Having a driver training or fleet safety program is likely something your insurance company already has on its radar. Companies with five or more vehicles and a history of claims could be required to complete the insurance company’s fleet seminar or safe driving training.
But even if your company has a good driving record, some type of driver safety class and/or additional training benefits your business directly, as well as the insurance company.
“It does have an impact on your rates, only because if you do implement a fleet training seminar, each year or every other year, you will start to see an improvement in your rates because it’s less likely that you’re going to have an accident,” says Marc McTeague, president of Best Hoovler McTeague Insurance Services, a member of SeibertKeck.
Smart Business spoke with McTeague about the importance of driver training and steps to consider taking that could help you maintain a motor vehicle safety program in your workplace.
What’s the first step to driver safety for business owners?
Business auto happens to be one of the bigger exposures to a business because, if there’s an accident, depending on injuries, it can be a pretty significant. So first, you want to start with employee drivers who have a good driving record.
If job candidates are applying for a position that requires them to drive, you can require a check of their motor vehicle report to make sure they are acceptable. Insurance carriers can provide you with what they recommend to be acceptable. Of course, if their record were clear, that person would be a good choice.
What are some conditions that affect auto rates or how much training employees need?
A number of things affect the underwriting, such as the radius of operation — a long distance radius of 200 or more miles could mean a higher rate. Other considerations can depend on the size and weight of the vehicles.
Often companies don’t have a choice with what kind or how much training employees need. Many insurance companies provide it through their loss control department at no cost. A loss control engineer may require drivers to attend a two- to three-hour class and take a test, or just listen to a seminar.
What, then, can employers do to create and maintain a motor vehicle safety program in the workplace?
Having formalized vehicle maintenance and a safe driving program of some kind are must-have risk management tools. However, some employers may feel reluctant to institute them because of the amount of time to set them up in their office. The idea is that improving driver training and fleet safety programs only can help your company, as the business auto exposure is lowered.
Some best practices that could help are:
- Safety policy statement indicating that the company has established a fleet safety policy to emphasize a commitment to the safety of its employee drivers and the general public.
- Seat belt use to reduce the severity of injuries.
- Restrictions on personal vehicles for employees using a personal auto for company use.
- Driver selection and qualification, including application for employment, reference checks, motor vehicle report investigations and an annual review of driving records.
- Vehicle inspection and maintenance.
- Post notices and signs in your building and in the yard reminding drivers to be safe and maintain their vehicle.
- Driver training annually, either online or conducted by a loss control engineer.
- Accident reporting and recordkeeping.
Keep up with the latest insurance news and how your company could be impacted by signing up for SeibertKeck's newsletter.
Marc McTeague is the president of Best Hoovler McTeague Insurance Services, a member of SeibertKeck. Reach him at (614) 246-RISK or firstname.lastname@example.org.
Insights Business Insurance is brought to you by SeibertKeck
In the aftermath of major disasters like Hurricane Sandy, renewed focus on planning for catastrophic incidents can actually undermine effective preparedness for more likely events and distort perception of risk in a way that makes businesses more vulnerable.
In a spectrum of risks, high-severity, low-frequency events are major natural disasters like hurricanes or earthquakes. On the other hand, there are high-frequency, low-severity disasters, such as human errors, computer crashes and power outages. Disasters such as fires and floods fall somewhere in between.
“We often focus on the catastrophic risks, those at the far right end of the spectrum,” says Mike Maloney, vice president, Comcast Business Services. “We assume that preparing for the worst-case scenario automatically includes preparation for all lesser risks. But, it hardly makes sense to initiate a full-blown disaster recovery plan every time the business experiences a minor deviation in operations. That is too expensive and cumbersome.”
Smart Business spoke with Maloney about how preparing for everyday disasters can keep your company — and its technology — on track.
Why is it especially important to prepare for everyday disasters?
If you prepare for the everyday disaster, you will also be ready to address the more serious and less likely threats. For example, power outages commonly occur on a standalone basis, such as brownouts during the summer months with peak air conditioning usage, but power outages also follow more serious threats like hurricanes.
How can you guard against human error?
Human error is the most common form of disaster. Of course, the best way to address this is to ensure proper staff training and good management practices. But, you will also need a strategy to mitigate cost when error does occur, such as on-demand, user-generated data backups and clear recovery procedures.
What’s the best strategy for preparing for equipment or third-party failures?
By making good vendor selections and following proper equipment maintenance procedures, you reduce the frequency of occurrence. Also, build in redundancy for when those failures will occur and have extra equipment in inventory.
Third-party failures are the failures of service providers needed to deliver products and services like telecommunications. The basic strategy is to invest in due diligence to make wise choices for third-party vendors to entrust with your critical services, negotiate appropriate service guarantees and support, and build in redundancy to cope with failure when it occurs.
How is planning for environmental hazards extended to more severe threats?
Environmental hazards are conditions that displace staff and could be as trivial as a water pipe bursting and flooding the office. So, plan for human safety and assure the technology is in place to enable temporary remote operations. This concept is extended for fire, natural hazards and sabotage, which pose more severe threats to safety and longer periods of remote operations.
Once you’ve established your planning framework, what’s next?
The next step is to identify the business’s key assets, which may sound simplistic but is not necessarily obvious. For example, a small software development company insured its property, so after a fire, it was fully reimbursed for the replacement costs of office furnishings. But its critical asset was its intellectual property, embedded in hundreds of thousands of lines of software code. The company had failed to back up the software and subsequently went out of business. If it had a severe budget constraint, as start-ups often do, it would have been better served to forfeit insurance on physical assets and invest in off-site secure data backup.
In addition to determining how best to protect the business, this provides insights as to how to better manage the course of normal operations. Several years ago, a disgruntled systems administrator of the city of San Francisco refused to relinquish key passwords to computer systems controlling, among other functions, employee payroll. A little due diligence to understand the key processes, assets and functions of operations might have revealed this vulnerability.
Mike Maloney is a vice president at Comcast Business Services. Reach him at email@example.com.
Insights Telecommunications is brought to you by Comcast Business Class
All companies that own, rent or lease a building may need flood insurance, regardless of whether the business is near a body of water or it is a requirement of a lender.
“Even if your business has a low risk of flooding, it’s wise to obtain a quote on flood insurance. Twenty-five percent of all flood claims occur in areas that are considered low to moderate risk,” says Linda Cook, vice president, Personal Insurance Division at ECBM. “Flooding can result from sources such as broken water mains, runoff water, storms, melting snow and other natural causes.”
In the aftermath of Hurricane Sandy, many property owners were unsure of how their flood policies would respond.
Smart Business spoke with Cook about what you need to know about flood insurance, including what is covered and not, to take back control.
What’s the National Flood Insurance Program?
The NFIP was established to provide a means for property owners to financially protect themselves against flooding in participating communities. A participating community agrees to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.
Why do you need flood insurance, especially if there’s federal assistance?
Most homeowner and business property policies do not cover flooding conditions or floods. A flood policy can be purchased through your insurance agent or directly through NFIP. All rates are set by FEMA and do not vary from one insurer to another. The premium for a flood policy averages about $700 annually, with maximum limits of $500,000 per nonresidential building and $500,000 for nonresidential contents. The maximum limit under a residential flood policy is $250,000 per building and $100,000 for contents. If higher limits are needed, they may be purchased under an excess flood insurance policy.
As for federal assistance, most forms of assistance are only available after the president declares an area a disaster, and less than 50 percent of all flood incidents are declared official disasters. In addition, most federal disaster assistance to businesses comes in the form of a loan.
How is property-flooding risk assessed?
There are several factors involved in assessing the degree of risk, but a prominent one is the flood zone of a property. This is an area that FEMA has defined according to varying levels of flood risk. An elevation certificate, acquired through a licensed surveyor or engineer, will be able to provide information on the flood zone, the base flood elevation of an area and how a building is elevated. For a favorable flood insurance rate, the building insured should be elevated above the base flood zone.
If you rent commercial space, does that mean you don’t have to do anything?
No. You will need to purchase flood insurance in your business name to provide coverage for your contents. The building owner should have a separate policy to cover the building and whatever contents he or she needs covered.
What else do you need to know when buying or using flood insurance?
A flood policy only provides coverage for direct physical loss by or from flood. Losses are paid on actual cash value (ACV), not replacement cost value. So if, for example, the cost in today’s market to replace your contents is $80,000 but the ACV may be determined to be $50,000, you may only receive the ACV amount, or $50,000.
One particular area where contents coverage is limited is in the area under the lowest elevated floor, which may be a basement, finished or unfinished, as well as an elevated area with lattice or walls. It is important to read your policy.
Some important items that a flood policy does not pay for are:
- Loss of revenue or profits.
- Loss of access to the insured property.
- Loss of use of the insured property or location.
- Loss from interruption of business or production.
- Damage caused by mold, moisture or mildew over a period of time.
A list of excluded items is available from a licensed agent or consultant.
Linda Cook is a vice president, Personal Insurance Division at ECBM. Reach her at (610) 668-7100, ext. 1288 or firstname.lastname@example.org.
Insights Risk Management is brought to you by ECBM
Most companies know the key to long-term growth is generating repeat business. Repeat customers mean greater brand loyalty, higher referrals and a steady stream of sales. Adding a new customer also costs considerably more than retaining an existing one.
But creating the kind of brand relationships that drive customers back again and again isn’t easy, especially for businesses that outsource their marketing and sales efforts to third-party call centers.
Smart Business spoke with Monica Ross, the vice president of training and development at InfoCision, on the value of first impressions and how to enhance customer relationships.
It’s about more than just taking orders
You don’t want your brand to get lost by having representatives who might treat a call with your customer as just another interaction. While they can help your customers make their purchases and answer their questions, it’s not creating a customer experience that is going to convert into future sales.
Companies need more than just order takers. To be competitive in this disjointed marketplace you need call centers that can build outstanding interactions by being as professional and connected to the brand as your own employees are. The order taker will process an order and get it done, but brand ambassadors will take it to a higher level to ensure the person feels good after the call.
You need to leverage the people on the phones if you’re looking to create outstanding customer interactions. Your call center is the voice of your company, so it's crucial to have mature, experienced professionals on the phones. The agents making and taking your calls are representing your company in front of your most valuable asset — your customers. Reputable call centers have highly selective hiring policies. At InfoCision, the average age of our Communicators is 42 years old, close to 80 percent are full time and almost 75 percent are their family’s main provider. Successful call center companies will also have robust recognition programs to retain and reward top performers.
Separate yourself from the crowd
With the trend toward multiple communication channels and a brand ambassador approach, an extensive training curriculum is essential. What separates brand ambassadors from typical call center representatives is their deep level of product and client knowledge, which can enhance the value of a call in a number of ways. Instead of just answering questions, brand ambassadors act as an extension of the brand they’re calling for, so they do a better job connecting with the customer from the first phone call. Brand ambassadors convey the feelings and voice of a brand. They are also comfortable enough with product and service lines to present other opportunities and upsell the customer and boost conversion rates.
Often, people are not 100 percent sold when they call in initially, and it’s going to translate into lost revenue. The phone call should be looked at as an opportunity to pin-point customer wants, answer questions and create need. Because of their training, a brand ambassador is going to know what questions to ask and what benefits their product or service offers. They will take this information and build on it to create that need for the customer.
Creating stronger brand ties
By enhancing brand value, brand ambassadors also add future value in customer retention. The real value of the brand ambassador comes after the phone call is completed: The prospect will have a stronger tie to the particular brand as well as a clearer feeling of who the company is and what it has to offer. Even if it’s a purchase of a singular item, it’s a company that the customer will want to go back to.
The success of brand ambassadors really comes down to the investment a company is willing to make upfront with time and training. The more involved they are in developing training materials and programs, the more ammunition they can provide to brand ambassadors. When those on the phone know the product and client, it’s going to positively impact the bottom line on that initial call. It’s about creating a better impression of who we represent. And, in this economy, where competition for customers is extremely fierce, strategic use of call centers can provide a company with far-reaching benefits that will help them to achieve goals, to enhance market position and to maintain their good reputation.
We’ve reached an age where technology is bringing businesses and customers closer together. Communication channels like teleservices, direct mail, Web allow for a customer’s diverse needs to be met. But it’s only as good as the person on the other end. By improving the quality of a customer’s experience, they will form a stronger bond with your organization and, as a result, increase your profit potential.
Monica Ross is the vice president of training and development at InfoCision. Reach her at (330-) 668-1400 or Monica.email@example.com.
All businesses face obstacles at some point that will impair growth and evolution.
“It’s important to push through the problem by understanding its cause,” says Josh Klarin, vice president of Business Development, Consulting, at Sequent. “What do you do when this cycle hits? Many factors could be the cause, and it’s easy to blame them. But you need to face the situation with honesty and realism and take a tough look at things.”
“We all get stuck, we all hit bumps and even take steps back as we build our businesses. The successful learn from these sticking points, build new knowledge and blast through them. Sometimes we just have to ask ourselves a few questions, remain calm and rediscover the things that built our companies in the first place.”
Smart Business spoke with Klarin about ways to address and surpass hurdles that your company encounters.
What do you mean when you say a business is stuck?
You’ve hit a level where you’ve just plateaued. It’s typically a revenue or profitability measurement, something financial. It could also be technology or controls, or you have lost sight of why you’re in business, your core services.
How do you identify the obstacles and bottlenecks causing the problem?
Ask yourself these questions:
- Are you stuck because everything has to flow through you or someone else at every step?
- Are your products and services clear?
- Do your people understand purpose and pricing?
- Have you built an environment of empowerment?
- Is there a fear of mistakes that stifles creativity or reasonable risk taking?
Owners of small and mid-sized businesses usually know there’s a problem but sometimes don’t want to admit it because of a founder’s pride or an unwillingness to look outside the forest and see what’s out there. The No. 1 cause of getting stuck is that the leaders of the business get in their own way — ‘I built it. I know it. Therefore, everything must come through me.’ That stifles the company and it stifles people.
What can you can do to overcome obstacles and grow your business?
First, employees want to have some authority and to know that not every little thing they do has to be run through an approval chain. You can use the analogy of raising children. When they’re young and small, you have to take care of them and feed them. As they get older, you have to let go a little bit and trust you’ve taught them and empowered them to do the right things. This really isn’t a lot different. That’s why when companies hit various growth stages, they’ll bring in a different person, someone with experience in operating a company of that size. In a small business, you’re not going to do that. You just have to look in the mirror and trust the people who helped you get to where you are today.
What role can employees play in moving the business forward?
It doesn’t matter how big or small your company is, employees not only want to be heard, they actually care and have something to say. Sometimes you just have to ask. The second thing you can do is ensure your environment encourages feedback, input and ideas. Have an informal gathering and engage employees. The simple act of asking can uncover some wonderful things and help your culture. They see things on an everyday basis that you wouldn’t necessarily see.
Once you’ve asked the right questions, you can create an environment where people want to engage, which is the third step. If they think you’re asking and are going to throw the ideas away, or they worry that if they say something wrong they’re going to be fired, that’s not creating the right culture and environment.
How can customers help move the business?
Customers are a fourth way to overcome obstacles and grow your business. Ask them what they are seeing with your business, how you are perceived, and what is working and what isn’t. Ask them why they decided to use you or to no longer do business with your company. Involve them in improvement by asking what they need and want. Remember, without your customers, you have no business. You should be able to find two or three that you can sit down with and start trying to address what they might be thinking about.
Could the solution be branching out into other products or services?
So many times, small businesses just want to get money, which you can understand, but they get stuck by spreading themselves too thin. A customer wants something, it’s not exactly what a company does or what it’s good at, but the business tries it. Before long, you’re trying five or six things that you’re not really good at and you forgot what got you here. Understandably, when you’re small it’s all about making payroll and keeping the lights on, but losing focus is such a big risk. You don’t want to abandon your core.
The final way to grow your business is to look at the core business to see if it has plateaued. If it hasn’t, that’s when you need to look at your competition and what your opportunities are. If you’re in a market that’s shrinking, it’s a whole different question. But if that’s not the case, you need to find out the elements that are making people chose a competitor, whether it’s a better product, price or service.
That’s not saying you shouldn’t look at new product lines or services, but there has to be some thoughtfulness to what you go into and don’t just jump into something that may be more than a few degrees from your core business.
Josh Klarin is vice president of Business Development, Consulting at Sequent. Reach him at (614) 410-2368 or JKlarin@sequent.biz.
Insights HR Outsourcing is brought to you by Sequent
If your business is looking for a better way to communicate, Session Initiation Protocol (SIP) may be the answer. SIP, a signaling protocol, can improve voice and video over Internet Protocol, video conferencing and file transfers. And best of all, it can spell substantial savings for a business compared to traditional phone lines, says Anton Loon, director of enterprise sales at PowerNet Global.
“When a company uses SIP technology instead of traditional phone lines, it can move much more quickly and at a lower cost,” Loon says. “SIP solutions are available for businesses of all sizes, from a small company that needs only one line with local and long distance for about $20 per month, all the way to corporations that have large call centers that operate 24/7.”
Smart Business spoke with Loon about how companies might benefit from implementing a SIP solution.
What is the primary difference between a SIP solution and traditional call routing?
A traditional time-division multiplexing (TDM) system uses physical switches to route calls. SIP uses IP routing, which provides a company’s employees with a much easier way to connect with each other, as well as the outside world.
SIP is not a new technology, so why have companies only recently begun to adopt it?
In 1994, IT managers knew that ‘AT&T worked’ in the telecom industry. If a business switched to another company and there were mistakes as a result, that IT manager’s head was on the line.
It’s been the same with SIP over the last few years. IT directors and managers have been leery about making the switch to this technology because, as with most things in life, change is scary. However, the technology has now progressed to the point that the cost savings are just too good for a business to pass up.
How can SIP improve a corporation’s flexibility and efficiency?
In terms of flexibility, a business can have the service up and running within 24 hours of requesting it. For example, a construction company can add trailers to various job sites and have phone service at those sites within a day.
The same holds true if a business moves to a new location. With a traditional system, you would typically have to wait 30 to 45 days for the new phone lines to be operational.
With a SIP solution, you can move around and operate anywhere in the world. SIP also provides flexibility for call center operations, because you can launch a new operation within days. For businesses like telemarketing centers, this means you can start selling more quickly.
In terms of efficiency, choosing a SIP solution will eliminate the 30- to 45-day waiting period required to implement a TDM system, as well as all the time that is required to coordinate the effort between all parties.
What are the three most important things that companies need to know about SIP technology?
First, that it works. There is no reason to fear this technology.
Second, it’s scalable. This is important because it allows you to start small to test the waters in order to get comfortable with the technology. It also allows you to ramp up for a larger call volume at any given time without having to add equipment to handle the increase. For example, if you want to launch a new outbound calling campaign tomorrow, you can do that. It also goes the other way, in that you can cut back on the number of phone lines servicing your company if business slows down. There’s a misperception that SIP is fraught with quality issues, but that is not the case. In our experience, there are no more service tickets with SIP than there are with traditional TDM systems.
Finally, the technology is here to stay, and it will only get better and more robust as time goes on. Another common misconception about SIP is that it’s the future, but it’s not. It’s here now, and it’s not going anywhere.
How is SIP being used practically in businesses?
A good example is a company in the health care industry. Their patients have to call in to confirm appointments and get verification of their medications. Obviously, this is a critical operation. One company had a TDM system and was dealing with high costs and quality issues. Then it switched to a more cost-effective SIP solution with a redundant platform. Now if it has problems with one of its carriers, it can signal to another platform. In total, it can toggle back and forth among three platforms to avoid outages.
How can a SIP solution help companies better manage remote employees?
Remote employees have become more commonplace today — not just salespeople, but call center employees, as well. SIP solutions improve productivity by enabling remote workers to quickly and easily access the company network.
In addition, sophisticated reporting tools such as hosted PBX solutions are available that can help managers monitor the number of sales calls being made, to whom they are being made, when and at what cost per call.
Anton Loon is director of enterprise sales at PowerNet Global. Reach him at (866) 764-7329.
Insights Technology is brought to you by PowerNet Global
Health care costs are increasing at an alarming pace and many businesses are struggling to maintain the level of health care benefits provided in the past.
While executives are keenly aware that comprehensive benefit programs play a significant role in attracting top-notch talent, many companies have neglected to analyze the effectiveness of their benefit strategy.
Reviewing your employee benefit program regularly offers the opportunity to revisit your carrier’s rates and ensure they are still competitive, says Steve Slaga, chief marketing officer at Total Health Care. Further, it presents an opportunity for employers to ensure their program continues to measure up against others in their industry.
“Health care benefits are important and serve as a very useful tool for employee retention and attracting new recruits,” Slaga says.
Smart Business spoke with Slaga about assessing the needs of your employees, how to determine an appropriate benefit plan and the importance of employee education.
How can a company assess the needs of its employees?
First, examine your health care plan to ensure you’re providing affordable, quality coverage with good service, flexibility and access to care. Make sure your plan isn’t prohibitively priced, so employees can afford to participate, and gauge employees’ satisfaction levels by utilizing surveys to determine which areas of the plan they consider strong and which can be improved upon. Bear in mind all employers are different and operate within circumstances unique to them, so not every health care plan fits every group.
The level of flexibility a health care plan facilitates is also an important consideration. Some plans work through Health Maintenance Organizations, which have a specific provider network, while others offer Preferred Provider Organizations or Point-of-Service plans with which employees have the option to go in or out of a predetermined physician and hospital network of preferred health care providers without fulfilling certain conditions, such as obtaining a referral. When choosing a health care plan, make sure the services fit the needs of your employees and that employees have access to a selection of physicians and specialists in their area.
How can employers determine an appropriate benefits plan for their employees?
Ask your agent or broker to do a comparative analysis among health care plans. That person will review the factors important to your employees, including pricing, access to care and type of benefits. The actual pricing is determined by the health care plan and is dependent on factors including the business, its industry and the average age of employees.
Employers at a minimum should review their benefit plans annually. By comparing your current plan to other plans, you can stay apprised of options in the marketplace, new products and how your premiums compare with other options. By reviewing plans regularly, you can assure employees you have shopped around and are providing them with the best value for their needs.
How can employers best balance the cost of the plan with employee needs?
This is a decision every employer must make on its own, and it hinges on factors including the type of benefit program desired for employees and how much employees will be expected to contribute.
As the cost of providing health care coverage continues to rise, many businesses have scaled back benefits. Among those companies that continue to offer benefits, their employees are more often asked to make higher contributions to offset costs. Other companies pass along a portion of the increased costs through higher deductibles or higher co-insurance; both solutions reflect the challenge of dealing with today’s rising medical costs.
Companies are also coping with escalating health care costs by implementing wellness plans designed to encourage employees to take preventive action to improve their health. The idea is that a healthier pool of insured employees makes fewer claims.
How can employers help employees understand the features of their health care plan?
Education is key. Employees need to have a clear, concise understanding of their benefits from day one. There are numerous ways to make information available to employees, including health plan websites, interactive assessment tools, newsletters and other communications.
It is also important to provide employees with forums where they can ask questions about the plan and provide feedback. In addition, many employers are looking beyond employee communication and implementing multipronged education programs that engage employees throughout the year.
Most employees receive benefit information during open enrollment periods and that’s often the last time they examine the details of the plan. Instead, there should be ongoing education with information distributed regularly to employees so they are fully aware of what their benefits cover. This will allow your employees to utilize and access their plans efficiently and effectively.
What value should a benefit provider bring to the table?
Your benefit provider should present clear and concise information about the health care plan in a timely manner. On a group level, a provider should be able to help you with billing, invoice and claims questions. On the member level, the provider should be able to answer benefits questions. Contact your provider to see what other services are available.
Steve Slaga is chief marketing officer at Total Health Care. Reach him at (313) 871-7810 or SSlaga@thc-online.com.
Insights Health Care is brought to you by Total Health Care
The property tax bill comes in the mail, and you pay it. But do you ever really look at it to determine whether you are paying the right amount?
“Property tax on the real estate and personal property that you own or that you lease is part of the overhead of the operation of your business,” says Carl Rashid Jr., leader of the Property Tax Appeals practice group at Dykema Gossett PLLC. “You want to make sure you are paying your fair share of taxes, but you certainly don’t want to pay more than your fair share.”
Smart Business spoke with Rashid about how to make sure you’re not paying too much, and, if you are, how to return that money to your bottom line.
Why should business owners be concerned about their property tax bill?
Real estate values have declined in the last few years, making it a good time to review the amount of taxes that you are paying. If your property was formerly worth $1 million, and you know for a fact that you could not get $1 million for it now, you should not still be paying property taxes based on a $1 million value. If you are looking at the bottom line, as you should be, you have to look at every item of expense in your overhead, and this can certainly be a major one.
When your next tax assessment comes, consult with an adviser to determine if the amount you are paying could be
How can an adviser help lower the amount of property tax a business pays?
Once you’ve received the assessment — usually in February in Michigan — and want to determine if you may be paying too much, contact an attorney to begin the assessment process. The attorney will look at the assessment, look at what comparable properties are going for in the area where your business is located, and oftentimes consult with an appraiser to determine the value.
To assist the adviser in making an accurate assessment, the business owner should provide the notice of assessment; the previous year’s tax bills; any appraisal reports that they may have; the insurance value of the property, although that is not always indicative of the true value of the property; and, if it’s an income-producing property such as an office building, a shopping center or an apartment building, the financial statements from the previous three years.
From there, the adviser will undertake the appeal seeking to lower the appraised value of the property and file it with the appropriate state authority.
How can business owners identify the right lawyer for their needs?
Look at the years of experience and the adviser’s success rate. That person’s relationships with the taxing units in the state are also critical. If those working at the taxing units respect the adviser, they are going to sit down at the table and try to resolve the issues. If they don’t respect the adviser, or don’t have a previous relationship with him or her, it can significantly lower the chances of success.
How long does the process take?
It could be a very long process, as long as three years, because of the backlog the state is facing. During that time, the taxpayer will continue to pay at the assessed value. And if the value is found to be less than the assessment amount, the portion that was overpaid will be refunded when the case is over.
While the appeal is pending, the lawyer will amend the petition to make sure that subsequent tax years are involved. The attorney will also keep you informed of the progress of the appeal as it goes through the tax tribunal or court system, and of subsequent filings.
Then, once there is a hearing and judgment, or a settlement — and most cases are settled — the revised assessment becomes the taxable value. The taxable value is frozen at that number and can only be increased by what the Consumer Price Index is in Michigan, but not to exceed 5 percent.
Once an appeal is settled, can a taxpayer appeal again the following year?
Yes. If you settled at a lower number, and after that the market drops again, as it has in the past few years, your property may be worth less than the value determined when you filed the appeal. If you feel that is the case, it may be worth it to repeat the process.
How does the taxpayer pay the adviser?
The case can be paid on an hourly basis or on a contingent fee basis. A lot of clients prefer not to receive regular bills and would rather pay a percentage of the amount recovered. Some clients also believe that hiring someone on a contingency basis provides an added incentive for the adviser to get results.
Would you advise that every business hire someone to appeal its property taxes?
No. A business should only appeal if there is enough tax dollars at stake to make it worth the time and effort of both the business and the lawyer involved.
It’s really determined on a case-by-case basis. If the amount in dispute is minimal then it becomes a business decision that each owner has to make based on what he or she is comfortable with and whether it is worth it to engage the services of a lawyer.
Carl Rashid Jr. is leader of the Property Tax Appeals practice group at Dykema Gossett PLLC. Reach him at (313) 568-5422 or firstname.lastname@example.org.
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Learning how to deal with disaster during a crisis is probably not the right way to go. In the aftermath of Hurricane Sandy, employers are reminded of the importance of insurance, disaster planning and claim preparation.
“Always at a time like this, organizations who were not affected need to take a step back and ask themselves, ‘What if?’” says Neil Harrison, group managing director, Risk Control, Claims & Engineering, at Aon Risk Solutions. “We are spending a lot of time talking to organizations and helping them to say, ‘OK, what if it was us? Would we have been ready? Were we prepared?’”
Smart Business spoke with Harrison and Roland Laury, CFPS, senior risk consultant at Aon Risk Solutions, about some best practices business owners can use to help them ride out any disaster.
How did Hurricane Sandy affect the overall insurance industry?
An event like Sandy gives the insurance industry an opportunity to demonstrate why it exists. Too often, businesses look at insurance purely as a cost, but the industry is playing a role in business specific and general economic recovery. From the perspective of brokers and insurance companies, they expect to be judged in terms of their performance and how they respond to clients. There is a lot of resource pressure, as the number of claims is significant, so already busy staff is suddenly taking on increased workloads. Resource scale and leverage become key, and operational efficiency is a prerequisite for success.
It’s too early for anyone to comment on the longer-term impacts of insurance pricing or coverage availability for individual businesses or industry segments. When these events happen, almost everybody has an opinion of the cost, and those opinions vary widely. The reality is nobody knows at this early stage. Property damage, business interruption and contingent business interruption all come together to create the overall cost. In addition, just because an organization is based in St. Louis or somewhere not in Sandy’s way doesn’t mean businesses didn’t have customers, suppliers or vendors who were affected. This may indirectly affect them in terms of business interruption or contingent business interruption.
What should business owners know about their insurance policy for an event like Sandy?
There are some key things that organizations should look at. The first step is making sure you’ve got the right insurance coverage — the terms, the conditions in place, definitions of perils — for this kind of event and that you understand it. Business owners need to understand limits and exclusions. They should aim to have claims preparation coverage on the property cover, meaning there’s the opportunity to engage an expert for some of the accounting work critical to quantifying and making the claim. With this coverage in place, and with a relevant expert engaged, generally speaking, a claim is better prepared and the process runs more smoothly.
Linked to that is the need to make sure that the values at risk — asset values and business interruption values — are well understood and accurate. Too often, an organization has a claim and then is found to be underinsured or overinsured. A best practice is having an external expert work with you on assessing those values during your policy renewal process. The business interruption is particularly important because it’s far more complicated to work out in post-loss panic mode. If you think about the economy since 2008, everybody has different values at risk now than they did then. Organizations may have just continued to index link their values or sums insured.
Looking beyond insurance, what can businesses do to respond well to disasters?
The organizations that have responded well are those with business continuity plans which are well defined, kept up to date, frequently tested and broad. The plans cover not just the direct issues of building damage but also employee safety and welfare issues, supplier issues, customer issues, etc. There’s no alternative to investing the time, and probably some money, in a far-reaching business continuity plan because it gives the balance sheet the best protection possible.
Insurance is an outcome in many ways of business continuity. Take a broad look at the business, plan for every eventuality, make sure everyone knows what to do when an incident happens, have restoration firms on contract so you’re first in queue when an incident happens, and have access to generators or additional alternative power.
How can a business best submit claims if it does suffer damage?
When a significant incident hits, the company has some responsibility to mitigate the damage and the cost of the loss. Much of it is common sense, but common sense is easier to apply when it’s written down and people know what they are responsible for. Make sure that:
- Everyone knows to report the loss to a broker or insurer immediately and there are clear lines of communication.
- Immediate action is taken to minimize loss.
- You keep the documents, invoices or receipts for any vendors brought in for restoration or to provide alternative power, etc. Later, this will become a part of the insurance claim.
- You take photographs of the damage. It’s surprising how many people get everything repaired and then try to make the insurance claim without proof.
- You engage an external expert, if needed. Sometimes when a business is in trouble mode, it’s all about recovery. Outside expertise allows the business leader to talk to customers and suppliers and deal with staff, while the expert handles the more tactical, and somewhat more mundane, issues.
It’s important for businesses to have continuity planning, follow best practices for insurance, consider a claim preparation clause and ensure common sense is applied when a loss occurs. Recognize that disaster response, claim response and claim preparation are specialist technical disciplines, and many organizations find that their investments in those areas have a positive return.
Neil Harrison is the group managing director, Risk Control, Claims & Engineering, at Aon Risk Solutions. Reach him at (312) 381-5660 or email@example.com.
Roland Laury, CFPS, is a senior risk consultant with Aon Risk Solutions. Reach him at (314) 719-5120 or firstname.lastname@example.org.
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Intellectual property (IP), whether patents, copyrights, trademarks or trade secrets, is an important asset for almost every company, regardless of industry or market focus.
“Business owners should be careful not to fall prey to the misconception that if their business does not involve manufacturing, research and development, or high-tech innovation, there is no IP to protect,” says Alexis Dillett Isztwan, member at Semanoff Ormsby Greenberg & Torchia, LLC. “In fact, with reliance on the Internet for the delivery of goods and services, as well as marketing, strong brand recognition and the development of original creative works have become an important driver for generating revenue. It is not unusual today for a business to have only one category of assets — its intellectual property.”
Smart Business spoke with Isztwan about how you can know whether you really own the IP that you paid for.
How does ownership typically work when a contractor develops IP?
Often, owners assume if they paid a contractor to create something — a website design, an Internet platform or portal, a logo design, a software program — then the business owns all the rights. The reality, however, is quite the opposite. Under copyright law, the author — the graphic designer or the software programmer — owns the copyright, and under patent law, the inventor owns the rights. This is true regardless of whether, or how much, the company paid.
For copyrights, there is a narrow, often-misunderstood exception called the ‘work for hire’ doctrine. The work for hire exception covers only two categories: (1) employees who create works within the scope of their employment, and (2) nonemployees who create a work that falls within one of the specifically enumerated categories in the copyright law. The second category applies infrequently, covering only works such as contributions to a collective work, parts of a motion picture or other audiovisual work, translations, an instructional text, a test, answer material for a test, or an atlas. The first exception covers works prepared by an employee, not contractors.
Determining whether a person is an employee requires evaluating the level of control the employer has over the work as well as the creator and his or her conduct. Even if the creator is an employee, it calls into question when the work was created and whether the subject matter is related to the scope of employment.
What can business owners do to ensure they own what they pay for?
The best way to solidify IP ownership is with a written contract signed by both parties prior to any services being performed, whether by an employee or contractor. The contract should clearly grant ownership of all works and inventions and related IP rights to the business. Ownership should not be dependent on or timed with payments.
Even businesses that attempt to cover ownership in a written agreement sometimes limit effectiveness by stating that all work should be considered ‘works for hire.’ Since copyright law does not cover all IP rights, the contract language should contain an immediate, explicit and irrevocable assignment of all rights in the work created.
One pitfall is failing to recognize when the contract is necessary. Whenever a business hires an outside party to prepare a product or other deliverable, a written contract for those services should contain a favorable ownership statement.
Too often, the contractor convinces the owner a written agreement is unnecessary or that the contractor operates on a purchase-order basis only. This is a red flag, as trying to extract an ownership statement later will come with a price and often be refused.
Is this an area of growing concern?
To many business owners, it is counterintuitive that IP ownership generally resides in the author or inventor rather than the party paying for the work. As a result, a number of owners are unaware of the problem until it surfaces in another context, such as when trying to sell the company, looking for financing, or in a dispute with the contractor or employee who created the work.
The ownership issue is not industry specific, but startup companies are more vulnerable to missteps. Startups, often low on cash, frequently look to friends to work for them based on a handshake promise of future interest in the company. When the business starts growing, those ‘friends’ come looking for their equity, and if you did not obtain an assignment of rights, you have little leverage, particularly when the savvy friend holds the IP ownership hostage in exchange for a
percentage of the business.
During the due diligence of a sale or financing, buyers or potential investors look at whether the company owns all of the asset rights, either to determine the value or ensure security. Increasingly, those assets are entirely or largely IP related. An unclear ownership chain often devalues the business. For example, a business hires multiple programmers to develop software without agreements, and tying up ownership requires tracking down each programmer to obtain an assignment of rights. It may be impossible to find each programmer and, if you do, even harder to convince them to agree to an assignment.
If you don’t have an assignment, what can happen to your property?
If your company does not own the IP rights, not only is the business potentially vulnerable to infringement claims but the actual owner also has the right to license or sell the work to other parties, including competitors. Imagine having a new software platform developed by a contractor without an assignment, and then that contractor licenses or sells it to your competitor. You lose control over what was supposed to add value to your business, and you could have to focus time and resources on either defending an infringement claim or obtaining the rights from other parties, likely at a much higher cost than originally paid.
Alexis Dillett Isztwan is a member at Semanoff Ormsby Greenberg & Torchia, LLC. Reach her at (215) 887-0200 or email@example.com.
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