Month: November 2019

Preface: An A+ culture pillars successful organizations, businesses, and communities, and is the main reason that lights people with a passion working with an enterprise.

Questions are the Strategic Runway Towards A Great Business  (Segment V)

Credit: Donald J. Sauder, CPA | CVA

Many companies take culture far too lightly. Perhaps some think it’s a trait that will simply sort itself out given enough time. Others build a kind of surrogate for culture by populating their break rooms and common areas with pool tables, pop culture tchotchkes and focus-grouped slogans.

Leaders are the key to shaping company culture — and even the culture beyond their walls……Has the company stood by these words? History often repeats itself, but it doesn’t have to. In shaping company culture, leaders must build a tightly woven collection of ideals, values, and goals — and ideally, it should be strong enough, and pro-social enough, to long outlast them.

To put it another way, “the true meaning of life” — or leadership, in our case — “is to plant trees under whose shade you do not expect to sit.” Those words are attributable to William Craig from his article, How Leaders Shape Company Culture. William specializes in writing about the secret of company culture in entrepreneurial success.

Yes, culture matters. In the business community, culture continues to matter. Greg Smith from Goldman Sachs is quoted in the article The Value of Corporate Culture as saying, “Culture was always a vital part of [the company’s] success. It revolved around teamwork, integrity, a spirit of humility, and still doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn client trust for 143 years”. 

He continued to say that he was saddened to see that the highly-respected culture of the organizations legacy had virtually disappeared with no traces remaining. Not surprising, even the most exceptional business cultures can be lost from the slow erosions formed along with the pursuit of “pouring-profits.” 

An A+ culture pillars successful organizations, businesses, and communities, and is the main reason that lights people with a passion or loyalty and excellence working with an enterprise. Think of a few successful enterprises in your sphere of contact, and then examine the culture. It’s there. Clear to the minds eye, strong and vibrant. 

Exemplify and build your business’s unique culture at every turn, every decision, and in every communication. Appreciate, develop and protect it – that is the heart of true business leadership. Endeavoring to walk the talk for long-term success requires keeping your focus on more than the money. You will likely need a strongly yoked leadership team to achieve the ideal culture. Secondly, evaluate if your enterprise cultures head and heart are above or below the clouds?  

Whether a journeyman in business, or a businessman, now ask yourself the following business self-assessment questions, for the Communications | Human Resources | Employees If you answer any question “NO,” then follow-up and ask yourself – “WHY NOT”? Document your answers, concisely. Answering “NO” isn’t necessarily wrong, but you should have clear answers to the “Why Nots.”

Communications | Human Resources | Employees 

1. Does your business have a visible culture?
2. Does your business have regular team training?
3. Does your team at all levels communicate effectively daily?
4. Does your business have an organizational chart or team accountability chart?
5. Does your business resolve internal conflicts successfully, and work proactively to mitigate them from occurring? 
6. Does your business have an effective process for all business meetings?
7. Does your business work to create opportunities for personal purpose and satisfaction for the team as a thank you for the daily services to further the organization’s mission?
8. Does your business communicate regularly to employees their specific purpose for being employed with the company?
9. Does your business have an employee handbook?
10. Does your business have an adequate and written paid time off policy?
11. Would your team say your business culture has appropriate accountability?
12. Does your management team listen to employees and ask questions to build better team relationships?
13. Does your business have employee performance evaluation meetings?
14. Does your business have any annual celebrations?
15. Does your business have clear job titles for each department?
16. Are your employees encouraged towards and rewarded for excellence?
17. Does your business only hire employees who are the best-qualified candidates for the position? 
18. Does your business have clearly defined job roles?
19. Are clearly defined performance expectations set upfront when onboarding new staff?
20. Do your employees know your business’s purpose?
21. Does your business have an employee feedback process?
22. Does your business a written onboarding plan for each department position?
23. Does your business have written compensation plans?
24. Does your business have an employee benefits plan?
25. Does your business have a company retirement plan?
26. Does your business have written processes for HR, operations, marketing, sales, and accounting?
27. Has your team heard a heart-felt “Thank you” from you this week?

Preface: Where did you begin? Where are you today? Where do you want to be in the future? What effectuation will be necessary so you will be there? Every enterprise CFO needs to ask these questions that will lead to an more accurate assessment of strengths, weaknesses, opportunities, and threats.

Skills Every Chief Financial Officer Needs  (2015)

Credit: Donald J. Sauder, CPA | CVA

The role of a chief financial officer (CFO), requires an ever-increasing need for the ability to make great financial decisions. Here are a few skill sets you should look for when hiring a CFO, and which your CFO should be encouraged to continue developing expertise in.

Strategic Thinking. A CFO should have the skill to help achieve the strategic vision of the business, a map of the business purpose, objectives, and strategy, with steps necessary to achieve that vision. Creating a vision, plan, or strategy on paper is not that difficult. Yet even a realistically achievable plan is challenging, when working to implement it. You need decisive acumen on your team. You need its leader, the CFO, to take action, to keep believing in the vision, and work tirelessly towards the achievement of that vision.

Courage to Question.   With strategic thinking skills, your CFO should have the expertise and experience to evaluate your business.Where did you begin? Where are you today? Where do you want to be in the future? This will lead to an assessment of strengths, weaknesses, opportunities, and threats. Your CFO needs to think through outcomes, while at the same time making necessary adjustments in working the plan when changes in the marketplace warrant it, such as adapting to new market conditions, innovations, opportunities, and risks. Like Jack Welch, who lead GE from a $4 billion to nearly $500 billion, says, “When it comes to strategy, ponder less, and do more.” The key is do more of the strategic. What is strategic? If you don’t want to answer that question, your CFO certainly better have an answer. Typically for entrepreneurs, the same strategy that got you from zero to $5 million in revenue (the typical sales volume when small businesses begin to think about hiring a CFO), won’t take your business to $15 million. You will probably place significant reliance on your CFO when working through strategy. Whether or not you’re a strategic entrepreneur, your CFO needs to be strategic.

You need your CFO to not only ask the right questions, but address them. He should have the courage to ask questions like, will the vision and strategy meet our objectives? Can we successfully implement the strategy? Is the strategy consistent with core values of the business and the culture of our clients? Does the business have the resources–financial capital, intellectual capital–to succeed in implementing our plan? Can we clearly envision and communicate the strategy to our employees?

Business Risk Planning. A CFO should have experience and expertise to work to identify inside and outside business risks with team discussion among company personnel. Your CFO should quantify and assess these identified risks and likelihood of the risks occurring. The risks should then be prioritized with regard to their probability and impact. Monitoring the risks should be assigned to a specific person for periodic review. As importantly, strategies for lessening the effects of those risks should be developed. Your CFO will need to balance strategy implementation with the associated risks. Sixty percent of increases in business value is built from revenue growth, so an understanding of risks in the marketplace will improve calculations on your business’s mineral vein.

In the summer of 2010, the multinational professional services firm Deloitte published a paper titled, “Risk Intelligent Decision-making: Ten essential skills for surviving and thriving in uncertainty.” The paper on risk management shows where things go wrong. This report names the following as top risks: 1) Relying on false assumptions, 2) Failing to exercise appropriate vigilance, 3) Tending to ignore velocity and momentum, 4) Failing to make key connections and manage complexity, 5) Failure to imagine failure, 6) Placing reliance on unverified sources of information, 7) Not maintaining adequate margins of safety, 8) Focusing only on the short term, 9) Failing to take enough of the right risks, and 10) Having a lack of operational discipline.

Read and act on these ten items each month, and your business will probably be in the top 10% or 15% of small business risk managers. Other risks include shortages in capital, supplier quality or concerns with timeliness, processes that are too complex or result in ineffective quality, inability to meet customer demand, human relations issues such as finding the right people for key roles, and the list goes on. These are the kinds of risks a CFO needs to constantly monitor and evaluate, finding strategies for managing those risks.

To be continued

 

Why You Need a Power of Attorney—Before It’s Too Late

Credit: Nevin Beiler, Attorney

There was a long pause. All of the people around the table were waiting for John to answer the question. The question was simple enough: “How many children do you have, and what are their names?” But for John, who was in his upper-sixties and struggling with the effects of a stroke he had about a year ago, this question was not easy to answer. He slowly listed the names of his first four children, but was unable to list the last one. He turned his head to look at his wife and his daughter, who were sitting on either side of him, but I had instructed them that John needed to answer the questions I was going to ask him by himself. This was the first question, and was supposed to be the easiest.

This was not how this meeting was supposed to go. John’s wife, Mary, had called me a few days before and said that they needed to have durable powers of attorney prepared so that their oldest daughter could help them with financial management. A durable power of attorney is a document that gives legal authority to someone else to act on your behalf. For example, an older person will often have a power of attorney that gives a responsible child or other trusted relative authority to manage their bank accounts and other property.

When Mary initially called me, she had not said anything about John having a stroke, and I had not asked her. But now, sitting and waiting to see if John could name his fifth child, it was becoming clear to me that I could not help John create a power of attorney. The fact that he could not name the town where they were living or respond to several other simple questions made this even clearer.

John probably would have willingly signed anything we put in front of him and told him to sign. He seemed to trust his wife and his daughter to do what was right and to ensure that he received proper care. But as an attorney, it would have been a violation of the Pennsylvania Rules of Professional Conduct for me to help John prepare and sign a legally-binding document if he did not understand what he was signing. If he could not remember all his children’s names and other simple information, trying to establish that he had the necessary legal capacity to sign a power of attorney document appeared hopeless. Helping John sign a power of attorney while knowing that he did not have legal capacity to do so would put my law license in jeopardy, and someone could later challenge the validity of any actions taken under his power of attorney because the document itself and the authority it tried to give would not be valid.

John’s wife and daughter were understandably disappointed to discover that John could not create a power of attorney, but they took the news graciously. Fortunately, John and Mary had both executed their Last Will & Testaments with another attorney about six years earlier, so John was not in danger of dying without a will. I had reviewed John and Mary’s wills at the beginning of the meeting. A few changes to how their charitable gifts in their wills were structured would have potentially reduced the tax bill of the estate, but otherwise their existing wills covered most of the bases. And assuming that Mary lived longer than John, it was not too late for her to update her will to take advantage of the potential tax savings.

But now, how was John’s family supposed to deal with John not having a power of attorney? Without this document, nobody could sign on John’s behalf. This would be a problem if, for example, John’s wife or daughter needed to withdraw funds from an account held only in John’s name or transfer the real estate that John and Mary owned jointly. In order to do this, they would need to file a petition for guardianship with the local court, have John declared mentally incompetent by a doctor, and have a judge appoint a guardian that could act on John’s behalf. This is generally not a pleasant or cost effective option.

Most of John and Mary’s financial accounts were owned jointly, so as long as Mary remained in good health and lived longer than John, they might not encounter too much difficulty. But if Mary would pass away before John, if they needed to sell their home, or if they would need to withdraw funds from John’s IRA account, then petitioning the court to appoint a guardian for John would be the only remaining option. I explained this to Mary and her daughter, and we discussed the best way to structure and manage their financial accounts going forward to deal with John not being able to have a power of attorney.

Near the end of the meeting, Mary was preparing to sign a durable power of attorney that would give authority to her daughter to take over her financial management in case Mary would also need help managing her finances. Just before signing the power of attorney Mary pulled a large brown enveloped out of her bag and asked, “What should I do with all these old papers?” I took the envelope, pulled a stack of documents out of it, and began looking through them. What joy! Among the papers was an original durable power of attorney document, made and signed by John! It was over ten years old, but it otherwise appeared to be validly executed and it gave authority to all the proper people to act on John’s behalf!

With this fortunate discovery, John and Mary’s world, and their children’s responsibilities, suddenly became so much simpler. Assuming that this ten-year-old power of attorney document would be accepted everywhere it was needed, no difficult and expensive guardianship proceeding would be necessary. There were no more concerns about needing to petition the court to appoint a guardian if Mary would pass away before John. What a relief!

Mary was very apologetic that she had not shown me the papers earlier, at the beginning of our meeting. While that would have made the last 90 minutes of discussion much simpler, I didn’t mind. I was just grateful that we had discovered John’s power of attorney before the meeting ended. Fortunately for them, they had planned ahead sufficiently that when the time came that they really needed a power of attorney document, there was one in their files, even though they didn’t realize it!

If they would have visited an attorney a few years earlier when John could think more clearly, they could have signed an updated power of attorney for John and updated their wills to maximize the tax savings from the charitable gifts specified in their wills. That would have been even better, but the fact that they had taken the steps to get proper estate planning documents drafted ten years ago would now save them and their family a lot of hassle.

This simple story illustrates an important point. We tend to wait to go out and get something until we need it. If we lead busy lives, sometimes it seems like only the urgent things get done. When it comes to getting a Durable Power of Attorney or other estate planning documents like a Last Will & Testament or a Health Care Power of Attorney, it is easy to keep putting it off until “later.” But when you or your family really need you to have a power of attorney, due to a mental illness or serious injury, it might be too late to get one. So plan ahead, and act while you still can.

This article was originally printed in the Plain Communities Business Exchange

Nevin Beiler is an attorney licensed to practice law in Pennsylvania (no other states). He practices primarily in the areas of wills & trusts, estate planning, and business law. Nevin is part of the conservative Anabaptist community and is committed to practicing law in a way that builds the Kingdom of God and is consistent with Anabaptist values. His office is in New Holland, PA, and he can be contacted by email at info@beilerlegalservices.com or by phone at 717-287-1688. More information can be found at www.beilerlegalservices.com.

Disclaimer: This article is general in nature and is not intended to provide specific legal or tax advice. Please contact Nevin or another attorney licensed in your state to discuss your specific legal questions. In order to protect confidentiality and provide a better illustration, names in the above story have been changed and some facts may have been changed or added.

Preface: Accounting approaches are not created equal. It’s like suit coat shopping; you have choices, ‘tailored-services’ or ‘off-the-rack’.

Questions are the Strategic Runway Towards A Great Business (Segment IV)

Credit: Donald J. Sauder, CPA | CVA

There is a day approaching when your business will need an accountant; ok, no new news there. Whether you’re an early year’s entrepreneur or working in a traditional family enterprise, trusted accountants have their place in service to every business.

The role of accountants has changed in recent decades from only keeping books or preparing tax filings, to more of an advisory position. When you have the budget, a large accounting firm can seem like a right choice, but there are always risks that you will get an ‘off-the-rack’ accounting service versus an accountant with a ‘tailored services’ approach who will genuinely listen to understand your business goals, aspirations, strategy, and needs as an entrepreneur. Only then can you obtain optimal solutions. Accounting approaches are not created equal. It’s like suit coat shopping; you have choices, ‘tailored-services’ or ‘off-the-rack’.

Tethering your business to a great working relationship where you can build trust is vitally important to get the most from your trusted advisors. To maximize value from your relationship with an (accountant) advisor, you need to be comfortable communicating on a effective and trustworthy basis and feeling confident with the professional judgments of the advice.

The best accountants look at what’s best, not only for the business, but also for you, the owner, and your team. The ‘right’ accountant is usually not a universal ‘one size fits all’. If business is simply a Dutch Blitz game, there is a substantial difference between a cheerleader and an expert coach.

When you are building a business, of any size, Luke 14:28 tells us why excellent accounting is of utmost importance. “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, saying, ‘This person began to build and wasn’t able to finish.’

Whether a journeyman in business or a businessman, now ask yourself the following business self-assessment questions for Accounting and Taxation. If you answer any question “NO”, then follow-up and ask yourself – “WHY NOT”? Document your answers, concisely. Answering “NO” isn’t necessarily wrong, but you should know “WHY NOT”?

Accounting | Taxation
1. Does your executive team continuously collect, track, and analyze key financial and operational data?
2. Does your business prepare an annual budget?
3. Does your business have three to five-year financial projections?
4. Does your business have a plan to effectively manage debt ?
5. Does your business meet annually with your banker?
6. Does your business have seasonal cash flow challenges?
7. Does your business have a line of credit with an outstanding balance?
8. Does your business monitor the equity to assets ratio?
9. Does your business regularly monitor and track working-capital levels?
10.Does your business track and manage overhead cost variances and expectations?
11. Does your business calibrate costs of production or customer service at least annually?
12. Does your business have a travel policy?
13. Does your executive team track key performance business indicators weekly?
14. Does your business plan strategic capital expenditures?
15. Does your business have target ranges for cash and working capital?
16. Does your business have satisfactory conversations with your accountant each year?
17. Does your business consider tax filings to be relatively stress-free?
18. Does your business have a sales tax compliance plan?
19. Does your business maintain appropriate compliance with multi-state income taxes?
20. Does your business have a high level of confidence in your tax filings and income tax compliance?
21. Does your business invest in annual tax planning?
22. Does your business obtain quarterly or annual enterprise financial statements?

---

---