company’s job openings reach top quality candidates.

What are some current trends in talent acquisition?

Pipelining — having a network of candidates you keep in contact with — is one. For example, IT is always a hot skill set, so your recruiters should be in constant communication with candidates. You may not have a need now, but you may have a need in six months, so you want to be ready with pipelined candidates who have the skills you need.

Mobile recruiting is another trend. With mobile apps, contact is immediate. You might think your employees are checking news headlines when they’re actually applying for a job or negotiating terms. Applicants no longer have to wait until they get home or have a break to correspond with a recruiter. Mobile needs to be one of the tools in your toolkit for talent acquisition. Top talent is making use of mobile apps, and they want to get their resumes in front of a hiring manager as soon as possible. Employers that are only utilizing job boards are losing out to companies that are using mobile apps to reach those candidates immediately.

Focusing on employer branding also has become much more prevalent. A subset of that is the practice of using current colleagues not only for referrals, but to act as ambassadors for the brand via social networking and professional networking sites.

Do strategies change with the level of the job?

Strategies need to fit the candidate. C-level and senior management positions are typically more difficult to fill, so more networking is required. Get involved in professional organizations and professional networking social media sites like LinkedIn. For some administrative jobs, it may be OK to use the old method of posting a job and gathering resumes. But for higher-level and more skilled positions, finding passive candidates through networking is the way to go. Occasionally, great candidates are looking for a job and apply to a posting. However, the real talent is the people who are happy with their jobs and not actively looking to leave.

Is branding particularly important when it comes to attracting passive candidates?

You want your company to be one where people want to work, so be careful about what type of reputation it has in the marketplace. Many employers aren’t aware of how they are perceived.

Survey your employees and find out what can be done to make your company a great place to work. Create an atmosphere where people are happy coming to work, proud to say where they work and willing to post positive workplace developments on social media, such as Glassdoor.

What are some tips to follow to ensure talent acquisition is done well?

Every company should seek to improve its branding and reply to applicants — it’s not good to start developing a reputation of being a black hole. Eventually, word will get around and people will be told not to bother sending you their resume. Establish a procedure to contact the candidates who are not selected, whether by email or phone.

Focus on the candidate experience. Those who are not hired may walk away disappointed, but you want them to be impressed that the process was professional and they were treated with respect.

Mary Oslin is a manager of Talent Acquisition at TriNet, Inc. Reach her at

Do you need help with your talent acquisition? Visit TriNet, Inc.'s website or ask @TriNet on Twitter.

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Merchant services affect the majority of companies — more than 90 percent of online purchases use credit cards.

“If you’re not sure if merchant services is the right fit for your company, think about what your competitors are doing. If you don’t accept cards today, then prospective customers may be going to other businesses,” says Jan Mitrovich, manager for Treasury Management and Merchant Services at California Bank & Trust.

Smart Business spoke with Mitrovich about how to understand merchant processing services and costs, and when to talk to your banker about new solutions.

How do you know if your company is using merchant services correctly?

Every company should consider where it’s doing business and how it’s transacting with customers. Examine whether you are effectively leveraging all your channels for sales opportunities. You may have a storefront that does terminal credit card processing. However, other payment options, including Web-based and e-commerce, may be worth considering.

How much of you sales efforts need to be in the field, such as industry shows? A mobile solution can extend your customer outreach while providing convenience to your customers.

The merchant services environment is continually changing. There are varying degrees of complexity, from processing basic transactions through a card reader, to merchants that need multiple payment channels, gift and loyalty card programs, check verification services and more. Your merchant partner can help you better understand your options and select the right solutions for your business.

What’s important to know when getting a merchant account?

The processing transaction fee can turn off businesses, but they must consider the value proposition of expanding their customer base by accepting more transactions.

Depending upon the transaction type and how it is processed, fees will vary, which gets confusing. Merchant processors also don’t always present the statement information and pricing in the same fashion. It’s common for business owners to think a quoted rate is the all-in cost.

Be aware of hidden fees. For example, only some organizations do pass through pricing for the interchange fees. A discount rate doesn’t necessarily compare apples-to-apples, so a more important question is, ‘What is the cost of the service?’

You also need to understand and educate your employees on the associated responsibilities and risks as a merchant processor, such as protecting customers’ sensitive data. Validation of payment card industry compliance is an important step to ensure credit card data is being protected. Data breach coverage can protect merchants from the cost associated with a data breach, which can easily run $35,000 or more.

What additional factors help determine which provider is the best fit?

One differentiator is customer service. Banks typically have a higher level of customer service, like 24/7 call support, than independent sales organizations.

You also need to consider whether to lease or buy equipment. The industry is moving toward chip-enabled cards that will require companies to change equipment during the next few years. Take the time to understand your options and pricing structure, as well as if any equipment is proprietary.

Finally, cut-off times for transactions and settlements can be a game changer. Settlement time frames differ, anywhere from next day to 30 days, depending upon the vendor. If you want to improve cash flow, in some cases, you can process transactions up to midnight with next-day availability of those funds.

How should you review current services?

Take the time to review your merchant statements and pricing. If your business model or activity levels have changed, talk with your merchant representative. New services or tools may be available that can create processing efficiencies for your business. For example, card-present transactions are generally lower risk and thus cost less to process, while manually keyed transactions cost more. You could make internal changes to reduce the volume of keyed entry transactions or possibly process transactions through a lower-cost channel.

Jan Mitrovich is manager of Treasury Management and Merchant Services at California Bank & Trust.

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