A company’s mission can be a very powerful tool for building employee engagement and fostering a winning culture. But that can’t be accomplished simply with a mission statement posted on a wall.
“It’s not so much about creating a statement. A company mission lives and breathes, whether it’s documented or not,” says Greg Stobbe, SPHR, J.D., Chief HR Officer at Benefitdecisions, Inc. “The mission is what drives the culture, which is what drives the organization.”
Smart Business spoke with Stobbe about the importance of having a mission and the impact it can have throughout your organization.
What is a company mission?
There’s a unique answer for every organization, but the mission is the what, why, who and how of the company; it’s the reason it exists. The mission isn’t developed — it’s already there, you just need to uncover it.
The mission is the organization’s ultimate goal, if you don’t have one you can’t truly define success or failure. It’s like a ship without a navigational system, you’re not going to know your course or if you’ve reached your destination because you don’t have one.
What are the benefits of having a mission?
The benefits are directly proportionate to the effort and thought that went into designing, implementing and maintaining focus on tracking the mission. There will not be any benefits if it’s just a statement, whether oral or written, and nobody pays attention to it.
Time spent on devising, developing and articulating a mission is a savvy investment in human capital that will pay dividends in the financial success of the organization. Employees who feel invested, who understand their roles, become engaged and emotionally attached. It would be very difficult for someone to be emotionally attached to an organization unless the person knew the mission and it resonated with him or her.
With the economy improving, employees might be apt to look at a position elsewhere for more pay. But when you have employees who are emotionally invested, their first motivation is not compensation. You can do more with a smaller group of employees who are passionate about the cause than with a larger group who show up for the paycheck. A passionate, engaged workforce can accomplish great things and that all goes back to the power of a company mission and how that affects employee engagement.
How is the mission articulated?
You need to work with employees on establishing the mission. It’s not like the secret recipe of Coca-Cola that’s kept in a vault in Atlanta and only three people know it. The mission drives the culture, and you should know what it is when you walk into a company’s headquarters. Once you know the company mission, everyone should know it and live it. If you approach any employee, he or she should be able to articulate what the organization's overall mission is and how his or her contributions are aligned with it.
What are the challenges faced in the process of developing the mission?
First and foremost, the mission has to come from the top — the CEO and/or the board of directors. They need to be stewards of the process. Companies can hire a consultant to put together a mission statement, but if that’s just because the CEO wants to check a box, it’s not going to produce any benefits. Companies with winning cultures are the ones where senior managers embody the mission. Through their example, it cascades down to all levels so that everyone, from the person at the front desk to the clerk in accounting, up through the C-suite knows the mission, and it’s something people live every day.
How is the mission accomplished?
Theoretically, if a company achieved its mission, the reason for the company ‘to be’ would no longer exist. Therefore, it is important to carefully consider your mission and thoughtfully craft it. The difference between the missions of ‘to feed hungry people’ versus ‘to eliminate hunger’ is evident. The former being an event, and the latter a true mission. An engaged workforce will ‘reboot’ each and every day and strive to achieve the mission.
Greg Stobbe, SPHR, J.D., is Chief HR Officer at Benefitdecisions, Inc. Reach him at (312) 376-0456 or firstname.lastname@example.org.
Insights Employee Benefits is brought to you by Benefitdecisions, Inc.
Small Business Administration (SBA) loan programs can fill needs that traditional bank lending does not.
“The key is going to a bank that is a preferred lender and has dedicated resources or an SBA specialist who really understands the eligibility requirements and programs,” says Tom Doherty, managing director and head of Business Banking at The PrivateBank.
Smart Business spoke with Doherty about how SBA loans can give your business access to vital capital.
How does SBA lending benefit businesses?
What the SBA offers fits into three categories:
• Collateral shortfall — Banks have certain advance rates on the collateral they lend against. If there’s a collateral shortfall, the SBA can provide a guarantee to enhance the financing.
• Lack of equity — Banks have down payment requirements, but the SBA will guarantee loans to allow for a smaller equity injection by the business owner.
• Need for extended terms — If the borrower needs to extend the amortization term of a loan beyond traditional bank financing, the SBA will step in. If, for example, you need financing for a piece of equipment, the bank might offer five years on the loan term. The SBA has a program where you could go seven to 10 years on that deal.
What are some misunderstandings about SBA lending?
What the SBA considers a small business differs by industry, and although there is no minimum, it goes larger than most would think. Visit www.sba.gov/content/small-business-size-standards to find qualifying cutoffs. The standards are expressed in either millions of dollars or number of employees. In some instances, a company can still qualify with 1,500 employees.
Then, there’s a perception that SBA is a lender of last resort. However, the SBA, like a bank, looks at cash flow. Recently, businesses have been returning to profit on their financial statements, so more are eligible for SBA programs.
Many borrowers also think SBA lending is a tedious process with a lot of paperwork. In part, this misconception may come when borrowers deal with an inexperienced lender. But the SBA has listened, too, and streamlined its processes, such as the small loan advantage program, which lends up to $350,000 on a very quick turnaround.
Are certain SBA loans not as well known?
The SBA’s 7(a) loan is the general flagship program with which most banks and borrowers are familiar. The SBA 504 loan program is a little lesser known. It applies when, for example, you want to buy a piece of real estate and put 10 percent down. The bank then takes 50 percent of the loan, and a local certified development company sells the remaining 40 percent as a debenture on the secondary market. Bottom line, it can give the borrower a 20-year fixed rate deal that’s not available conventionally.
What should a borrower know about the SBA loan process?
The SBA website, www.sba.gov, is a great place to find background on the different programs. But the best option is to go to a bank that is a preferred lender with a dedicated SBA specialist. As part of the application, there are SBA requirements to be met and documents to be completed. Many times, lenders don’t do enough of these on a regular basis to have expertise in putting the package together.
Once the application is complete, the loan goes through the normal course of underwriting because the SBA, in essence, has delegated the approval authority to that preferred lender.
What would allow more SBA lending?
Under 504, as part of the stimulus package, the government allowed banks to refinance existing real estate debt where businesses could improve their terms or lock in a longer fixed rate. However, this ended in September 2012 and the level of 504 lending has dropped significantly.
The new congressional budget proposal has suggested this refinancing provision be extended out to September 2014. This provision is something small business owners should push for and keep an eye on.
Tom Doherty is Managing Director and head of Business Banking at The PrivateBank. Reach him at (847) 920-3180 or email@example.com.
Website: Learn more about financing opportunities for small businesses through our small business banking page at http://www.theprivatebank.com.
Insights Banking is brought to you by The PrivateBank
The historical benefits of self-funded health insurance — lower costs, more flexibility and control — are even more appealing when added to the ability to avoid many Patient Protection and Affordable Care Act (PPACA) rules and expected premium increases.
As a result, there’s growing interest in self-funding. A March study by Munich Health North America of 326 executives from health plans, HMOs and insurance brokerages, found 82 percent of respondents saw more interest in self-funding, with nearly one-third seeing significant interest. The survey also found nearly 70 percent of insurance organizations plan to increase self-funding offerings during the next year.
“The PPACA has shed a light on self-funding because it created several new reasons why self-funding or partial self-funding is attractive,” says Mark Haegele, director, sales and account management, at HealthLink.
Smart Business spoke with Haegele about the reasons why self-funded health insurance is getting so much employer interest.
What historical self-funding benefits remain relevant today?
Historically, self-funded employers avoid the risk charge — typically 2 to 4 percent of the total premium — that all insurers build into premiums. Self-funded plans also avoid costs from insurer profit; premium taxes, usually 1 to 3 percent, depending on the state; and the insurance company’s fixed operating costs. A fully insured plan can include fixed operating costs that are 40 to 50 percent higher than a partially self-funded plan with a third party administrator.
Plan flexibility and control is the other overarching benefit of self-funding or partially self-funding. You don’t need to follow state coverage mandates for areas like autism, bariatric surgery and infertility treatments. Employers can customize plans based on member population needs.
Smaller, self-funded employers also receive detailed member data, resulting in the ability to make informed decisions. With the help of consultants and brokers, they can manage their population as much or as little as they want.
Why is health data more critical now?
The health care system is moving from a fee-for-service to a performance-based model, so transparency and information are more critical. If you expect members to make good purchasing choices, then employers and their members must know what services cost. This transparency is one of the staples of a self-funded plan. Employers know what services members partake in, the plan risk factors, what care those with chronic illnesses receive, etc.
What is drawing employers to self-funding because of the PPACA?
A number of pieces from the PPACA aren’t required under self-funding, including the:
• $8 billion insurer tax, currently calculated to be passed onto employers as a 4- to 6-percentage point increase in premiums.
• Medical loss ratio requirements, which force profitable insurance companies to reduce administrative expenses and ultimately lower service levels.
• Community rating rules that group small employers by geography, age, family composition and tobacco use. Thus, healthy, younger insurance groups will pay more — estimated to be 60 to 140 percent — while older, less healthy member groups pay less.
• Minimum essential benefits, where insurance companies are required to limit annual deductibles.
How are PPACA-driven premium increases already factoring in?
Although the PPACA’s community rating rules, insurance tax and minimum essential benefits don’t begin until Jan. 1, 2014, the repercussions have started. Some carriers are including extra 2013 premium increases. For example, rather than a 4 percent premium increase now, insurers might try to get employers to accept a 20 percent increase this year. In addition, despite state pushback, many insurance companies are considering offering an early renewal — changing the plan effective date from Jan. 1, 2014 to Dec. 1, 2013, for instance — to let employers temporarily avoid increases. However, those with a self-funded plan never have to worry about these costs.
Mark Haegele is director of sales and account management at HealthLink. Reach him at (314) 753-2100 or firstname.lastname@example.org.
Video: Watch our videos, “Saving Money Through Self-Funding Parts 1 & 2.”
Insights Health Care is brought to you by HealthLink
One of the primary functions of management is to understand what is actually going on in an organization, as opposed to what is supposed to be happening. However, for monitoring to be truly effective, there must first be good communication, a culture that promotes ethical behavior and a solid understanding of the particular organization’s risk factors.
“Organizational monitoring is not just about protecting a company from fraud,” says James P. Martin, CMA, CIA, CFE, managing director at Cendrowski Corporate Advisors LLC. “Monitoring systems can help ensure quality, that customer needs are being met and that the company is doing everything else that is necessary to achieve its goals.”
Smart Business spoke with Martin about how management can understand what is truly going on within the business.
What are the steps to an effective organizational monitoring plan?
First, the company must clearly define its goals. What is it trying to accomplish and how will it accomplish those goals? Second, what risks does it face? What can get in the way of the company accomplishing those goals? Third, what type of early warning system does the company need? How will it know if and when a risk has occurred or if someone has not performed as expected?
What impacts are electronic monitoring systems having?
Electronic monitoring systems have been around awhile but are drawing increased attention now with more severe penalties and potential outcomes for violations under Sarbanes-Oxley. Electronic monitoring systems are similar to a car’s dashboard. When trigger points, predefined events or hurdles are detected, ‘warning lights’ appear on the manager’s desktop.
While electronic monitoring is useful, it cannot — and should not — replace human involvement. The most important thing managers can do is be involved with operations on a day-to-day basis by walking around and talking with employees, holding regular meetings, receiving regular reports and phone calls, etc.
How are trigger points identified?
An organizational assessment of risk will help management identify areas that have more robust monitoring needs. Examples might include finance, everything related to potential issues arising with cash, or vendor management, such as notification every time a vendor’s address changes. Triggers also can monitor quality metrics, supply chain issues, personnel issues, etc. The system should be proactive so that management can address issues before they get out of control, preventing a crisis management situation.
It’s important to note that a monitoring system is more holistic than the definition of trigger points. The single biggest factor is people — what they will do in a given situation. The overall culture needs good communication systems and a clear understanding of management expectations.
Monitoring techniques need to continuously adapt to consider potential changes in behavior. There are a lot of examples of companies that had defined monitoring procedures, but creative people were able to identify and exploit areas that were not considered in those procedures.
How do private equity firms monitor the activities of the companies they invest in?
Private equity firms have to monitor the operations of the portfolio companies, not to the extent of detail that internal management does, but they do need to define risk. These companies have expectations, and if they identify certain events on the horizon, they can be prepared to take certain actions. Like the companies they monitor, private equity firms also must define their own particular trigger points.
Any tips for improving a system?
Make sure you’re monitoring the right areas. There may be areas you’ve historically monitored that have now changed, which is where the internal audit function comes in. The board’s audit committee must understand what is critical for the upcoming year. In examining the ‘audit universe’ — the model that defines every auditable event within the organization — areas of risk are identified, and then prioritized for audit. It's management’s responsibility to determine how many resources to invest in each given area of risk.
James P. Martin, CMA, CIA, CFE is managing director at Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or email@example.com.
Insights Accounting is brought to you by Cendrowski Corporate Advisors LLC
It would be nice to be able to have the philosophy that you can’t put a price on health, but the reality of rising costs in the health care industry means that approach can’t work.
“As a country, we can’t continue to spend 20 percent of our gross domestic product on health care without making sure we’re getting the best possible value,” says Dr. Brandon Koretz, associate professor of clinical medicine at the David Geffen School of Medicine and student in the Executive MBA Program at the UCLA Anderson School of Management.
Koretz says before entering the MBA program he had a tendency to spend whatever it cost to provide a valuable resource.
“My perspective was, ‘let’s get it.’ Now I understand that every dollar spent on one thing is a dollar that is not available for something else. I understand more fully the trade-offs and their implications,” he says.
Smart Business spoke with Koretz about the MBA program and the perspective it has given him on the health care industry.
Why were you interested in the MBA program?
I’m a geriatrician by training and care for Medicare patients. I also work at an academic health center and teach others how to provide care.
Medicare is at the cutting edge of financial changes in health care, and there’s a need to provide the best possible care at the most reasonable price; I need to understand the financial principles to ensure that is occurring. My Hippocratic oath isn’t just a promise to the patient in front of me, it’s also an obligation to be a good custodian of resources provided by society, which is paying for that patient’s care.
How has the program changed your views regarding the health care industry?
It’s given me another tool set to use when considering problems, a perspective I didn’t have before. In medical school, I didn’t have a finance or accounting class. I’m now a much more informed decision-maker when making budgets.
I’ve been able to bring business principles back to the people I teach. UCLA’s medical school is great about training doctors to understand up-to-date scientific literature, but we not only need to provide technically good service, we also need to meet patients’ emotional needs. If you’re rude, patients aren’t going to come back or may not follow your medical advice. So I’ve initiated discussions about things like wait time and how it can be improved. In years past, doctors would say, ‘That’s not my job.’ But, of course, it is; evidence is being accumulated that shows clinical outcomes are better when there’s a stronger connection between patient and doctor. A conscious focus on service can strengthen these connections.
How does the Anderson experience differ from other MBA programs?
What’s amazing at Anderson is how it is a community of learners. There’s an incredible diversity among students. Faculty can walk me through the fundamental concepts of finance while teaching people who work in the finance industry. Students are also sensitive to that diversity, and a person with a financial background will help me during a break when there’s something I don’t understand. There’s no ego or shame involved. People tutor each other — one group came in weekends on their own time and set up a series of tutoring sessions for students who didn’t understand accounting.
The expression I hear is, ‘At Anderson we take care of our own.’ Everyone works together to ensure the best possible learning experience. I’ve been able to develop a broad network of people in many industries. One project involved gathering information about the travel industry. Using resources at Anderson, a dozen interviews were set up within days. When it comes to Anderson, whatever else you’re doing stops. We really take care of each other.
Dr. Brandon Koretz is associate professor, clinical medicine, David Geffen School of Medicine at UCLA. Reach him at (310) 206-8272 or firstname.lastname@example.org.
Insights Executive Education is brought to you by UCLA Anderson School of Management
Businesses with multiple locations or branches, in many cases, are not leveraging computer network efficiencies by taking advantage of existing technologies to limit equipment deployment and enhance cost efficiencies.
“Branch offices are too often set up with unique data centers instead of having centrally located servers,” says Pervez Delawalla, president and CEO of Net2EZ.
Deploying a great deal of equipment at each office diminishes the computing power of servers at the individual branches.
“Their capacity isn’t being utilized completely at a branch and is unavailable enterprise-wide,” he says.
Smart Business spoke with Delawalla about leveraging data centers for maximum efficiency in cost and use.
What are some keys to centralizing a data source?
One important element is connectivity. If an enterprise sits in a major metropolitan area, then connectivity infrastructure should be reliable and readily available. However, when outsourcing to a data center, the connectivity piece is the least of a company’s challenges because data centers offer higher-capacity connections through multiple technologies, such as Multiprotocol Label Switching, point-to-point connection or bandwidth compression. This enables an enterprise to limit the amount of equipment it needs to deploy.
In what way does connectivity affect a business?
How a company sets itself up to utilize a data center hinges in part on the number of user accounts at that location. A smaller office with 10 or fewer employees could be well served by multiple 10-megabit connections that link to centralized hardware at a data center. Consider using an authentication server at each location. Employees log in through this server so passwords and usernames don’t travel outside of the building. Once a user is authenticated, he or she has access to all of the company’s data, enterprise-wide, housed in the data center.
Bandwidth capacity can always be added through a local provider as a company grows. From a technology perspective, it’s simply an upgrade to the connection and not a deployment of new equipment. Operationally, it amounts to simplifying that connection so it’s easier to support, monitor and track. The increased capacity of that connection helps facilitate the centralization of hardware, which allows the hardware burden to be decreased.
What savings can be realized through centralizing hardware?
A multi-branch enterprise is often using applications that are common across offices. Centralizing those common applications in a data center helps improve application management, which eliminates the need to employ IT personnel at individual locations because support can be provided at one site. It also means not having to deploy multiple servers for multiple sites, so cost savings can be realized by not buying as many server boxes.
Maintenance and upgrades also are made easier with a central data center because those don’t need to be accomplished on an individual basis. And if a security patch comes in it can be handled from one location. Further, having fewer servers means purchasing fewer licenses for software. Updates become easier, and license fees are less of an expense because software doesn’t have to be deployed in all locations.
However, just because hardware is centralized doesn’t mean everything is housed on a single server. The number of physical servers needed depends on capacity and redundancy needs of the company.
What can companies expect after centralizing their hardware?
The main benefits of centralizing are that the efficiency for support to the end user improves, deployment of upgrades becomes simpler and cost savings can be realized from reducing physical hardware. Having centrally located hardware also provides better security, management and handling of company assets. Security is improved because hardware can be physically monitored from a single location and server access can be better controlled. With less equipment to manage, limiting access becomes easier, meaning there’s less chance a costly mistake is made.
Pervez Delawalla is president and CEO at Net2EZ. Reach him at (310) 426-6700 or email@example.com.
Insights Technology is brought to you by Net2EZ
Identifying the intrinsic value of your company is an extraordinarily beneficial exercise, especially when business owners are looking to maximize the sale of their company, says Joshua Geffon, a shareholder at Stradling Yocca Carlson & Rauth.
“The crown jewel of an enterprise may be intellectual property (IP), the management team, key customers or brand recognition, and/or any combination of these ingredients. The key for an entrepreneur is to recognize, exploit and promote these attributes to gain maximum value for the enterprise during the acquisition process,” Geffon says.
Smart Business spoke with Geffon about what business owners should know before engaging in the acquisition process.
What are some mistakes owners make that jeopardize the sale of their companies?
A fairly common mistake is not doing enough to secure the company’s IP. Confidentiality and IP assignment agreements, patent filings and related IP protection should be in place to have clear and strong IP ownership and title.
Broad indemnification by the seller on contracts creates risk that buyers of companies don’t like. Material contracts that allow customers, suppliers, service providers or other partners to easily terminate can significantly undermine a seller’s value proposition.
Also, tax and planning is critical. Overlooking tax-related filings often leads to significant turmoil and financial hardship. Inversely, proactive corporate and personal tax planning for founders and executives also can create real economic benefits.
What’s important to have in order before initiating the acquisition process?
Be sure you are prepared to provide copies of well-organized and complete corporate, capitalization and financial records, as well as material contracts, as part of a due diligence review by the buyer. Being well organized on these matters ahead of time will buy a lot of credibility with the buyer. Messy or inaccurate records will cast doubt on the value of your company.
What legal pitfalls often trip up the sale?
Buyers are always concerned about risk. Risk comes from inside your company in the form of personnel — employees, consultants and others — and outside from lawsuits, warranty and return claims, supplier terminations and limits on business operations.
Employees are often the company’s greatest asset and typically a company’s largest expense. Sellers usually engage in pre-emptive measures to entice employees to stay by offering equity, cash and other incentives that require personnel to work as diligently for the buyer as they did prior to the transaction.
Your company’s value proposition may be significantly weakened, and deals have died, if buyers identify agreements that limit rights to develop, manufacture, assemble, distribute, market or sell products.
How do you determine a realistic price?
Depending on the stage of your business and the industry, there are a few methodologies available. The most common are discounted cash flows and price to sales, but this relies upon a history of revenues and costs and/or sales. Early stage companies have a harder time utilizing these valuation methods.
When traditional valuation models are inapplicable, recent transactions in the sector or the valuation of similar public companies can be used. Gauging your value proposition with board members, advisers and strategic partners can help you solidify an approximate value.
Remember that buyers are valuing your business on your financial statements, projections, business plan and opportunities in your industry, along with synergistic opportunities with the buyer.
Who should help a business owner in a sale?
Secure competent, experienced service providers. These people will help you get a better sense of the market, your company’s value and your risk exposures. Get them involved well before the sale to ensure the process runs as efficiently as possible.
A good merger and acquisitions attorney will lead you through the process, identify and mitigate risks, and explore potential resolutions to issues ahead of the transaction. An independent accountant who can review and audit your financial statements also may be needed.
Joshua Geffon is a shareholder at Stradling Yocca Carlson & Rauth. Reach him at (424) 214-7000 or firstname.lastname@example.org.
Social media: Learn more about Joshua Geffon.
Insights Legal Affairs is brought to you by Stradling Yocca Carlson & Rauth
Engaged employees know your company’s expectations and believe their job descriptions implicitly include exceeding them. They use their talents to excel, connect well with colleagues and customers, and move their companies forward.
To learn more about transforming engagement levels in the workplace, Smart Business spoke with Diana Hendel, Pharm.D., CEO of three MemorialCare hospitals in Long Beach. MemorialCare is recognized as one of only 32 companies worldwide to receive the 2013 Gallup Great Workplace award.
How can you recognize an engaged employee?
When engaged employees walk past visitors in our hospitals’ hallways they make eye contact, smile and stop to help people find their way. Disengaged employees hurry by, believing that’s not in their job description. Engaged employees are more productive, customer-centric, safe and successful. They are 3.5 times more likely to be thriving in their lives, experience better days and have fewer unhealthy days. We see a direct correlation between high employee engagement and the service satisfaction scores we receive from our patients and their families.
What’s the first step to improve engagement?
Creating a work environment that values people and aims to ensure each employee has an emotional connection to the company’s mission is at the heart of sustaining employee engagement. Become an active partner with your employees to maintain or improve their health and wellness. Create an environment that makes being healthy easier, with nutritious on-site food options, walking challenges, weight reduction programs, gyms, smoke-free campuses, activity days, health information and more.
Encourage teams to take walking rather than sitting meetings, take activity breaks and make walking workstations available. In MemorialCare’s case, implementing these core aspects of a wellness program resulted in 77 percent of our employees reporting that their organization makes an effort to help them improve their health.
What are the next steps to partnering with employees?
Once you’ve implemented the foundation of a wellness program, the next step is to provide your employees with the knowledge they need to impact their risk factors for chronic disease. Understanding the key biometric numbers of blood pressure, blood sugar, cholesterol and body mass index, and their connection to heart disease and diabetes can help individuals lower their risk. Chronic diseases like high blood pressure, diabetes, asthma and depression are responsible for two-thirds of the total increase in health care spending, so reducing these conditions can help lower health care expenses.
Actively partner with employees who need the most help managing chronic conditions. The latest evidence shows that the support of a team including a wellness coach, nurse, dietician and physician can give individuals with chronic conditions what they need to make important changes.
MemorialCare partners with our employees with chronic conditions to make long-lasting lifestyle changes, lessen complications, improve outcomes, and lower medical and pharmaceutical costs through our program, The Good Life — In Balance. With 93 percent participant retention, the program has led to significant improvements in participants’ blood glucose and blood pressure.
How can employers improve the workplace?
Help identify key factors in moving the dial on your employees’ engagement by participating in a survey, like those initiated by Gallup. These surveys compare your results with other companies so you can learn where you excel or need improvement. There is a direct connection between investing in employees’ wellness and achieving internationally recognized employee engagement levels. By creating a culture where well-being is valued, you can improve health, morale and productivity, while reducing absenteeism as well as the costs of workers’ compensation and health
Diana Hendel, Pharm.D, CEO, Long Beach Memorial, Miller Children’s Hospital Long Beach, Community Hospital Long Beach. Reach her at email@example.com.
Website: See more health and wellness information, podcasts and videos.
Insights Health Care is brought to you by MemorialCare Health System
In this day and age, insurance is a very important line item for businesses. And you don’t want a broker who is unable to deliver results.
Managing Director David Toth, of Momentous Insurance Brokerage, Inc., says it’s critical for your insurance agent or broker to be familiar with your specific industry. If you make widgets, the broker should have experience with manufacturers. If you’re running a hospital, the broker needs experience in the health care industry.
“Experience and past performance of underwriting the business successfully is key,” he says. “You don’t want to be a guinea pig.”
Smart Business spoke with Toth about how to vet and ensure good service from your insurance broker.
What should you be looking for and asking about when vetting a new agent?
Use the vetting process to make sure you have a broker who understands your business, is responsive and shows flexibility. For example, in the entertainment field, you need special insurance enhancements and carefully crafted policy language to ensure the broadest coverage possible. You also need a broker who is capable of adhering to your wishes — it’s not how the broker wants it, it’s how the client wants it.
Ask for referrals, which most brokers are more than willing to share, rather than depending solely on a firm’s website. Also take time to meet the key people in the firm.
Inquire thoroughly about what insurance markets are available, because the more competition the broker can foster for your insurance, the better your program. In addition, inquire whether people from the brokerage sit on any of the governing boards of the carriers they represent, as this means they have influence on policy decisions and/or claims procedures.
One more point of qualification to ask a new broker is: What limit of errors and omissions insurance do you carry? If the brokerage only carries $1 million, is this enough if a broker’s mistake results in a loss to your business? Keep in mind this is the limit they carry for all clients in the firm.
Are there ways to tell if an agent provides good service?
It depends on whom you ask. Some clients might place responsiveness at the top of the list, while others need to be kept abreast of changes in the industry, including trends with insurance prices. So, for example, is the agent sharing the upcoming changes with the Patient Protection and Affordable Care Act? Has the brokerage advised you that if you’re in California your workers’ compensation rates might increase because of changes with the insurance code? Do you already know that with insurance carriers exiting the California management liability market, those lines could increase dramatically?
Other service concerns are:
• How does the agent keep you up to date on the claims process? Does he or she regularly follow up?
• What does the broker do in terms of your premium rates? Is he or she doing all he or she can to obtain the best rates for you?
• Is the agent delivering the renewal two weeks prior to renewal, or waiting until the last minute? Do you feel as if you are part of the process and have control?
• How available is the agent? If it’s important to you on a Saturday, it should be important to the broker on a Saturday.
How do you know whether to stay with your current broker or to move on?
Loyalty is a great thing, but it doesn’t hurt to have another set of eyes. Ask an independent insurance broker to review your insurance program — usually at no cost — and make sure you don’t have duplicate coverage or coverage gaps, while double-checking for extra benefits and/or cost savings. And if someone else can’t improve upon your insurance policies significantly, it confirms that your current broker is doing a good job.
David Toth is managing director at Momentous Insurance Brokerage, Inc. Reach him at (818) 933-2721 or firstname.lastname@example.org.
Blog: Insurance strategies are constantly changing as the market evolves. To keep up, subscribe to our blog.
Insights Business Insurance is brought to you by Momentous Insurance Brokerage, Inc.
Small business owners still remain concerned about access to capital and making sure that they have access to the best solutions for improving their cash flow and finances.
So what specific financial solutions can truly help small businesses throughout the state grow and prosper?
Smart Business spoke with California Bank & Trust Executive Vice President Betty Rengifo Uribe about ways small business owners can leverage some helpful financial solutions to save money and streamline operations.
What specific types of financial solutions should small business owners be considering right now?
There are several different solutions that many business owners can use to improve their finances.
Since access to capital is still a critical issue for many small business owners, entrepreneurs should consider a wide range of solutions, including loans, lines of credit, leases and, perhaps most importantly, Small Business Administration (SBA) loans that may offer very favorable rates and terms.
Beyond that, any solution that can help grow revenues and streamline operations is worth a further look. Some of the most useful include: merchant services, business credit cards and remote deposit.
How can small businesses use merchant services to their best advantage?
Any business, large or small, should be offering customers as many payment options as possible. With the right merchant services solutions and technology, you can accept credit cards, debit cards and even gift cards.
What’s your advice for using business credit cards?
One of the best cases for using a business credit card is that it allows you to keep your business expenses completely separate from your personal expenses. With many cards, you will receive detailed reports of expenses that are already sorted by categories. That can make it a lot easier for both you and your accountant during tax season — saving time and resources.
Many small business owners have cards issued to employees. You have to be careful and monitor spending, but imagine how much easier it is for employees to pay their expenses with a credit card instead of dealing with the tedious paperwork of requesting reimbursement checks. This allows your employees more time to focus on their core job responsibilities.
Additionally, you get the usual benefits of credit cards, such as various rewards programs, a credit line that you’re able to access and protection against fraud for purchases made with the card.
What is remote deposit, and how does it help small business owners?
Business owners and their employees need to make the best use of their time. One way to do that is to avoid frequent trips to the bank to make deposits.
With remote deposit, you can deposit checks right from your office. You simply scan checks and they’re automatically deposited into your account. That means you can make deposits anytime — on weekends or in the evening — which can give you an extended deposit window for crediting funds to your account.
Remote deposit also allows you to store images of checks electronically so there’s no need to store physical copies of deposited items.
What do you say to business owners who don’t see value in solutions like these?
Time and time again these solutions and others really move the needle in terms of streamlining operations and enhancing revenue opportunities. Not every solution fits every business, of course, but with a wide range of choices, your business banker can help you customize solutions that address your goals and add more value to your business.
Betty Rengifo Uribe is executive vice president at California Bank & Trust.
Website: Helpful resources for small businesses.
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