In today’s market, there are two major
considerations when choosing a mix of
payment options: cost and fraud protection. Both are vital. However, most business owners know there are several routes
they can take, and it can be confusing.
“The ‘right’ payment mix delicately balances costs, security/control needed, settlement timing, and the frequency of the
payment transaction,” explains Matt Zeck,
vice president at Fifth Third Bank in
Smart Business asked Zeck for tips on
choosing the best options available to
businesses today — while avoiding problems like payment fraud.
What are some of the payment options available these days?
Today’s financial marketplace continues
to support the traditional payment options
of cash and check. However, additional
instruments, such as ACH (Automated
Clearing House), wire transfers and the
use of purchasing cards have expanded
the payment option spectrum and provided additional enhanced benefits for business entities.
As the size of the transaction dollar value
increases and the frequency of the payment decreases, the accounts payable
operational focus shifts from one of
increasing efficiency to one of maintaining
Companies will generally use wire transfers (a more expensive but much more
secure form of payment) for capital purchases that are done very infrequently. An
example might be buying a company airplane. More often these days, companies
use credit cards (purchasing cards or T&E
cards) to complete more routine or commodity-type transactions like buying
office supplies. In the middle is the use of
ACH to electronically transmit funds
securely from one organization’s accounts
to another, say, direct deposit of payroll to
Of course, all of the payment examples
above can be completed using the traditional check method — still used heavily
by businesses today.
Are any of these methods more secured
The security of the method of payment is
an important factor in determining what
method to use. Wire transfers typically
have the most security built into them —
due to the necessary bank documentation
required to establish wire transfer services
and the approvals built into the system
itself. As a result, wires are typically the
more expensive payment method.
Use of the ACH system is a very economical alternative, while still maintaining
good security protocol. Additionally, the
‘timing’ of when the funds will clear the
account (based on the effective date put on
the payment file) is a security advantage of
ACH in that excess funds can be appropriated accordingly.
The use of card programs has greatly
advanced over the past few years and
numerous security enhancements have
evolved to protect the company (and
banks) using the plastic payment options.
Security controls, such as credit limits, amount per transaction, dollars and number of transactions per day limits, per card
cycle date limit, and restrictions of use
based on the industry and types of goods
sold by the merchant (identified as their
Merchant Category Code — MCC), have
provided enhanced levels of security for
putting cards into the hands of employees
to purchase needed items.
And it certainly goes without saying that
with the use of paper checks, employing
Positive Pay check fraud protection services is strongly encouraged. Each time a
check is written and distributed, all the
necessary information to perpetrate fraud
is released into the financial marketplace.
Positive Pay helps protect companies’ cash
and identify potential fraud before it financially impacts them.
Given the economy, shouldn’t a firm just push
for the lowest-cost methods?
Under the old adage ‘you get what you
pay for,’ sometimes the lowest-cost methods offer more exposure to fraud opportunities or limit the ability to properly fund
for the disbursement item. Checks are a
low-cost alternative, but they are subject to
fraud and companies must maintain balances in their accounts until the check
clears at a later, undeterminable time (usually two to seven days).
Things change. Who should I talk to for
updates on new or more secure methods?
A discussion with your financial adviser
or treasury management specialist will
help begin the discovery conversation
related to a company’s current payment
mix and help identify opportunities for
more secure payment alternatives.
The more sophisticated a company’s disbursement mix becomes, the greater the
need for a treasury management specialist
to assist in configuring the right payables
structure. Most local bankers have treasury
management partners they consult with for
more complex disbursement designs.
MATT ZECK is vice president and commercial sales manager for the corporate treasury management team of Fifth Third Bank's
Cincinnati and Northern Kentucky markets. Reach him at (513) 534-0344 or Matthew.Zeck@53.com.
Nothing puts a damper on a morning
quite like the threat of a lawsuit. Your
executive team discovers that another What you do next will have a huge impact
on your success in defending against those
allegations, says Matthew S. Anderson,
shareholder at the Dallas law firm of Munck
Carter, P.C. “Whatever you do,” he says, “don’t panic.” Smart Business spoke to Anderson about
the appropriate steps to take at the threat of
patent litigation. I just received that letter what do I do
now? With the broad subject matter available
for patent protection, any company is
potentially vulnerable to infringement accusations for products it sells, services it provides, even its internal business practices. A
company can even be accused of infringement for the way it uses a product purchased from someone else. A letter suggesting you may ‘practice a patented invention’ doesn’t even mean you’ve intentionally done something wrong just that you
should carefully examine your practices
and potential liability. Should we tell them their charges are
unfounded, ridiculous? No if only for the reason that you may
not immediately know what the asserted
patent covers and how it relates to your
business practices or products. If you’ve
been informed of a potential infringement,
approach responding as seriously and
methodically as you would any significant
legal transaction. You certainly don’t want
to go on the record with the patent owner
or his legal counsel without consulting your
legal team first. Your lawyers, particularly attorneys experienced in both intellectual property and litigation matters, can help you determine
your potential exposure from legal, monetary and business perspectives. A thorough
analysis can help you determine if you
infringed at all, what the potential monetary
damages are and how hard you should
defend the accusation. Your attorneys also
can help determine when the best solution
for you is a business deal with the other
side, rather than a legal fight. Typically, attorneys will first draft a letter
to send in reply. It basically says, ‘We’ve
received your letter, we’re taking it seriously, and we will investigate.’ What information will my lawyer want to
have? Your attorneys will review the asserted
patent to determine what devices or
processes are covered, then sit down with
various people in your company to get an
initial view of whether there’s an actual
infringement problem. Depending on the
nature of the patent, the attorneys may
need to interview management, salespeople, engineers or others. Attorneys will
work to determine what other liabilities or
indemnifications you may have, depending
on your relationships with customers and
upstream vendors affected by the patent. What if there is a chance they are correct? There are several different ways you can
respond. If the potential financial exposure
is small, you may simply wish to settle the
matter and move on. You can negotiate to
license the patent and let the patent owner’s
enforcement activities help you keep your
place in the market. You may wish to vigorously defend the accusation or challenge
the validity of the other party’s patent in the
courts or in the United States Patent and
Trademark Office. You mean their patent might not be valid in
the first place? Sometimes, the Patent Office issues a
patent it shouldn’t. When that happens, the
patent can be declared invalid. If you’ve
been threatened with an infringement lawsuit, you may want to sue the other side
first, to have the courts declare that either
the patent is invalid or you don’t infringe.
By taking the matter to the courts first, you
generally can choose where the lawsuit will
be tried. As an alternative, your attorneys
can ask the Patent Office to reexamine the
patent, an option that may be less expensive than trial. What is the best way to cover my company to
assure this never happens? While it seldom is possible to be sure that
nothing you do will ever infringe a patent,
should you become aware of a patent that
potentially covers your business or products, a patent attorney can help you avoid
or reduce legal exposure by providing a
professional legal opinion as to noninfringement, or can help you ‘design around’
patents that you are aware of so that you
don’t infringe. If you hear of patents that are
being asserted in your industry or against
your customers or competitors, it may be
prudent to have your attorneys examine
your potential exposure before the patent
owner approaches you. MATTHEW S. ANDERSON is a shareholder at Munck Carter, P.C., where he practices in the Intellectual Property section. His practice
focuses on patent procurement, enforcement and defense, and identifying, protecting and exploiting intellectual property. Reach him at email@example.com.
What you do next will have a huge impact on your success in defending against those allegations, says Matthew S. Anderson, shareholder at the Dallas law firm of Munck Carter, P.C.
“Whatever you do,” he says, “don’t panic.”
Smart Business spoke to Anderson about the appropriate steps to take at the threat of patent litigation.
I just received that letter what do I do now?
With the broad subject matter available for patent protection, any company is potentially vulnerable to infringement accusations for products it sells, services it provides, even its internal business practices. A company can even be accused of infringement for the way it uses a product purchased from someone else. A letter suggesting you may ‘practice a patented invention’ doesn’t even mean you’ve intentionally done something wrong just that you should carefully examine your practices and potential liability.
Should we tell them their charges are unfounded, ridiculous?
No if only for the reason that you may not immediately know what the asserted patent covers and how it relates to your business practices or products. If you’ve been informed of a potential infringement, approach responding as seriously and methodically as you would any significant legal transaction. You certainly don’t want to go on the record with the patent owner or his legal counsel without consulting your legal team first.
Your lawyers, particularly attorneys experienced in both intellectual property and litigation matters, can help you determine your potential exposure from legal, monetary and business perspectives. A thorough analysis can help you determine if you infringed at all, what the potential monetary damages are and how hard you should defend the accusation. Your attorneys also can help determine when the best solution for you is a business deal with the other side, rather than a legal fight.
Typically, attorneys will first draft a letter to send in reply. It basically says, ‘We’ve received your letter, we’re taking it seriously, and we will investigate.’
What information will my lawyer want to have?
Your attorneys will review the asserted patent to determine what devices or processes are covered, then sit down with various people in your company to get an initial view of whether there’s an actual infringement problem. Depending on the nature of the patent, the attorneys may need to interview management, salespeople, engineers or others. Attorneys will work to determine what other liabilities or indemnifications you may have, depending on your relationships with customers and upstream vendors affected by the patent.
What if there is a chance they are correct?
There are several different ways you can respond. If the potential financial exposure is small, you may simply wish to settle the matter and move on. You can negotiate to license the patent and let the patent owner’s enforcement activities help you keep your place in the market. You may wish to vigorously defend the accusation or challenge the validity of the other party’s patent in the courts or in the United States Patent and Trademark Office.
You mean their patent might not be valid in the first place?
Sometimes, the Patent Office issues a patent it shouldn’t. When that happens, the patent can be declared invalid. If you’ve been threatened with an infringement lawsuit, you may want to sue the other side first, to have the courts declare that either the patent is invalid or you don’t infringe. By taking the matter to the courts first, you generally can choose where the lawsuit will be tried. As an alternative, your attorneys can ask the Patent Office to reexamine the patent, an option that may be less expensive than trial.
What is the best way to cover my company to assure this never happens?
While it seldom is possible to be sure that nothing you do will ever infringe a patent, should you become aware of a patent that potentially covers your business or products, a patent attorney can help you avoid or reduce legal exposure by providing a professional legal opinion as to noninfringement, or can help you ‘design around’ patents that you are aware of so that you don’t infringe. If you hear of patents that are being asserted in your industry or against your customers or competitors, it may be prudent to have your attorneys examine your potential exposure before the patent owner approaches you.
MATTHEW S. ANDERSON is a shareholder at Munck Carter, P.C., where he practices in the Intellectual Property section. His practice focuses on patent procurement, enforcement and defense, and identifying, protecting and exploiting intellectual property. Reach him at firstname.lastname@example.org.
Employees spend a lot of time at work. Thus, it’s only natural that they turn to their employers, their source of health insurance, for health care information.
Because of this, employers should offer workers related information and resources. Progressive companies are helping employees get the answers they want and the services they need, right at the workplace.
“It should be the obligation of every organization to make information, programs and services accessible,” says Doug Ribley, vice president of health and wellness services at Akron General Health System.
Smart Business spoke with Ribley about ways you can provide your employees with the information and assistance they need.
Isn’t health care information usually a function of human resources?
Typically, employee health initiatives fall under the HR umbrella. HR professionals work tirelessly to recruit, retain and maximize productivity within the work force. Employee health initiatives play an important role in the realization of these goals. Development and delivery of a comprehensive employee health menu of services requires a unique and specific skill set. For this reason, third-party employee health and wellness venders are often contracted to assist organizations in achieving their employee health objectives.
With a clear understanding of an organizational health profile and outcome expectations, a service provider can present a defined list of deliverables and meet this commitment in an efficient, effective and cost-effective manner. It is common for organizations to realize a $4 to $5 return on every $1 invested with this approach.
What sorts of resource materials should HR have at hand?
With any successful program, the promotion and communication related to an employee health initiative directly correlates to program success. Resource materials provide information on lifestyle-related disease, including risk factor, prevention and treatment practices. Distribution of this information should take many forms, including Web-based platforms. Organizational information centers serve as distribution points for flyers, brochures and pamphlets and typically use bulletin boards with information dispensers to create an attractive and user-friendly information location. A broad range of information should be made readily available and should include materials on health screenings, health education, nutritional recommendations and programs, clinical support services, and occupational medicine.
Is it legal for employers to get involved in employee health issues?
Typically, organizations introduce an employee health initiative by issuing a health risk appraisal (HRA) and offering incentives to maximize employee participation. This information is gathered by a third-party employee health vender in most cases, who analyzes individual data and assembles aggregate data that represents health trends related to the entire organization.
Once complete, a specific program is developed to address areas that need improvement. The trend is to offer specific services that directly address the needs of each individual employee. On-site clinics, pharmacies, fitness centers, etc., are becoming more prevalent in the workplace and include the gathering of personal health information (PHI) from the participating employee.
It is legal to acquire this information as long as the employee grants permission and the organization follows HIPAA regulations for use and storage of this information. Any program that requires employee PHI must present the employee with a document titled, ‘Notice of Privacy Practices.’
What other on-site resources do companies provide?
As employers continue to bear the majority of the burden related to growing health insurance premiums, more organizations are expanding their employee health initiative to include a broad range of health, wellness and clinical services. The objective is to identify employees at risk, establish programs and services that prevent and/or treat chronic disease and reduce identified risk factors, make adherence and/or access to health services quick and convenient, and offer a comprehensive menu of health services that improve the quality of life for participating employees. This directly contributes to organizational success by reducing health care costs, absenteeism and workers’ comp injuries, while increasing employee morale, productivity and retention. On-site physicians, clinics and pharmacies are becoming more commonplace as they have a direct positive impact on time away from work and on convenience.
Should a firm push health information to workers?
Providing information and program/service options to prevent and treat disease, illness and injury is the right thing to do. Employers who take a proactive approach are seen as an organization that cares. Pushing health information on employees may create some push-back, however, making information readily accessible is the right thing to do. In addition to elevating awareness and positively impacting work force health, the very real opportunity to save lives makes this a meaningful, important and worthwhile area of focus for all organizations.
DOUG RIBLEY is vice president of health and wellness services at Akron General Health System. Reach him at email@example.com.
Many businesses hold patents, which protect the core of the company’s existence. Whether it is two or dozens of such patents, they represent the company’s ability to distinguish itself to the market. However, the landscape around protection of those patents is changing.
Smart Business asked Michael Wilson of the Dallas law firm of Munck Carter, P.C. to help us through the thicket.
What is going on with our rights to enforce our patents?
First, the U.S. Supreme Court has been more active over the past couple of years in considering and deciding cases affecting patent rights. Overall, I think the impact of the recent decisions is that the courts are making it more difficult to enforce patent rights. It also has become easier to challenge the validity of a patent as part of a lawsuit.
Earlier this year, the U.S. House of Representatives passed a patent reform bill, H.R. 1908. The U.S. Senate was considering a similar bill. The bills could negatively impact the rights of patent owners. For example, both bills include changes affecting such things as venue (where a patent owner can file a lawsuit) and calculation of damages (the amount of money that a patent holder can recover from those found to have infringed a patent).
Supporters of the bills promise to press for passage during the next session of Congress, so many people expect change as soon as 2009. However, the November election could cause shake-ups in the committees that control these issues. That could delay the bill or cause changes to the more important proposals.
How would these changes impact venue?
Where a patent owner files a patent infringement suit can have a significant impact on how the case turns out and costs associated with the case. The proposed venue changes would require most patent suits to be filed where the defendant is based or has a major presence. Right now, a patent holder has more options, including filing in the patent owner’s home district or in any venue in which the defendant is selling infringing products. This allows plaintiffs to bring claims in federal districts that they believe are better suited to hearing their claims.
For example, recently more plaintiffs have elected to file patent suits in the Eastern District of Texas, both because of their perception of the juries here and because the district has adopted specific ‘patent rules’ designed to streamline and speed the litigation process.
How would these changes affect one’s ability to recover damages?
Supporters of patent reform believe damage awards are too high. The proposed changes include rules to control how courts and juries measure damages where there is infringement. What has not received as much press, though, is that the courts often reduce or eliminate these damage awards, even without any changes. For example, reform proponents like to point to the $1.5 billion jury verdict Alcatel-Lucent obtained against Microsoft in 2007, but the trial judge vacated the award.
In addition, there is a legitimate concern that patent reform may have a corresponding negative impact on the value of these patents, which is not good news to the companies that own them.
Don’t some big companies oppose these changes?
Many companies and groups oppose changes, including some of the large pharmaceutical companies. These companies have spent a great deal of time and money in research and development and in obtaining patents. The last thing they want are changes in the law that weaken their rights.
In addition, many businesspeople and economists believe that the current patent system has been incredibly successful in sparking innovation in this country, so they are reluctant to make wholesale changes to a system that seems to have worked for a long time.
Support comes from big businesses that are commonly named as defendants in patent infringement suits, including large technology companies. But that is not to say that the bills do not have broader support. Definitely, public attention from cases such as the Microsoft and BlackBerry cases has created a perception that the patent laws need changing.
What do these changes mean to a smaller business?
These days, many small businesses have spent a great deal of capital and human resources creating new and innovative technologies. In many cases, a company’s patents and other intellectual property are among its most valuable assets. The proposed new laws could reduce the value of those patents. So any business that owns patents needs to take stock of its intellectual property rights and strongly consider whether to be more aggressive in licensing or otherwise enforcing its rights before any patent reform takes place.
MICHAEL C. WILSON is a shareholder at Munck Carter, P.C. and a member of the firm's litigation section. Wilson has 17 years of experience in all aspects of litigation, including trials, arbitration, mediation and appeals. Reach him at firstname.lastname@example.org.
When it comes to a company’s wellness program, a key to keeping people interested is an ongoing program to generate excitement about both the program itself and the benefits it offers workers.
“It is key that management supports wellness initiatives by providing time and financial support as innovative and helpful programs are developed,” says Peggy Zanin, RN, BSN, MS, the coordinator of Women’s Heart Health Program at Akron General Medical Center’s Heart & Vascular Center.
Smart Business spoke to Zanin about ways a company can build excitement and maintain worker interest in its wellness programs.
What are wellness programs designed to do?
Workplace wellness programs are designed to create a culture of health in the workplace. They often offer incentives for employees who adopt healthier lifestyles, such as discounts on group health premiums, and penalize those employees who do not. A healthier work force lives longer and is happier, so employee wellness programs are good ideas. Ideally, programs are designed to help employees make better lifestyle choices.
Is it better to have a designated ‘spirit leader’ or to have a top executive take on the cheerleader role?
The top executive does not have to be the cheerleader. It may be vital that the top executive involves many champions to live and share the wellness mantra. Again it really is key that management supports wellness initiatives. They need to provide time and financial support.
What kinds of wellness events work best?
A pep rally is not always needed, but a health message presented in different forums to reach diverse employees should be offered at least monthly. The events should take many forms and are often easiest and most beneficial when they are linked with national events. Make events timely. Use national health themes to generate interest and confirm the importance of message. Provide programs when people are available. Workers have demanding schedules and family obligations so it is crucial to make the programs enjoyable, convenient and affordable.
How do you get the message out?
Generating buzz takes a communications strategy, successful tactics and a commitment from leadership. Nothing beats repetition. Consider e-mail blasts, fliers, posters and giveaways to pique your employees’ interest. You may also want to develop a standard design template and color palette to strengthen the branding of your program. Sending the message that you care about your employees’ well-being will help reinforce their healthy behavior.
How can you get your employees to be excited about wellness programs?
Creating a wellness committee to support your new programs is critical to transforming your company’s culture. A wellness committee can help empower your staff to be more active and adopt positive behaviors that support a lifelong commitment to a healthy lifestyle.
Recruit the fit and those challenged to live a healthy lifestyle, smokers and nonsmokers, and a range of professionals, such as human resources managers, employee health representatives and marketing experts. The more diverse your core group is, the more likely you are to create enthusiasm in all parts of your workplace and the easier it will be to spread the message about the program.
A wellness committee also can help you get a handle on how these programs are being accepted by the employees, gather information about what programs work and determine what kind of incentives would be most popular.
How do incentives drive engagement?
It’s vital that employers offer no-cost or low-cost incentives to incite employee lifestyle changes. Some employers are providing subsidized on-site healthy lunch programs or discounted gym memberships. I’ve seen very effective programs that pay employees as little as $1 for each pound of weight they lose. Like any incentive program, the plan must be well communicated and reinforced in order for it to work.
What health messages should employers repeatedly share with their employees?
Companies want to focus on programs that raise awareness and prevention for the leading causes of injury and death. As their employees become healthier they will be more productive and ultimately have less illness and disease. By engaging employees in healthier lifestyle choices, it will lead them to a better quality of life and they will be able to give more to their job and others. Women and men need to know their health risks and proactive employers will design fun, innovative programs to help prevent these diseases. Heart disease and stroke are the two leading causes of death throughout the world. Many women still believe breast cancer is their major health concern.
Presentations, health screens, contests, walks and continual messages are beneficial and worthwhile to assist workers to be more active, stop smoking and control waistlines, blood pressure, diabetes and lipid levels.
PEGGY ZANIN, RN, BSN, MS, is the coordinator of the Women’s Heart Health Program at Akron General Medical Center’s Heart and Vascular Center. Reach her at email@example.com.
When it comes to gathering business intelligence, everyone does the basics. However, a well-run call center program — either inbound or outbound — can provide a host of very granular information that will boost response.
“Businesses don’t just want to know that homemakers are by the phone between noon and 2 p.m. or that businesspeople are home after 8 p.m.,” says Michael Van Scyoc, senior vice president of information technology client services for InfoCision Management Corp. “We want to know exactly when we can reach any certain individual — say, between 1 and 1:30 or between 7 and 7:30. Today’s databases can give more sophisticated data than ever before.”
With predictive modeling against national databases and demographic breakdowns that go beyond age or sex, today’s call center databases can provide a granular mother lode of business intelligence, he says.
Smart Business spoke with Van Scyoc about databases, what information can be gleaned from them and how to use that information to make your call center hum.
What kinds of intelligence and information can a call center gather?
There is so much information that can be gathered from a call center operation. Perhaps the more important thing to keep in mind is the speed at which you can gain the intelligence. The call center provides immediate feedback. You can change your sales pitch or fundraising appeal, go live with your changes and immediately see the results of your changes. You simply can’t do that with the radio, TV or mail. By the very nature of a one-to-one interaction over the phone, you are able to collect very specific information about a specific customer. And, more importantly, with this specific information, you are able to market to and service your customers with great intelligence about them.
How often should this intelligence and information be updated?
Frequently and continuously. You may be replacing old information with new information, but often, you are adding new information to the existing historical information to add more clarity. You really have to understand the life cycle or trend of the relationship with your customers. The same is true for new leads or prospects. A single interaction doesn’t really tell you enough.
What if I don’t have a lot of historical information on my customers?
That’s where data enhancement services come in. With limited information about your customers, it’s possible to add demographic information like age, income, religion and occupation. It’s also possible to add purchasing behavior and psychographic segmentation. With this level of information, you can better provide the desired services or products to your customers. You know the best time to call them, with what up-sell or cross-sell products or services they will have a high propensity to buy.
When it comes to identifying new leads, you start by modeling your current customers. By using key customer indicators, you can build valid statistical models to predict the likelihood of a sale or positive response from prospects.
With all the data out there today, how do you decipher what’s most important?
Today, we are often overwhelmed with so much information to wade through. It really depends on what you are trying to achieve at a given time.
Basically, there are two aspects to focus on: productivity and performance. Productivity is your measurement of efficiency or use of time, like talk time, average speed of answer, abandon rates and service levels. Performance is your measurement of effectiveness or desired outcome, such as sales conversion, response rate and dollar per transaction. These are the basic statistics you need to look at from a tactical perspective. All of today’s well-run call centers have this type of information at their fingertips in real time.
How do I know which metrics to follow?
It’s really based on your current business drivers or campaigns. Maybe you are trying to increase the number of leads that are converted to sales. Maybe you are trying to increase the sale amount while maintaining a conversion rate. Or, maybe you are trying to maintain sales and conversions rates while lowering talk time in order to reduce costs. You may not even be interested in sales. Maybe your metrics are all based on cost-effective, high-quality customer service to your existing customers. It really depends on today’s focus. Tomorrow the focus may be the same or it may have change to meet changes in business.
MICHAEL VAN SCYOC is senior vice president of information technology client services for InfoCision Management Corp. Reach him at firstname.lastname@example.org. In business for 25 years, InfoCision Management Corporation is the second largest privately held teleservices company and a leading provider of customer care services, commercial sales and marketing for a variety of Fortune 100 companies and smaller businesses. InfoCision is also a leader of inbound and outbound marketing for nonprofit, religious and political organizations. InfoCision operates 32 call centers at 13 locations throughout Ohio, Pennsylvania and West Virginia. For more information, visit www.infocision.com.
Most business owners devote their
entire lives to building a successful enterprise. One day, for whatever reason, it comes time to sell.
“When clients engage in the process of
selling a business rarely do they understand the complexities of the actual
transaction that is being considered,”
says Will Thatcher, vice president and
affiliate head of business banking for
Fifth Third Bank.
The road to a successful transaction is
littered with obstacles. Smart Business
asked Thatcher to help negotiate around
How far ahead of a potential sale should
one start getting the ducks lined up?
Over the years, I have seen many reasons why business acquisitions have not
occurred. The tangible ones are easy to
identify — the seller might prefer a stock
purchase while the buyer wants the
potential tax advantages and liability
protection of an asset purchase. Or, the
existing owner will not carry any contingent liabilities for future warranty
claims. Sometimes, the current owner
does not want to carry a seller note into
the future after closing.
There also are many reasons why transactions are not completed that do not
include the tangible dollars, but rather
instincts or preferences, such as the
owner does not believe he or she can
trust the suitor with the company, the
suitor wants to change the name of the
business, key employees will be down-sized, the company will be moved out of
market by the new suitor, payable relationships are strained, financial controls
are suspect, etc.
Therefore, whether you are a buying a
company or selling a company, it is
important to be mentally prepared for
what you are searching for in a transaction. As it relates to the seller, it is very
important to work with your accountant,
banker and a business broker to get your
balance sheet and income statement in a
position to be sold. No different than selling a home, there are many small things that can be incorporated into your presentation to potential suitors that will
improve its potential purchase price.
Clients that intend to maximize value
may spend many months, if not years,
preparing their company for sale,
depending on the complexity on their
Is this a good time to be selling today?
When the economy is not as robust
there are great opportunities for both
buyers and sellers. Presently, there are
many displaced senior-level, capable
professionals who are looking for a business to purchase and do not want to
change geographic locations due to family considerations.
Furthermore, these future acquirers
typically have well-funded 401(k) plans,
are highly motivated to venture into
something new and are not necessarily
With that said, there are several things
that a seller should investigate prior to
engaging suitors: 1) In my industry, how would a bank structure a business acquisition? 2) What is the typical criteria for
setting a sales price in my industry, and
does it fit my needs? and 3) How long do
I want to wait for my sale proceeds?
What financial information must I be prepared to share? Can I be protected against
someone using that information — tax figures or customer data — outside the sale?
This is a great question and one of the
key reasons why it is important that a
seller engage counsel early on in the
process. The potential seller needs to be
prepared to be fully transparent, but
there is a time and place for everything.
The seller may have processes, employees and clients that allow it to be successful, and it is important to guard that
information until it is required to be divulged. Therefore, confidentiality agreements are to be signed by all parties and
those professional advisers to the buyer,
as well. These agreements are designed
to protect the seller from the proliferation of their company’s information.
In terms of what information may be
shared, suffice to say all financial information utilized to make financial decisions — divisional reporting, receivable
and payable information, client lists, corporate financial statements and possibly
even pertinent portions of personal tax
returns — will be on the table.
But it’s hard to let my ‘baby’ go.
In my experience, more business transactions are not matriculated due to the
seller’s expectations not matching the
market than to a lack of qualified purchasers or financing in the market. The
appetite for risk by financial institutions
may adjust due to the economic climate;
therefore, it is important that the business owner engage professionals to
understand what the temperature of the
market is and decide if the time is right to
WILL THATCHER is vice president and affiliate head of business banking for Fifth Third Bank’s Cincinnati and Northern Kentucky
market. He can be reached at Will.Thatcher@53.com.
An effective wellness program helps create a healthy balance between one’s work life and personal life. Part of the trick is to find a good way to balance what happens on the job with what is going on at home. The key is to find that balance and achieve it with minimal disruption, says Moshe S. Torem, M.D., the chief of integrative medicine at Akron General Health System.
“Both blue-collar and white-collar workers must establish boundaries or their work will pressure them all the time,” says Torem. “In corporate America today, there is a phenomenon called ‘presenteeism.’ That is when a worker is ‘present’ at the job but not 100 percent productive. This happens in different ways at different levels.”
Smart Business spoke with Torem about presenteeism and how you and your employees can find a good work-life balance.
Why should a company worry about employees off the job, and what are the boundaries between work and home?
A company wants an employee who is physically and mentally healthy and able to focus and concentrate, not one who’s distracted or tired on the job. Presenteeism can be due to depression, sleep deprivation, anxiety or the aftereffects of excessive drinking or drug use even if the employee is not drunk on the job. Bottom line, if employees’ home lives are negatively affecting their job performances, employers need to be concerned.
However, a company must spell out its expectations and policy beforehand. Any company has the right to do random drug tests, and to discipline a worker in violation. The work-home boundary is not rigid. Technology has extended the boundaries of work. Take an IT worker who must be available to answer questions about computer systems at any hour of the day. A firm has a right to expect that worker be sober and alert, even when the worker is off the premises. The same holds for an at-home worker. The company has the right to set standards and expectations for them.
Many employees don’t want their jobs to usurp their personal spaces and consume their lives. They say what they do after work hours is their own business and that’s true, to an extent. But if you are paid to do a job fully and what you do after work affects what you do on the job, the business does have an interest. Why pay 100 percent of salary to an impaired worker who is only 30 percent productive?
How is the life of today’s executive different than it was 30 years ago?
Presenteeism is a special case for high-level employees. There are many examples of executives forced to take a leave of absence due to burnout. It usually results from the failure to take time to relax and unwind. The pressure of the organization invades every part of the executive’s life and his or her whole identity is tied up in the business. Again, technology has erased some important boundaries. What is good from a business point of view can be hard on an executive. Laptop computers, PDAs and cell phones make it difficult for executives to find refuge from work. Without protection from technology that invades your boundaries, you face burnout and impaired productivity. Executives must preserve other identities father, mother, coach, etc. to maintain inner balance.
How can a company’s wellness program address these concerns?
First, human resource manuals should establish clear policies on what is expected of employees that workers must be alert, awake, productive and clear of alcohol or drugs. There will be less confusion if this is spelled out in advance with clarity.
Many companies do not allow smoking on the job. Some don’t want workers smoking at home, either, since it raises health insurance costs. By spelling out the consequences beforehand, the company can enforce such a policy. Perhaps the smoker will have to foot the cost of higher premiums. Or, the firm might give free sports tickets to those who quit smoking. Or, pay nonsmokers’ health insurance costs. The same can be done for workers who keep their weight down. In any case, everyone wins healthy employees work better and don’t have the presenteeism problem.
Does a healthy lifestyle start at home?
It starts with the individual at home. Executives must be in charge of their technologies. Don’t work for your cell phone; make it work for you. Screen calls. Check e-mail only at certain times. What’s going to happen in the one hour you set aside for your children? You’ll help your kids and you’ll avoid problems like burnout, mental exhaustion, insomnia and anxiety. If you are a slave to gadgets, then it is like the tail is wagging the dog.
Do workers have an obligation to self-care?
Yes, they do. Unfortunately, some stressed executives self-medicate, usually with alcohol. It goes back to boundaries. An executive with a clear division of work and home will be healthier. Make special time and space for yourself. Have that dialogue with yourself. Set boundaries. Don’t be a slave to technology. Create time and space to express the other aspects of your life.
MOSHE S. TOREM, M.D., is the chief of integrative medicine at Akron General Health System. Reach him at (330) 665-8209 or email@example.com.
It’s one thing to add a new product to your
company’s line. It’s another thing altogether to take the entire line overseas. Many things are different in the international market, including floating credit and methods of
getting paid. Thus, every business owner
should have a firm grip on how to manage
foreign currency deposits and accounts if
they expect to expand into the global arena
“Doing business globally today is much easier than it was 10 years ago or even a couple
of years ago,” says Greg Greene, a vice president and market manager in business banking with Fifth Third Bank. “With gross
domestic product growth in countries like
China, India, Taiwan and Eastern Europe
that is often in double digits, this provides a
unique opportunity to keep expanding operations in a tough economic environment.”
Smart Business spoke with Greene about
doing business in the international market
and the foresight and planning involved with
such an endeavor.
Why should a firm consider exporting as a
way to strengthen its business?
Our business climate already has a very
developed global infrastructure. With the
advent of new technology and stronger logistics, doing business overseas is fairly easy.
There are several professionals in Cincinnati
who can easily help you develop a plan to
expand globally. You have to break down the
barriers of conventional thought on this subject. Having revenue generated from foreign
countries provides a natural hedge against a
slumping U.S. economy. Similar to diversification strategies in your own investment
portfolio, varying your revenue stream from
different countries can provide greater stability. The U.S. dollar is at an all-time low
against several of the global currencies right
now. This translates into a natural advantage
for U.S. companies that want to export. If
you export into Europe, you will often have
a 15 to 20 percent pricing advantage based
on the sole fact that our currency is weak
against the Euro. Given this natural advantage, this is an excellent time to penetrate
new markets and potentially increase margins. As the global economy continues to
develop, many Fortune 500 companies, which a lot of local small businesses rely on,
will want to partner with vendors that have
command of the global environment. They
want folks who can easily react, supply or
source globally to support their operations.
What advice would you give to companies
undertaking this initiative?
From my experience, most people that get
into exporting do so by sheer luck. An opportunity presents itself and they take advantage
of it. Most strong exporters become so
through the school of hard knocks, learning
from mistakes, many of which could have
been avoided had they done the proper
research and involved the right professionals
upfront. Do the research and set up the infrastructure first prior to exporting. You will
save a lot of money and headaches. Every situation will vary, but here are some tips:
- The U.S. Department of Commerce has
an export assistance center in Cincinnati that
can help connect you with different markets
as well as help you with some analysis.
United States that is designed to ease trade.
You can find these very easily via the Internet
or through organizations, such as the Northern Kentucky International Trade
Association or Southern Ohio District Export
Council. Those organizations are great places
to get educated on various aspects of trade.
accountant who can help you with any legal
or tax ramifications upfront.
countries around the world.
you personalized attention and advice, yet
has the infrastructure to help mitigate currency, payment and collection risks.
What can an international banker do for you?
There’s an amazing amount of products
and services international bankers can provide. It all focuses on three major items:
- Payment risk — A good international
bank will have a number of different solutions that can help mitigate your risk of payment. Even in countries that are politically
unstable, a good bank can almost completely
mitigate your financial risk. Remember, there
is no global court system, so if you don’t
develop a corporate policy behind collections, then you run the risk of losing money.
bank can offer several strategies to reduce
your foreign currency risk. If you sell or buy
products in foreign currency, you are
exposed to fluctuations. As markets and
technology get more sophisticated, currencies are much more volatile. For example,
the advent of the euro in late ’90s started with
an initial exchange rate of 1.18:1. A couple
years later, the euro dropped to 0.83:1 USD,
and since then has strengthened to over 1.5:1.
If you were an exporter dealing in foreign
currency and had no strategy, you experienced a dramatic impact in profitability.
good international bank has a global infrastructure to collect and transfer funds quickly and easily. They also have products and
services that allow you to maximize your
cash flow in other countries. A few banks will
allow you to set up accounts in different
countries and monitor all of them online.
GREG GREENE is a vice president and market manager in business banking for Fifth Third Bank. Reach him at (859) 283-8511 or
Few assets are as important both to a company’s sales efforts and to maintaining good customer relations as its list of client names and data. Lose the list and you give away much of the proprietary information that you built up during the years of working with the customer. Your firm stands to lose face and business if the list is stolen and used by others to undercut your business. When possible, customer lists should be protected as trade secrets, says J. Robert Arnett II, an attorney with the Dallas law firm of Munck Butrus Carter, P.C.
Are all client lists protectable as trade secrets?
Not by a long shot. First, they have to be secret. That does not require an absolute secret known to one person and one person only but it does mean the information cannot be well-known or easily acquired in the trade or industry. Second, they have to derive value or at least potential value from the fact that the information is not generally known or easily acquired. In other words, the fact that you have the information and your competitors do not gives you a competitive advantage. Third, the owner has to take reasonable efforts to maintain the secrecy of the list, which includes physical security and educating employees about their obligation to keep the information confidential. If customer lists are legitimate trade secrets, courts will give them a high level of protection.
How can a firm protect its customer lists?
First, you can employ physical security measures keeping the lists secured, restricting access to the area within your facility where the lists are kept, limiting access to those employees who have a need to know and use them, password protecting files, and limiting access to computer servers where the lists are kept. Second, you can take steps with your existing employees to reinforce the secrecy of the lists by training employees about the importance of protecting trade secrets and requiring employees to sign nondisclosure and/or noncompete agreements. Third, you can take steps with departing employees to reduce the risk of them stealing your lists conducting exit interviews to remind departing employees of their duty to not disclose trade secrets and confidential information, checking what materials the employees are taking with them as they leave, requiring them to leave immediately, retrieving their keys and pass cards, disabling their computer network access, and having them come back after hours to clean out their offices under supervision.
What about when a trusted employee leaves? A simple jump drive will download an entire hard drive.
You can’t completely stop employee theft, particularly when technology exists that makes it easy to copy information. You can minimize the risk by having employees sign nondisclosure and noncompete agreements. Noncompete agreements have to be reasonable as to duration, scope of prohibited activities and geographic extent, but courts are willing to enforce reasonable noncompetes by issuing injunctions against departing employees. If they can’t go after your customers at all for some period of time say two years stolen lists have less value to them, and by the time they can compete the stolen list may have lost most of its value. Some firms also employ measures that will alert them if someone has stolen and is using a list, for example, by ‘salting’ the list with people who are not real customers or prospects and who will inform the firm if someone has contacted them to solicit business.
Isn’t it difficult, even with names ‘salted’ in a list, to prove a list was stolen?
It is a rare case in which a departing employee admits to stealing a list. Unless you get some direct evidence through discovery, you generally have to rely on circumstantial evidence. But that is broadly true in all types of business litigation and is not a barrier to enforcing your rights.
For example, if a competitor who hired your former employee suddenly contacts your best customers and undercuts your prices, that is pretty good circumstantial evidence it is using your list. And, if a competitor calls a ‘salted’ name like your uncle who is not in the relevant market it is hard to envision the competitor coming up with an innocent explanation. That’s very good evidence, even if it is circumstantial.
You may also be able to get direct evidence that the competitor has your list through aggressive discovery, including seeking a forensic examination of your competitor’s electronic files. That can be expensive, but if the list you are trying to protect is valuable it can be worth the effort and expense.
J. ROBERT ARNETT II has more than 20 years of experience in all aspects of civil litigation at trial and appellate levels in state and federal courts as well as before domestic and international arbitration tribunals. A shareholder at the Dallas law firm of Munck Butrus Carter, P.C., 100 percent of his practice is devoted to litigation. Reach him at Barnett@munckbutrus.com.