Sue Ostrowski

Monday, 26 October 2009 20:00

Estate planning strategies

The decreasing value of assets in a down economy may make this the ideal time to review your estate plan. At a time of lower interest rates and lower business valuations, beginning to transfer assets out of your estate now can benefit both you and your beneficiaries, according to Mary Jo Lockshin, a partner at Stark & Knoll LPA.

“For those who are going to transfer business assets or make gifts through a trust — whether for an individual or a charity — the current economic conditions, with low interest rates and values, present the ideal opportunity for gifting assets,” says Lockshin.

Smart Business spoke with Lockshin about why now is a great time to review your estate and succession plans and how establishing trusts can help ensure your legacy for generations to come.

What should you consider when reviewing your estate plan?

It’s important to consider whether there have been any changes in your family situation, such as the birth or death of a family member, a change in marital status, or a change in the financial situation of a beneficiary. Also, look at who gets what to see if those provisions still reflect your intent.

How can a down economy help you and your beneficiaries get more out of your estate?

When the values are lower in a closely held business, you can gift a greater number of shares or a greater percentage of interest in the company. If a gift is made when the value is lower, you succeed in getting more assets out of the estate of the original owner and having the assets transferred to someone in the next generation. This may ultimately result in paying less estate tax.

Also, lower interest rates free up more money for people to have an incentive to invest, especially in regard to certain planning vehicles. And financially, it makes it more advantageous to administer certain types of trusts that are dependent on interest rates.

Can you set up estate planning vehicles on your own, or does doing so require professional help?

It’s always best to have a professional involved because estate planning and business succession documents are legal documents that should be drafted by an attorney.

There are a lot of forms on the Internet, but state law governs estate planning and probate, and much of the information online is not specific to Ohio law.

And if you’re missing even one small clause or you have the incorrect information regarding Ohio law, you could cost your family members a substantial amount of money to undo the damage done by having poorly drafted estate planning documents. It’s a good investment to have your documents drafted by an estate planning attorney from the very beginning.

What information should you have available to share with your estate planner?

Information is required regarding assets and income needs, as well as long-term goals regarding where you would like to leave your estate when you pass away. To the extent that you have that information readily available, it makes the process much easier and can save you time and money because the attorney won’t have to spend time digging for that information.

It is also beneficial to know if there are certain purposes for which you would like to leave the assets rather than giving assets outright to beneficiaries because trusts are the primary means of leaving the benefit of an estate to future generations without relinquishing complete control to them.

What are the advantages of using a trust as a vehicle for estate planning?

You first need to consider whether you should be making gifts of your estate through your estate plan or whether it would be more beneficial — not only to you but to your beneficiaries — if you leave your assets in a trust.

Trusts are a very effective mechanism for transferring the benefit of your estate to your beneficiaries while maintaining control of your estate. It’s the only way that your assets can be controlled after you pass away, because a will makes a gift of your assets, and once those assets are in the name of a beneficiary, they can do anything they want with them. Also, the more control a beneficiary has over the assets, the more likely that those assets will be taxed or will be lost in a divorce or lost to a creditor or bankruptcy issue.

Trusts are very effective estate planning tools, not only for minimizing taxes but also for maintaining control of your assets for generations to come. You can designate in the trust the purpose for which the assets must be used, such as health, education, maintenance and support.

It’s a good tool for preserving assets, but it’s also a good tool for protecting the beneficiary from circumstances that may be outside their control. For example, there may be a beneficiary who is easily influenced, and a trust can protect that person from losing money to scams. A trust can also keep assets in the bloodline in case of divorce and can protect government benefits that might be jeopardized by an outright inheritance.

Why is a down economy a great time to transfer assets?

This may be the absolute best time to either gift or sell assets to other family members. For example, take someone who owns a Florida vacation home and the value has decreased from $600,000 to $300,000. The main benefit of getting it out of that person’s name by a gift or sale is that at most you’re using up to $300,000 of your unified exclusion. With proper planning you might even be using a lot less than that. If over time the property goes back up in value, all of that appreciation is out of your estate. That can be said for a vacation home or ownership in a business. Now is the time to at least explore estate planning to ultimately lower taxes and leave more of your estate to your loved ones.

Mary Jo Lockshin is a partner at Stark & Knoll LPA. Reach her at (330) 572-1313 or

Friday, 25 September 2009 20:00

It’s more than sex

When you mention harassment in the workplace, most people think of the stereotypical male boss chasing his female secretary around the desk. But harassment today has gone far beyond sexual comments and behaviors to include harassment focused on religion, ethnicity, sexual orientation, age or military status, to name just a few, says S. A. “Sam” Murray, CEO of ManagEase Inc.

“Employers are prohibited from having an environment where harassment occurs based on any protected category,” Murray says. But if harassment occurs despite your best efforts, your company is protected if you have an appropriately drafted harassment policy and procedures in place.

“Employers aren’t obligated under the law to police harassment,” she says. “Generally, the law lets employers off the hook if they have trained their employees about harassment, have a harassment policy in place and distribute it to their employees on an annual basis, respond to claims immediately and expeditiously handle resolutions to any complaints that are made.”

Smart Business spoke with Murray about how to protect your company against claims of harassment, both sexual and otherwise.

How do you make employees aware of what is unacceptable behavior in the workplace?

You need to have a policy that defines the kinds of behaviors considered a violation of the rules. As an employer, your policy should be stricter than what the law would otherwise allow. In other words, it may not legally qualify as sexual harassment to hug someone in a work environment, but because that behavior can become problematic and create a claim, it should be included in the policy as prohibited behavior.

Having a very strict and defined policy makes it very easy for you to approach an employee and say, ‘You need to know that your behavior does not comply with our harassment policy, and you need to stop that behavior.’ Then you can correct them and give them examples of how they should be behaving instead.

How can you prevent harassment in the workplace?

That’s done through training. All companies should at least train their managers. In California, the law requires companies with 50 or more employees to train managers every two years. Train your managers on how to observe for infractions, enforce policies and set a good example. On top of that, create procedures that encourage people to come in and address their concerns before the behavior becomes a formal complaint.

The law requires that an employer investigate all complaints of harassment, so being responsive to complaints and correcting them in a way that is positive for all parties encourages people to feel comfortable bringing their concerns forward.

Educating employees about various cultures, beliefs, practices and values is also important in creating an environment of tolerance and courtesy.

How can an employer create a policy regarding harassment?

California provides a brochure that identifies what harassment is, but I don’t encourage companies to use that brochure because it directs employees to contact a federal agency if they have a complaint, and that agency tends to focus on policing, not problem-solving. It’s better to turn to your attorney or a qualified HR source to create a policy.

Companies that try to do it themselves tend to end up with policies that are too short and focus only on sexual harassment. Frankly, that’s not where the majority of claims are coming from these days. Companies with homegrown efforts think they are covered, but they do not have a comprehensive policy that really protects them.

What types of things should be covered in a harassment policy?

There’s so much diversity now in the workplace that it creates opportunities for people to make fun of differences. Telling ethnic jokes could be harassment. Telling religious jokes or age-related jokes or making fun of people who are older or forgetful would also be considered harassment.

Companies are seeing more age and ethnic types of complaints and less sexual harassment because most people have been exposed to sexual harassment information on TV or the Internet or via training, and it’s understood by most people that this behavior is wrong.

Many employees are still shocked to find out that they can’t make fun of another employee’s ethnic background. They may have been raised with these behaviors in their home or see it in the movies and they think it’s a normal thing to do. They may even think they’re taking a shortcut to a friendship by razzing the person. They don’t realize that people feel singled out and embarrassed.

You see an employee, or worse, a manager making fun of another employee’s accent or religious practices and he thinks he’s being funny. Instead, he’s really mocking a coworker in a humiliating way and impacting the work relationship and even the company’s image.

When you point out the effects of this behavior on the person being mocked some people get it. Others persist in thinking they can say what they want. What they don’t realize is that the employment environment has specific rules that provide for fair play and equal opportunity. You don’t have the same kind of freedom that you do standing on a street corner or sitting in your kitchen and espousing your views. In a work environment, there are restrictions and requirements and companies run much better when these are honored by all.

S. A. “Sam” Murray is CEO of ManagEase Inc. Reach her at (714) 378-0880 or

Wednesday, 26 August 2009 20:00

Process improvement

Process improvement has traditionally been associated with manufacturing. Yet, most, if not all, businesses can benefit from looking at how they operate and finding new ways to increase productivity.

“All industries can learn from manufacturers,” says Dave Mills, project manager at Definity Partners. “Proven implementation methods and process improvement tools can be applied to any organization in any industry with operational and process functions.”

Smart Business spoke with Mills about how your business can begin to implement process improvements to cut waste, improve efficiency and increase profitability.

What can companies in other industries learn from manufacturers about process improvement?

Many manufacturers have simplified, standardized and automated their operations by involving employees to drive improvement results. Now, other industries are employing lean principles, especially service companies, nonprofits and health care organizations.

These other industries are realizing that getting their people involved is key to understanding process challenges on a daily basis. This perspective is key to understanding what’s holding them back from being able to implement improvements. It doesn’t matter whether you’re in manufacturing or some other industry, having your people involved is the key to driving and creating sustainable improvements.

What industry segments are most likely to need improvements in terms of operational efficiency?

Any industry with cost pressures will benefit. If you have costs that are going up or even staying the same while your revenue is going down, working on operational efficiency is a must.

Global economic forces in manufacturing have forced it to lead the way with operational improvement. As the national health care debate continues, medical services organizations must streamline themselves to take costs out of the system. Additionally, technological advancements have caused several industries to begin working on their operational efficiencies. They’re being impacted by innovation, creating another opportunity to evaluate processes and identify potential opportunities.

Even nonprofits can benefit from process improvement. With the current economic challenges, their revenue is going down while their costs are going up and the number of constituents they’re serving is increasing. By streamlining their processes, they can trim waste and operate more efficiently with fewer resources.

What process improvement techniques work especially well for service industries?

Any activity involving the customer experience must be evaluated. Think about what your customer wants — whether it’s a manufacturing company looking to reduce product delivery time, a medical practice eliminating the time patients are kept in the waiting room or a nonprofit anticipating more service demand. If you start with the customer, you’re going to be focusing on the right things.

A proven technique is our ‘run, improve grow’ model. It’s a way of understanding how your employees are looking at what they do on a daily basis. Are they working on making improvements in the business, and are they looking at ways to grow the organization? As you work on making improvements that can help you with the way that you’re running, you start to remove waste in the process. This gives you more time to focus on improvements and organizational growth.

How can health care and service industries determine when to undertake a process improvement initiative?

The challenge is that you always can find a reason not to begin an improvement initiative — you are facing new competition, market demand is changing, new products are being introduced or something else. With that said, the best time to initiate change is before you are forced to by market conditions. Being proactive in improvements is always better than a reactive response.

Take an example of two merging non-profits. They leveraged that opportunity to spend time improving their processes. It would have been very easy to say, ‘We shouldn’t do that now because we’re merging and we’re too busy.’ Instead, they looked at it the other way and said, ‘Now is as good a time as any. We’re going to be making changes anyway, so let’s take this as an opportunity to look at our process and eliminate some of the waste in there and take the best of both worlds and bring them together.’

Don’t wait until there are problems or only focus on the top of your organization. You really need to take every opportunity to involve your most valuable employees who are on the front lines to take your processes to the next level.

What are the benefits of a process improvement effort?

The No. 1 key deliverable is that it needs to make financial sense. No matter what industry you’re in, there’s always an opportunity to address the bottom line. Focus on increasing productivity, cutting defects and/or reducing operational costs.

What is often even more important and impactful, however, is creating that culture where you can continually drive and sustain process improvements. It’s not just when you’re working on a project; you need to create a culture where motivating employees allows you to continue to drive improvements throughout the organization. Success is measured on never being complacent when it comes to achieving better results.

In the end, it allows you to be more competitive so that you’re not just reacting to the economy or the competition, but you’re being proactive with the continuous improvement culture that you created to drive operational excellence.

Dave Mills is a project manager at Definity Partners. Reach him at (866) 520-2003 or

Sunday, 26 July 2009 20:00

Getting the word out

E-mail distribution lists can make it simple for a company to communicate with its clients, potential clients and internal employees. By carefully targeting recipients by specific interests, you can make sure the right people are hearing the right message from your company.

“Mailing lists are a very high-value and very inexpensive way to keep in contact with a lot of people,” says Wayne Walton, a business analyst at Arke Systems. “Having well-defined mailing lists will not only help control your message to customers and employees but also control your message for the company as a whole.”

Smart Business spoke with Walton about how to target your message and how to make sure you aren’t sending out too much information.

How can a company get started disseminating its message using e-mail distribution lists?

Ideally, if your company has customer relationship management software, there will already be a database of e-mail addresses that you’ll be able to pull from. If you don’t have that, there are numerous companies from which you can purchase marketing lists. The other way to do it is to start searching through your company’s history. Even if you’re not aware of it, your company as a whole will have that information; it just may not be in a central application. In addition, external salespeople have their own lists that you can gather from.

It then comes down to deciding what you need to be looking for within your customers or potential customers that you want to base that list on. Your marketing lists can be as specific as you want — one company could have hundreds of lists. You could have just 10 people on a list if you know they’re high-value people who have a particular interest in common.

How do you target your message to different audiences?

Each list tends to include entirely different messages, especially if you’re looking to create high value for the people on the receiving end. You need to make sure that the message is well targeted and that it’s going to be within their area of interest.

Even if you’re going to be marketing the same product to two different groups, it could be two completely different messages that you send them based on their needs. You wouldn’t want to send a message about a product to IT managers telling them how it will increase their sales, and you wouldn’t want to send sales managers something about how much better their search function is going to be by using your product.

How do you craft your message for maximum impact?

As marketing and advertising gets more sophisticated and businesses get more competitive, crafting an effective message has become more challenging than ever. Using four steps, known as AIDA, can help companies stand out.

Attention — How does your ad grab the audience’s attention? In a print ad, this may be a wacky image. In a seminar, this may be a personal story that engages the crowd.

Interest — How does your ad create interest in your product or service? Are you appealing to a specific problem in a specific industry? What can you say quickly to get them to the next step?

Desire — Now you must make the reader/customer want your product. This is where you attach to their emotional need to fix the problem you can solve.

Action — Do they drive to the store to get your product? Do they need to schedule an appointment for your service? What do you want the prospect to do as a next step?

How often should you send out messages to keep your name in front of clients and potential clients?

How often you send messages to your mailing lists really depends on how relevant your message is and how much value it has for the group of people you’re sending it to. If you’re marketing a product or service to a group of people who find your message to be of high value, whether it’s important information or a special offer, they won’t mind receiving these messages from you on a more frequent basis. For example, a business professional may enjoy receiving a semi-monthly newsletter from your company if the articles you publish speak toward their particular role and responsibilities within their company. Or, a person with a special interest in golf may like to get weekly e-mail offers or promotions from their favorite golf store.

However, if the messages you’re sending out are broad or general, many people would prefer to receive them on a less frequent basis, quarterly for example. This should be enough to get your name in front of them, but not too frequent that they become annoyed by your communications or send you to spam. You should also consider data such as opt-out rates to determine if you’re communicating too frequently or sending out non-relevant information.

Wayne Walton is a business analyst at Arke Systems. Reach him at (404) 812-3123 or

Thursday, 25 June 2009 20:00

Brand building

You may not have realized it yet, but the days of you being in complete control of your brand are long gone.

“Companies have ceded the control of their brands to their customers,” says Bo Bothe, president and chief creative officer of BrandExtract. “There’s no way that a company can control all the messages and all the information about it in the outside world. The brand is no longer about me just telling you about my company, it’s about us having a regular, ongoing conversation about the value that my company brings to you as the customer.”

By using social media such as LinkedIn, Facebook, Twitter, direct e-mail and other options in conjunction with traditional marketing efforts, you can improve both the perception of your brand and your company’s relationships with your customers.

Smart Business spoke with Bothe about how to use social media to attract, engage and serve, rather than to sell, and how giving away useful information can influence the way people perceive your brand.

How has branding changed in the past several years?

The tools always change, but consumer behavior is shifting even more significantly. CEOs are no longer in absolute control of their message. If you are looking to build a relationship with key stakeholders, you don’t do it the same way you used to.

It used to be that customers trusted you with a handshake or through your advertising. Today, customers find trust a different way. With so much information available online, people connect with a brand in a different way. It’s now about how you share information with them, and that’s a big shift.

What do you need to think about before jumping into social media?

There are three things to consider. First, does your organization embrace the media and does it have the ability to generate the content? This includes the need to assess your employees’ ability to embrace the technology. They just may not care enough about a topic to talk about it that much.

The second thing is the audience’s desire. Is your audience using the media? Are they even looking to engage your company online? Do your research. Figure out what they care about and whether your customers are looking for the kind of information you have to offer.

Finally, you have to have a plan to manage your social media. Knowing what the choices are is only the beginning. Do I need to hire someone and who should it be? What media are best for our company? Can I do this internally? A company has to have a strategy for answering these questions and more. Each platform is best suited for a different type of interaction. A blog can be a very effective tool but should include very different information than what you would communicate through Twitter. The important thing is to control the content, as you would any brand messaging.

Even if a company decides not to actively engage in social media at this time, it must be aware of what options are out there — and what, if anything, the marketplace is saying online about the company and the experiences they have had with it. This allows you to address both negative and positive online conversations head on.

How does using social media help keep a company in touch with its customers?

Social media provides an outlet for you to constantly communicate with your customer in a way that’s not threatening. If you’re on Twitter and you’re continually promoting a product, people aren’t going to listen to you. But if you’re on Twitter and you’re providing useful information, interesting links, stories built around what you do, or you’ve got a blog that’s providing useful information, it’s going to let people know your brand is genuinely committed to their success.

Authenticity goes a long way in today’s world. If customers don’t feel you’re being authentic, they’re not going to do business with you. If they don’t feel as if you are in it for them, or they can’t get the information they want immediately from your Web site or other digital media, they’re gone.

How can a company provide useful information to its customers?

As an example, Scotts Miracle-Gro lets you sign up for a newsletter with helpful lawn care tips. They will e-mail you when it’s a good time to plant something, or when to put down fertilizer. They’re providing information and supporting their sales channels. They’re not asking you to just click on anything and buy it (though a purchase is just one click away).

They’re being seen as a thought leader and as someone who’s going to share information freely and openly with you. People purchase brands that are focused on helping them be successful by giving them information they can use — in many cases for free.

There’s a twofold benefit: The company receives the goodwill generated from providing information, and it also gets the customer’s e-mail address and important information that helps it understand customer needs.

What are the other benefits in engaging customers with your brand?

You can get the pulse of your customers and really understand what products they want and what they’re talking about, and use these tools to have an ongoing conversation with them. That can help you figure out what products you need to launch, or what markets you need to get into and, in some cases, out of.

Using social media gives you the ability to track and manage your brand by having a conversation. Customers will tell you what you need to know about your product or service to make effective decisions faster. You can then make adjustments on that, and that’s ultimately what this is about — building and managing a brand.

Bo Bothe is the president and chief creative officer of BrandExtract, an integrated branding and communications firm that guides growing companies by providing strategic branding solutions, marketing communications, advertising, print and interactive services. Reach him at or (713) 942-7959 or visit

Thursday, 25 June 2009 20:00

Failure to preserve

If your company is being sued, don’t even think about deleting any electronically stored information (ESI). Instead, you need to preserve your electronic information like documents, e-mails, PowerPoint presentations, voice mails, and any audio or visual recordings. Each of these items could be evidence in your case.

“Litigators engage in discovery, and for a long time, that has generally meant that I give you my documents and you give me yours,” says John Susany, chair of the litigation and employment group at Stark & Knoll LPA. “That’s changed. Documents now include electronic documents. So the question becomes, what do you do with computer data? The answer is that you have to produce it to the other side if it’s responsive because this electronically stored information could ultimately be evidence in a trial or a hearing.”

Smart Business spoke to Susany about how to make sure you preserve your ESI and how failing to do so could cost you in court.

Once you’ve been sued, what is the first thing you need to think about regarding your ESI?

Your obligations begin before you even receive the lawsuit. As soon as a company becomes aware that it is likely to be sued, it needs to preserve and safeguard its electronic data.

To do that, you need to understand what the sources of electronic information are because you need to identify and secure any relevant information. That is sometimes a gargantuan project because the vast majority of documents a company creates are electronic. For big companies or those with an IT person, it’s somewhat easier because the IT person can oversee it. But in smaller companies that don’t have an IT department, someone has to take control of the case, inform the employees about what electronic information is, and create a plan to protect it.

You don’t want to delete e-mails or documents. In some cases, you want to preserve the hard drive of a computer to allow you to access all versions of a document. With ESI, what you produce is not just the final iteration of a document, like the signed contract. In the old days, you would just produce the pieces of paper that you saved. But through the magic of computer storage, you have to produce every iteration of that document, including every change in it that anyone has made, from its genesis to its final form.

Even though not all electronic information that a company generates is responsive to a discovery request or even relevant to a lawsuit, you still must preserve it. For example, in an employment case, the personnel file, employee handbook and written evaluations are almost always relevant, but company communications with the employee, personal communications with the employee and e-mails about that employee all become relevant. As with paper documents, you and your attorney have to make an analysis of what types of electronic documents are needed, and you have to make sure they’re produced.

How would the other side know if a company deleted evidence?

Just because you delete electronic information it doesn’t mean it’s necessarily gone. For example, deleting an e-mail doesn’t remove it from the computer’s hard drive. Hitting the delete button really just hides it from your view. Forensic experts can review computers and networks, and in most cases, can retrieve the deleted data. In those instances where information has been destroyed, its destruction or even extraction leaves an electronic footprint. In that way, the forensic expert can show there was a deletion or extraction event and likely show who did it. It would be an awkward thing to explain to a judge why you or one of your employees deleted information when you knew a case was coming.

What are the consequences of failing to preserve electronically stored information?

If you get sued, you’re focusing on fighting what’s in the complaint. If you’re not as focused on preserving and producing evidence, your failure to do that could cause you to lose the case.

The courts have been very, very tough on companies and attorneys who don’t do this. If they believe you or your company has done this, the opposing party can file a separate cause of action against you for ‘spoliation,’ which is the destruction of evidence. If a party in a lawsuit is found guilty of spoliation, the court has almost limitless remedies it could impose.

If the party who brought the case destroyed evidence, the court could dismiss the lawsuit. It could also impose sanctions like a fine or issue rulings that undercut the case. For example, it could limit the evidence a party is allowed to present during the trial. It could even allow the jury to assume certain things that haven’t been proven in court, under the theory that, if a party hadn’t destroyed the evidence, the other side could have proven its case.

On the other hand, if the defendant destroyed evidence, the court could decide the case against it. Simply put, the judge can just say, ‘You lose. I don’t care what other evidence you might have. But, because you destroyed evidence, I am deciding that you are hiding something, and I’m going to find you liable.’

If you are in the midst of litigation and haven’t taken steps to protect your electronic information, you may have already lost your case. So, if you’re in that situation or if you’re about to get involved in a lawsuit, get moving. You have a lot of work to do.

Tuesday, 26 May 2009 20:00

Driving change

It may feel counterintuitive, but as business slows, now is the perfect time to accelerate planning and improvement initiatives.

“Companies that are going to do really well coming out of this recession are the ones who keep a constant eye on the future and view business improvement as truly continuous,” says Jay Kuhn, president of Definity Partners. “Don’t wait for new challenges or hope for new opportunities to develop. Lead your organization, and start today.

“You need to look to the future, anticipate marketplace needs and make business improvement part of your culture,” he adds.

Smart Business spoke with Kuhn about how to make process improvements during times of economic uncertainty to position your business for success going forward.

What is the key to making process improvements?

You must step back and look at where you need to go. Re-evaluate the marketplace situation. Truly understand the needs of your customers — both current and emerging needs. Then, rebuild your business processes to efficiently and effectively supply the demand.

The most successful companies create a culture that embraces change and delivers sustainable improvement. They don’t get hung up on the constraints of their old approach. They understand that the old way of doing things continually loses relevance and eventually becomes obsolete. Instead of simply amending an existing process, successful companies take a transformational approach that builds from a visionary platform.

Ask yourself, ‘If I started my business today, how would it look? Whom would I serve? How would the operational processes be different than what we’re doing today?’ The answers to these questions will provide you with the foundation for a successful transformational approach.

How do you start making changes?

Start by shoring up the basics of your organization. Look at the core processes. Determine what is driving success and what is causing performance issues in each operational area. Don’t get bogged down attempting to create the end-all, ideal solution. Remember, the goal is improvement not perfection. Try different ideas to see what works and what doesn’t work. Incorporate each new insight into your ongoing efforts.

As you search for the best solutions, be careful not to fall prey to common organizational defense mechanisms. For example, during years when the economy was good, many companies blamed issues such as poor lead times or delivery delays on the fact that they were so busy. Yet, now when many of those same companies are experiencing significant declines in demand — when they are less busy — the same operational challenges remain. So, the inefficiencies now get attributed to different causes, such as limited human resources, budget cutbacks or some other recessionary condition. This head-in-the-sand approach makes driving continuous improvement extremely difficult, if not impossible.

How do you get people to buy in to change in an uncertain economy?

Most people want to do a good job, they want to be heard and they want to contribute to a successful operation. As a result, we find employees are generally very open to change. This is particularly true during challenging times when needs are more obvious. Regardless of economic conditions, two key elements seem most critical for generating and maintaining employee buy-in.

First and foremost, focus on the ‘why’ rather than the ‘who’ when identifying improvements. Don’t get caught up in the blame game. It’s far more important and productive to identify the right approach, and then lead people to implement it effectively.

Secondly — and equally important — make certain the necessary tools and procedures are in place for effective two-way communication. A healthy dialogue between the leadership team and employees keeps everyone informed and engaged. Communication drives creativity and innovation, and it helps identify and eliminate misunderstandings and motivational issues.

How do you deal with those who are resistant to change?

Continually build momentum by demonstrating success and tying it back to the bottom line. If you can show employees how it will directly impact them, they will be more willing to change. You must explain how it’s going to make life easier for them, better for the customer and/or provide a competitive advantage for the company. Once you’re able to prove success, they will begin to open up their minds and become more involved in the effort.

Start small: If you wanted to improve productivity by 30 percent, look for ways to make incremental improvements. Ask employees for any and all ideas. Take their input, put it into action and continually report back on the success. In doing so, make sure to link results to their involvement. You need them to understand that they are an integral part of the solution. One of the big mistakes companies make is asking employees to get involved, then not listening to their input or failing to show how the input made a difference. This oversight frustrates the employees and is detrimental to the improvement initiative.

Jay Kuhn is president of Definity Partners. Reach him at (866) 520-2003 or

Saturday, 25 April 2009 20:00

A time for change

In today’s economy, many companies are feeling pain like never before. Business is declining. Growth is extremely difficult. Everyone is seemingly caught in a cycle of fear and is experiencing extraordinary levels of stress.

In this landscape of challenge, however, opportunities exist. To find them, companies need to look beyond traditional process improvement initiatives and consider a complete business transformation.

Ray Attiyah, founder and chief innovation officer at Definity Partners, says organizations that thrive in a down economy focus on the future. They continually rethink their process, structure and culture, and focus on evolving demands of the marketplace.

“If you’re looking to grow profitability and improve cash flow in a down market, just removing waste from an existing process may not get you there,” explains Attiyah. “Instead of looking to improve productivity by 10 to 15 percent over the next year, focus on transformation to achieve dramatically higher returns.”

He cites the example of one client whose profits doubled in three years after initiating the transformational journey. Definity Partners helped another company effectively ramp up to meet massive new market opportunities. A new and nimble approach grew revenues from $10 million to $1.5 billion during a 10-year period.

Smart Business spoke with Attiyah about how to transform your business.

How does transforming a business differ from continuous improvement?

Continuous improvement takes an existing process and removes the activities that do not add value — the problems that prevent you from generating good, reliable business results. It looks at where you are today and how to improve business outcomes. It’s change with a small ‘c’ — addressing the low-hanging fruit to survive.

Business transformation, on the other hand, is redesigning your entire system. The focus is not about what you’re currently doing right or wrong. Rather, it looks at where your business has to go to accommodate future demands. It’s about defining a vision and executing a plan for sustainable success. Transformation is change with a capital ‘C’ — building a new business enterprise that thrives.

Transformational changes commonly deliver 10 to 20 times the benefits of continuous improvement initiatives. A real paradigm shift can help achieve results never before imaginable. It is a fundamental change in how you run, improve and grow your business.

What is the first step in transforming your business?

Start by understanding how your markets are evolving and how you need to reposition your company in the emerging marketplace. Envision a new future. What are the benefits in terms of cost, growth and market share? Your business model evolves over time. New trends and technologies can make existing processes obsolete and ineffective. It’s like trying to improve the buggy whip production process, while the marketplace adopts gasoline-powered vehicles. Even the most effective production process will not deliver profitability.

Transformation starts with a vision for success, then works backwards. Redesign your business based on future needs rather than today’s operations. Ask yourself, ‘If we started all over again, what would we be doing and how would we do it best?’

Is there resistance to such sweeping change?

It is human nature to resist change. Many established organizations are unable and/or unwilling to take the necessary steps for success. Generally, the most resistance comes from management. Employees often are more open because they experience the flawed system on a daily basis. In fact, some of the best employees may be frustrated because a stagnant environment has squelched their ideas for improvement. Transformation requires structural change.

To overcome opposition, it’s important to create a compelling vision, communicate the benefits and get some quick wins.

How can a leader get employees to help transform the business?

Most improvement efforts hit roadblocks based on silos. People are trying to make departmental improvements, rather than looking at the big picture. Eliminate that mindset. Look outward, not just inward. Get your team focused on the whole system and the external marketplace, with an eye on the future. Make sure they understand how the sum is more than each individual part. Then, identify the champions — the top 10 to 20 percent that have demonstrated prior initiative, capabilities, competencies and a willingness to try new things. Provide them with a vision for success and get them engaged for real business transformation.

How do you sustain the new culture?

Sustainable improvement requires effective management. It is all about driving the right behavior. Too often, conflict develops between day-to-day operations and transformational efforts. Eliminate this conflict by aligning your management approach with your transformational process. Managers are typically skilled at leading operational tasks, but often lack the experience and confidence to drive true business transformation.

Change needs to be definitive and implemented with bold leadership. No one will embrace the new approach if old ways remain intact. There always will be a place for process improvement. Yet, to build a new culture, you must make the old one obsolete. Completely usher in the new and better system, and implement the transformation throughout the entire organization.

Ray Attiyah is founder and chief innovation officer at Definity Partners. Reach him at (866) 520-2003 or

Thursday, 26 March 2009 20:00

Selling high

Although a business owner may not be planning to sell his or her company now, Rick Parent, vice president of Gumbiner Savett Inc., an accounting and business advisory firm, says owners should always operate the business as though they are.

“Everything is for sale at the right price,” says Parent. “I’ve seen many instances where business owners say that they are not going to sell. ‘This is always going to be a family business, even when I’m gone.’ But at the right price, everyone’s mindset changes.”

To make sure owners are prepared to sell when a buyer approaches them with an offer, Parent says businesses should build a solid foundation with a strong infrastructure, implement internal controls, establish sound policies and procedures and prepare a business plan with financial projections.

“Businesses that don’t have a strong infrastructure leave a lot of money on the table or can kill a sale because buyers generally do not feel confident about the integrity of the numbers when they question the way the business is run,” he says.

Smart Business spoke with Parent about how to prepare your business for sale.

When is the best time to sell a business?

The best time to sell a business is when the owner can obtain the best price. This sounds simple, but a business needs to be achieving maximum profitability and the market conditions need to be favorable for a sale. Those factors in place will allow for the highest rate of return for owners.

How can owners maximize the value of their business and its attractiveness to potential buyers?

Most well-run businesses go through the internal process of developing three- to five-year business plans. If a business owner envisions selling in the next few years, a business plan and financial projections are necessary for a prospective buyer. Once a business plan is created, it is best to have the financial statements audited or at least reviewed. Unless required by lenders, many companies do not have their financial statements audited or reviewed.

However, most buyers of businesses will require that historical financial statements be certified by an auditor to validate the reported historical earnings, which are typically used for deriving a purchase price. This will allow for a maximum purchase price for your company because critical financial data will be in the format needed for proper due diligence in establishing the value and price.

It’s very important to have good advisers — an attorney, an investment banker and an accountant — usually obtained through a referral from a trusted friend or business associate. These advisers need to understand the business and be positioned to provide the necessary level of service for the business profile. Using an investment banker as an example, you wouldn’t necessarily want to get the biggest investment banker and end up being a small fish in a big pond. Rather, you should find a banker who specializes in your industry and who’s best suited for your business.

Once advisers are in place, how will they help the business?

Advisers will help owners refine their business plan and get the financial statements in place. You want to create a situation where, when a prospective buyer expresses an interest in the company, the buyer’s due diligence process is seamless and, in a sense, turnkey. Having everything ready for a buyer — the analyses and historical as well as forward-looking statements — can create more value.

Businesses with good business plans, projections and audited financial statements, as well as solid internal controls and procedures, generally receive the highest sales offers.

How will sales contracts add value to a company?

Long-term customer contracts can be a value-add for a prospective seller. Termed ‘backlog,’ the value of the backlog (total contractual revenues) validates the revenue projections. Customer contracts are typically found in industries such as software, contractors and entertainment.

How will employees help an owner prepare for a business sale?

A business owner should invest in qualified personnel to manage the various departments. Their worth to the company is invaluable, not only during a sale but on a regular basis. Many entrepreneurs underplay the importance of hiring a professional financial staff. The CFO or the corporate controller is the linchpin to establishing and monitoring internal controls. He or she is responsible for ensuring that policies and procedures are properly documented, that there is segregation of duties and that key controls are in place to prevent fraud. A business owner should include the key department heads in the sales process and financially reward them from the success of the sale.

Knowledgeable, qualified department heads, along with a solid foundation and the right advisers, are key to preparing a business for sale. The amount of the sale price is likely to increase if owners invest upfront in establishing this infrastructure.

RICK PARENT is vice president of Gumbiner Savett Inc. Reach him at (310) 828-9798 or

Monday, 28 November 2005 12:10

Pharmacists of tomorrow

CVS /Pharmacy is working with the youth of today to help create the pharmacists of tomorrow through its Pharmacies of Promise program.

CVS’ local division of Government Programs partners with the Workforce Investment Board, Cleveland Initiative for Education and Cuyahoga Community College to introduce students to career opportunities in pharmacy by illustrating that achieving in math and science can lead to job opportunities. The program works with students in underserved communities to ensure a diverse work force of qualified pharmacists and pharmacy technologists for the future.

Beginning in elementary school, CVS pharmacists visit classrooms to talk about the importance of science and math, and middle-schoolers are invited to job shadow. High-schoolers interested in pursuing pharmacy undergo a rigorous selection process to be accepted in the scholarship/internship program, which provides part-time jobs, internships and scholarships until graduation from pharmacy school.

In addition, in 1996, CVS and Family Solutions created one of CVS’ first models for a regional learning center, combined with a One Stop, a career services center offering career counseling, job listings and other employment-related services. Since then, CVS has hired nearly 35,000 former welfare recipients nationwide.

CVS is also committed to providing opportunities for individuals and stopping the cycle of crime and violence. It and the Lutheran Metropolitan Ministry’s Community Re-Entry Program initiated a re-entry pilot project in the Greater Cleveland area this year. Those in the program work in a retail store for 30 days to learn the business and then are hired into the store.

The goal with all of CVS’ programs through its Government Programs division is to create employment opportunities so individuals can earn a living wage and have affordable health care and a sense of purpose to protect against violence, crime, teen pregnancy, substance abuse and emotional problems that perpetuate the cycle of poverty.

To further help the communities it serves, CVS has organized faith-based job fairs and was a funding partner of the Workforce Summit 2004 and 2005.

The company also focuses its efforts on recruiting mature workers. Through special recruitment, training and retention policies, 18 percent of CVS’ work force is comprised of people older than 50.

In addition, CVS/Pharmacy has contributed more than $100,000 in the last two years to organizations, nonprofits, schools and churches throughout Northeast Ohio.

How to reach: CVS/Pharmacy, (330) 487-6957