When SugarHouse Casino opened its doors to the public in September 2010, the buzz was palpable throughout the region. Located on the Delaware River, it is Philadelphia’s first casino, and its debut came with a full royal fanfare: media headlines, applicants clamoring to apply for jobs and a leadership team assembled from a pool of experienced gaming industry experts from around the country.
At the center was Wendy Hamilton, the casino’s general manager. Like everyone else associated with SugarHouse, she basked in the glow of the casino’s debut. But she also knew the spotlight wouldn’t always be this bright.
“It was all new, novel and exciting,” says Hamilton, now in her second year running the casino. “We were all making decisions every day that were going to determine who we are and how we would do business for the rest of our lives here. It was really a high energy and exciting time for everyone. But now, it’s not so new anymore and it is not as exciting. The media isn’t as interested in everything we do. So the challenge has become about how we ensure this is still a great place to work, ensure people still enjoy coming to work every day when it isn’t so novel anymore.”
It happens to virtually any business that opens to a heaping helping of pomp and circumstance: At the outset, it’s an event. After some time passes, it becomes a job. Even if the Phillies are in first place this month, by now home games have become a matter-of-fact part of summertime life. The buzz surrounding Opening Day is a distant memory.
Replace the crack of the bat with the ringing of slot machines, and you have Hamilton’s predicament over the past year-plus.
“It is something that the leadership team here thinks about every day,” she says. “We are always looking for new ways to keep the team engaged, ways to get everybody on board with what we are doing.”
Plug yourself in
Maintaining a high level of engagement with your employees comes down to how you communicate. That is the simply stated version of the solution. What Hamilton has discovered is that you need to choose your interaction points for the best possible impact.
In an organization like SugarHouse, which employs just more than 1,000, you can build communication touch points through a variety of mediums. The tried-and-true methods include newsletters, e-mail blasts, speeches and videoconferences.
But what works best for Hamilton and her leadership team, and what she emphasizes, is relationship-building through informal interaction. Hamilton walks the casino floor, visits the employee lunchroom, chats with cashiers during a lull in business, so she can learn what they are learning. Hamilton says it is critical to develop a sense of familiarity between the casino’s executive team and the employees working the floor, because those employees talk to customers every day. They find out what customers like and don’t like about their experiences at the casino, and can help the executive team to identify issues at ground level before they become major problems.
“We are in a very consumer-oriented business, in a very high-touch industry,” Hamilton says. “For example, we do a lot of giveaways to certain customers who are worth a certain dollar level to us. They are usually invited to the casino at a specific day and time to pick up their gift. Let’s say it is a set of pots and pans, which is a gift that creates some logistical concerns. A set of pots and pans is not easily handed over to a customer and carried around the casino for the rest of their visit.
“So what might happen is an employee relays a suggestion from a customer about doing the pot and pan giveaway at the end of the visit, so they can just pull up to the valet stand, put the package in the car and drive away. On the executive level, it might make more sense to us if we give the package away at the promotions center, but the people at ground level will have a better feel for the details of the situation.”
Through their daily observations, employees can formulate common-sense suggestions that can have wide-ranging positive results over the long term. But if you don’t put in the time and effort to connect with them and develop a sense of familiarity, they won’t feel engaged, their enthusiasm for the job will wane and they won’t come to you with their ideas.
“I like knowing people’s names, knowing what part of the casino they work in, and even knowing a little bit about them personally,” Hamilton says. “If you can keep it casual and informal, it’s not a big deal to run into them somewhere and ask them to help you out with something. You can comfortably ask them about a new potential policy and how it might impact them in their area of work. It keeps the communication very quick, easy and efficient.”
You won’t be able to use every single idea that an employee brings forward. But even when you have to reject an idea, or table it for a while, you can still use that as an opportunity for connection, engagement and motivation.
“When you can’t use an idea, there ought to be a reason,” Hamilton says. “Either it is a good idea for your purposes or it isn’t. If it is a good idea, you use it. If it isn’t, you need to explain to the person why it won’t work. If it is a regulatory reason or something along that line, just tell them that. More often than not, it’s going to be a situation where you like the idea but you just can’t use it right now. It might be something you can do a couple of months from now. If that is the case, you have to tell them it is a great idea and there is a better chance of it happening in a few months. But it all comes back to how you communicate with the person in that situation.”
Though you can’t often develop the same level of familiarity with customers that you can with employees, you can take some of the same informal communication principles and apply it to how you interact with customers.
“I find that the little tidbit you get from a five-minute conversation with a customer is as valuable as the customer surveys we send out,” Hamilton says. “It’s a lot of being around the operation, being there while they are playing or while they are having dinner. You just ask them what is going good about their experience and how their experience could be better. I would say it is difficult sometimes in a business setting to really get a group of executives used to just being there and having those kinds of conversations – the type of conversations you would have around your own water cooler in the executive offices. You need to be able to talk like that to your customers and your employees because that is where you are going to get the real information.”
Build your team
If you’re going to keep your employees engaged over the long haul, your communication philosophy has to become a fundamental building block of your culture. Putting words on a piece of paper, or stating it to your work force, is only the first step, however. You need to promote your communication philosophy, and you need to have a leadership team that fully buys in to your plan and can implement your communication strategy.
At SugarHouse, Hamilton had the advantage of building her own leadership team from scratch, and doing so months before the casino opened its doors.
“We were very lucky here, because at the time we were hiring, this industry was experiencing some turbulence in other markets like Atlantic City and Las Vegas,” she says. “What it meant was, people who were some of the experts in this business, people who had been in a certain field for quite a while and might have turned us down under other circumstances, were willing to take the risk and come here. The field was kind of open to us.”
After Hamilton made the first couple of management hires, a chain reaction developed as those hires then started recruiting via their own professional connections.
“Once I had one or two people on board, those people did the same things, helping me by recruiting some of their own peers to fill out their own teams,” Hamilton says. “We also hired a number of people who applied to us cold, but it helps to have connections through somebody that you are working with, and you’re able to reach out and recruit through those connections.”
As Hamilton was recruiting to build her leadership team, and her team was recruiting to build their departmental teams, she emphasized three overarching traits that all management-level team members needed to possess.
“They needed to be smart, like any executive would, and they need to be a bit clever about solving problems,” she says. “Beyond that, they also need to be people who can interact in a social setting. If they are people who can function in their neighborhood or in their kid’s school, it’s largely the same thing. Sometimes you have to train people to have those informal conversations at work, because it’s not how they were coached previously. But anybody who is smart and fairly social can pull it off once the main idea is introduced.”
When building a team that can stimulate dialogue and engage employees, you need to consider your culture first. If you want to build a management team that can promote open communication, that concept first needs to be a part of your organization’s core values. If you can’t define your values accurately, you won’t be able to hire to fit your values.
Through her professional connections, Hamilton knew of many people in the gaming and casino industry with a high level of technical competency in their areas of specialization. But by getting to know those people over the years, she developed a sense of who would fit the culture at SugarHouse and who wouldn’t.
“I can name a couple of good finance folks, but I knew right away the one who would fit perfectly into the culture we wanted to build here,” she says. “You really have to be committed to making sure that you don’t have someone who might be very strong on the technical side but won’t add anything to the culture. But while you want everybody to identify with your culture and values, you don’t want to hire people who are all the same. So I don’t like to use the word ‘fit’ when it comes to culture. You don’t want to end up with 10 vice presidents who all have the same type of personality.”
Good team-building falls under the heading of “chemistry.” It’s a nebulous word when it comes to social interaction and what it means to have everybody working together. But somehow, the issue of chemistry must be addressed if you’re going to have a unified management team, and in turn, a unified, engaged and motivated company at large.
“At the end of the day, it’s up to you to make the call about whether a person is a good cultural fit or whether they simply bring the technical skills,” Hamilton says. “You could have the best people, but if they don’t fit with the culture and won’t get along with certain people, it weakens the team.
“You want to create a team that likes being together, a team that will look out for each other and have each other’s backs. Everybody has strengths and weaknesses, and if you build a team that is complementary, the job gets done, everybody plays a part and nothing falls apart because of a conflict or somebody’s weakness.”
How to reach: SugarHouse Casino, (877) 477-3715 or www.sugarhousecasino.com
The Hamilton file
Education: Degree in biology from Duke University; MBA in finance from St. Joseph’s University
First job: I sold saltwater taffy on the boardwalk in Ocean City, N.J. when I was 14 years old.
What is the best business lesson you’ve learned?
Don’t take it personally. Let me define that a bit. On one hand, people do their jobs well because they take it personally. However, some days you just can’t get a hit. And when things aren’t going your way, that is when you have to be careful to not lose enthusiasm. Sometimes, things are going to get tough and something is not going to go right. But especially in a leadership role, you can’t let it affect your energy and enthusiasm. You still have to project a positive attitude, because people are going to look up to you.
What is your definition of success?
Obviously, you need to be producing a quality end product. But for me personally, I want to be able to assume those things are happening. It sounds ridiculously simple, but success is when you as the leader have the people around you fulfilled and your employees are happy. You want an environment where people enjoy coming to work. That, to me, is when you can say you are successful in your role.
The third-largest budget item for many U.S. companies is energy, which falls just behind labor and material costs, according to ecova.com. The cost of energy for the U.S. commercial and industrial sectors was more than $202 billion from 2009 to 2011.
As one of the largest expenditures, it is important for employers to find the right combination of energy products by using the best energy supplier for their business needs. And for many, the best energy strategy may involve using petroleum products, bundled with other energy needs.
Petroleum accounts for 3.5 to 4 percent of the total primary energy consumption for commercial business, according to the U.S. Department of Energy. In addition, in 2010, the average price for petroleum — which includes distillate fuel, LPG, kerosene, motor gasoline and residual fuel — was lower than electricity.
“When searching for a energy supplier for petroleum, employers should look for a company with an all-encompassing portfolio of energy offerings, proving reliable, readily available and cost-competitive distillate supply at various supply terminals,” says Paul Rippy, senior marketer for petroleum products at PPL EnergyPlus.
Smart Business spoke with Rippy about which energy suppliers offer petroleum products, how to choose the right energy supplier and the current petroleum short-term market outlook.
Do all energy suppliers offer petroleum products?
No. While there are many energy suppliers that offer various products and services to help you with your energy supply needs, not all suppliers offer a comprehensive choice of energy supply options to help every facet of your business. If your business operates facilities that require different types of energy, it is important to align your business with an energy supplier that can meet all of your needs, whether that is using electricity, natural gas, petroleum products or all three.
When you are looking for a supplier that can be a one-stop shop for energy needs — including electricity, natural gas, petroleum products, renewable energy, demand response and mechanical services — you want to look for an energy supplier that can provide all of these products on a consistent basis. Not all suppliers offer petroleum products consistently or in all the areas where your facilities are located.
What are the advantages of bundling petroleum products with other energy supply products?
Certainly, when you find an energy supplier that is able to bundle various energy products and services to meet your business’s needs, you benefit from the ease and convenience of a one-stop-shop type of relationship. With a single energy supplier capable of meeting all your energy needs you, as an employer, can focus more directly on your other business aspects.
In addition, you may have facilities that are in various locations and have different energy needs. Selecting a supplier that knows how your business works and has committed to understanding your unique energy supply needs is the start of a business relationship that enables your company to have the most advantageous products and services for its energy needs.
What should employers look for when shopping for a petroleum supplier?
Employers should strongly consider the petroleum supplier’s professionalism, experience and ability to provide a diverse, reliable and readily available array of energy products. For example, companies such as PPL EnergyPlus maintain strategically located and limited available terminal capacity space to store products, allowing easy access to their rack customer base. You also want to select a supplier with a strong financial background, knowledge of petroleum and energy markets, and a strong commitment to customer service. And, of course, you want a supplier that can navigate the volatility of the petroleum market and provide your business with competitive prices.
What’s the short-term prospect for petroleum product prices?
As of the middle of May, U.S. gasoline prices were at an average of $3.754, decreasing throughout the beginning of May, according to the U.S. Energy Information Administration. The average in the Mid-Atlantic region was $3.764.
Based on experience and knowledge of the petroleum products market, we believes that distillate product prices will bottom out over the summer months before rising unsteadily into the winter. Gasoline prices will continue to trend downward through the summer into the winter months before trending upward next spring.
This is based on current market and economic data. We don’t have a crystal ball to have certain knowledge of the volatile petroleum market, but we follow the markets closely every day and use that knowledge to benefit customers.
However, the situation always remains in flux; certain events could occur tomorrow that would significantly change the outlook on short-term future petroleum product market prices.
PPL EnergyPlus offers unbranded diesel fuel, gasoline, heating oil and kerosene to electric generation facilities, distributors and large commercial and industrial, and federal, state and local government customers, not only in Pennsylvania but also throughout the Mid-Atlantic region. The Petroleum Products Division continues its strong, well-established supply relationships with refiners, commodity brokers and wholesalers.
Paul Rippy is senior marketer for petroleum products at PPL EnergyPlus. Reach him at (610) 774-5630 or MPRippy@pplweb.com.
Insights Energy is brought to you by PPL EnergyPlus
Telecommunications is a critical part of the business environment and always has been. As analog-based telecommunications become obsolete, the evolution of Internet protocol is the next long-term — and unavoidable — solution.
“Voice over IP (VoIP) has come a long way, improving call control and quality immensely since its infancy,” says Michael Louden, director of enterprise sales at Comcast. “As Session Initiation Protocol (SIP) technology matures, it has created a revolutionary ripple effect, setting universal adoption of IP Voice in motion.”
Smart Business spoke with Louden about how VoIP works, its advantages and what to consider before adopting it at your business.
What is the difference between analog voice and VoIP?
For analog voice, POTS (plain old telephone service) uses a dedicated path through the public switched telephone network and enables a connection as long as circuits are available. The network was designed to maintain a stable, high level of voice quality that is available nearly anywhere. POTS is still based mostly on a copper medium and one line handles one call at a time.
Voice over IP uses SIP in much the same way as the public switched telephone network and has similar clarity and consistency. However, there are fewer infrastructure concerns, as IP can run over multiple physical mediums, including copper, fiber or collective forms of wireless technology. As long as you can route IP traffic, you can use VoIP, and you can technically utilize any Internet connection to place calls. There is no limit to your call capacity, as long as the Internet protocol-private branch exchange (IP-PBX) and network bandwidth can support it. Another advantage is that restrictions and surcharges on long distance calling are minimized or eliminated.
How does a business know when to adopt VoIP?
There are a few key questions to ask that will give you a place to start when considering VoIP.
- Step back and take a holistic look at how the current phone system complements your business, specifically how it is utilized and what the critical functions are. Ask what employees like and dislike about the current system, as receptionist needs, executive management requirements and inbound/outbound call flow are important to consider.
- Look at the physical networking and switching. Most IP phones have two ports so you can connect both a computer and phone through the same wall jack. However, this limits the port speed of your computer workstations.
- Are your switches able to provide Power over Ethernet? PoE-capable phones conserve space by eliminating the need for AC power adapters. If not, then AC powered PoE injectors are options.
- If multiple offices are part of this equation, review interoffice communication, as the ability to extension dial between locations is sometimes overlooked.
- Are there field personnel who work from smaller satellite offices or remote locations? Teleworkers also impact call capacity. It might be worth having a phone system that allows IP or virtual private network connectivity, giving remote workers the ability to access the system as if they were on site.
- Consider whether to get a locally managed or hosted private branch exchange. The locally managed PBX is managed within your own organization by a telecom administrator or outsourced IT consultant. It’s a good solution for mid-sized to larger organizations because of scalability and control over provisions, features, handsets and ingress/egress call processing. It takes more initial capital investment but has lower operating expenses in the long run.
- Hosted PBX is a product powered by a cloud-based software phone switch, often good for small and mid-sized businesses, or businesses with multiple locations. Features are available to unite desktops, mobiles and telephones, and disaster recovery capability is possible. Hosted PBX is an operating expense with predictable costs per user.
- There are some core considerations when looking also at a service provider, including call quality control because voice quality and stability are directly affected by poor network performance, causing dropped calls, poor quality audio and loss of in or outbound audio. When considering price, look at the value of the provider as a whole and ask about network infrastructure and ownership, reputation with VoIP, how the implement/installation process works, equipment requirements and package options.
What is Metro Ethernet, and how would it impact a business?
A Metro Ethernet network, loosely defined as a regional extension of your Ethernet-based LAN, connects geographically separate sites as if they were offices in the same building. You no longer have to traverse the public Internet for interoffice communication with VoIP. Metro Ethernet also has no special interfaces because most networking equipment has at least one Ethernet interface. It uses network divergence rather than converging voice and data over a single network, which can help with bandwidth availability for both voice and data.
Fiber-based Metro Ethernet enhances business continuity, performance and stability for all types of VoIP communication. The networks are scalable, resilient and built to meet the needs of demanding networking applications.
Why is VoIP the future of telecommunications?
VoIP carries most of the world’s voice traffic today. A vast majority of the advanced services you appreciate now are enabled using VoIP such as voicemail to email, click to dial, find-me-follow-me, web-based PBX administration and more. With VoIP, telephone calls can be made anywhere an Internet connection is available.
Michael Louden is Director of Enterprise Sales at Comcast. Reach him at (610) 499-2331 or Michael_Louden@cable.comcast.com.
Insights Telecommunications is brought to you by Comcast Business Class
Documents written by lawyers are often hard to understand. They’re chock-full of arcane terms, and they systematically violate every precept of the “plain language” movement.
Lawyers have only themselves to blame. Most of them can, and occasionally do, write clearly. But should you insist that your lawyer always use plain English? No, says William Maffucci, an attorney at Semanoff Ormsby Greenberg & Torchia, LLC.
Smart Business spoke with Maffucci about when to insist that your lawyer speak clearly and when, instead, to leave legalese alone.
What is plain language?
Plain language is language that a listener or reader is likely to understand.
Lawyers in the plain-language movement reject the assumptions that legalese is indispensable, that every fact recited at the beginning of an agreement must begin with ‘whereas,’ and that every affidavit must end with ‘further affiant sayeth naught.’ They begin sentences with ‘and’ and ‘but’ rather than ‘moreover’ and ‘notwithstanding the aforesaid.’ They use contractions. Even sentence fragments.
Advocates of plain language prefer small words (provided they do not compromise meaning), short sentences (but not to the point of monotony), short paragraphs (ditto), and the active tense (except when the passive tense serves a purpose). They strive to ‘omit needless words,’ but they recognize that sometimes repetition itself serves a need.
Is plain language always preferable to legalese?
In a perfect world, everyone — lawyers included — would always use plain language. Even in our imperfect world, lawyers should use plain language rather than legalese when all other things are equal. But rarely are all other things equal.
Writing an original document in plain language is hard, and excising legalese from an existing document is harder. Both take time.
Sometimes you should insist that your lawyer take that time. Clarity is critical in some documents, such as employee handbooks. Plain language is sometimes mandatory in consumer contracts. And the ability to enforce a waiver of a constitutional right often depends upon proving that the other party actually understood the waiver.
But sometimes it makes no sense to require a lawyer to spend the time necessary to express a concept with plainer language or greater concision. Common commercial documents that conform to centuries of custom in an industry are likely to be understood by people in the industry. What would requiring your lawyer to rewrite them in plain English achieve, other than a higher legal fee?
Other times, a lawyer may be unwilling to buck tradition. Every term traditionally used in deeds, for example, has at some time been interpreted by the courts. The fact that the term still appears in modern forms leads lawyers to assume that the term serves some (often unknown) purpose.
Have the courts concluded that the traditional terms always serve a purpose?
No. Occasionally the courts have declared that some of traditional conveyancing words can be omitted without consequence. So have the legislatures.
By statute in Pennsylvania, the words ‘grant and convey’ are sufficient to convey real estate, so conveyancers no longer need include the other terms traditionally used for that purpose — ‘bargain and sell, release and confirm.’ But here’s a dirty little secret of the legal profession: Very few lawyers have memorized all of the authorized shortcuts. And I don’t think any court or legislature has ever handed down an opinion or enacted a statute specifying that the continued use of a term that has been deemed to be surplusage makes the instrument ineffective.
At the same time, there have been court decisions and statutes establishing that certain boilerplate phrases (think ‘small print’) are indispensable. One statute makes it important to include in certain contracts a provision specifying that, by signing the contracts, the parties ‘intend to be legally bound.’
And court decisions have turned on the distinction in construction subcontracts between the words ‘if’ and ‘when’ in the phrases ‘pay if paid’ and ‘pay when paid.’ Lawyers share horror stories of fortunes lost in court decisions interpreting such seemingly inconsequential terms. Naturally, the lawyers develop a reluctance to change words that have been used since time immemorial.
Is there a rule of thumb for deciding when to tell you lawyer to use plain English and when to leave legalese alone?
Never stop considering the context in which a lawyer is being asked to communicate. If the lawyer is drafting a loan-participation agreement that will bind only long-established financial institutions conducting business as usual, the lawyer should not be faulted for pulling a tried-and-true template off the shelf and making no effort to clarify it. If the lawyer is drafting workplace rules for a glass factory, the lawyer should be faulted for not using the vernacular of that trade. If the lawyer is drafting an agreement by which the client’s neighbor would grant the client an easement over the neighbor’s property, the lawyer should use language that is likely to be understood not just by the client but also by the neighbor — and by future owners of the properties, if the original parties intend that the easement last in perpetuity.
Consider the additional time that your lawyer would spend to communicate more clearly to be an investment, and always ask yourself whether the investment makes sense.
After more than six years of decreasing insurance premiums and broadly available coverage, commercial insurance rates have reached bottom and are beginning to increase, while coverage terms and conditions are diminishing.
“Now is the time for business owners to focus greater attention on their property and liability insurance programs and take steps to minimize the impact of these coming changes,” says Philip Glick, senior vice president at ECBM Insurance Brokers & Consultants.
Smart Business spoke with Glick about what a tighter insurance market means and how businesses can handle these changes.
What happens when insurance premiums rise?
Historically when premiums begin to rise, coverage terms and conditions also are generally scaled back. Many of the broad coverage terms and conditions that have been readily available during the past few years are becoming more difficult to maintain.
What are other indications of a tighter market?
Many insurance companies have begun to slow down the adjusting of property insurance losses, particularly with respect to the business income portion of claims. Property claims that historically could be adjusted in three to six months are often taking more than a year to close out. Property insurance companies also are routinely bringing in forensic accounting firms to pick apart every line of income and extra expense claims, often delaying the adjusting process by as much as a year.
Insurance companies are routinely denying coverage for additional insureds under the general liability policies of those they cover. For example, there are extensive delays for landlords getting acceptance of coverage for claims filed by people injured at their tenants’ premises. This is also occurring when general contractors ask for coverage for claims by their subcontractors and property owners are seeing delays in obtaining coverage for claims filed against them from construction site injuries for work done by general contractors.
During the past several years, insurance companies have been imposing coverage restrictions. As an example, insurance companies will not provide contractual liability coverage nor extend additional insured status to another party for the sole negligence of that other party under the commercial general liability policies they write for contractors to extend coverage to building owners.
There’s a push for higher windstorm deductibles on property insurance coverage written for clients with properties not just on the Florida coast, but in areas 30 to 40 miles from the coast, including large parts of New Jersey, southern Connecticut and Massachusetts. They are imposing deductibles as high as 2 to 3 percent of insured building values for windstorm losses.
What can employers do to mitigate these changes to property and liability insurance?
As business owners, you can take a number of proactive steps now.
- Take control of adjusting new property loss, including setting strict timelines and strategies soon after the loss occurs. Then closely monitor progress from the initial claim report until the final closeout and payment.
- Demand that your vendors, contractors and suppliers provide the required additional insured coverage needed and get confirming renewal certificates of insurance. Copies of the appropriate additional insured endorsements should back up these certificates on the supplier’s renewal insurance policies to verify that the additional insured protection is extended to you.
- Push back aggressively on your contractors, suppliers and vendors to be sure their insurance companies promptly accept the tender of any claims from your company under their general liability insurance policies.
- Carefully evaluate the detailed terms and conditions of the renewal proposals for every insurance policy you purchase. In addition, scrutinize the renewal coverage provided to you by your vendors, contractors and tenants to be sure the renewal is as broad as the prior coverage you relied upon.
- Meet early with your insurance broker or agent to get an early warning of any likely changes in coverage terms and conditions and premium increases. Also, request your renewal insurance proposals as early as possible including getting several optional quotes for each major insurance policy to have choices available to help mitigate any rate increases of attempted coverage restrictions.
- Get renewal proposals including higher deductibles on property coverage, and also including optional deductible quotes on your general liability insurance renewals, as ways to reduce renewal premium increases. Likewise, get quotes with higher automobile physical damage deductibles.
- For larger businesses, consider renewal workers’ compensation proposals that include deductibles or retrospective (cost plus) rating options if your current policy is written on a guaranteed cost basis.
- Increase your umbrella liability, directors’ and officers’ liability and other liability policy limits now if your current coverage limits are too low. Similarly, increase your insured property and business income values to adequate amounts while you can still negotiate reasonable property insurance renewal premiums before rates move up further.
- Attempt to lock in renewal premiums and coverage terms and conditions now for a longer term. Many insurance companies are still willing to provide 15-month or 18-month terms and, in some cases, even 24-month policy terms and conditions for clients with good loss experience and a strong financial position. During the past few years, many insurance buyers didn’t pursue longer-term policies believing that they could obtain lower rates on renewals as the market continued to soften.
- Evaluate the responsiveness, scope of services, financial strength and staying power of the insurance companies and the insurance agents or brokers you do business with. Be sure the professionals you deal with will help you implement strategies to properly protect your business through the next few years.
Philip Glick is a senior vice president with ECBM Insurance Brokers & Consultants. Reach him at (610) 668-7100, ext. 1310, or firstname.lastname@example.org.
Insights Risk Management is brought to you by ECBM Insurance Brokers and Consultants
When is the last time you reviewed your company’s buy-sell agreement? If you’re like the owners of many private companies, that document is sitting in a file collecting dust. The stagnant legal document is often viewed as something that you create and then put away, only looking at if a business partner dies, retires, gets sick or decides to leave.
But that is a big mistake, says Mario O. Vicari, director at Kreischer Miller in Horsham, Pa.
“The buy-sell agreement is a critical roadmap that outlines the economic terms and conditions of transactions between a company and its shareholders in case of a triggering event in a private company’s stock,” says Vicari. ”It essentially determines the market for the company’s stock among shareholders.”
The buy-sell agreement is a highly customized document that a company’s shareholders should intimately understand and should play an active role in crafting so that it reflects their collective intent.
Smart Business spoke with Vicari about how to execute an effective buy-sell agreement.
What is the purpose of a buy-sell agreement?
First, when structured properly, a buy-sell agreement reflects the intent and the bargain of shareholders relative to transactions in a private company’s stock. For this to occur, shareholders should participate in the crafting of the document and its provisions, and review it at least annually.
Second, the agreement protects the company by ensuring that its provisions do not present a set of economic circumstances that could jeopardize the company’s liquidity by requiring it to fund a transaction that was not planned for or properly structured. Important elements to consider are reasonable valuation and payment provisions.
Third, it protects the shareholders and their families by providing funding mechanisms through proper insurance coverage in the event of an untimely death of a shareholder. Finally, a properly structured and monitored agreement helps avoid shareholder disputes and litigation because the economic provisions are well understood and agreed to by all parties in advance of any triggering events, and the valuation is monitored annually.
What are the important triggering events that should be addressed in a buy-sell agreement?
There are five major triggering events that are normally addressed in a buy-sell agreement: death, disability, separation from employment, retirement and sale. It is important to note that each trigger could cause different terms and conditions in the agreement, such as length of payout or discount on valuation. For instance, a company can protect itself from an unanticipated liquidity event caused by an unplanned separation from the company by placing a discount on the valuation and/or longer payment terms on that transaction trigger.
There are two other common triggers — divorce and bankruptcy of a shareholder. In each of these cases, company stock could become part of a divorce or credit estate and the holder of those shares would have the same rights as the other shareholders. In order to avoid this type of situation, a well-designed agreement can prevent a shareholder from allowing shares to fall into someone else’s hands by requiring the shareholder to ‘put,’ or sell their shares back to the company in exchange for a note before the divorce or credit action is settled.
What are common mistakes that business owners make in these agreements?
The most common mistake is having a provision that the company’s value is to be determined by an outside appraiser in case of a triggering event. This causes problems on several fronts. First, when shareholders don’t understand the value of their shares within the agreement, they are often surprised when a trigger occurs. This sometimes leads to bad feelings, disputes or litigation. It also does not allow shareholders to properly plan their personal affairs.
Second, when an important variable in the agreement such as the value of the shares is not known, it is impossible to know whether other elements of the agreement are properly structured, such as the amount of life insurance to carry or whether the company can afford the payout provisions. A better strategy is for the shareholders, with the help of a valuation adviser, to develop a formula that is contained in the agreement that can be measured and quantified each year after the company’s financial statements are complete.
This allows shareholders to monitor the value for their sake, as well as the company’s, and to make sure that the valuation and payment provisions are reasonable in light of the company’s current financial position and cash flows.
Who should be involved in drafting a buy-sell agreement?
We think that balanced advice is very important. Certainly, all the shareholders should be active participants, as it is their company and their stock. We also think it is a good idea to include the company’s financial officer.
Outside advisers should include the company’s CPA, attorney and insurance counsel. If the company’s CPA does not have valuation expertise or credentials such as a CVA, then a valuation adviser may also be needed.
Mario O. Vicari is a director at Kreischer Miller, Horsham, Pa. Reach him at email@example.com or (215) 441-4600. Follow him on Twitter @mariovicari.
Insights Accounting & Consulting is brought to you by Kreischer Miller
Learn how SBA Financing can help your business grow & succeed
Thursday, May 31, 2012
10:00 a.m. to 11:00 a.m. EST (US & Canada)
Registration is required: Click Here to Register
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Brief description of the topic:
In trying to grow their businesses, owners often find themselves seeking credit to finance those expansions.
Join Kreischer Miller, Fox Rothschild LLP and PNC Bank for this free webinar that will be hosted by PNC Bank and Smart Business to learn how U.S. Small Business Administration (SBA) loan programs may help.
The SBA offers a variety of loan programs that provide basic to complex financing solutions that business owners might not be able to attain conventionally. Hear from our well-versed panel — a CPA, an attorney and a senior SBA business development officer — who will go through case studies that show the unique ways SBA loans can be structured to help businesses successfully grow and expand.
In this session you will learn:
- How the SBA transformed since the Small Business Jobs Act was passed in 2010
- Benefits of SBA financing vs. conventional financing
- Overview of the SBA 7(a), 504 and Express Loan Programs
- Case studies showing creative ways SBA loans can be structured
Steven E. Staugaitis, a CPA and leader of Kreischer Miller’s Entrepreneurial Services specialty services group. Steve focuses on serving privately held companies with their accounting, tax and business advisory needs.
Thomas J. Kent, Jr., is a partner and Attorney for Fox Rothschild and co-chairs the firm’s Franchising, Licensing & Distribution Practice. He focuses on franchise law as well as mergers and acquisitions.
Lisa Kennedy, Vice President, Senior Business Development Officer at PNC Bank is one of the top SBA lenders in the nation. With over 22 years of SBA financing experience, she has helped fund over $150 million in SBA loans.
The Webinar and/or materials were prepared for general information purposes only and are not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell securities or currencies or to engage in any specific transactions, and do not purport to be comprehensive. Under no circumstances should any information contained in the seminar, and/or materials be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon any such information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed in the seminar and/or materials are subject to change without notice due to market conditions and other factors.
PNC is a registered mark of The PNC Financial Services Group, Inc. (“PNC”). Banking and lending products and services and bank deposit products and investment and wealth management and fiduciary services are provided by PNC Bank, National Association, Member FDIC.
©2012 The PNC Financial Services Group, Inc. All rights reserved.
Executives are some of the busiest people I know. They are often some of the unhealthiest, as well.
The trend in today’s workplace is towards doing more and more with less and less. This adds strain to the already overworked executive. That strain affects the health of the executive and hinders his or her ability to do their job effectively.
This trend cannot continue. It is destroying the lives of too many top-notch professionals.
Here are 27 tips for staying healthy as a busy executive:
1. Remember to smell the flowers. Take time out to enjoy the little things in life. Being just as impressed by small events as large ones helps to cultivate wisdom and clarity.
2. Stop living a “hit-and-miss life.” Living aimlessly is like shooting multiple arrows that miss their targets. This is a waste of time and not a trait of an effective leader.
3. Anxiety is anticipation run riot. Anticipating the worst keeps us from enjoying the present. Realize that anxiety does not facilitate self-control.
4. Remember to take breaks. Taking breaks during work helps you accomplish more during the time that you are working.
5. Avoid procrastination. Remove temptations around you such as an instant messenger program or magazines, which might tempt you from being efficient at work.
6. Keep things simple. Eliminate the things that cause clutter in your life, such as unnecessary magazine subscriptions, paper and too many unused gadgets.
7. Take care of yourself. Executives who look haggard or tired tend to have more responsibilities heaped on them, because your physical condition and dress sends the message that you permit that.
8. Commit yourself to exercise at least three times a week. Keeping yourself in shape will help you perform efficiently in all areas of your life.
9. Always eat breakfast. Low blood sugar as a result of not eating properly can cause unproductive afternoons.
10. Take your vitamins. If you eat constantly on the run to save time, take vitamins to avoid potential slumps in energy.
11. Bag your lunch. Not only is this cheaper, but it is more nutritious because you have control over what you eat. This can spare you from eating empty calories that exhaust you.
12. Sit down with your family for dinner. This is the one thing that you can do each day to bond with family members. It also saves money and allows you to control your diet.
13. Make dates with your mate. Planning romantic outings keeps your relationship erotic and alive.
14. Get professional help. If you can’t cope due to bad time management skills or emotional problems, get the help that you need.
15. Ask for help if you need it. Pride prevents most executives from asking for assistance from higher ups or colleagues. Being trained wastes less time than trying to figure out something yourself.
16. Make sure you have quiet time. Set personal time aside for yourself each week doing something that you enjoy doing alone. This gives you clarity and is a form of meditation.
17. Get enough sleep. People who are sleep deprived make more time consuming mistakes and are too irritable to lead a quality life style.
18. Never get too hungry. People who are hungry are irritable and make mistakes so that things need to be done over again.
19. Avoid people who suck your time. Needy or emotionally disturbed individuals can seriously throw your plans for the day astray. Avoid them the best you can.
20. Deal with your anger. Angry individuals are hasty, reckless and make careless errors that cause time consuming mistakes.
21. If you are tired, rest. It is better to rest and do a task twice as fast afterwards, rather than do it slowly because you are exhausted.
22. Take life one day at a time. Live in the present, not in the future, and you will accomplish more.
23. Give back to the community. Engage in one meaningful activity where money is “not the goal”. This empowers you spiritually and prevents you from getting too stuck in your own problems.
24. Make yourself inaccessible at certain times. Let others know when you are working and cannot be disturbed.
25. Reward yourself for a job well done. Whenever you complete a big task, make sure to keep motivated by giving yourself a reward.
26. Seek out the good in every situation. Disappointments and delays are a part of life. Learn how to make it up to your family if you are late and can’t be there for them.
27. Realize that you always have choices. Make choices about how you spend your time, and do not be at the mercy of obligations that you cannot fulfill.
As a busy executive, staying healthy has to be at the top of your priority list. It is essential to your job as a leader. Use these tips to guide you into the healthy lifestyle you deserve.
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.
In a growing business, the myriad daily tasks of getting whatever a company produces “out the door” can be all-consuming. Lots of energy is typically focused on cash flow management, finding and training new employees, meetings, sourcing supplies, deadlines, etc. In the hustle and bustle, your staff can forget the most important factor of any business: the customers. However, without what our firm refers to as “Level 5 Customer Service,” growth can stall or collapse completely.
In studies, 70 percent of why most clients leave is due to poor customer service. As managers, we need to constantly be reassessing why customers prefer our products or services over the competitions’, whether we are exceeding customers’ expectations, and how we show gratitude to our customers.
Ignoring your customers can be like sitting on a landmine. For instance, prior to social networking online, the typical dissatisfied customer would verbally tell eight to 10 people about a problem with a vendor or service provider. In the post-Facebook-YouTube-Twitter-Interest world, that dissatisfaction is posted online in ways that can travel globally within hours. A single service disappointment can turn into the bomb that crashes sales.
However, Level 5 Customer Service can halt that exponential explosion in most cases. That’s because studies show seven of 10 complaining customers will do business with you again if you solve the problem in their favor.
Service expectations vary by culture. However in Western-educated societies, there are five key customer service practices that should be taught and re-taught regularly in any workplace:
- Greet the customer verbally and with a smile;
- Listen to understand the customer’s need;
- Explain features and benefits of products or services so customers have sufficient information to make decisions;
- Suggest additional items that may address their explicit needs, as well as possible ancillary needs they may not be aware of or may not have considered; and
- Thank the customer. Thank them even when no sale occurs. Thanks – like praise – go a long way toward generating goodwill.
Last, when presented with a customer’s concern or complaint, listen attentively, do not interrupt, be polite, apologize for the inconvenience and any error, and make a decision that resolves the issue in way that leaves the customer as warm and fuzzy as possible. When you provide a customer with more than he or she expects, you create a Level 5 experience. That experience reinforces customer loyalty.
Patricia Adams is the CEO of Zeitgeist Expressions and the author of “ABCs of Change: Three Building Blocks to Happy Relationships.” In 2011, she was named one of Ernst & Young LLP’s 2011 Entrepreneurial Winning Women, one of Enterprising W omen magazine’s 2011 Enterprising Women of the Year Award and the SBA’s 2011 Small Business Person of the Year for Region VI. Her company Zeitgeist Wellness Group offers a full-service Employee Assistance Program to businesses in the San Antonio region. For more information, visit www.zwgoup.net.