Cloud computing is revolutionizing information technology, and if it hasn’t yet impacted your business, it will soon, says Mike Maloney, vice president of business services at Comcast.
“Cloud computing is a new way of delivering resources, not a new technology,” says Maloney. “And the timing for cloud computing to reach critical mass couldn’t come at a better point.
In today’s belt-tightening climate, this new economic model for computing is enabling companies to accomplish more with less, and the move to cloud-based computing marks a historic point in the evolution of business.”
Smart Business spoke with Maloney about how to harness the power of the cloud for growth, profit and success.
What is cloud computing?
Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources that can be rapidly provisioned and released with minimal management effort or service provider interaction. The cloud allows users to connect from anywhere at any time, making connections via a shared platform.
Until the advent of the cloud, computing tasks were not possible without the application of software on a computer. You bought a license, installed the application and then used the program. With the development of local area networks, or LANs, the client-server model of computing was born, offering an opportunity to begin sharing resources.
Today, cloud computing has leapfrogged the client server model by providing applications from a server that is accessed from a web browser.
Is use of the cloud catching on with U.S. companies?
In a June 2011 survey of U.S. companies, only about 28 percent were using cloud computing in a meaningful way. However, there’s a lot of enthusiasm for cloud capabilities.
More than 90 percent of IT executives believe that the cloud will provide some kind of business advantage to their businesses, 63 percent say they’ll realize cost savings and 29 percent say they’ll achieve increased flexibility.
How can the cloud environment impact businesses?
When it’s deployed properly, it should give a business extra value over a long period of time. It should be able to address the quick-changing needs of businesses better than traditional IT services do, and the cloud should enable business innovation. When you go to the cloud you reap the benefits of speed, agility, price, innovation, simplicity, a managed system and availability. Most of all, it’s about scalability. Whether you’re talking SaaS, DaaS, IaaS or any of the services, you can quickly scale up your activities to meet demand, add new users and cut costs.
What are the shortcomings of the cloud?
The biggest concern may be security, which includes privacy, compliance, and legal and contractual issues. To be considered protected in the cloud, your data must be properly segregated from that of another company. Data protection, then, is a requirement for any enterprise that seeks to protect the core of its business. Businesses must also address other key areas, including physical security where data are stored, and customers must be sure that they will have regular and predictable access to their data and applications.
Cloud computing can offer the enterprise or mid-sized businesses a significant business advantage, but it’s up to you to understand the opportunities and risks involved. When evaluating any cloud model, make a detailed checklist to ensure you answer all the key questions fundamental to a successful deployment and utilization. Smart customers ask tough questions before committing to any cloud vendor.
What other factors should companies consider when looking at cloud use?
For any company looking to move to the cloud, it’s important to note that you are transferring new operating risk and requirements on to your network. Upon moving to the cloud, 100 percent of your application has to travel the WAN every time users want to access it. So it’s critically important to invest in your network infrastructure to ensure you have the uptime and reliability you need.
As you conduct your evaluation of network providers you should look at four key criteria:
- Absolute speed. What is the absolute speed of the underlying transport that is available to you as more traffic from all users begins traversing the network? Traffic doesn’t necessarily grow linearly, but it will grow with your users and the number of applications you add over time. Your ability to turn up bandwidth quickly is critical.
- Network reliability. Now that you have 100 percent of your traffic traversing the network every time a customer or employee accesses the application, the reliability of your network becomes that much more important.
- Scalability. This is critical to scale up to add applications, users and sites. The network must provide immediate opportunity for growth. In this new cloud-based approach, you can easily manage capacity by adding bandwidth, and that changes the conversation with your network service provider.
- Application-specific bandwidth control. Not all applications are created equal. You must be able to deploy application-specific bandwidth controls so that you can decide where to prioritize your traffic to address load conditions, or just to ensure that those mission-critical real-time applications get the bandwidth they need.
These criteria serve as a starting point, but you should pull back the covers on any communications company to examine the network infrastructure and the core attributes in the heart of the operation.
Mike Maloney is vice president of business services at Comcast. Reach him at Michael_Maloney@cable.comcast.com.
Insights Telecommunications is brought to you by Comcast Business Class
Before entering into an international commercial agreement, it is vital to ensure your company will be protected in the event of a dispute.
Litigation can drag on for years and can be extremely disruptive and expensive. Litigating against a foreign company can be particularly complex with issues that include service of the complaint in a foreign country and jurisdictional objections that can be raised by a foreign defendant. That is why international arbitration may be the answer, says Michael B. Dubin, a member with Semanoff Ormsby Greenberg & Torchia, LLC.
“International arbitration is an easy way to litigate against a foreign company that allows you to avoid a lot of the headaches,” says Dubin. “With any international commercial agreement, consult with an attorney early to assist with both the structure of the business terms as well as contingencies in the event of a dispute.”
Smart Business spoke with Dubin about the advantages and intricacies of international arbitration.
What is international arbitration?
International arbitration is a confidential, private arbitration proceeding to resolve disputes between parties to an international commercial agreement. The agreement provides that all disputes arising out of or relating to the agreement will be resolved by binding arbitration by one or more arbitrators (usually three) selected by or on behalf of the parties and sets forth under what rules the arbitration will be conducted.
The arbitration is similar to a trial but heard before experienced attorneys and/or businesspeople sitting as the arbitrator(s), rather than a judge or jury. After the arbitration, the arbitrator(s) will issue a binding award that cannot be appealed except under limited circumstances, such as for fraud or undue influence on the arbitrator(s).
How can international arbitration help resolve a dispute for my company?
International arbitration provides a quicker, more efficient resolution of a dispute than litigation and allows the parties to avoid the uncertainties of litigating in a foreign court. A typical international arbitration can be completed in approximately one year from the date of filing.
Arbitration generally, including international arbitration, substantially limits the exchange of discovery between the parties, thereby expediting the entire process. The arbitrator(s) routinely allow the parties to request information and documents from the opposing party and possibly take a limited number of depositions, if warranted. However, depositions are discouraged.
One disadvantage to arbitration is the actual out-of-pocket costs to the parties. For example, a party initiating an arbitration seeking damages of $500,000 to $1 million can expect to pay a filing fee of approximately $8,500. In addition to the filing fee, the parties are required to pay the hourly or daily rates of the arbitrator(s), which can be expensive in a case with three experienced arbitrators.
How can companies best protect themselves before international arbitration, especially mid-sized companies that might not be familiar with the process?
Most mid-sized companies are unfamiliar with international arbitration. If your company is contemplating entering into an international commercial agreement, consult with an attorney during the initial stages of negotiation instead of waiting until after the agreement is signed and a dispute has arisen.
There are several critical items that companies should consider and provisions that should be included in international agreements if arbitration is the desired dispute resolution method. These provisions include:
- A clause providing that all disputes arising out of or relating to the agreement will be resolved by binding arbitration.
- Under what rules the arbitration will be conducted.
- That interim (injunctive) relief shall be permitted.
- The number of arbitrators and how they will be selected. For instance, agreements commonly provide for three arbitrators, one to be selected by each party and the third arbitrator, who will act as the chairperson, to be selected by the two party-selected arbitrators.
- The language in which the arbitration will be conducted.
- The state and/or country’s substantive laws that will govern the arbitration.
- The city and country where the arbitration will be conducted.
- Whether the prevailing party will be awarded its attorneys’ fees and costs.
- The award can be enforced in any court of competent jurisdiction, meaning the prevailing party can enter the award as a judgment in court to enforce and collect on the award.
What steps should a company take once it becomes aware of a dispute?
Once you become aware that your company is involved in a dispute that could lead to arbitration or litigation, it is important to preserve all relevant documents and to inform your employees (and IT team) not to delete or destroy any documents, including electronic documents, that may be relevant to the dispute. Also contact your company’s in-house counsel and/or outside counsel early on to best protect your company.
International disputes can be complicated and expensive, but a well-drafted international commercial agreement can simplify the process, help control costs and put your company in the best position for a successful resolution.
Michael B. Dubin is a member at Semanoff Ormsby Greenberg & Torchia, LLC. Reach him at (215) 887-2658 or email@example.com.
Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC
Businesses often need to evaluate where they are in order to decide where they want to go, and sometimes the best way to do that is by comparing themselves to a standard.
“In today’s world of sharing information, companies can now drill down to specific cost drivers within workers’ compensation, direct medical care, direct pharmacy source and litigation management, to name a few,” says Daniel Slezak, vice president at ECBM. “Benchmarking has proven to be a most valuable process for identifying performance improvement areas. Once the information is shared in scale, you can identify the best-performing companies, which leads to the identification and implementation of best practices.”
Smart Business spoke with Slezak about how to benchmark your risks and lower your costs as a result.
What are some risks that companies need to manage?
If you start with the premise that an organization needs the commitment of top management, other risks come into play when the doors of the business first open. Some risks to keep in mind are:
- Employee hiring and screening practices. Without proper personnel, you cannot grow your business.
- Safety education, orientation and training. Once you have a trusted employee base, you need to have a constantly evolving safety message.
- Worker involvement. When you allow employees to buy in to your message and take ownership, performance improves.
- Recognition and rewards.
- Accident and incident investigations. When a problem occurs, you need to determine why and then take corrective measures.
- Drug and alcohol testing can enhance your positions and mitigate ultimate cost.
Once a company has addressed these basic risks at its foundation, it can move on to more specific areas, depending on its operations. Some examples include personal protective equipment, IT backup and security, and having well-maintained vehicles.
What are the benefits to benchmarking risk management costs?
Every business faces the possibility of accidental loss of property, income, liability and injury to its employees. If you are committed to minimizing those losses, insurance brokers and risk managers have the resources to put in place a plan that will possibly engineer solutions or effectively educate employees on a strategy you can enforce. The ultimate benefits are safe, healthy employees who are more productive with their working activities.
What are some examples of best practices?
The concept of benchmarking in insurance is simple — provide guidance to a company that will be shared with management and show them that the terms of coverage and cost are reasonable relative to other similar organizations.
You also can dig into the elements that make a program successful. For example, in workers’ compensation, you need to know your medical versus indemnity split of claims. The more claims you keep as medical only, the more the total cost of claims drops. As you measure your company against others, determine what program you could have in place to achieve the best practice. Then ask if it is something that is manageable.
You also can look at the closure rate. How long are your claims staying open? Are you getting employee back to work? Best efforts are not acceptable; your company needs to strive for best practice as the goal.
By drilling down within your vendor costs, you can eliminate extra expenses by knowing best practices before implementing them. Medical bill repricing can vary greatly by vendor. As an example, a risk management consulting firm recently effected a simple change in a client’s program that is projected to save it millions of dollars, in a client’s program that is projected to save it millions of dollars, which we personally just achieved with a client.
What pitfalls do companies encounter when benchmarking?
The most critical concern is choosing the correct peer group. Your broker will align you with the same industry and company size, but the geographical footprint also needs to be considered. For example, if you have a retail operation with stores located in mostly urban areas, you can’t expect the same results as someone with a high concentration in suburban areas when it comes to general liability or workers’ compensation claims. Another pitfall is failing to engage top management. The team has to be on the same page throughout the process so that expectations are set, measured and supported in a timely fashion.
How can you compare risk management practices and costs to other similar companies?
Risk management consultants constantly use benchmarking to determine adequate limits and pricing models. The data available today allows you to determine if you are carrying adequate directors and officers limits and what terms and conditions are available. This type of measurement can be used on other lines of coverage as well. It starts with having credible information about your own company. Most actuaries want to look at 10 years if you are trying to establish your own triangle of losses for a workers’ compensation rate. However, if you have at least five years, the actuary can identify trends and cost drivers. Keep in mind that some benchmarking, such as policy terms conditions and pricing, is a snapshot view of one year comparing your company to the ‘pool’ at a point in time.
With your data in hand, contact an insurance broker. Most quality brokers have the ability to access databases, such as RIMS Benchmarking Survey, NCCI and Advisen, for comparisons. Tillinghast Towers Perrin D&O Survey is universally regarded as an excellent source of information on D&O. Then, by implementing best practices for managing risks, you can lower costs, increase productivity and make top management smile.
Daniel Slezak is a vice president for ECBM. Reach him at (610) 668-7100, ext. 1323, or firstname.lastname@example.org.
Insights Risk Management is brought to you by ECBM Insurance Brokers and Consultants
A fundamental investing concept is that investors need to be compensated for taking on additional risk. However, investors often do not anticipate operational risks, and as a result, are often not compensated for them, says Todd E. Crouthamel, director, Audit & Accounting, at Kreischer Miller, Horsham, Pa.
“Operational risk can be difficult to price into the risk premium because human error is unpredictable,” says Crouthamel. “Therefore, many investors are left to assume that human errors will be prevented by the managers’ systems and controls, in order to rationalize hiring that manager. However, this is not always the case.”
Smart Business spoke with Crouthamel about how to differentiate between investment risk and operational risk.
What is investment risk?
Investment risk can be defined simply as the risk that the actual return on an investment will be lower than the investor’s expectations. Many investors are able to assess investment track records and investment models to decide if the potential rewards are worth the perceived risks in an investment. This type of risk is also readily measurable using various statistical measures, including:
- Alpha, the excess return of an investment relative to the return of the benchmark
- Beta, the measure of a volatility relative to the overall market
- R-squared, the measure that represents the percentage of an asset’s movement that can be explained by movements in the benchmark
- Standard deviation, the measure of the dispersion of data from its mean
- Sharpe ratio, which describes how much excess return is generated for extra volatility of holding an asset
What is operational risk?
The ratios described above are all built on certain assumptions, including that volatility equals risk. These ratios all derive risk measures based on quantitative factors; however, they do not consider qualitative factors, including the investment manager’s internal controls, design and implementation of its systems, and oversight of its employees. This is operational risk.
Human error makes operational risk unpredictable. Many investors may assume that human errors are prevented by the managers’ systems and controls, but that is not always the case. Consider the following situations:
- You hire Manager A to manage a large cap equity portfolio, and instead, Manager A finds better opportunities in the small caps and rationalizes investing your portfolio in small caps in the interest of earning you a better return. This guideline violation results in your portfolio being overweighted in small caps and minimizes your exposure to large caps.
- Manager B was recently examined by the Securities and Exchange Commission (SEC) and the SEC concluded that Manager B’s compliance program was wholly inadequate.
- Manager C has a trader with inappropriate access rights to override controls in the compliance system. The trader executes trades that are in violation of the investment guidelines and conceals these through the inappropriate access rights so these securities are not identified as investment guideline violations.
These examples are real. While some of these risks may be identified in the risk measures described previously, many go undetected until disaster strikes and losses pile up.
How can investors protect themselves from operational risk?
Elimination of operational risk is virtually impossible; however, it can be mitigated with some additional due diligence. Consider the following best practices:
- Review the Form ADV. If your investment manager is registered with the SEC, go to www.adviserinfo.sec.gov and read the adviser’s Form ADV, which consists of two parts. Part I provides details on the business, ownership, client base, employees, affiliations and disciplinary actions. Part II is a narrative that describes the services offered, fees, conflicts of interest and the backgrounds of management. Make sure that this information is consistent with what you already know about the adviser. If you are uncomfortable with any of the disclosures, make additional inquiries of the investment manager. If you are still not satisfied, consider another manager.
- Read the investment manager’s most recent SEC examination letter. The SEC conducts routine examinations of investment managers’ compliance systems and issues a letter detailing violations and enhancements that the investment manager should make. If your investment adviser is reluctant to share this letter with you, consider another manager who is more transparent.
- Make inquiries of the investment manager regarding its systems and internal controls surrounding compliance with investment guidelines. The compliance system should be automated, and overrides of transactions outside of the investment guidelines should require more than one sign off, preferably by someone who is independent of the trading and investment management process.
- Make inquiries of the investment manager regarding the financial strength of the company. An investment manager that is having financial difficulties may be more likely to take bigger risks.
- Read the investment manager’s report on internal controls. Many investment managers have a report that is prepared by an independent third party that tests various internal controls surrounding establishing new accounts, trading, reconciliation and accounting. This report generally details the testing performed and the results.
- If you are not confident in your ability to conduct operational due diligence, consider hiring a third party to conduct it on your behalf.
While these best practices may reduce your exposure to operational risks, there is no substitute for a healthy dose of skepticism. If an investment manager’s returns look too good to be true, they probably are.
TODD CROUTHAMEL is a director, Audit & Accounting, and a member of the Investment Industry group at Kreischer Miller. Reach him at (215) 441-4600 or email@example.com.
Insights Accounting & Consulting is brought to you by Kreischer Miller
Knock Knock! Who’s there? Iowa. Iowa who? Iowa lot of money for my marketing programs. Okay, so that might not be the funniest joke ever but it serves well for exploring humor as an effective business tool.
As people communicate more individually in areas of presentation and electronic media, many focus on creating a “professional” image, which simply means making it look like what’s expected. Sadly this often results in boring and forgettable websites, PowerPoint and videos. It doesn’t help the presenter connect emotionally nor differentiate from the other “professional” offerings.
Rarely do you hear people coming out of a business presentation saying: “That person was hysterical!” More often presenters attempt connection by tugging emotional heartstrings creating small trauma. In most film festivals, dramas outnumber, comedies by 20 to 1. Why? The great 18th century actor Edmund Kean answered us as he lay dying: “Death is easy, comedy is hard.”
Still, humor is a worthy aspiration, accomplishing tasks seldom achieved by serious approach.
- Humor establishes rapport – Almost all people love to laugh. Non-offensive jokes can easily establish likeability and trust. A joke related to a difficult situation can disarm a prospect or client when delivering “tough medicine.” Relationships are often built on experiences of shared humor. People do business with people they like, and if they smile and laugh every time you are near they associate you with happiness. Combined with knowledge, humor enhances expertise, demonstrating confidence and strength.
- Humor triggers memorability – Many strive to create “AHA! moments” in customer’s minds. This occurs when one is thinking one way and you turn their head to think another. Those are the very mechanics of a joke punch-line. In our example I suggest a Midwestern state and quickly turn it to a statement of finances. The unexpected wordplay registers in the brain as humor, which triggers endorphins that encode for memory. This is why a childhood joke exists in our repertoire decades after introduction.
- Humor creates alignment – A joke is based upon shared experience. Humor works well when there is communal understanding of the issues at hand. By identifying a common problem and creating a punch-line around it, insiders will adopt the punch-line as a trigger representing the issue. So when no one remembers to turn off the lights when leaving, a giant light switch painted on the wall makes people laugh and remember their responsibility without embarrassment.
Exploring humor research can be beneficial to creating memorable marketing, particularly in video. But suffice it to say if you just want people to like and remember you in a consistent and productive manner, simply follow the words of the late, great Donald Oconnor and “Make ‘em laugh! Make ‘em laugh! Make ‘em laugh!”
An Inc. 500 entrepreneur with a more than $1 billion sales and marketing track record, Kevin Daum is the best selling author of Video Marketing For Dummies. and ROAR! Get Heard in the Sales and Marketing Jungle. Visit him at KevinDaum.com or @awesomeroar
An accountant can serve many types of roles for CEOs, from hands-off keeper of the books to proactive, fully engaged adviser. It’s up to executives to decide how heavily they want to rely on their accountants. But in general, the more interaction they have, the fewer financial surprises they’ll run into.
“If you want to derive the most benefit, you have to work with your accountants year-round,” says Steve Christian, managing director at Kreischer Miller. “If you just want a scorekeeper who prepares a financial statement and a tax return and don’t want to include him in your team of advisers, you certainly don’t need to. But most progressively minded companies try to surround themselves with good advisers. And the way you become a good adviser is to intimately know the company you’re advising and spend as much time with them as you can, 365 days a year.”
Often, accountants can steer a company clear of pitfalls that might have adverse tax or financial consequences.
“Sometimes you enter into a transaction — you buy a company, you buy some equipment, you do something related to a transaction — and it will have some negative impact as to the financial statement or the tax returns,” Christian says. “Our value takes place by guiding you through the impact of transactions, as opposed to the value of preparing a return or preparing a financial statement. That’s why we really think you need to call us before you act rather than after you act.”
Advice on best practices in a client company’s market sector is another area in which accountants can provide value.
“CEOs know their companies intimately, but unless you belong to a peer group or something like that, you may not have many opportunities to see what best practices other companies are utilizing,” Christian says. “Meanwhile, your accounting firm may support 1,000 different clients out there. So while we may not have the answers to everything, we can tell our clients what we’re seeing is happening with other companies, and they can use that information take advantage of best practices.”
Steve Christian, managing director with Kreischer Miller, has a range of experience providing business advisory, audit, accounting and tax services to a variety of businesses, including privately held companies, partnerships, and SEC registrants.
HOW TO REACH: Kreischer Miller, www.kmco.com or (215) 441-4600
How often do CEOs need to talk to their accountants in order to effectively manage their company’s finances? Obviously, this question can’t be answered with a simple blanket statement: “X times a year for a total of Y hours should do the trick.” There are too many different types of businesses, each with different amounts of expertise and unique needs of their own.
But if you talk to even a small number experts in the accounting field, a couple of themes emerge. One is that when CEOs are contemplating unusual transactions, it’s always better to err on the side of having too much contact with their accountant than not enough. Another refrain is that any time a CEO has any doubts or unease about an upcoming transaction, it’s definitely time to call your accountant to let him or her know you have something you need to talk about.
“Typically, in a larger company, the CFO would take on that role,” says Mark Koziel, vice president of firm services and global alliances for the American Institute of Certified Public Accountants. “But what about the CEO who doesn’t have the C-suite and the finance function inside their organization? That’s where, in particular, we talk a lot about being the trusted business adviser for that CEO. Especially in family-owned businesses, you see this a lot. You need that financial adviser, but you may not need them full time, so you can lean on your CPA on a regular basis throughout the year.
“They should be there for part of the strategic planning sessions. If the CPA knows what’s going on throughout the year and is present for discussions about important things like expansion, employment and succession, then they can be better informed for when they do the year-end planning and consulting.”
The benefits of touching base periodically with clients throughout the year, not just at year end, is a common theme among those with experience in the accounting field.
“When you meet with clients during the year, you can go over their financial statements, among many other things,” says Sharon Cook, president of the National Society of Accountants. “You can make sure they are doing everything properly. And you can make suggestions about some of the other things they need to do, for taxes and for other financial purposes.”
Think, talk, transact
Talking to your financial team throughout the year enables your experts to make suggestions in advance of key transactions that can greatly alter the tax and financial impact of those decisions.
“When you get to year end, depending on what the CPA is doing for you — if it’s a compiled financial statement, an audited financial statement, a tax return — there are definite tax implications that could be affected,” Koziel says. “And maybe some decisions would have been made another way if the CEO had considered the tax implications of what they were about to do.”
Making assumptions on your own rather than asking professionals for guidance can lead to unpleasant surprises. Accountants come across these types of situations frequently in their daily interactions with clients.
“A situation that I find clients often have problems with is, for example, in a year in which they’re expecting a large profit, they want to be able to reduce that,” Cook says. “So one of the first things they think about buying is a car, because they think they’re going to be able to write that car off in full in the first year. Then, by the time you get the books and you’re ready to do the tax return, you have to tell them, ‘Guess what — you’re not going to be able to do that. You’re going to have some limits in terms of what you can deduct this year.’”
For many types of nonroutine transactions, getting advice beforehand from your accountant or finance team is almost always the wisest course for business executives to follow.
“Some of the types of transactions that should be discussed ahead of time would be, for instance, any type of big-dollar purchases that they’re looking at,” Koziel says. “Buying versus leasing is one that needs to be looked at carefully, such as whether you want to buy or lease a building. Another important one is business expansion: If they’re looking to buy a business or even sell their business, the whole M&A transaction and how that will take place is a very important thing to consider.
“Major investment decisions along the way could have significant impact. And succession of the business — that’s another huge issue. You should be having big-time conversations about that early on.”
Other nonroutine transactions that should be reviewed carefully ahead of time include borrowing money, major equipment purchases and like-kind exchanges.
“Before you do a like-kind exchange, you should definitely talk to your accountant to make sure it’s done properly so it won’t be disallowed somewhere down the line,” says Cook. “There are many types of like-kind exchanges. It could involve property that they own. A lot of times, especially in smaller businesses, it may involve cars or equipment that they have around, where they can exchange it and therefore not pay the tax that they would have had to pay if they had sold it directly to someone else.
“Any time a CEO wants to make a big expenditure on any kind of equipment, they need to talk to their accountant to make sure they’re getting the benefit of everything they have, especially if they want to borrow money to pay for it. Because if they want to borrow money, they’ve got to figure out, ‘What is that going to do to my bottom line? Is this something I really need to do, and is it right for me?’”
An accountant’s value to a CEO or a client company isn’t limited to figuring out the tax effects of transactions before they’re entered into. There are many other types of general business issues for which an accountant can provide valuable advice.
“Strategic planning is a big one,” Koziel says. “One of the best services a CPA can provide to a CEO is to just get them in a room for a day and sit down and talk about the business. Do a strategic planning session. Make it formal, kind of like a board of directors meeting.
“Having frequent conversations throughout the year is useful in many ways. The beauty of the CPA environment is you gain a lot of knowledge about particular industries. Take construction, for example. Typically, the CPA has more than one construction contractor client, so they see good habits and bad habits that are out there, based on other businesses in that market. And they also can sometimes translate things to other types of businesses. Maybe it’s a customer service strategy in a certain retail business that could be replicated in, let’s say, a not-for-profit that you might have as a client.
“The ability to observe how a variety of different businesses operate and being able to assess the good habits from the bad habits and recommending the good habits to other types of businesses that are in their client base — these are valuable services that CPAs are in a position to offer.”
Another important service that accountants can provide is keeping tabs on key financial line items to watch for significant changes, then investigating those changes to determine the factors that are causing them, and, if needed, recommending ways to counteract the changes.
“If you keep in close contact with your clients, especially if they’re doing their own accounting in-house, one of the things you can do is review their gross profit percentages,” Cook says. “Are they staying consistent? Are they changing dramatically from one period to another? What’s the cause of that? And you can sit down and go over that with them and see if there’s a problem. It may be in their inventory control, if they have inventory. Or is the cost of their regular purchases going up? And if so, what do they need to do to offset that? Does that mean that they need to find a way to increase sales? Or do they need to have better controls on what’s in inventory and how it’s coming out of inventory?”
The definition of trust
One of the accountant’s main goals is to achieve trusted business adviser status with his or her clients. It’s a prestigious standing, and it must be earned over time.
“It’s about giving your clients the absolute best service you can provide,” Cook says. “To be able to review and make sure they’re handling their affairs properly, to produce good financial statements, to have the best possible relationship between the accountant and the CEO, and ultimately, to make sure that their business prospers. That’s the key. That’s what you aim for.”
Koziel concluded by telling a story — “the ultimate story of a CPA as a trusted adviser,” as he calls it.
“I was at lunch with a CPA friend of mine about a month ago, and he says to me — because he’s heard me say time and again: ‘Trusted adviser, trusted adviser’ — he says, ‘You know, I never really understood the meaning of “trusted adviser” until just this past weekend. I got a call from the wife of a client of mine. The client is a construction contractor; he owns a construction business.’
“This guy was a huge car buff and had a warehouse full of antique cars. He was in the warehouse tinkering one day, and he fell to his death off of a ladder — changing a light bulb, of all things. So he says to me, ‘I’m sitting there last weekend, and this client’s wife calls me. … A little while later, I’m in her living room. It’s the wife, the two daughters, the two son-in-laws and me.’ He says, ‘That is the trusted adviser relationship. That’s exactly what you’ve been talking about. The only one that they felt comfortable enough with — the only one they felt confident enough with as the outside consultant to the family — was me. It’s almost like I was part of the family.’
“That’s the type of relationship that you start to see in these businesses with their CPAs,” Koziel says. “And as a CEO, if you don’t have that trusted adviser relationship now — well, we’re talking about your life’s savings. Whether it’s invested all in the business or whether it’s held in other types of assets — these are your life’s savings. Who are you going to trust with those types of decisions? And you’d better have that person with you year-round, to help you make better decisions all along the way.”
HOW TO REACH: American Institute of Certified Public Accountants, www.aicpa.org; National Society of Accountants, www.nsacct.org
As an executive, your overall well-being consists of your effectiveness combined with your happiness. Effectiveness means that you are able to produce desired results; happiness means that you are in a state of well-being and contentment.
Most executives spend a good amount of their time worrying about effectiveness. They set tough goals and push hard each day to achieve them in the most effective manner. They are results driven, and any thought of happiness comes only after the results are achieved.
This begs the question: Can a busy, hardworking executive be both effective and happy?
I believe the answer is yes. In fact, I am convinced that better results stem from increased happiness. With this in mind, here are some tips to consider that will increase your happiness as an executive:
Start with a happiness exercise
Take out a piece of paper right now and list all the things in life that make you happy. DO NOT censor them. List them as they come to mind. Let it free flow from your mind and heart. List as many people, places, situations, causes, activities, feelings and opportunities as you can possibly dream up.
Now, get in touch with your mind and heart and begin to narrow the list down. In the end, you want to have a list of no more than four things that make you happy.
You now have within your grasp the areas where you should focus your energy, time and resources. The items on the list are at the very core of your personal happiness.
Happiness in all areas of your life is the key that unlocks great measures of effectiveness. Once discovered, your personal happiness will have a direct effect on your business effectiveness.
Take this exercise seriously. Be open, honest and determined. You will be surprised at the results.
Stay happy through ongoing education
Never stop learning.
We must be surrounded with people who know more than we do. They must be a part of what we do with our life and business.
Successful, effective executives know that education does not have an expiration date.
When was the last time you put a teacher or coach into your business goals and plans?
What new thing have you learned lately? Are you willing to stretch your mind to consider more than you already know?
Happiness can be found in a good teacher, trainer or mentor. Look for someone who helps you develop new skill sets and fosters your growth. Allow them to push you to consider new ideas, thoughts and ways of working, acting and leading.
I know this is easier said than done, but consider the fact that stress is the #1 killer of a healthy body and mind. Stress eats away at the foundation of your happiness. It distracts you, wears on you and drags you down.
Meditation, yoga, hiking, exercise and deep breathing exercises help reduce and even eliminate stress. Each of these has been shown to reduce the risk of heart disease, diabetes and other ailments.
Do not overwhelm yourself with the thought of adding each of these to your life. Pick one that interests you and do it. Make a deliberate choice to incorporate a stress reducing activity into your daily life.
Consider this: The absence of stress brings on the presence of happiness.
Have an attitude of gratitude
Our attitude of gratitude serves to focus our minds on the things we have and the things we want, desire and need to live an even fuller, more meaningful and happier life.
In the end, gratitude is not just an attitude – it is a choice.
When we choose to be grateful and to express that gratefulness, we find our lives being shaped by its power. When that happens, we move our life to greater heights of happiness and effectiveness as an executive.
The basis of this article is that a hardworking, results-driven, empowered executive can find ways to be both effective in his or her work and experience happiness in their life. Although we see it far too often in the workplace, the two do not have to be mutually exclusive.
An executive that takes the time to think and dream about the things that truly make them happy, who is willing to stay fresh through ongoing education and who works hard to eliminate stress is an executive who has found the secret to being both happy and effective.
I wish you all the best.
DeLores Pressley, motivational speaker and personal power expert, is one of the most respected and sought-after experts on success, motivation, confidence and personal power. She is an international keynote speaker, author, life coach and the founder of the Born Successful Institute and DeLores Pressley Worldwide. She helps individuals utilize personal power, increase confidence and live a life of significance. Her story has been touted in The Washington Post, Black Enterprise, First for Women, Essence, New York Daily News, Ebony and Marie Claire. She is a frequent media guest and has been interviewed on every major network – ABC, NBC, CBS and FOX – including America’s top rated shows OPRAH and Entertainment Tonight.
She is the author of “Oh Yes You Can,” “Clean Out the Closet of Your Life” and “Believe in the Power of You.” To book her as a speaker or coach, contact her office at 330.649.9809 or via email firstname.lastname@example.org or visit her website at www.delorespressley.com.
If you’re like most CEOs, your day is spent rushing around from appointment to appointment, both internal and off-site, meeting people, solving problems and plotting strategy. The hours fly by, days blur into weeks, and the years start to blend together into a nonstop race against time.
Take a moment to ask yourself if this lifestyle makes any sense. What race are you hoping to win? What’s the reward when you get to the finish line, assuming you even know where the finish line is?
John Ortberg, author of “The Life You’ve Always Wanted,” says it’s important to ruthlessly eliminate the hurry from our lives. If you are in a hurry, there is little time to care about people. We need to slow down, even to the point of solitude.
While we are running our nonstop race, the people that suffer the most are those around us. Friends, family, colleagues and employees are often ignored as relationships are neglected in favor of the next big deal.
Ortberg suggests forcing yourself to slow down and put yourself in a position to wait. For instance, pick the longest line at the grocery store or take the long way to work. Doing so will help train yourself to slow down and be patient.
You are the person that sets the pace in your company, so if you slow down and make sure things are done right, others will do the same.
Working at a pace that’s too fast typically results in things being overlooked — things like employee recognition. When you don’t recognize and reward your employees, their job satisfaction can decline and they may leave. For every person who leaves, you and your staff have to dedicate more time to finding a capable replacement, resulting in an even faster pace as time is lost to recruiting and training. It can quickly become a vicious cycle.
Enjoy life by slowing your pace and being more productive, both at work and at home. Slowing down doesn’t mean you aren’t getting things done, it means you are doing things right and building relationships with people.
Not every transaction will turn a profit in business, but you can bet that almost every relationship you have with people will pay off in the long run. Isn’t it time you started investing in those relationships by taking the time to slow down and build them?
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.