By Norman A. Pappas
Author of Passing the Bucks
 

Dear Business Owner or Heirs:                                             

On behalf of your United States Government, thank you for giving us your business. We appreciate your not making any better plans to distribute the wealth you worked for so many decades to accumulate. We’ll do our best to spend it wisely.

Sincerely,
The Government

You’ll never get a letter like that one. You won’t need to. Without a proper plan for the future of your business, your business may not have a future. 

Just as your personal Will determines what will become of your personal assets; a business succession plan determines what will become of your business. And given the years of devotion and dedication you’ve put into it, the business might very well be considered another “loved one” that must be provided for.

The overall Plan consists of two parts: a Business Succession Plan, which is a long-term strategy for the business when the owner retires; and a Strategic Contingency Plan, which is a short-term strategy that becomes operational upon the unexpected loss of the owner, through the disability or death. Together, The Plan serves as an effective road map, steering the business’ passengers through the twists and turns of transition from one owner to the next.

Most business owners don’t realize the range of issues involved, and the problems that can arise when no plan – or a bad plan – is in place. Unfortunately, the complexity of the process and the difficult decisions that will need to be made, often cause the owner to postpone action. But the cost of not planning is high: over 70 percent of family businesses fail to survive into the second generation; over 85 percent fail before the third.

There are a number of pitfalls that trip up the best intentions of owners, families, and managers. They include:

• Personal issues (i.e., family issues as to how to deal with children working in the business and those not in the business)
• Key personnel issues (i.e., which employees will stay and who will go)
• Tax issues (income and estate)
• Legal Issues (buy-sell agreements)
• Financial issues (such as funding buy-sell agreements, retirement plans, and estate taxes)

In order to start the succession plan, you need to do the following:

• Determine your wishes for the future disposition of your business.
• Decide on a successor(s) or owner(s).
• Anticipate and address any family or employee issues.
• Begin to prepare the successor(s) for their future responsibilities.
• Set aside assets that may be required for the transition.
• Coordinate your personal and business finances to provide sufficient retirement income and fund any estate tax liability. 

Planning can be a complex process involving difficult decisions on issues, both professional and personal. But the rewards are worth it: A solid foundation for the survival and ongoing success of your business; security and peace of mind for owners, managers and employees; and, often, significant tax and financial advantages for both the owner and the business.

Succession planning should start the day you realize you have a viable business to pass on someday, not matter how far in the future that is. Don’t forget that your plan is not a “death issue.” It can and should be a “living issue,” that will work for you and your heirs for decades to come.

Norman A. Pappas is president and founder of Pappas Financial, The Enterprise Securities Company and The Enterprise Investment Company. He has extensive experience in solving the unique problems faced by successful high net worth individuals, business owners and corporations. He is a frequent guest speaker and lecturer and the author of several articles on various business and estate planning topics. He is the author of the book, PASSING THE BUCKS, Protecting your wealth from one generation to another.
You can contact him at:

Pappas Financial
30301 Northwestern Highway
Suite 200
Farmington Hills, MI 48334-3233
Tel: (248) 539-8282
Fax: (248) 539-8283
npappas@pappasfinancial.com
 

By Sam Giannola

You need more business. This means spending more resources to market your goods/services. Whether you have limited marketing resources or a strong marketing program, don’t you hate to waste time and money on prospects that are not ready to buy? Statistics show that personalized marketing programs driven across print, email, Web and other interactive media are achieving higher response rates and bottom-dollar returns than one-size-fits-all campaigns.

Cross media marketing enables you to utilize the most appropriate channels for each marketing project, delivering concise, measurable campaigns that carry consistent messaging across all channels and helps you establish a dialogue with your customer, building customer loyalty. Through increased relevancy of content, imagery and wording in your cross media marketing campaign, you hone in on your ideal customer and achieve more lucrative results than you would with generic marketing pieces sent to a larger audience.

It is practical and cost-effective for organizations of all sizes to conduct sophisticated cross media marketing programs that feature personalized and relevant content. The content is delivered across all select media including direct mail, email, Web pages and advertising. These campaigns are executed without the acquisition of new marketing skill and trained employees, new hardware or software or licenses. Using cross media marketing, a large universe of prospects is automatically narrowed to a list of warm leads, improving response rates and your return on investment (ROI). The entire campaign is tracked with detailed reporting available 24/7 and includes all facets of the campaign.

Benefits of cross media marketing?

• Focus on those customers that drive your business.
• Create a list of new prospects that have characteristics you’ve identified as your “best customer” traits.
• Identify potential customers based on location, income, home-owner status and more.

Build Your Customer Base & Loyalty
The rising cost of new customer acquisition makes it imperative to grow a stronger relationship with existing customers. The number one marketing oversight made today is to ignore the most profitable prospects you already have. Cross media marketing simplifies and automates the process of maintaining contact with customers—increasing sales and strengthening brand loyalty.

What drives your prospect to respond? In the myriad of messages your prospect receives each day, there are three elements of your campaign that increase the possibility of turning their interest into a sale:

1. Message timing
2. Relevance
3. Personalization

Cross media marketing programs are tailored to match your customers’ needs with your product/services. It is important to deliver an offer when the consumer is most likely to purchase. You will have the ability to deliver an offer that responds to your prospect’s unique needs, desires and preferences. You will also have the ability to deliver an offer that is tailored to a unique recipient — astronomically increasing the possibility of engaging with you.

Monitor, Measure & Drive Success
Your cross media marketing campaign requires accessing information created by the campaign; there are a few methods to do this, one is via a dashboard. The dashboard is used to measure message response, offer effectiveness and list performance, this information can then be used to fine-tune your marketing strategy and coordinate follow-up efforts. Data captured during the campaign can be downloaded for further analysis. This data may also be imported into your CRM application.

Tracking responses in real time gives you instant notification of how the campaign is unfolding, providing insight to any needed adjustments and a timeline for when the next wave of communication should be sent. Response rates improve when there are multiple direct marketing touches. Knowing when the customer has responded allows your sales staff to continue their efforts in closing the deal. It is important to make sure that once the cross media program generates a lead, that lead is given top priority.

Remember, your lead has engaged with you on their terms, responding to messages and offers that tie-back to a specific need they expressed. The best time to close a deal is soon after they show interest in your offer. This is where real-time tracking becomes your best friend. You will know instantly when a prospect is interested — providing an opportunity for your salesperson to turn this hot lead into a customer.

In today’s business environment where information is obtained from a diverse number of sources it is the wise business owner that harnesses the power of multiple channels of communication to create a dialog between their company and their prospects.

Sam Giannola is with DBS Print and Marketing, celebrating 22 years in business. You can contact him at:
23800 W. 10 Mile Rd. Suite 205
Southfield MI 48033
o: 800.252.7345 Ext. 21
f: 248.324.5599
www.DBSPrintMarketing.com 
 

Health care reform imposes a $2,500 limit on annual salary reduction contributions to health Flexible Spending Accounts (“health FSAs) offered under cafeteria plans, effective for taxable years beginning after December 31, 2012 As provided in Section 125(i)(1) of the Internal Revenue Code (the “Code”), the $2,500 amount is indexed for inflation for taxable years beginning after December 31, 2013.

On May 30, 2012, the IRS released Notice 2012-40 which provides guidance on the effective date of the $2,500 limit on salary reduction contributions to health FSAs and on the deadline for amending plans to comply with that limit. This notice also provides relief for certain contributions that mistakenly exceed the $2,500 limit and that are corrected in a timely manner.

Specifically, Notice 2012-40 provides that:

• The $2,500 limit does not apply for plan years that begin before 2013;
• If the a cafeteria plan has a short plan year, the $2,500 limit must be prorated based on the number of months in the short plan year
• The term “taxable year” in Code Section 125(i) refers to the plan year of the cafeteria plan as this is the period for which salary reduction elections are made;
• The $2500 limit is applied on an employee-by-employee basis and is applied separately for each unrelated employer that an individual may be working for during the year;
• Plans may adopt the required amendments to reflect the $2,500 limit at any time through the end of calendar year 2014;
• In the case of a plan providing a grace period (which may be up to two months and 15 days), unused salary reduction contributions to the health FSA for plan years beginning in 2012 or later that are carried over into the grace period for that plan year will not count against the $2,500 limit for the subsequent plan year; and
• Relief is provided for certain salary reduction contributions exceeding the $2,500 limit that are due to a reasonable mistake and not willful neglect and that are corrected by the employer.

The statutory $2,500 limit under Code Section 125(i) applies only to salary reduction contributions under a health FSA, and does not apply to certain employer non-elective contributions (sometimes called flex credits), to any types of contributions or amounts available for reimbursement under other types of FSAs, health savings accounts, or health reimbursement arrangements, or to salary reduction contributions to cafeteria plans that are used to pay an employee’s share of health coverage premiums (or the corresponding employee share under a self-insured employer-sponsored health plan).

A copy of Notice 2012-40 is provided by clicking on the link below:

http://www.irs.gov/pub/irs-drop/n-12-40.pdf

Source: Larry Grudzien, Attorney
 

By Mike Wanstreet
Solucient Security Systems

The increasing price of copper has air conditioning units a prime target of burglars. According to news reports across the nation, thieves have made an all-out assault on AC units, either taking entire window-box units or stripping the copper from stationary units. Many unsuspecting owners don’t realize they’ve been hit until they go for the thermostat and realize that the cool air is a no-go. That’s bad news with summer quickly approaching and A/C demand at a maximum.

Police say both residential and commercial buildings are vulnerable to thieves, who generally remove the copper wire and sell it to scrap-metal dealers. Flint-area businesses are losing millions of dollars to copper thieves, calling the copper crime wave an outright epidemic. Headlines involving A/C theft is a daily occurrence in Genesee County, citing the theft of everything from toaster-sized units, to 25-ton capacity refrigeration evaporators.

Some of the theft is surgical in nature, with thieves carefully removing tiny bits of wire from the units to sell to scrap dealers. Others steal entire A/C units, like the one taken from New Jerusalem Baptist Church in Flint. Its replacement cost was more than $1 million, while the copper inside a single room unit is valued at approximately $100. 

According to The New York Times, near-record prices for copper have spurred the theft of A/C units. The value of precious metals and raw materials has increased drastically since 2003. This steady increase has also fueled the secondhand scrap marketing, inciting demand. The thefts have proved difficult to stop for over-taxed police and have been a costly nuisance to public utilities — forced to spend millions of dollars on repairs and security.

In addition to copper’s black-market price at $4.00 per pound, A/C units prove to be easy targets for common thieves. Copper can be sold to scrap yards for cash without being traced to a specific source.  Police suspect criminals have grown smarter, using new technology to ease the process of stripping the copper wire.

Security professionals offer several tips to help A/C owners protect themselves and avoid being victims of copper theft:

• Record the serial and model numbers of your air conditioner. If the unit is stolen and resold whole, police may be able to track the product through those numbers.
• If a building is vacant, remove the unit until it is occupied.
• Install steel security bars around crawl spaces to prevent easy access under the building.
• Install motion-sensor lights outside the property at the location of the air conditioner.
• Install a locked privacy fence around the perimeter.
• Go with a local security provider who will wire the A/C units so that if the A/C unit or electrical power is cut or tampered with, an alarm signal is transmitted to a central monitoring station that can immediately dispatch police.
• Using the latest in high tech security, install a motion sensor equipped with a hidden digital camera to capture verified video images of the theft or tampering, which are sent to a central monitoring station that can immediately dispatch law enforcement to a crime in progress.
• Remember to always use local and trusted providers for security services and HVAC systems.

No matter what preventative actions you take for your property, being aware is the first step in your plan of action to protect your business and its assets.

Solucient Security Systems is one of the largest privately-owned security companies in Michigan. With its own Michigan-based alarm monitoring facility, Solucient has been servicing commercial and residential security customers for over 70 years. Formerly known as Stanley Alarm Systems, Solucient is one of the leading voices in the security industry. Contact Solucient at 1.855.201.1500 or visit http://solucientsecurity.com/

By Larry Klimek
JKL Associates

As a Business Strategist for over 20 years and a past senior level executive, I have a unique vantage point of business owners and how they approach growing and building one of their most valuable assets – their business. If you look around at other successful organizations, including your competition, you too can identify some key or best practices that can move your business to the next level. The question is – do you execute what is necessary to take action and implement change?

To start with, many small businesses have “bookshelf” strategic plans! Once the basis and direction for the startup of the business, these guidance systems of: core values, strategies, tactics, goals and performance indicators have taken a back seat to the daily push and pull to keep the business afloat. In recent economic times, business leaders have had to stray away from these plans to manage the bleeding placed upon them by downturns in the marketplace.

With the vibrations of the business landscape moving toward improvement, now is a critical time for the leaders of small and medium sized businesses to put back in place one of the most critical business documents and that is the strategic business plan. You can have all the “Best Practices,” “Best Resources,”  “Best Product/Service” and even the most prolific customers, but without strategic direction or the glue to build a lean profitable entity, you have to continually start over and over again. This turnover in processes, people, products and customers cost the net book value of your business dearly.

As you and your business re-emerge from the lackluster past five years, there are a few items that you should be strategizing on to leverage moving forward.

• Are the core values and vision for the future still vibrant and taking the proper place in guiding decision making?
• What has taken place in your industry, market, and with your competitors that leaves opportunities unrecognized? Are you an innovator or replicator?
• Is your organization’s structure set up to not just continue to run the business, but position it for growth? 
• What resources are needed to achieve new results and not just more of the levels of the past few years?
• Are your strategic imperatives defined so that they have performance metrics to assess, re-align as needed and then drive forward to a new result?
• What level of risk of the current culture are you ready to exploit to move to a better, more agile future culture?
• How are your sales and marketing plans integrated to leverage the new sales arena including social media, the internet and constant shopping by all buyers?

Ultimately, the question for top leadership is – are you working in the business or have you set up yourself to work on your business? To build a business it requires more than just time at the office or with clients. It requires strategic involvement and thought-out tactical actions. Without a well-articulated strategy, you get stuff accomplished, but to truly grow your asset/business the alignment of effort to key imperatives allows you, the owner, to lead and execute at a performance level admired and supported by all of your employees.

This week, take a few minutes to pull out that bookshelf strategic plan, dust it off and check off those items you have achieved by holding yourself accountable to its original objectives. Then give strong consideration for re-invigorating the life blood of your business by once again initiating the guidance system found in an updated strategic plan.

If you believe that you need a trusted advisor to add to your business leadership, look for a resource that is open to not just asking the simple questions, but digging into the real challenges to core answers.

Larry Klimek is president of JKL Associates in Grosse Pointe Farms. JKL Associates strategically builds lean, profitable business and the talent to make them great. Visit www.jklassociates.com or call (313) 527-7945 to learn more.