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Leadership Through Change

Your business’s ability to change in response to today’s rapidly shifting climate is crucial to its survival. Do you have the resources you need to lead the change you require? BG Consulting Group’s unique suite of competencies supports development, socialization and management of your change strategy. Test your readiness with our three-minute video. We welcome your call to schedule a brief introductory discussion around how we can help you succeed.

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Business Basics 103

By Stacy L. Bauer

Corporate social responsibility (CSR) refers to companies as good citizens, concerned with the welfare of society and not just the owners. CSR is based on fairness, integrity and respect. While a company’s loyalty and obligation is to its owners, being a good corporate citizen can increase profitability in the long run. Companies with a good CSR reputation are cosidered ethical and often attract and retain better employees, enjoy greater employee loyalty, and draw more customers.

There are a variety of methods for CSR, including corporate philanthropy, corporate social initiatives, corporate responsibility and corporate policy. In addition to money, many companies allow their employees to volunteer during company time.

We know that companies have a responsibility to customers, pleasing them by offering real value. All things being equal, customers tend to favor the socially conscious company over its less socially conscious competitors. In fact, customers are often willing to pay more for goods from the socially responsible company. Thus CSR is also a tool to attract new customers. The question then becomes, how to make customers aware. Social media has become a low-cost, efficient way of conveying a company’s CSR efforts, allowing companies to reach and interact with a broad and diverse audience. However the company must live up to its hype or face dire consequences. If a company does not follow through on its CSR as claimed, it loses customers’ trust; customers do not want to do business with a company they don’t trust.

Many investors also believe that it makes financial sense to invest in companies engaged in CSR , and that ethical behavior adds to the bottom line.

Companies that treat their employees with respect usually earn the respect of their employees. This mutual respect can have a significant impact on the company’s profit. Retaining good employees saves money, is good for business and also good for morale. A disgruntled employee can wreak havoc on a business, thus loss of employee commitment, confidence and trust in the company can be extremely costly.

CSR has many benefits, each of which can increase a company’s profitability while also doing good for society as a whole.

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Why You Need a Great Accountant on Your Business Team

By Nancy Hancock Griffith

Whether you’re operating a for profit or a nonprofit enterprise, you need a great team of advisors helping you out. Surrounding yourself with people who are not only there to answer the questions you ask, but to ask questions you haven’t thought of yet is key to your success. And one of the most important team members (next to your BauerGriffith attorney, of course!) is your accountant.

Now when I say accountant, I mean more than a bookkeeper, or someone to fill out your tax returns. Both of these skills are very important, but there are so many opportunities to save money and structure your business for success that many business owners miss without the savvy advice of an accountant.

Here are just a few key issues to think about:

  • Are you paying and collecting sales tax when you need to, and only when you need to.
  • Have you classified your workers properly as employees or independent contractors, and how can making a few tweaks to the way you work with your staff potentially save you a ton of money.
  • Are you capturing all the possible business deductions you can for expenses.
  • Are you classifying your expenses properly to capture all possible depreciation for your building or capital purchases (think desks and chairs, not just buildings and large equipment).
  • Are you monitoring cash flow on a monthly basis, even when some expenses are paid annually.
  • Are you budgeting for hidden expenses like credit card processing fees and employee related taxes.

Of course, the list goes on. Practically every business of every size needs to examine these issues in advance of closing the year-end books to make sure every advantage is captured. If all your accountant is doing for you is telling you how much to pay the IRS, then they’re not doing enough. So add this important team member to your list of advisors now to make 2020 your best year yet.

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What You Need to Know about Crisis Communications

By Nancy Hancock Griffith

We’ve seen notices from just about every type of business, delivered in just about every way imaginable, outlining the response to the COVID-19 pandemic. I think we can all agree, this is a crisis. So it’s time to review some basic, and oft forgotten, principles of crisis communications.

  1. Be honest. This one’s pretty easy, especially in states where non-essential businesses are shut down. Outline what, if any, service you’re still able to provide, and how to access it for the time being. If response times are going to be slower, set realistic expectations. This will help both your clients and your employees.
  2. Stay in your lane. Let’s leave the science to the scientists, folks. Don’t explain the virus. Whatever you say today, even if it is correct, will be old news tomorrow anyway. When you speak, speak about your business. And don’t predict when or how you’ll be able to return to normal, until we all really know when and how we’ll be able to return to normal.
  3. Stay professional. You have a brand for you business. Make sure everything you’re saying now, including what you say, how you say it, when you say it, and what channels you use, consistently reflects your established brand.
  4. Here’s the big one — this is actually a chance to enhance your client relationships, and perhaps pave the way for some new ones. You need to be balanced, and don’t come across as mercenary, but anything you can offer online, at advantageous cost structures, any message you can give about how you serve your community now and when normal returns, is important. Don’t just focus on doom and gloom — remind everyone we’ll see each other on the other side.
  5. Make sure you keep 1 through 3 in mind when you work on number 4!

If you’re having trouble crafting your message, try contacting a reputable crisis communications team for help. We’re happy to give you our recommendations if you reach out to us on our website.

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Advice for Leaders in the Post COVID-19 World

By Davis Young, Guest Blogger for Crain’s Cleveland Business, June 9, 2020

Like us, we’re sure you read a large number of emails, articles and blog posts in an effort to sort through the issues relating to operating your business in the post COVID-19 environment.  Top of mind for many of our clients is the issue of leadership, and how business leaders can clearly and confidently communicate with employees regarding the new workplace policies and behaviors that will be implemented.  Change is difficult, and today’s business leaders must not only embrace change, but guide their employees to do the same.  We’re happy to share an excellent blog post by Davis Young that was recently published in Crain’s Cleveland Business, outlining some key components of a successful workplace communications strategy.

Workplaces Opening Up Present an Important Opportunity

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As the world of work begins to open up again, we have arrived at a moment of opportunity for employers and employees to come together in common purpose to align mutual expectations. We need to think seriously and often not only about our own individual roles but also how we can support colleagues who share our same sense of shock and disbelief over recent events.

Masks, shields, partitions, gloves, social distancing and sanitizer dispensers are meant to protect and to assure us our company is doing the right things. That’s an important upside. The ever-present downside is that these new workplace enhancements are constant visual reminders to employees that they are in an environment of risk — risk of becoming seriously ill, risk their job may go away, risk their company and its customers may be on very shaky ground. And if you are working remotely at least in the short term, you face the risk of having no one to talk to, the risk of feeling disconnected, of suddenly feeling left out of the loop.

Companies need to acknowledge and accommodate the fears their people have. The world has changed on a dime and if ever there was a need for empathy in the workplace it is now. No CEO can look their people in the eye and tell them they know what’s going to happen next. They don’t know. Nobody does. If leaders want their people to perform well in an environment of uncertainty, this is the moment to ensure that truth, kindness, understanding and patience are part of the company culture. That’s not a sign of weakness. It’s a sign of strength.

• Leaders need to position themselves as credible resources for timely information. Absent that, rumors will take control and that’s the last thing anybody wants. Be transparent. Tell it like it is.

• Communicate regularly, but don’t overcommunicate. There are plenty of companies that will fall into that trap and cause employees to tune out. Every employee has a right to expect that if it’s something important, they will learn it first from leadership. That’s the way to get rid of rumors.

• Be open to any question or comment. It’s OK for somebody to feel insecure in this environment. Acknowledge that. Employees have one issue that stands out above all others: “Is my job safe?” Nobody knows, but the best way to have that happen is for each person to focus fully on doing really good work. Encourage that. It must be the standard.

• Everyone needs to support each other at all levels. If there was ever a time for teamwork and pulling in the same direction, it is now. If employees want to come out of this pandemic with jobs, everyone must do all they can to take care of customers and each other. This is no time to lose a customer or a client because of poor performance or shoddy service. Excellence in all aspects of work must be the expectation.

• Every employee has a life outside of work. Those lives have been seriously disrupted by the pandemic. More employees are going to bring more personal issues into the workplace than ever before. The single best way to accommodate that is for all of us to become better listeners.

• Companies should expect everyone to come to work with a positive attitude. That is the way through our common dilemma. Yes, times are tough. Yes, there is great uncertainty. Yes, it’s scary. But we all need to be part of the solution, not part of the problem. That’s all about attitude and bringing a can-do outlook to work every day.

No question, it’s going to be a new world of work. There is no going back to “normal.” We can’t return to yesterday. We are in a difficult situation, but the truth is we have an exciting opportunity in front of us to create a new and even better future. We mourn what we have lost, but our workplaces can be even better and stronger going forward if we are thoughtful in how we create the future.

Young was president of the former public relations firm Edward Howard & Co. He has counseled numerous well-known organizations on communicating with their employees.

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Interim Financial Management

By Charles Deutchman

Sometimes the bench isn’t deep enough.  Sometimes owners lose confidence in their upper management, and other times they simply need help in strengthening their team so they can achieve their goals.  Sometimes that means bringing in a smart, reliable “pinch hitter” who can objectively determine the company’s needs and suggest the most efficient way to shore-up or augment the situation.  Every business is made up of many different players who have a wide variety of styles and personalities.  A good interim manager must be able to assess the corporate climate and make the kind of decisions that are good for the team as a whole.

Our team of financial consultants is ready and able to provide such financial services to your enterprise.  These services include, but are not limited to, the following areas of expertise:

          Executive Management:

  • Financial statement preparation and analysis
  • Cash forecasting
  • Budgeting implementation, oversight, and management
  • Treasury/Cash management
  • Developing key business performance indicators (KPIs)
  • C-Suite advisor

          Emerging Company Oversight:

  • Business plan development
  • Capitalization strategies
  • Evaluating business opportunities
  • General business advising

          Turn-Around and Rehabilitation of Business:

  • Evaluate capital and funding options
  • Expense reduction plans
  • Risk management assistance
  • Analysis of markets and competitors
  • Vendor management
  • Headcount evaluation

          Mergers & Acquisition/Strategic Transactions:

  • Strategic planning
  • Due diligence preparation and supervision
  • Sourcing equity funding
  • Sourcing debt financing

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Force Majeure Contract Clauses

COVID-19 has caused us to take a deeper look at many of our business practices, including the physical workplace, business plans, and emergency contingency plans. Business contracts are another area that need review.

Business agreements routinely include boiler plate language, such as a force majeure clause. This language protects the parties in the event of an unlikely circumstance that would significantly impair either or both parties’ ability to perform, such as fire, war, flooding, earthquake and the like. While these clauses have rarely been relevant, the pandemic requires us to take another look.

One of the benefits of force majeure clauses is that they protect a party that is unable to perform from claims of breach of contract and related damages resulting from non-performance. The events listed in force majeure clauses differ from a breach of contract scenario because the party did not choose to not perform, rather circumstances beyond its control caused its inability and thus failure to perform.

If your business cannot perform under a contract due to COVID-19, either because of the virus itself or the government’s response to it (shelter in place orders, quarantine or other governmental restraints), look at your existing contracts to determine whether each has a force majeure clause and, if so, whether it is broad enough to include the current pandemic, and how the parties agreed to proceed in the event the clause is triggered. If there is no force majeure clause, or if it is not broad enough to cover COVID-19, there are other legal defenses that can help you, such as frustration of purpose and impracticability.

And while force majeure clauses and other defenses may be available, the best first strategy is to communicate with the other party to the agreement. Using common sense, issues related to non-performance or inability to perfom can hopefully be resolved without resorting to legal action.

Until now, virus, pandemic, quarantine and the like have not typically been listed in force majeure clauses. Many businesses are taking the time now to update their contracts to include such circumstances as a hedge against future unknowns.

By Stacy Bauer

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The Six Feet Office

Cushman and Wakefield has not only begun to reimagine what our offices might look like when we return to work, they have started implementing the six feet office. They have helped more than 10,000 organizations in China, and developed a prototype in its Amersterdam headquarters. Eventually we need to get back to the office, let’s take a look at some of their suggestions.

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Guidance on Re-Opening a Business

We are being bombarded with information regarding COVID-19, its symptoms, its toll on frontline workers, and by the numbers. We are also being given guidance, often conflicting, on how to safely reopen a business once the governor provides the green light for each sector. Below are several links to CDC, OSHA, WHO and other internationally recognized health organizations, providing suggestions on how to safely re-open and remain open.

https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html
Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19) | CDC
Guidance on Preparing Workplaces for COVID-19
Getting your workplace ready for COVID-19
Worker Exposure Risk to COVID-19
https://www.ey.com/en_us/transactions/companies-can-reshape-results-and-plan-for-covid-19-recovery
https://emtemp.gcom.cloud/ngw/globalassets/en/insights/coronavirus/lead-your-employees-through-emotional-impact.pdf

By JJ Divino

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What’s Wrong With This Transaction?

Bob Buyer and Stu Seller agree that Bob will buy Stu’s business.  Stu is 100% owner of the corporation.  They agree on an asset only purchase, for a purchase price of $425,000.  They each sign a two page document showing a purchase price of $250,000, and Bob provides Stu with $100,000 in cash and a personal check for $40,000, payable to Stu.

There are several problems with this scenario.  First, it is difficult to prepare an adequate asset purchase agreement in two pages, and certainly the purchase price in the document should match the agreed upon purchase price.  It is doubtful this document was prepared, or even reviewed, by an attorney.  No mention is made of a bill of sale, assignment of lease or any other mechanism to transfer the business from Stu to Bob.  

In addition, Bob should not personally purchase the assets, but should create a corporate entity to purchase and own the assets.

Next, paying cash provides no paper trail, which would be necessary in the event something goes wrong.  Further, Stu is not the owner of the assets, his company is, thus has no legal right to transfer them.  Any check should be payable to the company and all funds deposited in the company’s account. 

Finally, it is unclear what the purchase price is or how it will be paid.  $140,000 is neither the agreed upon price or the price reflected in the document.  How much does Bob owe, and what are the terms regarding its payment? No mention is made of a promissory note or other document describing any balance owed by Bob or the payment terms.

By Stacy Bauer