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Sikich Leading Edge Magazine, Spring 2012
 

Sikich Leading Edge Magazine, Spring 2012

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The Leading Edge Magazine is a quarterly publication from Sikich that offers advice and information to help you manage your business. The Spring 2012 issue cover story is on Entrepreneurs Vs. ...

The Leading Edge Magazine is a quarterly publication from Sikich that offers advice and information to help you manage your business. The Spring 2012 issue cover story is on Entrepreneurs Vs. Established: What the Two Can Learn From Each Other.

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    Sikich Leading Edge Magazine, Spring 2012 Sikich Leading Edge Magazine, Spring 2012 Document Transcript

    • SPRING 2012 PUBLISHED BY Sikich LLPADVICE & INFORMATION TO HELP YOU MANAGE YOUR BUSINESSENTREPRENEURS What the Two Can Learn FromVS. ESTABLISHED Each Other
    • ADVICE & INFORMATION TO HELP YOU MANAGE YOUR BUSINESS Future proof your business Celebrating 30 Years of Taking care of your company’s future can be a daunting task. The Service and Innovation. longevity and success of your business depend on your ability to cultivate What began as a small an infrastructure for growth that gives your stakeholders confidence. CPA firm in 1928 grewThis infrastructure has two main elements: people and technology. Now, more than into Sikich Gardner & Co.ever, finding and nurturing a leadership team that can help you grow, innovate and in 1982. Since then,nourish not only employees but also clients is challenging. The unpredictable and Sikich LLP has evolvedfast-paced business landscape means top talent must be more proactive and willing to into a leading Midwest business consulting firm.embrace change and technology. As we reflect on the pastAnd by technology, I mean much more than just hardware and software. We 30 years, and chart our future course, weare living through the IT revolution, which has exponentially improved business are ever mindful of the importance of ourefficiencies, communication, collaboration and decision-making based on real-time client relationships and the dedicated anddata. Technology has become what powers the nerve center of a business. The cloud resourceful people that are Sikich.is the next wave of technological genius, allowing greater flexibility and scalability forbusiness of all sizes. We’re grateful to our clients for helping us achieve this milestone; and this is just theThe rapid pace of technological innovation combined with the competitive beginning of our success, for us and them.landscape for top talent in our global marketplace has created a complex yet exciting Our clients know they’re getting the bestenvironment. Sikich can help you create a plan for the future and build confidence resources and holistic suite of servicesthrough the right financial strategy, technological infrastructure and future leaders. available to run their business, and they’llGive us a call to set up your business for healthy growth today and tomorrow. continue to have that commitment for theRespectfully, next 30 years and beyond!James A. Sikich, CPACEO & Managing Partner Through our unique combination of services, Sikich can build value in your organization and take it to the next level. SUBSCRIPTION UPDATE Services: Complete this form and fax to Samantha Staniszewski at (630) 499-7474 or e-mail • Accounting & Consulting Services to sstaniszewski@sikich.com. Please update your subscription list as follows: • Assurance Services • Business Software & IT Services ■ Change address ■ Subscribe • Business Valuation ■ Unsubscribe from Leading Edge • Dispute Advisory Services Name __________________________________________________________________ • Graphic Design & Marketing Services • Human Resource Consulting Title ___________________________________________________________________ • Investment Banking & Corporate Finance Company _______________________________________________________________ • Performance Measurement • Retirement Plan Services Address ________________________________________________________________ • Tax Services City _____________________________State ___________________Zip_____________ • Wealth Management Phone __________________________________ Email __________________________ For more information, visit us at Copy this form as necessary for multiple requests. www.sikich.com or connect with us on Facebook: www.facebook.com/sikichllp Twitter: www.twitter.com/sikichllp Securities are offered through Sikich Corporate Finance LLC, a registered broker dealer with the Securities Exchange Commission and a member of FINRA/SIPC. Advisory services offered through Sikich Financial, a Registered Investment Advisor. General securities offered through Triad Advisors, Member FINRA/SIPC.2 SPRING 2012
    • VOLUME 12 • ISSUE 3 • SPRING 2012 Leading Edge www.LeadingEdgeAlliance.com contentsThe Leading Edge Alliance is an interna-tional professional association of inde-pendently owned accounting and con-sulting firms. The Leading Edge Allianceenables member firms to access theresources of a multibillion-dollar globalprofessional services organization,providing business development, pro-fessional training and education, andpeer-to-peer networking opportunitiesnationally and globally, around the cor-ner and around the world. featuresMembers are quality firms who are suc-cessful, have deep client relationships,and strong ties to the community. The 4 Entrepreneurs vs. establishedAlliance provides members with animpressive combination: the compre- business leadershensive size and scope of a large mul-tinational company while offering their What the two can learn from each other clients the continuity, consistency andquality service of a local firm.Member firms have access to extensiveteams of business advisors—a peer-to- 14 Personal professional developmentpeer connection that provides the right and company developmentbusiness solutions for clients.To find out more about the Alliance, How you can have both contact Karen Kehl-Rose, president, at+1 630.513.9814 or kkr@The-LEA.com. Leading Edge Advisory Committee 16 Business in China Tricia Egry / Alpern Rosenthal Correctly written scope of business can attract tax, Mary Franklin / Lurie Besikof Lapidus & Co., LLP customs treatment benefits Jen Lemanski / PKF Texas Gary Voth / PKF Texas Karen Kehl-Rose / The Leading Edge Alliance departments In affiliation with Smart Business Content Marketing www.sbnonline.com 9 News and information Ann M. Gynn / Editor from our firm Danielle Toth / Associate Editor Stacy Vickroy / Art Director Andrea Jager / Graphic Designer 13 Bits & PiecesLeading Edge is published four times peryear by Smart Business Content Marketing,835 Sharon Drive, Suite 200, Cleveland, OH 18 On the Bookshelf44145. (440) 250-7000, (800) 988-4726,FAX (440) 250-7001, www.sbnonline.com.Periodicals postage paid at Cleveland, Ohio.IRS Treasury Regulations require us to informyou that any tax advice contained in the bodyof this communication was not intended orwritten to be used, and cannot be used, bythe recipient for the purpose of avoiding pen-alties that may be imposed under the InternalRevenue Code or applicable state or local taxlaw provisions.LEADING EDGE 3
    • ENTREPRENEURS What the two can learn from each other L BY DANIELLE TOTH eaders of entrepreneurial and established businesses may find they differ in motivation, work environment and professional responsibilities, but these executives can teach each other a lot. Going beyond the differences in typical dress (casual versus power), office (tight space versus corner office) or even salary, experts—some of whom have been on both sides of the spectrum—share lessons and experiences that can improve anyone’s business, from start-up to Fortune 500. Entrepreneurial business lessons Risk-taking Entrepreneurs are determined to succeed and willing to take chances to achieve that success, says Omar Mohammad, who last year launched Publingo, a peer-to- peer website that allows businesses to connect to form mutually beneficial relationships. He says he took a chance when he quit the pharmacy business he had built, took his savings and created Publingo. “I had no other Plan B,” Mohammad says. “Failure was not an option. The first year to year and a half was tough. I didn’t make any money, and I was putting in 60-hour weeks working six days a week. But I didn’t give up. I stayed dedicated, and my business turned fruitful.”4 SPRING 2012
    • cover featurevs. ESTABLISHED BUSINESS LEADERSLEADING EDGE 5
    • product innovation or improvement. Passion is contagious—people who share their excitement about an idea are more likely to make those around them excited about it as well. “Keeping passion is tough,” Roeser says. “My advice is to take a look at what got you into the business in the first place. In my case, I’ve been a journalist and TV reporter, and I’ve always loved writing articles. So even now, with owning my own agency and hosting my own online podcast, I still make the time to write articles for newspapers and magazines because I love doing it.” Guidance Entrepreneurs recognize they need guidance, something business leaders shouldn’t forsake just because this isn’t their first rodeo. “Being a boss is sometimes incredibly dull,” Roeser says. “And you can’t always go to your staff, clients or spouse to vent or for advice. I’ve been blessed to have a lot of friends who are fellow business owners, but I’m also part of a mentoring group in which business owners can sit down together and work through some common issues.” Mentoring groups and CEO roundtables provide business leaders with the guidance Jeffrey Davis, chairman and founder of embrace: learning from your mistakes. and soundboard they need to keep theirconsulting firm Mage LLC, says too many “As an entrepreneur, I wish I would have business running smoothly and successfully.established business leaders don’t take risks known sooner that making mistakes is OK,” Life or business coaches are also goodfor the good of the organization. Davis says. “And people in big corporations options to help business leaders evaluate Businesses generally tend to need to understand that too. Mistakes can be their business or life and implement anyinstitutionalize their products and procedures productive if used properly. They help us learn necessary changes.so they become predictable. Davis says how to do things better and make better “These resources can also help youadopting the unpredictable, risk-taking judgments. If I make a mistake in a sales call, challenge yourself,” Roeser says. “Whennature of entrepreneurs potentially could I’ll know how to negotiate better next time. you’re the boss, it often can be tricky toimprove a product or procedure. It’s all part of the learning process.” challenge yourself when you’re busy “Businesses are concerned with putting out challenging others. But you need to look inthe same box year after year in an efficient, Passion the mirror and ask yourself what activitiesprofitable manner, and they hire the Entrepreneurs may be short on cash, but they you can do to recharge your batteries andemployees that will help them put out that aren’t short on passion. As Rodger Roeser, reaffirm yourself professionally.”box,” Davis says. “But instead of putting out owner and president of the public relations Roeser, for example, says he continuallythe same old box, those employees should be firm The Eisen Agency explains, sets both personal and professional goals forsaying, ‘How can we come up with a newer, entrepreneurs are generally excited about himself. This year, for example, he hasbetter box?’” their ideas and love to talk about them. challenged himself to read all of Jules Verne’s What if the risk doesn’t pay off? An executive of an established company can books. Whatever a leader’s challenge may be,Executives of established businesses can learn use passion as well and share his or her it is important to continually push to achieveanother lesson that entrepreneurs constantly enthusiasm for a new marketing initiative, his or her goals.6 SPRING 2012
    • cover feature MENTORING &Experienced business lessonsConf identWhen John Schulte started out, he sold NETWORKINGflowers on street corners and artwork tobusinesses door-to-door. Often cold callingprospects, he was shy and nervous. Now president of the Minneapolis-based RESOURCESNational Mail Order Association, Schulte Entrepreneurs and business leaders alike can benefit from mentoring andoften speaks to large crowds. While he still networking resources, says Jeffrey Davis, chairman and founder of consultingsometimes feels uncomfortable when firm Mage LLC. “I always think it’s good to have advisers,” he says. “Nobody hasspeaking, especially with people he doesn’t all the answers.”know, he has learned to speak confidentlyabout his ideas—something entrepreneurs Check out these resources:need to recognize to pitch their product orservice to a potential investor or client. SCORE – www.score.org – A partner of the U.S. Small Business Administration, “Knowledge is the first thing,” Schulte SCORE (Service Corps of Retired Executives Association) is dedicated to educatingsays. “If you’re knowledgeable in a subject, entrepreneurs and helping small businesses start, grow and succeed. It has ayou’ll gain confidence. So know what you’re network of more than 13,000 volunteers who offer confidential business counselingtalking about—know your business inside services to small business entrepreneurs at no charge. It also provides workshopsand out so you’re prepared for any questions and events throughout the country and online workshops.that come your way. And if you don’t knowthe answer to the question, that’s OK. Point SBDCs – www.asbdc-us.org – More than 1,000 Small Business Developmentthem to someone who does or find out the Centers across the country provide no-cost business consulting and low-costanswer and get back to them.” training. Small business owners and entrepreneurs can schedule face-to-face Another way to gain confidence is tosimply pretend. “If I tell myself to be brave appointments on everything from writing a business plan to international trade.and I act brave, eventually I will become National CEO Network – nationalceonetwork.com – With about 3,000 members,brave,” Schulte says. the National CEO Network is a free organization that provides networking He offers the example of a person opportunities as well as mixers, socials, workshops and other events acrossattending a party where he or she doesn’tknow anyone but the host. While the the country.individual might feel strange socializing with Vistage International -the guests, following the host around all www.vistage.com - Vistagenight isn’t an option. So what should the has more than 15,000person do? Walk up to a fellow guest,introduce him or herself and start a members that include chiefconversation. The more frequently the executives and businesspartygoer does this, the more comfortable it leaders worldwide. It offersis to initiate future conversations. executive leadership programs and businessAnalytical coaching including one-on-Big businesses have the ability to analyze one mentoring sessions,data to create efficiencies. “Establishedbusinesses know the importance of analytics,” workshops, an onlinesays Chris Mirabile, founder and CEO of network, peer groupHotlist, a social networking site. “They install meetings and podcasts,analytic platforms or conduct focus group or articles and webinars.user testing. They can then take that data to continued on page 8LEADING EDGE 7
    • cover feature ENTREPRENEURSHIP GROWING AROUND THE WORLD The Global Entrepreneurship Monitor, a worldwide project that entrepreneurs (ages 18 to 35), 141 million early-stage conducts an annual assessment of entrepreneurial activity, entrepreneurs who expect to create at least five new jobs in the recently released its 2011 report. next five years and 65 million early-stage entrepreneurs who The report, which interviewed more than 140,000 adults expect to create 20 or more new jobs in the next five years. ages 18 to 64 in 54 economies in diverse geographies and In the United States, the total early-stage entrepreneurial development levels, estimated 388 million entrepreneurs were activity rate, or percentage of the working-age population actively engaged in starting and running new businesses in actively involved in business start-ups, was at 12.3 percent in 2011. This number is up from the 250 million entrepreneurs 2011, up from 7.6 percent in 2010 and close to its all-time the organization reported in its 2010 report. high of 12.4 percent in 2005. The 2011 number also includes an estimated 163 million For more statistics and information, view the report at women early-stage entrepreneurs, 165 million young early-stage www.gemconsortium.org/docs/cat/1/global-reports.continued from page 7determine what information is critically Realistic once I start asking them questions aboutimportant to the success of their business.” Entrepreneurs often lack the real business- how they’re going to execute an idea, they Mirabile implemented systems to gain world knowledge executives of established have no clue,” Harrell says. “They have ainformation such as how often people log businesses have, says Ed Harrell, managing good idea, but it’s not thought through.onto the site, how they use it and where they partner of early-stage equity investor Harrell They haven’t thought about cash flow orspend the bulk of their time. The data Capital Partners in Maryland and international outreach or things like that.enables Mirabile to improve the business by entrepreneur in residence at Harrisburg And that’s something that business leadersserving his customers better. University of Science and Technology in think through every day. Before they can Analysis need not be costly—businesses Pennsylvania. present an idea to their boss, they have tocan create focus groups and offer their “People read about Facebook creator Mark show how it will benefit the company andcompany’s products or services in exchange Zuckerberg, who is worth $18 billion at less be a good use of the company’s resources.for participation. Companies also can than 30 years old, and have unrealistic Entrepreneurs should think of it thesimply better organize their existing data to expectations as to how easy it is to start a same way.”create useful information. For example, a company and how quickly you can becomeretail store can organize its customer successful,” Harrell says. “It takes more than Shared lessonsinformation in a spreadsheet to identify passion and a good idea.” “Whether you’re an entrepreneur or a VP at afrom which cities their clients come and Executives of established businesses use Fortune 500 company, you can always getbetter tailor its services based on the socio- their experience to set realistic expectations. smarter and should never stop learning,”economic characteristics ascribed to those Potential funders of entrepreneurial Davis says. “Whatever you’re doing today islocations. businesses want to see similar realism and going to be different tomorrow. The world is Knowing just what its users want has want benchmarks set to prove the changing fast, and business is a Darwinianhelped Hotlist grow—it has about 400,000 investment is being used wisely and the world. Those who evolve will survive, andusers and is growing at a rate of 25 percent business is progressing. those who don’t, wont. And the way toper month. “I meet with a lot of entrepreneurs, and survive is to be constantly learning.” LE8 SPRING 2012
    • INSIDE: • Should your company use cloud computing? • 6 tips for using social media • Client Spotlight / Industry UpdatesDon’t overlook succession planning: Start earlyE ven successful business owners often overlook the need tohave a succession plan in place.Succession planning isn’t easy; it Allow for emotional detachmenttakes time and involves many from the business and give yourselfcomplex issues. Often, business more options for planning the exit.owners simply don’t know how toget started. Whether you’retransferring ownership of yourcompany, selling your businesses Consider tax and otheror dealing with unexpected events, financial implications. A solidyou need a well-crafted succession succession plan should address theplan to help you make important financial, legal and tax implicationsdecisions and ensure your business involved with transferring orcan continue long after you’re selling your business. A taxgone. Here are a few tips to get professional can help you addressyou started: the tax aspects and minimize your tax bill and maximize the afterAssemble a team of trusted tax cash flow on the sale of youradvisors. Succession planning business. Tax strategies such asmay seem overwhelming, but gifting and use of trusts may beyou don’t have to go it alone. the exit. Establish clear personal you sell shares in your options to consider in addition toAssembling a team of advisors goals and define where you would company to your employees. the development of an estate planshould be at the top of your list. like to take the business. Create a 4. Selling to management and personal retirement plan forWith a seasoned financial advisor, timeline to help keep you on track the owner. Considering tax andcertified public accountant, and set milestones for achieving Put a price tag on your financial implications upfront willattorney and business valuation your goals and objectives. Keep business. Before you sell leave you well-suited to supportexpert at your side, succession your plan up-to-date by creating or exit your business, you your long-term financial goals.planning will not seem like such a consistent, ongoing monitoring need to determine what your Other key considerationsa daunting task. Be sure to choose process. Review and modify at business is worth. Having this to make in designing aadvisors that have a demonstrated least once a year as the business information will help you make succession plan:expertise in succession planning, world is forever changing. sound decisions regarding • Employee issuesand those with whom you have your exit strategy. You need • Ownership structureor can build a solid relationship. Evaluate your options. The to assess a number of factors, • Management successionYour accountant, for example, can development of your options may including future potential profit, • Legal issuesoffer technical knowledge and depend on your reasons for exiting competitors, intellectual property, • Contractual issueshas worked side-by-side with you the business. Whatever the reason, income taxes and customer base. • Retirement, pension andto understand your business and analyze all your options so when Take the time to consult with profit-sharing plansmeet your financial goals. it’s time to hand over the keys to valuation experts in order to • Emotions your business, you can do so with gain a full assessment. Without • FamilyStart planning. It’s never too ease. Some options include: a solid understanding of yourearly to start planning—5 years 1. Passing the keys to a family business worth, you could receive Remember, successionminimum. By beginning to member significantly less than the true planning should be an excitingplan for succession, you provide 2. Selling to a partner, value at sale. Correspondingly, time. With a proactive approachyourself time to refine personal strategic buyer or financial you may find that your business and a little forward-thinking, yougoals and build the next team, buyer (for instance, a private is worth less than you thought. If can attain personal financialallow for emotional detachment equity firm) you planned early, you now have satisfaction and ensure thefrom the business and give 3. Employee Stock Ownership the luxury of time to work toward business you worked so hard toyourself more options for planning Plan (ESOP), which is when increasing the value before sale. build continues to thrive. LELEADING EDGE 9
    • Should your company use cloud computing?By Jim DrummC loud computing is reshaping the IT landscape.The cloud allows companies to Early adopters of cloud computing are touting the lower operating costs and scalability. Inhost virtually all their data and fact, the HBR report stated 44applications on remote servers percent of current cloud users seeand then access these items via their increased agility as athe Internet. Cloud computing competitive advantage providedhas yet to go completely by the cloud. Another bonus,mainstream, but usage is on the according to early adopters, is therise. According to “How the ability to perform research andCloud Looks from the Top,” a development, and take risks sansreport from Harvard Business a high cost.Review Analytic Services, cloud If you’re still contemplating ausage will surge from 16 move to the cloud, research ispercent to 52 percent in the key to making the right decision.next three years. Here are a few pros and cons to jumpstart your analysis. PROS CONS AFFORDABLE: The No. 1 reason companies are excited SECURITY: The main benefit and concern with cloud computing about cloud computing is reducing costs. You no longer need is having your data accessible on the web. Although security is to invest in a plethora of IT staff and servers. With cloud tight and getting even more advanced as technology providers computing, you pay only for what you use, meaning you pay perfect the framework, it is still a concern. If you need to when you access the data on the remote servers. Companies supervise and secure data on-premises and locally control your also see reduced costs in terms of software licenses and information, the cloud may not be the right fit. implementation costs. SCALABILITY AND FLEXIBILITY: With cloud computing, you CONNECTIVITY: You should ask yourself whether the risk of can maximize resources for better efficiency and reduce losing internet connection and therefore access to your database unused capacity. You can also scale up or down to meet the will greatly impact your day-to-day business. It is a risk some changing demands of your business. companies are willing to take but something to consider. If there is an Internet outage, would your business grind to a halt? EFFICIENCY: The cloud allows you to focus on your core CONTROL: You no longer have control of when the competencies and let an expert handle your infrastructure infrastructure is changed or how fast problems are resolved. needs. Cloud computing also makes infrastructure and software upgrades a breeze. Even better, it reduces overall energy use and your physical footprint. COLLABORATION: The cloud allows easier collaboration with CUSTOMIZATION: If you require in-depth customizations and clients and partners alike. Plus, it provides easy access to integration with your current systems for your daily business data no matter what type of device (tablet, smartphone, functions, cloud computing may not be accommodating to your desktop, etc.) the end-user has. needs.If you are still unsure whether your company should utilize cloud computing, Sikich offers cloud and on-premise solutions, and we can help you uncover whichoption is right for your business. Visit our website at www.sikich.com/technology to learn more about our business software and IT solutions and download acomplimentary whitepaper, 35 Questions Every CFO Needs to Ask About ERP Software In the Cloud. LE10 SPRING 2012
    • Sikich LLP 6 social media tips to increase customer interactions By Michelle J. Spellerberg Social Network Users Worldwide, 2011-2014 W e are in the midst of a communication revolution. millions and % change Technology has forever changed the way we share 1,854.7 1,662.4 information with family, friends, clients, vendors and the world. 1,433.5 Not only does information travel faster than ever before, but 1,202.2 every person has the ability to quickly and easily share his or her voice at any time. In fact, by the end of 2012, there will be more than 1.5 23.1% billion Internet users and a whopping 1.2 billion social media 19.2% 16.0% users, according to eMarketer, which compiles and publishes 11.6% data and analyses on digital marketing, media and commerce. Digital communication is here to stay and will expand as 2011 2012 2013 2014 Social network users % change continuous connectivity via mobile devices such as tablets and Note: internet users who use a social network site bia any device at least smartphones improves. Today, web users spend the largest once per month Source: eMarketer, Feb 2012 chunk of their online time on social media sites, according to 136999 The Nielsen Company, a leader in research, ratings and data for all types of media. However, many businesses have yet to fully utilize social media as a customer acquisition and retention tool. The first step is to start participating today. Here are a few 3 Be strategically flexible: Participating in social media means you need to go with the flow, but you also need a plan of attack. First, build content that fits around your customer lifecycle and needs but tips to get your company interacting with the customer of still helps you to stand out and be heard, read or watched. Second, today and tomorrow. find the right person to create content on-the-fly as news happens 1 Become a storyteller: Instead of just facts and figures, sell your solutions using stories. Stories create a memorable and personal experience for your customers. They may not remember and your community demands answers. Social media is real-time communication; it is not a place for static web content. Social media is an ongoing conversation with multiple friends that takes twists and your product or service name, but they will remember the turns. Your social media manager must adjust but also must know highlights of a well-told story. For example, your small business when to move forward with the plan and change the conversation. 4 customers don’t care that you worked with a Fortune 500 Show it don’t type it: YouTube is the second biggest search engine company. Instead, they want to hear how you helped a similar after Google (Google also owns YouTube). Quick video clips are a company or organization of a similar size and in a similar great way to educate, inform and inspire your customers to act. Videos industry improve performance or knock down hurdles. Plus, they make content more consumable. Even better, ask your social media want to hear it from your customers—not you. community members to submit their own videos (aka UGC). 2 Think participation: No marketing spend is harder to achieve but better for business than user-generated content (UGC), which is content of all forms created by people outside 5 Follow the 10-second rule: You don’t have to say everything in a social media post. Instead, you want to think in headlines. Grab someone’s attention and then provide them a link to the detailed of your company. However, social media makes it easier to information. You also need to get to the point; if your prose is too obtain UGC. If you can grab the attention of the audience and fluffy and vague, social media participants won’t click as they won’t get them to act, you can obtain UCG. Your first goal is to get know what to expect on the other side. your community to interact with the brand by sharing your content. Next, you want the community to comment on posts and have conversations with you and other community 6 Brand yourself: As a CEO, your personal brand can be just as effective at marketing your company as your company or organization’s brand. Creating a public profile to share information members. Third, you want people to freely share stories, and participate in conversations with clients, vendors and the media reviews and other relevant information. A Yelp review about a can help you be seen as a thought leader. You can also use social great experience or a thank you to a great employee on media to push philanthropic initiatives or do a little customer Facebook is better publicity than any advertisement you could research. No matter why you decide to market yourself, the most ever buy because it is authentic and doesn’t come directly from important thing to remember is to be as transparent and authentic as the company. you would be in any public conversation. LELEADING EDGE 11
    • Sikich LLPClient Spotlight: Huston PattersonHuston Patterson Printers’ success dates company in Ottawa, Ill. Sigma Graphics close personal relationships with Sikichback to its roots in 1895 when it operated offers clients’ smaller scale print products accountants and advisors. Over theas Herald & Review Printing and Stationery, such as brochures, calendars, envelopes years, Sikich has developed a meticulousthe commercial printing division of the and catalogs. understanding of the company that allowsDecatur Herald & Review newspaper in Huston Patterson puts innovation at the the Sikich team to proactively bring ideasDecatur, Ill. Today, the industry leader is the forefront of its business and its clients at and solutions uniquely structured to helplongest-standing, privately owned package the center. The company’s reputation for Huston Patterson uncover tax advantagesprinter in North America. excellence comes from creating, developing and meet its financial goals. Huston Patterson specializes in and adopting the best innovative solutions Want to get an inside look at Hustonlarge format printing, focusing on large- that lead the industry and consistently Patterson and learn more about howformat offset prints up to 64 inches. The exceed client expectations. The company’s Sikich added value to the company?company prints labels that get laminated commitment to innovation and customer Watch the Client Spotlight Video atto corrugation in order to create point-of- service is evident in its HPX-brand programs. www.sikich.com/client-spotlight.purchase (POP) displays (the large stands or Programs such as the HPX Academy, ankiosks that promote merchandise, typically online training program that keeps clientslocated near the checkout counter where abreast of critical issues within the printconsumers make last-minute purchase industry; or the HPX Quick Ship program,decisions) as well as labels for product which guarantees same-day shipping for allboxes, both found in many major retail orders in by 10 a.m. (CST) are innovative waysoutlets. The company also operates a the company adds value to client service.specialty products division, Sigma Graphics, Huston Patterson has partnered withwhich is a full-service commercial printer Sikich for more than 25 years, developingIndustry UpdatesKeeping abreast of statistics, trends and industry developments allows you to identify risks and uncover opportunities in the market.With better insight into the competitive landscape, you can make more informed, strategic decisions and gain a competitive edge. Ourquarterly industry updates offer intelligence from First Research* and focus on the critical facts that affect your day-to-day business. CONSTRUCTION PROFESSIONAL SERVICES Risk of skyscraper boom – A recent report by Forecast: Double-digit growth to continue international investment bank Barclays Capital suggests for digital advertising – U.S. spending on online the state of skyscraper construction projects in China and advertising increased about 20 percent in 2011 fromIndia could signal an impending economic correction. The report points the year before, compared to growth of about 2 percent for overallto the economic crises that followed similar building booms in the past, ad spending, according to data from eMarketer, which compilessuch as the Great Depression amid the completion of the Empire State and publishes data and analyses on digital marketing, media andBuilding and the Chrysler Building, and the oil crisis and economic commerce, reported by the Chicago Tribune. Online ad spendingstagnation of the 1970s while the Sears Tower and the World Trade is predicted by some industry insiders to reach $31 billion in 2012Center were finished. Barclays Capital suggests the booms are a sign and grow to about $50 billion by 2015. Digital will also continueof excess credit and represent a misallocation of capital. to be a larger portion of total ad spending, growing from about 20 percent to 28 percent during the same three-year time period.Scattered gains for residential construction – While still Search advertising is the largest spending segment, accountingdepressed nationally, residential construction activity has picked for nearly half. However, video is the fastest-growing segment. Asup in regional markets, according to the Chicago Tribune. Builders digital continues to expand, many predict the space will cease to beare seeing an uptick in activity in Raleigh, N.C.; Austin, Texas; and its own segment and will become the norm among agencies, justOmaha, Neb.; among other markets. Experts said some metro areas as radio, TV and print advertising evolved into the norm.weathered the recession better than others, and those with fast- *Industry Intelligence from First Research, a division of Hoover’s (a D&B company).growing populations have a higher need for new housing. Data Published: February 6, 201212 SPRING 2012
    • bits21ST CENTURYDORIAN GRAY SAVES & Facial-aging software has moved from being an entertainment gimmick to a planning tool. It allows consumers to visualize BUT STAY FLEXIBLE pieces JOB GROWTH A GOOD SIGN, While the U.S. Bureau of Labor Statistics recently reported that the overall jobless rate had fallen to a three-year low, a leading workforce solutions company reminds employers that flexibility should still reign supreme. Flexible work models that employ a range of full-time, contingent and virtual skilled workers are the way to drive productivity in a their older self and feel challenging environment. less inhibited about Jeffrey A. Joerres, chairman and CEO of ManpowerGroup of saving for their Milwaukee, says the job growth serves to boost the nation’s hiring retirement. confidence, but his firm expects the number of job openings to continue In Journal of Marketing Research’s “Increasing Saving to fluctuate.Behavior Through Age-Progressed Renderings of the Future “Employers must master flexible work models which enable them toSelf,” researchers found all test subjects who interacted with tap the right skilled talent, eventheir virtual future selves exhibited an increased tendency to remotely located, in a moment’s notice,”accept later monetary rewards over immediate ones. he says. “The pressure to drive In other words, the image sinks home the message that you productivity while volatile marketwould be wise to think about those golden years now. conditions vacillate is intensifying­ — Previous research has suggested that committing to companies that cannot quickly tap thedecisions about your future or expanding the value of future right talent inevitably lose theirrewards can help in the future-oriented decision process. competitive edge.”LEADERS CAN UNWITTINGLY KILL OFF MEANINGFUL WORK The single most important job in your that matters. The first, and fundamental, company is not to develop a super strategy so requirement is that the work be meaningful you gain an impressive market share—it’s to to the people doing it.” ensure that employees make progress in The authors argue that managers at all meaningful work, say the authors of the levels routinely—and unwittingly— recent, The Progress Principle. undermine the meaningfulness of work for Teresa Amabile and Steven Kramer their direct subordinates through everyday describe a multi-year research project that words and actions. “These include dismissing found that even incremental steps forward the importance of subordinates’ work or boost what they call “inner work life,” which ideas, destroying a sense of ownership by is the constant flow of emotions, motivations switching people off project teams before and perceptions that constitute a person’s work is finalized, shifting goals so frequently reactions to the events of the work day. Inner that people despair that their work will ever work life also affects the bottom line, see the light of day and neglecting to keep Amabile says. subordinates up to date on changing “People are more creative, productive, priorities for customers,” Amabile says. committed and collegial in their jobs when “A sense of purpose in the work, and they have positive inner work lives,” she says. consistent action to reinforce it, has to come “But it’s not just any sort of progress in work from the top,” she says.LEADING EDGE 13
    • Personal professionaldevelopmentAND company developmentHow you can have both BY DANIELLE TOTH P ersonal professional development and company development go hand in hand. Better-trained, more knowledgeable employees not only improve their individual skill set but bring those skills to improve the company. Some companies struggle to appreciate professional development for fear that the improved skill set will make the employee more marketable and increase the risk of departure for a better opportunity. Other companies may think personal professional development isn’t “real work” because it takes time away from normal duties employees should be fulfilling. “There’s the fear that if you’re caught going out to a networking breakfast or lunch that your boss won’t see you at your desk, or in the break room at noon, and think you’re out on the golf course,” says Rodger Roeser, owner and president of The Eisen Agency, a public relations firm in the Cincinnati area. “While the perception is that you’re not working, it is really quite the opposite.” Develop employees and reap rewards Make personal development part of your company culture, says Dave Lavinsky, president and co-founder of Growthink, a company that offers products and services for entrepreneurs. For example, he and an employee attended a marketing conference to learn the latest thinking, tactics and strategies. Growthink paid for the three-day14 SPRING 2012
    • strategictrip, and when the two returned the first should make sure an employee is generallything they did was have a company-wide happy on all four of those axes,” he says.conference call to share key takeaways fromthe conference. “YOU CAN For example, in terms of the progressing toward a goal or achievement criterion, MOTIVATE “You can motivate employees by having Growthink asks its employees how theythem share their ideas and advice and think they should be judged. Lavinsky asks, EMPLOYEESparticipate in the growth of the company,” “If I were to remove your fixedLavinsky says. “The key is to make it a part compensation and pay you solely on variableof your culture so that everyone wants to compensation, what factors would be fair tolearn and is excited about learning.” Roeser says in some industries earning BY HAVING judge you on?” Employees usually respond with thingsindividual accreditation is a boon to boththe employee and the company. “We have an THEM SHARE such as customer satisfaction, revenue or profits, depending on their position.incentive program that if anybody at myfirm wants to earn their accreditation in THEIR IDEAS.” Lavinsky then meets with them to discuss the factors, whether he agrees or disagreespublic relations, we pay for them to go – Dave Lavinsky, and why. The two agree on a factor thethrough the training and give them a $1,000 president and co-founder employee can work toward, and thebonus. It’s attractive for my firm to say we’re of Growthink employee can receive bonuses based onan APR-accredited business, and the whether he or she meets that factor.(benefit to the) employee is learning new “This allows employees to voice theirskills, meeting new people and getting that Marketability vs. Departure opinions and also gives them opportunitiespersonal, professional growth.” Lavinsky heard some advice once that stuck to grow,” Lavinsky says. Roeser also asks employees who attend a with him. Rather than thinking, “What if I Roeser agrees a company should foster anprofessional development event to fill out a spend time and money training my environment where people want to stay, butTPS report (jokingly named for the inane employees and they leave,” a good leader it also accepts that even if it does everythingreports in the movie Office Space) that should turn that around and think, “What if for the best, employees will inevitably comeincludes whom the employee met and what I spend time and money on my employees and go.they talked about. When an employee turns and they stay?”a report in, he or she receives a poker chip, He acknowledges that employees could What’s the answer?which can be cashed in at the end of the leave after they advance their skills, but the While helping employees develop personallyyear for various rewards, such as time off, investment still is worth it for a company. and professionally takes time and money, itthe ability to go home early or come in late, “No great company has employees doing is worth it in the end, experts say. The newparking passes and even money. mediocre jobs,” Lavinsky says. skill sets and confidence developed should A company also can gain by appealing to However, companies can enhance the bring new ideas, efficiencies and revenue tocauses for which employees are passionate chance that employees won’t leave by a company. And companies needn’t worryand encouraging their personal and implementing strategies to foster a work about employees taking those skills to aprofessional development in those areas. For environment in which employees will want competitor—employees naturally come andexample, Roeser says, he encourages his to stay. Employees generally look at four go, but more will be apt to stay if they areemployees to join a philanthropic cause. things when deciding whether to stay or provided with a desirable work environment “There is no shortage of nonprofits to leave a job: where they can grow professionally.adopt,” he says. “Each person was able to • Am I paid well or fairly? “Owners, executives and employeesevaluate those nonprofits on their own • Do I have job fulfillment? should get out at least once a week andcriteria and then tell me the group they • Am I learning and improving so I will be participate in some sort of professionalwanted to help. It wasn’t a mandate, but more valuable in the future? development,” Roeser says. “How else willmost of the employees decided to become • Am I progressing toward a goal or people know you? People don’t hireinvolved. And when it came down to it, making achievements? businesses; they hire people … and the waythere’s no better personal or professional A company needs to address all of these they’re going to get to know and eventuallygrowth than serving your community. You criteria but not necessarily satisfy each one hire that person is by meeting them in alearn a lot.” 100 percent, Lavinsky says. “An employer professional development situation.” LELEADING EDGE 15
    • Business in ChinaCorrectlywritten scopeof businesscan attracttax, customstreatmentbenefitsBY CHRIS DEVONSHIRE-ELLIS,DEZAN SHIRA & ASSOCIATESE stablishing a business in China does not necessarily mean you can engage in any kind of business activity, as is the case in most Western countries. Companies canoperate only within a business scopeapproved by the registration and licensingauthorities, and if you breach these, yourcompany can either be fined or, in seriouscases, have its license withdrawn.Accordingly, it is vital to determine what youwant to do right from the start. Generally speaking, “normal” businessactivities are fairly easily defined in Chinaand you’re unlikely to find problems.However, certain activities are linked to an will not even necessarily qualify you as a this is why there is usually a link between theincrease in the registered capital production company in the eyes of China’s scope of business and finance. In fact, therequirements, and even to the specific regulations, even though it suggests you are. most common challenge to dubious scopes ofqualifications and numbers of employees you This is because registering a business in China business generally comes from the localhave. In certain fields, the business itself must involves several government departments. A Chinese tax bureau. If they are not satisfiedprove that it has the required professional clerk who doesn’t spot a cheeky scope of with the scope of business written on yourexperience prior to a business scope being business, and issues the license anyway, doesn’t new business license, they can refuse togranted in the desired industry. mean you are home free. Indeed, we have process your tax registration—a vitally The scope of business must in fact be well encountered numerous problems of this important document when going through thedefined, and leave no large room for nature, all requiring a scope of business change complete licensing process in China—whichinterpretation. Lazy, or deliberately on the license. The issue here is that businesses will leave you hanging, unable to operate.disingenuous, business scopes—such as only involved in manufacturing require different tax The tax bureaus in China are often farusing the phrase “production of (product)”— treatments than, say, a consulting business, and sharper and pay greater attention to the16 SPRING 2012
    • implications of your scope of business than scope of business can improve, which is The lessons for writing a scope of businessthe business license issuing departments. You obviously good news. An example is the in China are simple: Be honest and bedo need to satisfy the tax bureau’s inspection, recent announcement by Chinese customs accurate. It is advisable to take professionaland this means ensuring your business scope that grants tax exemptions to foreign advice and use a firm with a strong Chinais accurate. Attempts to fool the tax bureau investors in encouraged industries. Of course, presence that knows what it is doing. Itsinto thinking you are one thing, while in fact this advantage needs to be applied for—and advice might not just help you write a goodyou are another—even if you can get it past it too is cross-referenced with your scope of scope of business, but may help you obtainthe approvals process—will inevitably end in business on the business license, as well as other benefits that China often provides tofailure. Play the game the right way and say your tax bureau registration, to ensure your foreign investors in select areas or industries.what it is you are really doing. If not, you are company qualifies. For instance, having the correct scope ofonly saving up trouble for later. That said, businesses of course evolve and business not only clears away uncertainties, Writing your scope of business in China mature, and at a later stage you may wish to but may also help you obtain better tax andusually requires assistance from a professional increase your scope of business to include customs treatments. LEfirm familiar with China’s business laws and, other activities. Often, but not always, this canfor foreign investors, the “Foreign Investment mean an additional investment into the Dezan Shira & Associates, a Leading Edge AllianceCatalogue.” This document, which is usually business is required in terms of registered firm, specializes in foreign direct investment,redrafted every four years, outlines exactly capital status; however, in all cases an providing business advisory, tax, accounting, payrollwhat investors in China may and may not do, application to amend the business license can and due diligence services to multinationalswhich areas require additional licenses or be made with your original licensing investing in China, Hong Kong, India, Singapore andpermission, and the circumstances surrounding authorities. The procedure involves Vietnam. Established in 1992, the firm is a leadingthese. Accuracy is the watchword here. submission of the original license, redrafting regional practice in Asia with 20 offices in five But attention to detail by your advisors isn’t of the desired scope, and proof of any jurisdictions, employing more than 170 businessjust about ensuring your scope of business is additional requirements that may need to be advisory and tax professionals.accurate. There can be positive aspects to this met. If completed properly, an enhanced scopetoo, as in certain encouraged industries tax of business—and the license to go with it— To contact the firm please email china@dezshira.comtreatment towards companies in your defined can be issued within four to six weeks. or visit www.dezshira.com.LEADING EDGE 17
    • on the bookshelfSPRING READING: INNOVATION, FAIR PRAISE, RIGHT MANAGEMENTT his edition’s installment of “On the something goes wrong can create anger and 1977), is best known for his 1973 Small is Bookshelf ” includes volumes that advise frustration, and cause workers to disengage and Beautiful: A Study of Economics as if People on generating innovative ideas for your perform tasks with less enthusiasm. Further, it Mattered, a critique of Western economies thatorganization; being fair when doling out praise can cause people to shut down and not speak proposes human-scale, decentralizedand criticism; and selecting the right their minds because they fear reprisals. The technologies as a path toward environmentallymanagement tools to get maximum value. authors offer compelling evidence that sustainable economic growth. In Small is mismanaging the allocation of credit and Beautiful in the 21st Century, DianaBeyond the Obvious: blame can destroy workplace morale, and they Schumacher, who is married to E.F.’s eldestKiller Questions That provide advice on avoiding the blame-game son Christian, traces the economist’s legacySpark Game-Changing trap and dealing successfully with company through the activities of a number of like-Innovation finger pointers and credit grabbers. minded organizations that have beenPhil McKinney established since his death. Schumacher hasHyperion New Perspectives on worked for the British Council, the University272 pages Asset Price Bubbles of Chicago School of Business Studies, andMcKinney, who most Douglas Evanoff, the New Economics Foundation.recently served as vice president and chief George Kaufman andtechnology officer for Hewlett-Packard’s A. G. Malliaris Beyond PerformancePersonal Systems Group, writes that Oxford University Press Management: Why,companies’ fortunes rise and fall on their ability 480 pages When, and How toto generate ideas that produce the types of New Perspectives on Asset Use 40 Tools and Bestinnovations customers will buy. To help Price Bubbles examines our understanding of Practices for Superiorcompanies generate groundbreaking ideas, asset bubbles in light of the global financial Business PerformanceMcKinney presents a series of “Killer crisis of 2007-09, a crisis caused in part by a Jeremy Hope andQuestions” designed to spur reevaluation of old sequence of repeated bubbles in the Nasdaq Steve Playerorganizational beliefs to determine whether market, the housing market, the credit market Harvard Business Review Pressthey still have value for the company. The and commodity markets. With the most 416 pagesauthor also provides a guide that explains in recent bubble effects in mind, the editors Countless management tools are available topractical terms how to apply the ideas he sets review earlier conventional-thinking research help executives lead their companies, butforth in the book, as well as a timeline and a that accepted that asset bubbles could be they often fall short of their potential.set of rules to keep companies on schedule and managed with little or no real effect on Beyond Performance Management explainson track. economy. They also examine research that why. The authors review several popular challenged that thinking long before the management tools—e.g., mission statements,The Blame Game: 2007-09 economic crisis. In the end, they balanced scorecards, rolling forecasts, keyHow the Hidden summarize the lessons learned to create a performance indicators, Six Sigma, andRules of Credit and better understanding of the potential impact performance appraisals—and explain how toBlame Determine Our of asset bubbles. select the right ones, how to implementSuccess or Failure them correctly, and how to extract maximumBen Dattner with Small is Beautiful in value from each. Hope is co-founder of theDarren Dahl the 21st Century: Beyond Budgeting Round Table (BBRT)Free Press The Legacy of E. F. and has authored numerous books and266 pages Schumacher articles on performance management,In The Blame Game, Dattner and Dahl explore Diana Schumacher including Reinventing the CFO (2006).how credit and blame are apportioned in the Green Books Player is the director of BBRT Northworkplace. The act of unfairly impugning an 128 pages America and co-author of Future Readyemployee or a group of employees when The subject of this book, (2010). LE British economist E.F. Schumacher (1911-18 SPRING 2012
    • This firm and other members of theLeading Edge Alliance are leaders inmany key markets, including: The Leading Edge Alliance is an international professionalAlabama India Palestine association of independently owned accounting and consulting firms.Albania Indiana PanamaAfghanistan Indonesia Paraguay The Alliance enables member firms to access the resources of aArgentina Iowa Paris multibillion dollar global professional services organization, providingAtlanta Ireland PeruAustralia Israel Philadelphia business development, professional training and education, and peer-to-Austria Italy Phoenix peer networking opportunities nationally and globally, around the cornerAzerbaijan Jordan Philippines and around the world.Bahrain Kansas PittsburghBaltimore Kazakhstan PolandBangladesh Kenya Providence Members are quality firms who are very successful, have deep clientBelgium Knoxville Puerto RicoBolivia Korea Richmond relationships, and strong ties to the community. The Alliance providesBoston Kuwait Reno members with an impressive combination: the comprehensive size andBrazil Las Vegas Romania scope of a large multinational company while offering their clients theBritish Virgin Islands Latvia Russian FederationBuffalo Lebanon San Francisco continuity, consistency and quality service of a local firm. Member firmsBulgaria Lexington Saudi Arabia have access to extensive teams of business advisors – a peer-to-peerCayman Islands London ScotlandChattanooga Los Angeles Seattle connection that provides the right business solutions for clients.Chicago Luxembourg SenegalChile Macedonia SerbiaChina Madison, WI SingaporeCincinnati Malaysia SlovakiaCleveland Malta Slovenia The Leading Edge offers:Colombia Mauritius South CarolinaCroatia Memphis Spain • Access to extensive teams of accounting professionals and businessCyprus Mexico Sweden advisors—a peer-to-peer connection that provides the right solutionsCzech Republic Miami Switzerland for clients.Dallas Michigan TaiwanDayton Minneapolis/St. Paul Thailand • Innovative, practice-proven strategies for improving performance inDenver Missouri Tokyo management, business processes, finance, operations, informationDominican Republic Moldova TorontoEcuador Montenegro Tucson technology and marketing.Egypt Montreal Tunisia • A leading knowledge resource for multi-disciplinary information andEl Salvador Morocco Turkey industry-specific expertise responsive to clients’ unique needs.Finland Nashville UkraineFort Lauderdale Nebraska United Arab • The Alliance offers accounting, consulting and tax services through aGhana Netherlands Emirates global alliance of firms with over 18,323 professional staff, more thanGermany New Orleans UgandaGreece New Jersey Uruguay 1,600 partners and over 23,518 staff in 455 offices.Guatemala New York U.S. Virgin Islands • The Leading Edge Alliance offers global business advisory expertiseHarrisburg, PA New Zealand Venezuela and experience with innovation, progressiveness and quality.Hartford North Carolina Washington, D.C.Hong Kong Norway VietnamHonolulu Orange County, CA Virginia/West VirginiaHouston OregonHungary Pakistan To find out more about The Leading Edge Alliance, visit www.LeadingEdgeAlliance.com or contact Karen Kehl-Rose, Visit LeadingEdgeAlliance.com for a detailed listing of member firms. president, at +1 630.513.9814 or kkr@The-LEA.com.LEADING EDGE 19
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