Jayne Gest

Boris Weinstein, 82, is passionate about litter prevention. It’s been like a second career for him since his retirement, and he easily spends 2,000 hours a year on his anti-litter work. And like many leaders, business or otherwise, he’s been able to use his passion to inspire and motivate others.

Weinstein first dabbled in litter cleanup as a junior commando in World War II, gathering material for the war effort. Later, in his professional advertising career, he came up with the slogan for Mayor Pete Flaherty, “For Pete’s Sake,” which was used on waste containers.

When he retired and was walking his dog four times a day through his Shadyside neighborhood, he noticed the same litter in the same spot day-after-day.

“It became very apparent that my approach was wrong. I was thinking big, when I really should have been thinking small,” Weinstein says of the public service campaigns he had helped develop.

“I started just concentrating in my own community, and I blocked off an area of about 40 streets and for 16 days I kept a diary of sorts. I went out for an hour, an hour and a half every day — and lo and behold my area was cleaner.”

Weinstein created a plan for getting rid of litter, which he called Citizens Against Litter, where one person can make a difference, and people who care can pick up for people who litter and don’t care.

The nearby United Jewish Federation in Squirrel Hill noticed Weinstein’s efforts in Shadyside and asked for his help. This cleanup coalition, or Redd Up Coalition, which organized volunteers who picked up litter on a regular basis, grew to include Homewood, Point Breeze North and Point Breeze South.


A grass-roots network of leaders

A strategic thinker, Weinstein wanted to go citywide. So, in 2006, he put together a two-year effort to organize a network of leaders who could engage their own neighborhoods for volunteer cleanups.

He kept the movement going by staying in constant communication.

“My work with the network leaders — it’s a constant situation,” he says. “I’m in contact with them through email, through telephone, through my monthly newsletter.

“Through them we’re able to organize significant cleanups, and we’re able to get the volunteers out. And I think that this is what sends a message to people: That if Boris can do it, and Boris continues to do it and doesn’t let up, we also can get involved.”

Weinstein says when motivating and inspiring volunteers and residents, he’s found that the constant, consistent connection is key.

“The notes that I get from people, and I do get them regularly, say, ‘You’re an inspiration to me,’” he says. “I think I’m an inspiration to them because I’m always in their face. They appreciate that it’s on my mind, letting them know and reminding them when we’re having the campaigns.”


Controlling litter with a community effort

Today, Weinstein helps coordinate large-scale cleanups, called Redd Ups, twice a year for 200 to 250 communities in Pittsburgh, Allegheny County and surrounding areas, with around 15,000 volunteers per cleanup.

This year’s spring Redd Up, scheduled for April 25 to 27, falls around Earth Day.

The University of Pittsburgh partnered with the fall Redd Up, putting 3,300 students in more than 75 city neighborhoods, townships and boroughs in 2013.

“I’m out to prove that picking up litter can be done by people in the community, and it doesn’t have to cost money,” Weinstein says, who also spent a number of years as a member and chair of the Clean Pittsburgh Commission.

In February, he received the 2013 Iron Eyes Cody Award, the top volunteer honor of Keep America Beautiful, but he’s not done yet.

Along with continuing to coordinate Redd Ups, Weinstein has been advocating a one-year neighbor test to address what he calls the four causes of litter — every day litter, illegal dumpsites, open and overflowing waste containers, and unclean storefronts. He wants city departments to do a thorough job of enforcing existing ordinances, which he believes will help eliminate and control litter.

And he still enjoys being part of cleaning up Pittsburgh.

“I’m still excited when new communities respond to my solicitation. I’m surprised and excited when I get unsolicited dispatches from people who say they want to participate,” he says. “I can’t get out from under it. I don’t want to. Obviously, it’s in my blood and I just want to continue.”

 

How to reach: Boris Weinstein and Citizens Against Litter, (412) 688-9120 or www.citizensagainstlitter.org

Business succession is the one thing many companies fail to address for fear of relinquishing control, a lack of time, the feeling that successors aren’t ready or other reasons. But, it’s never too early to start succession planning.

“Statistically, roughly only 30 percent of family-owned businesses are effectively transferred to the second generation and just 10 percent make it to the third generation,” says Julianne Cruz, managing director of Advisory Services at CB&T Wealth Management. “There are myriad reasons for this, but one recurring issue is a lack of effective succession planning.”

Smart Business spoke with Cruz about how to effectively position your chosen successors for success.

How should business owners get started?

You need to consider the three ‘T’s of successful transition:

  • Transferring management.
  • Transferring ownership.
  • Tax consequences.

In all cases, having a plan that is strategic and well executed is key, but that takes time. The most successful transition plans take place over a number of years, as successors develop the skill sets required to run the business. 

How is management transferred?

It’s important to select an independent adviser who is highly experienced with planning issues to arrive at the best plan for you and the next generation. Some areas to consider are: If more than one child is involved in the business, how will contentious decisions be made once you exit the business? If you want certain key, loyal employees to be cared for, as they are likely necessary for a smooth transition, what assurances do you have this will happen? What happens if unexpected health issues force the transition early?

A well-developed plan 
ensures the business will thrive without interruptions, helps the next generation grow into their role at a reasonable pace and promotes future harmony among family members. A short-term plan ensures there’s enough liquidity and insurance to hire necessary experts and avoid a fire sale. A mid-term plan must prepare developing successors or key employees to be in decision-making roles initially.

It also would have a timeline for family members to step into 
their new roles with certain targets. The long-term plan is ultimately what you want to happen — the best of all circumstances. After discussing your plan with advisers and successors, involve your key employees, who may be more satisfied knowing the company’s future.  

What are some factors to consider with transferring ownership?

Once the management transition plan is established, plans for transferring ownership can occur. Usually this begins with your retirement plans. How much income will be needed and what’s the timeline? If you need cash from the business, are you willing to bear the ‘investment risk’ of he business as a source of income once you’re not involved? Then, consider estate-planning issues. Are all your children involved in the business? If not, do you desire to ensure each child will ultimately receive an equal estate share? 

How do tax consequences factor in? 

Taxes are the tertiary consideration once decisions have been made regarding the general retirement and estate plans. As is the case with investment portfolios, taxes should never drive the decision-making process. Tax-reduction strategies should only be considered after other issues are decided. Business owners in general, and particularly family-business owners, should begin now and get an experienced, independent adviser to guide them through the process. The earlier you plan, the better the results. Sound, experienced advice will make the process that much easier, and maybe even bring family members closer. 

Wealth management services are offered through Contango Capital Advisors, Inc. (Contango), which operates as CB&T Wealth Management in California. Contango is a registered investment adviser, a nonbank affiliate of California Bank & Trust and a nonbank subsidiary of Zions Bancorporation. Some representatives of CB&T Wealth Management are also registered representatives of Zions Direct, which is a member of FINRA/SIPC and a nonbank subsidiary of Zions Bank. Employees of Contango are shared employees of Zions Trust, a subsidiary of Zions Bank and an affiliate of Contango. #CCA0813-0090 

Julianne Cruz is Managing Director, Advisory Services, for CB&T Wealth Management. Reach her at (310) 258-9301 or julianne.cruz@contangoadvisors.com

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

Managed services are increasing in popularity, as more companies outsource their computer network management.

“A structured managed services program provides the benefit of reducing your IT costs and risks of hardware failure while standardizing IT management through streamlined efficiency, often all at lower costs than the company could manage by doing it in-house,” says Eric Risheill, subject matter expert for the Managed Services Division at Blue Technologies Smart Solutions.

Managed services programs are imperative for those who don’t have in-house IT talent or the capacity to manage their networks. Risheill adds many small and midsize businesses have not replaced downsized IT staff, so managed service providers (MSP) can fill that gap easily and cost effectively.

Smart Business spoke with Risheill about how to utilize a MSP in your company.

How can business owners decide which service(s) to outsource?

Some companies instinctively know what they need to keep, but many don’t; they simply may have a hunch things could be running better.

The MSP will ask pointed, direct questions designed to ascertain what services are of value. Expert MSPs take the core services and modularize them to put them into packages in an effort to match a client’s needs. Then, customize it further to get the perfect fit.

Some only seek monitoring, with the MSP only calling if there’s a problem. However, most employers who are going down this path will say, ‘It would be nice to know if there’s a problem, but we don’t have the skills to deal with it.’ Therefore, the MSP should not only identify the problem but also fix it, even though that company may have the capacity to do so. This should include a backup mechanism.

How should companies deal with pushback from their internal IT staff?

An IT person’s first thought might be, ‘Hey, that’s my job, and if someone comes in to help me I’m not doing my job right.’ There is a degree of that, but MSPs are not out to create a reduction in head count. They come to help and are hopefully viewed as a resource to count on.

From an IT perspective, networking computer management is not that exciting. It’s one of those necessary evils, and very frequently the smaller, internal team doesn’t have the capacity to deal with computer management — doing the patching, the anti-virus and updates. In fact, for a lot of smaller companies, there may not be a dedicated IT resource at all. Sometimes the president, CFO or controller manages all the technology in addition to his or her full-time job.

What are some best practices when moving into managed services?

Roll up your sleeves and ask direct questions to those providing IT support, related to the costs to maintain workstations, software revisions, server status or network status.

Generally, business owners will know if there are frequent outages or problems with the network or viruses, but they really need to get answers from their IT staff and get it with proof. For example, reports that show the system is fully patched or one that shows the anti-virus is up to date.

Secondly, determine the cost of maintaining your equipment. Don’t forget to factor in labor costs, including salary and benefits, technology costs, contract costs, etc. Then, compare these costs against what a MSP will charge you.

Finally, execute a document with your MSP called a service level agreement. This agreement spells out, in full detail, exactly how things are going to go. It’s the responsibility of both parties to negotiate and fully understand the terms before they get started. Then you know the full extent of the services and how they will be delivered, because the last thing you want is a surprise when you need somebody.

Eric Risheill is a subject matter expert for the Managed Services Division at Blue Technologies Smart Solutions. Reach him at (216) 271-4800 or erisheill@btohio.com.

Insights Technology is brought to you by Blue Technologies Smart Solutions

Additional insured — it’s a standard practice in most industries to require vendors to protect you under their insurance policies. These insurance transfers occur most frequently when hiring companies to do construction, maintenance or security, or if you’re leasing space.

“The concept is if I hire you to do work for me, I don’t want to be liable for you. I don’t want to be responsible for what you may do wrong, so I want you to cover me with your insurance” says Brian Chance, MBA, CPCU, AIC, vice president of Claims and Services at ECBM.

Over the years, the use of additional insured status has expanded to more than it was originally intended. So, the insurance industry responded by reigning in coverage.

Smart Business spoke with Chance about additional insured form changes and what this means for existing and future contracts.

When did the insurance industry change the standard forms? What has been the effect?

In April 2013, the insurance industry tightened how much coverage an additional insured can obtain. The new forms aren’t mandatory, so some carriers are still using older versions. However, if they aren’t using the new forms yet, they will soon try to integrate them in their customary practices.

It’s too soon to say how this is impacting businesses. However, the changes will take many by surprise when they discover they don’t have the coverage they thought they requested as part of a business transaction.

What is the biggest change to additional insured endorsements?

The forms now say the language in your contract or agreement governs the scope, extent and limit of coverage that the additional insured receives. For example, if you hire a roofing contractor, you might require that contractor to have $1 million of coverage and name you as an additional insured. Then, let’s say, the contractor accidentally burns down your neighbor’s $5 million building, and he or she sues you. In the past, you could use additional insured status to not only get the first $1 million but also higher limits through the contractor’s excess policies. Now, your limit is just the $1 million you requested.

Before, your contract requirements may not have been flawless, but you were able to get needed protection anyway. Under the new forms, if you are less than perfect in what you ask for, the policies won’t automatically give you what you really want.

What other changes minimize this coverage?

In addition to limits, another concern is the order the policy pays. If you go through the trouble of obtaining additional insured coverage, you want it to pay claims before your policy does. Your contracts need to require the additional insured coverage to be primary and yours to be excess.

Furthermore, carriers will only grant additional insureds the coverage that state law allows. At last count, 10 states, including Delaware and New York, don’t allow you to be an additional insured for your own negligence under another company’s policy. Those states passed statutes to stop negligent people from transferring the cost of their negligence to business partners. So, if your employee injures an employee of your contractor, that injured employee might sue your company. Before, you could use additional insured status to make the contractor pay for that lawsuit. The new language makes it harder to cherry-pick state law, limiting options when you are negligent.

Does it matter when a contract is signed?

No. You need to address this issue in your new contracts and look at existing contracts. Your existing contracts may not contain the right language to obtain the coverage you think you have under today’s policy forms. This is especially true for long-term contracts like lease agreements.

What’s the takeaway for business owners?

Any business owner who hires someone else or leases property is at risk for problems. You should review contracts and standard agreements with your risk management and insurance adviser to ensure you request the best you can get in your contracts.

It may be difficult to update old contracts, because it opens up negotiations to all terms, not just the insurance piece. You may not be able to act immediately, but if existing agreements are re-opened in the normal course of business, these additional insured insurance changes should be addressed.

Brian Chance, MBA, CPCU, AIC, is vice president of Claims and Services at ECBM. Reach him at (610) 668-7100, ext. 1325 or bchance@ecbm.com.

Insights Risk Management is brought to you by ECBM

A 2013 survey of 2,000 U.S. health care consumers found that 83 percent are entirely unfamiliar with private exchanges, according to Accenture, a global management consulting company.

A Kaiser Health poll conducted at the same time found that almost half of respondents didn’t understand that public exchanges are a provision of the Affordable Care Act (ACA).

A year later, those numbers might have moved somewhat, but the confusion and caution about the health care exchange concept is still causing slow initial enrollment for both.

“I haven’t seen a massive uptake on the private exchanges yet,” says Mark Haegele, director of sales and account management at HealthLink. “But I have started to see, for the first time, a few employers say, ‘I’m no longer offering insurance, and you can just go on the public exchange.’”

However, the wait-and-see approach may change soon. By 2017, private exchanges are expected to catch up to public exchanges, with one in five Americans purchasing benefits from a health insurance exchange, Accenture projects.

Smart Business spoke with Haegele about how the two exchange types differ.

How are private exchanges different from the public ones?

The public exchanges, which are mandated by the ACA, allow certain unemployed individuals, individuals with employer-sponsored plans and some small companies to purchase health insurance. The exchanges are sponsored by the government, either state or federal, and cover medical and prescription drugs with four levels of coverage. The individual consumers and small employer groups pay for the coverage, with some eligible to receive government subsidies.

Private exchanges are available to employees of companies who decide to participate. Right now, only a few organizations are offering private exchanges, such as Aon Hewitt, Towers Watson and Gallagher Benefit Services, Inc. The employer sponsors the coverage, but a private exchange has a broad range of coverage from medical and prescription drugs to dental, vision and voluntary benefits. Like a traditional health plan, usually the employer and employee each pay for part of the coverage.

What’s the attraction to private exchanges? Do they help employers control health costs?

Private exchanges are a way for employers to easily establish a defined contribution-type health plan. They can say, ‘I spent $1 million last year on health care for my employees. I’m willing to spend $1 million plus 3 percent next year, but that’s it.’ Then, every person gets an allocation and can choose within the available plans.

Private exchanges create predictability. You’re buying a more budget-friendly solution, that helps employers be one more step removed from insurance, versus managing your own health plan. In fact, it may end up being a stepping-stone to the public exchanges. Once employees get used to exchange-type health plans, some employers may decide to stop health coverage altogether, having them go on the public exchange.

An exchange doesn’t inherently do anything to control health care costs. It’s not a silver bullet. The claims are still the claims. The health status is still the health status. And the insurance companies still have to price each plan with their underwriters. You can build in prevention measures to keep costs down, but that’s like any health plan.

What else should employers know about private exchanges?

So far, private exchanges are structured as a single carrier solution. For example, if Aon Hewitt’s private exchange has Anthem, UnitedHealthcare and Cigna, a 500-life employer can go to the exchange and pick one of those three carriers. Then, health plan members have a menu of plan offerings under that single carrier.

Typically, the majority of employer-sponsored health plans have two or three options. Under the exchange model, you might have upward of 10 choices, as well as ancillary coverages. There are still plenty of choices, but it’s not like each health plan member can decide between UnitedHealthcare, Anthem and Cigna. It basically puts different carriers’ defined contribution plans in a room together, making it easier for employers to choose one.

Mark Haegele is the director of sales and account management at HealthLink. Reach him at (314) 753-2100 or mark.haegele@healthlink.com.

Insights Health Care is brought to you by HealthLink

Overseas sales and exports can really help business owners grow their companies. But, when the company gets its first international inquiry, an owner might say, “I always deal cash in advance. Send me a check. I’ll send you the product.”

That’s not how the world works, says Art Rice, vice president and manager of International Operations and Product Management at FirstMerit Bank.

“The world rarely operates on cash in advance anymore. So, it may be days, weeks or months between the actual sale of the merchandise or service and the resolution of the accounts receivable,” he says.

This extended sales cycle can strain your working capital, but the U.S. government has several programs to help, Rice says, including the Export-Import Bank of the United States (Eximbank) and the Small Business Administration (SBA).

And your banker can be very helpful as you get into international sales or expand into new markets, says Frank Pak, vice president, International Division, at FirstMerit.

“We can serve as a great referral source to other professionals involved in supporting exporters, and also referring them to government assistance centers like the U.S. Export Assistance Centers or the SBA, an international lawyer, a freight forwarder, export insurance broker, etc.,” he says.

Smart Business spoke with Rice and Pak about available export support programs.

What are some export support programs?

The Export Working Capital Programs of the Eximbank and the SBA provide an exporter with funds for things like materials and payroll while producing the product. Banks receive a 90 percent guarantee on the loan’s principal and interest, because the government wants to encourage U.S. job creation. Also, the work in process can be included in the advance funding calculations.

It’s better to work with a bank that has Delegated Lending Authority from the Eximbank or Preferred Lender designation from the SBA for this program as it can expedite the process and assures that you’re working with an experienced lender.

Credit Insurance on foreign receivables is when an exporter purchases protection against non-payment of its foreign receivables from Eximbank or a private insurance company. Normally, banks don’t allow the foreign accounts receivable to be included in a company’s borrowing base because of the perceived heightened risk when buyers are located in a foreign country.

With insurance, an exporter has the opportunity to offer longer repayment terms. For example, a company, that typically offers no more than 60-day terms to its customers, sees its competitors in foreign markets offering 120-day terms. With export credit insurance, the exporter is able to take the risk of longer terms that will enable it to be more competitive. Also, if it assigns the insurance policy to its bank, the bank can advance against those receivables, improving cash flow.

For larger export sales, buyers in higher interest rate countries often look for some form of extended payment terms. Typically referred to as buyer financing, the exporter can decline and lose the sale, offer unprotected terms or use a form of insurance to protect its medium term receivable. The U.S. government supports such sales with programs called Medium Term Loan Guarantees. A bank is willing to participate because repayment is guaranteed by the U.S. government. The exporter benefits because it satisfies what the buyer needs and receives payment from the bank almost immediately after shipping its product. While there are restrictions, successful exporters have used such programs for 70 years.

What’s important to know about using export programs like these?

You don’t have to go it alone. Your banker is an advocate who can help you find the right resources as you set up your export program and understand the advantages and disadvantages of available payment methods.

Contacting your banker early in the process, as you’re developing your business plan and researching markets, will shorten your learning curve and help you become successful sooner. Banks can also direct you to government resources, which have additional tools available to support exporters as they expand into new markets. Reach out to your bank now, even if you’re just thinking about exporting overseas, because your banker will be happy to share his or her expertise.

Art Rice is vice president and manager of International Operations and Product Management at FirstMerit Bank. Reach him at (330) 384-7178 or arthur.rice@firstmerit.com.

Frank Pak is vice president, International Division at FirstMerit Bank. Reach him at (216) 317-7399 or frank.pak@firstmerit.com.

Insights Banking & Finance is brought to you by FirstMerit Bank

Many people join a nonprofit board of directors because they are passionate about the organization’s mission. What they really want to do is to help the organization accomplish it, but there is a host of governance responsibilities that go along with that.

Marie Brilmyer, CPA, M.Acc., a director of assurance services at SS&G, says nonprofit boards need to think about strategy, monitoring, oversight, compliance and financial health like a corporate board.

“A board needs to think ahead,” she says. “It needs to be sure that the organization can fulfill the mission today and tomorrow. It can’t be uncomfortable with profit because a model where an organization continues to lose money, and is budgeted to do so, is clearly not going to be sustained.

“While there are different nuances, at the end of the day, they really need to be looked at, whether it be for-profit or nonprofit, in a similar manner with regards to finances.”

Smart Business spoke with Brilmyer about the nonprofit board’s role in creating smart, sustainable fiscal decisions.

Many nonprofit board members are from the corporate world. How similar are the two board types?

It’s not that different. Nonprofit boards look at the executive director’s performance; corporate boards look at the CEO’s. Corporate boards look out for investors; nonprofit boards look out for the donors. The two discuss compensation, internal controls and fraud risks. Each of the respective boards’ charges can be aligned.

Nonprofit boards often have people with financial backgrounds for their expertise. The organization looks to the board to set financial policy and help management make decisions. Boards go through the budget process, review financial reports regularly, ensure investments are prudent and oversee compliance. Compliance is key because nonprofits follow rules and regulations for gifts, endowment restrictions, fundraising, lobbying, tax filings and private inurement, when a 501(c)(3)’s money is devoted to private use, not charitable purposes.

What can happen if the oversight falls short?

Not only could the nonprofit organization be unsustainable, it could lose its tax exemption status. Recently, there’s been a slight trend of nonprofits, especially in Ohio, losing that status by not properly filing taxes. Although recent IRS regulations make it easier to regain tax-exempt status, it can still cripple the organization.

How should a board be set up?

Boards need to discuss financial matters routinely, which might be more often than standard board meetings occur. At every meeting, the board should receive a formal report from the treasurer or staff — and then ask questions of those reports. Check for consistency from period to period.

Monitor restricted dollars regularly. If a donor donates money for a specific purpose, such as a scholarship, somebody must keep track of that donation to ensure it gets used for what it was intended.

Examine the organization’s internal controls. In a small organization with few employees, the board should see if it could possibly be part of that internal control function, such as acting as a check signer or reviewing certain transactions.

Assess the capabilities of the accounting staff. Is the bookkeeper capable? Are things being recorded properly, or is it somebody who is inexperienced? Assessing this upfront can help lessen the headache later when things have to be cleaned up.

Always check on compliance, whether taxes or other areas. The board needs to review and approve of tax filings, making sure they are going out the door properly.

Finally, assess the fraud risks and see if there is potential for fraud. Does staff have an open line of communication to the board? Direct communication can head off fraud that may occur later.

Board members need to know what their responsibilities are, and if for some reason they can’t fulfill them, especially for complicated matters, seek outside council.

Do board members get nervous about finding funds to pay for outside expertise?

That’s always the No. 1 concern, but often the board gets accountants involved too late. You can save time, energy and money by setting things up properly first, rather than going back in after something has been accounted for incorrectly.

Marie Brilmyer, CPA, M.Acc. is a Director of Assurance Services at SS&G. Reach her at (330) 668-9696 or MBrilmyer@SSandG.com.

Insights Accounting & Consulting is brought to you by SS&G

As a rule, you make money in real estate when you buy, not when you sell.

With that said, it’s common for an owner not to know when to sell, says Joseph V. Barna, SIOR, a principal at Cushman & Wakefield/CRESCO Real Estate. The property owner needs to weigh market conditions, along with internal factors like occupancy, cash flow and the condition of the building.

“You don’t want to wait until you’re in trouble, because there are sophisticated buyers out there,” Barna says. “The buyers know you’re in trouble and that sooner or later the building is going to go back to the bank, where they can buy it at a discount. You don’t want to put yourself in that situation.”

Smart Business spoke with Barna about when to put your property on the market.


How do owners get into trouble with commercial property?

Many people purchased properties when the market was robust, buildings were at a premium and rents were high. They’ve seen values decrease 10 to 30 percent and rents decreased or stayed flat, and now face a balloon payment that’s more than the building’s worth. Let’s say they paid $1 million and put 20 percent down, but when the note is up and principal is due, the property is reappraised at $700,000. The lender might finance 80 percent of the $700,000 and the owner will need to invest additional cash to consummate the transaction.

Another problem is when you start to have vacancies and cash flow dries up, especially if you’re carrying a mortgage. Then, not only do you have to find a new tenant, you’ll also need to pay for the carry plus improvements and related fees.

Owners procrastinate thinking they will get a tenant or the market will turn, but nothing happens quickly in real estate, so they keep digging themselves a deeper hole. In some cases, they give the keys back to the bank and walk away if lucky enough to have a non-recourse mortgage, rather than continue to feed an unprofitable investment.


What’s a better way to handle a property?
Instead of waiting until you’re in a negative position, it makes sense to evaluate how that property is positioned and possibly bring it to market sooner — especially if you foresee a vacancy issue, capital improvements or refinancing situation. If you have a small or midsize portfolio, you don’t want to be in a bind with major vacancies and limited cash flow.

It’s not uncommon for a building to sit vacant for years. Therefore, if you sense you could be at risk you should bring the property to market and have time to find that ‘highest and best’ user or investor. Again, it goes back to ensuring you don’t overpay when you buy, while understanding the functionality and need in the market for that specific property type.


How can a sale-leaseback be a tool for business owners who own their property?
A sale-leaseback allows owners to sell their property while retaining the benefits of tenancy through a long-term lease. This increasingly utilized tool allows owners to use their essential real estate without tying up large sums of debt and equity capital.

It is possible to exceed market values depending upon the credit of the seller and the term of the lease. A sale-leaseback is also a logical solution to a short- or long-term exit strategy. Other reasons why owners utilize this tool include paying down debt, making an acquisition and reallocating capital in more productive uses, as well as estate planning.


How can a broker help?
If you are considering selling your property, it is important to understand who is the ‘highest and best’ potential buyer no matter if it’s a user or investment sale. You need to know the demand of your specific product type, market conditions, most effective manner to position the product and what needs to take place to maximize value.

By consulting with a broker, you’re not committing to anything; you’re doing your due diligence and getting questions answered. Gathering all the facts early will help you make the right decision at the right time.

 

Joseph V. Barna, SIOR, is a principal at CRESCO. Reach him at (216) 525-1469 or jbarna@crescorealestate.com.

Insights Real Estate is brought to you by CRESCO

 

When John Sheppard stepped into his role as president and CEO of EveryWare Global Inc. nearly two years ago, he knew he was faced with the difficult challenge of bringing together two ingrained cultures of two iconic brands — what he didn’t know, was that the two companies had yet to meet.

Anchor Hocking and Oneida, two of the most well-known and long-time consumer brands in tabletop and food preparation products had been purchased by Monomoy Capital Partners in 2007 and 2012 respectively, and the two companies were set to become one under the umbrella of EveryWare.

“I think there might have been a phone call at one point, but for the most part, they operated independently,” he says. “There was no discussion between them.”

Sheppard has more than 25 years of senior leadership experience with some of the world’s largest consumer goods companies, including 20 years in executive positions at Coca-Cola Co. When he came to EveryWare, he was looking for an opportunity to move back into a CEO role, growing a branded business, especially on the international side.

Sheppard was up to the challenge of turning perfect strangers into one team.

“This was exciting to me because Anchor Hocking and Oneida, particularly Oneida, are some of the best-known brands in the business,” he says. “When I came in, the whole objective was to take these two companies and great brands and combine and integrate them — so, pull together a leadership team, create a vision for the company and then execute on that.”

Here’s how Sheppard merged the companies together and took them public, creating an organization with more than $440 million in annual revenue and 2,000 employees.


Becoming one company

The first step in a merger is usually to get the management teams together and go through the transition punch list, as it were.

Sheppard began by telling them how EveryWare was going to operate moving forward. Then, he looked for strengths and weaknesses, finding the right talent and putting them in the right place.

Sheppard says he came in with an open mind, trying to meet with and listen carefully to the employees in the first few months he was there to find out where they believed the business could expand, and where it couldn’t.

“It became pretty clear where the strengths and weaknesses were, and where we had opportunities to cut costs,” he says.

“There were definitely some headcount reductions during that process, and that was natural because in any acquisition you don’t necessarily need two complete sets of SG&A [selling, general and administrative] costs,” Sheppard says.

But open communication is key — letting people know what you’re doing and when you’re doing it. Sheppard says the uncertainty is what drives people crazy.

“They would rather hear the bad news, as opposed to just dragging on, with no information at all,” he says.

Over time, it became apparent that most of the resources would be moved to the Ohio headquarters.

Sheppard says even though he’d been through many mergers and acquisitions before, you always learn as you go forward and see things you would have done differently.

In addition to making sure you communicate proactively with your board and the outside public as much as possible to avoid surprises, management changes should be made quickly if there’s a problem.

“I think probably, from a management team standpoint, I would have integrated food service and retail sooner, rather than later. I waited until last year and I probably should have done it earlier,” he says.

“So, move quickly when you know you have an issue to resolve.”


Going public

At the end of 2012, the decision was made to take EveryWare public. An initial public offering would create currency for the company, opening the door to potential acquisitions down the road.

It also was an opportunity for the private equity firm to take some money off the table. Because it owned 100 percent, an IPO allowed the firm to give back to its shareholders and partners.

Sheppard says they worked intensely for four or five months before going public under the stock ticker EVRY last May.

“That was intense,” Sheppard says. “That was a lot of midnight, 2 a.m., weekend, holidays, you-name-it meetings.”

Sheppard drew on his experience working in public companies and taking companies public to help spearhead the time-consuming and complicated transition.

“It’s quite an intense process,” he says, “It requires an understanding of the difference between a private and public company. You have to be extremely open about business, making sure you’re communicating effectively both internally and externally.”

Everyone had to come to the realization that life as a private company is a lot different than life as a public company.

“Some people found that more difficult than they would have thought,” Sheppard says.

“It’s probably not a great place to start trying to learn — right when you get thrown into the middle of a public offering,” he says. “We had some learning curves with some of the finance people, as they were learning the systems and processes and how to go public and all that. But we had a lot of hardworking people in finance and everywhere else.”


Expanding to new markets

After two major changes over the past two years, Sheppard says the company’s biggest challenges now are execution and focus as management works on a number of initiatives.

EveryWare has begun to expand into new categories, launching new products and SKUs.

“We entered into Brazil, Korea and expanded our business into Mexico and China,” Sheppard says. “And we also added a bunch of new customers in 2013, and we’re also starting to announce some in 2014.

“We’ve really started to grow the brand — expanding both horizontally and vertically. We’ve expanded our current customers and we’ve added new customers.”

EveryWare sells tableware, flatware, dinnerware, beverageware and serveware to retail outlets like Wal-Mart, Target and Bed Bath & Beyond. It also sells to hotels, restaurants and cruise lines.

Sheppard says the top-line growth was about 5 to 6 percent in 2013, which is three times the industry rate.

“International is driving a lot of that. International drives a lot of the growth — that’s because of both new markets and doing better in existing markets,” he says.

Again, Sheppard can draw on his 12 years of experience running Coca-Cola’s operations in Africa, England, Poland and Austria to help guide global moves.

The company chose to enter Brazil and South Korea for a number of reasons: the two countries have a $1.2 billion tabletop market and there are not many Western companies there, though both have relatively stable governments and a strong affiliation towards American goods.

EveryWare also wants to focus on penetrating new U.S. channels.

“Our retail business will be focusing on clubs, department and grocery stores, and in new product innovation, where we launch new SKUs,” Sheppard says. “Internationally, we’ll be opening new markets. In food service, we’re really focused on driving our placement of new products in restaurants and hotels. We’re excited about that. That’s going to be the focus going forward — profitable top-line growth.”

 

Takeaways:

  • Communication is key.
  • Going from a private to public company requires new thinking.
  • Finding the right international markets will drive top-line growth.

 

The Sheppard File:

Name: John Sheppard
Title: President, CEO and director
Company: EveryWare Global Inc.

Born: Washington, D.C.

Education: Bachelor of arts in marketing at the University of Georgia, master’s degree in business administration in finance at the University of Georgia’s Terry College of Business.

What was your first job and what did you learn from it? I was in graduate school and saw an ad in the paper for Coca-Cola about an IT job, a systems job. I didn’t really know what system they were talking about, but I read up on it and got familiar enough with it so that when I went into the interview, I could talk about it. It was a financial IT package that I had used a little bit in graduate school.

So, I expanded my knowledge of the financial software package and got the job at Coca-Cola. After I became an expert on that software, I moved on to more regular financial analysis and financial management, eventually going overseas as the CFO of the Africa division.

I got my foot in the door at Coca-Cola, which is what I wanted to do. I knew once I got in, I could probably find my real calling in life.

Who do you admire in business? I’ve met so many. I met Bill Gates a couple of times. I really like that he was tough and always saw the end game.

I also joined a group called YPO, Young Presidents’ Organization, which is a worldwide organization. That brought me in touch with a lot of different executives around the world in a similar position. It was sort of networking for senior executives.

What is the best business advice you ever received? Listen well and base your decisions on facts, and then act decisively. Don’t waffle.

When you’re the leader, you listen, you gather the facts and then you act decisively. That’s what leaders do. They need to do that because then people will follow them.

 

Learn more about EveryWare Global Inc. at:

LinkedIn: www.linkedin.com/company/everyware-global-inc

 

How to reach: EveryWare Global, Inc., (740) 681-2500 or www.everywareglobal.com

Health care used to be one of the more scrutinized types of insurance, but that’s no longer part of the landscape.

Under the Affordable Care Act (ACA), the only criteria that determines price for small group health insurance is date of birth, zip code and whether you smoke or not — making it one of the few insurances where risk isn’t really considered, says Pete Seminaroti, vice president of the Healthcare Division at SeibertKeck Insurance Agency.

But even in the ACA era most business owners need a competitive health plan.

“Why do employers provide benefits? Not only to retain the employees they have, but also to entice a strong candidate as a new employee. Employees look beyond wages to health benefits,” Seminaroti says. “Benefits are important to retain and hire good people, and that still overshadows the other issues.”

Smart Business spoke with Seminaroti about trends in Ohio health insurance.

Who needs to buy health insurance?

Practically everyone needs to purchase insurance, either as an individual or group. If your employer doesn’t provide coverage, you need to enroll for an individual plan.

As business owners, the ACA has changed the rules for providing coverage. If you employ two to 49 full-time equivalent employees, you aren’t required to provide insurance as a small business. If you have 50 to 99 employees, you are considered a large group and need to provide insurance by 2016. Those with 100 or more employees must provide insurance by 2015. Failure to comply will result in government penalties.

What are the biggest factors to consider when purchasing health coverage?

Obviously, pricing drives most things, when we make a purchase privately or corporately.

Another large factor is the benefits structure. More than ever business owners want to ensure their network of providers, doctors, hospitals and medical facilities is strong. The insurance options have narrowed in the small group market; before, you might have had 50 to 70 choices, and now, it’s been simplified to about a dozen.

An owner also wants to go with a quality company that processes claims efficiently, with few errors. Typically the industry has done a good job of that. When you consider how many claims are processed daily, the number that go awry is minimal.

Finding the right insurance is easier when business owners can draw from their health care adviser’s knowledge. This ensures the owner has their choice of plans with the proper coverage and good network at a price within their budget.

With limited underwriting, are prices rising more than usual? Wasn’t Ohio projected to face large increases?

Over the past couple of years, there was a lot of that going around — Ohio was projected to increase anywhere from 40 to 80 percent.

In truth, some rates have gone up significantly, while other small groups have benefited from the ACA. An increase or decrease can highly depend on your small group’s makeup. In the past, if you had a group with high utilization, you were forced to stay with the same carrier for multiple years and your rates would increase. Now, that same group cannot be penalized because risk is no longer a factor.

What other tools are available to help?

In Ohio, we have a co-op that’s starting to bid out to small groups. It’s supposed to cost 10 to 15 percent less because it has eliminated the top layers of an insurance company. The co-op is run by a board of trustees comprised of the companies that have plans with that co-op. It will be interesting to see how the first year goes. If it’s successful, more co-ops may start.

There has been more interest in certain levels of self-funding. The self-funding industry came out with new structures that don’t expose employers to as much risk. It’s also a way to avoid some of the ACA taxes.

The health care insurance environment will continue to change over the next five years, and having a knowledgeable agent will be crucial in navigating the best course of action. Currently, most businesses still need to offer health insurance, and many employees, given the choice, would prefer for their employer to pick the health plan. Working with your trusted health care adviser, you can create a plan that will work for both the company and offer solutions for the employees.

Pete Seminaroti is a vice president of the Healthcare Division at the SeibertKeck Insurance Agency. Reach him at (330) 865-6578 or pseminaroti@seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck