Sikich Leading Edge Magazine: Information Overload


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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 Winter issue cover story is on Information Overload: How to get the most from your business data.

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Sikich Leading Edge Magazine: Information Overload

  1. 1. WINTER 2012 PUBLISHED BY Sikich LLPADVICE & INFORMATION TO HELP YOU MANAGE YOUR BUSINESS INFORMATION overload How to get the most from your business dataPlusSBA loansin 2012Doing businessin Brazil
  2. 2. ADVICE & INFORMATION TO HELP YOU MANAGE YOUR BUSINESS Definitely Different.® We may not look like your typical accounting firm. We’ve moved That’s because Sikich is to our NEW anything but typical. corporate We understand that each business, each headquarters! organization, and each industry is unique and needs to approach situations differently.Sikich LLP is pleased to announce its NEW corporate headquarters effective For more than 30 years, Sikich has beenNovember 21, 2011. leveraging its business consulting expertise to transform and adapt to changing times.To further our dedication to providing you with the highest level of service, we By setting new standards for improvedhave relocated our corporate office from 998 Corporate Blvd., Aurora, to the performance, we have redefined the way ourTellabs building located near the border of Aurora and Naperville at I-88 and clients do business. Our clients like the convenience of working with one partnerRoute 59. We now have a centrally located, top-quality facility that enhances who is able to provide a full range ofthe operations of our growing business and provides an optimum working services and appreciate the different voices,environment for our team. views and perspectives of a team that is focused on the execution of long-termPlease update your records and stay in touch! strategic goals. We are ready to make aNEW Corporate Office All other contact information remains the same:1415 W. Diehl Road Phone: 630.566.8400 difference for you.Suite 400 Fax: 630.566.8401 • Accounting & Consulting ServicesNaperville, IL 60563 Website: • Assurance Services • Business Valuation • Dispute Advisory Services • Graphic Design & Marketing ServicesSUBSCRIPTION UPDATE • Human Resource ConsultingComplete this form and fax to Samantha Staniszewski at (630) 499-7474 or e-mail • Investment Banking & Corporate Financeto Please update your subscription list as follows: • Performance Measurement • Retirement Plan Services■ Change address ■ Subscribe • Tax Services■ Unsubscribe from Leading Edge • Technology Services & ProductsName _________________________________________________________________ • Wealth ManagementTitle __________________________________________________________________Company ______________________________________________________________Address _______________________________________________________________City ____________________________State __________________Zip ____________ Chicago | Decatur Indianapolis | Naperville | RockfordPhone _________________________________ Email _________________________ Springfield | St. LouisCopy this form as necessary for multiple requests. 877.279.1900 | 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 WINTER 2012
  3. 3. VOLUME 12 • ISSUE 2 • WINTER 2012 Leading Edge 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 Information OverloadAlliance provides members with animpressive combination: the compre- How to get the mosthensive size and scope of a large mul-tinational company while offering their from your business dataclients the continuity, consistency andquality service of a local firm.Member firms have access to extensiveteams of business advisors—a peer-to- 14 SBA loans set record in 2011: What’s next?peer connection that provides the rightbusiness solutions for clients. Plus tips on how to secure one in 2012To find out more about the Alliance,contact Karen Kehl-Rose, president, at+1 630.513.9814 or 16 Top 6 things to know Leading Edge Advisory about doing business in Brazil Committee Tricia Egry / Alpern Rosenthal Mary Franklin / Lurie Besikof Lapidus & Co., LLP Jen Lemanski / PKF Texas departments Gary Voth / PKF Texas Karen Kehl-Rose / The Leading Edge Alliance 9 News and information In affiliation with from our firm Smart Business Content Marketing Ann M. Gynn / Editor Danielle Toth / Associate Editor 13 Bits & Pieces Stacy Vickroy / Art Director Andrea Jager / Graphic Designer 18 On the BookshelfLeading Edge is published four times peryear by Smart Business Content Marketing,835 Sharon Drive, Suite 200, Cleveland, OH44145. (440) 250-7000, (800) 988-4726,FAX (440) 250-7001, 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
  4. 4. 4 WINTER 2012
  5. 5. cover feature INFORMATION overload How to get the most from your business data BY DANIELLE TOTH D ata keeps piling up at your business—client names, emails, purchase information, industry research, etc. They fill up seldom-used spreadsheets, stuff filing cabinets and sit on servers in cold, dark rooms with nary a query. “There is a big accumulation of data that’s taken place over the last decade that has accelerated over the last few years because of the development and implementation of inexpensive data storage,” says Larry Miller, CEO of Activate Networks, a Massachusetts-based social network analytics company. “Ten terabytes of data was a big deal 10 years ago, whereas now it’s not a big deal at all. The sheer pervasiveness of data is astounding.” While amassing data is cheaper, tapping into that data is where the true value for your organization comes. Chances are your data isn’t living up to its full potential and wasting time and resources. Turn data collection into a data strategy for innumerable benefits. Step 1: Evaluate existing data. To use data effectively, it first needs to be organized and managed correctly, says Daniel Teachey, senior director of marketing at DataFlux, a North Carolina-based data management company. “Companies collect data on just about everything,” Teachey says. “They’ve generated literally gigabytes and terabytes of information, but that information needs to be categorized and managed in a uniform way so companies can then use it properly.”LEADING EDGE 5
  6. 6. An interdepartmental database of customers can help management keep track of which customers have made purchases or contact with the company and which haven’t, giving the company a better idea of whom it should target in its marketing campaigns, she says. With better access to better data, the company is spending its money in a smarter, more efficient way, Von Achen says. She says companies can decide whether to start anew or import old data (from a specific date, not all the data ever collected) into the new information system. “Information systems should be used Data Flux’s Teachey says the system itself isn’t as important as the need to standardize more to develop business strategy rather a business’ practices so data is entered in the same way throughout the company for easy than just housing data.” organization and retrieval. Customer data, which is typically the most – Kendra Von Achen, frequently collected and used information, president, DB Pros should be entered following a standard format for items such as addresses (write the full word or abbreviate street names?) and names (last name or first name first?) Standardizing information about products To organize its data, a company should company will measure itself from a and materials is a little more complex, Teacheyfirst remove invalid data. Take phone beginning baseline and monitor their data admits. “If you go to the store and buy anumbers as an example. If your database has improvement program to see how it has package of 20 hex nuts, that purchase can benumbers in the “phone” field with fewer than improved the company, both in time and represented many ways in a database,” he10 digits, remove or update the invalid revenue. The company can then continue to explains. “For example, you can use 20 count, ctnumber, Teachey advises. make adjustments and improvements to or cnt. Or you can identify the item by an item He says validation is also based on increase its efficiency.” code. Generally we recommend identifyingcommon sense. For example, a health care items by an item code because they areprovider most likely keeps patient records Step 2: Make data easily accessible. normally standard throughout the industry.”that include both the patient’s gender and No matter how good the information is, Information system evaluation also shouldhealth conditions. A female patient cannot access to the information is a must for take into account security access measureshave a prostate condition, and a male patient success. A standard information-retrieval because not everyone in the company may becannot be pregnant. If the data review system can vary based on a company’s and privy to the data, although DB Pros’ Vonindicates incongruent information, it should possibly departments’ needs, says Kendra Von Achen recommends against privatizing toobe removed or reviewed, he says. Achen, president of DB Pros, a New Jersey- much. “Information systems should be used Cleaning up and organizing data translates based data consulting firm for entrepreneurs more to develop business strategy rather thanto a more immediate ROI. As an example, and small businesses. just housing data,” she says. “Having an openTeachey says, clean data reduces the spoilage While a new information system can be database is an important value for therate in a direct mail marketing campaign. A costly, the ROI is substantial, she explains. company.”company that sends a catalog to 15,000 Implementing a more effective system cancustomers could reduce its spoil rate to less save the company money in terms of number Step 3: Use data to the maximum.than 1 percent, thus saving on needless of personnel and improved time Don’t overlook non-traditional uses for yourpostage, printing and related costs for management, including reducing the amount data. Customer data, for example, can be usedcatalogs that no one receives. That translates of hours needed to manually enter, re-enter in more ways than checking to see if an orderto a better return on investment. or retrieve information. was delivered or finding addresses for a key “When you reduce costs, you increase One of the biggest benefits is improved mailing. The information can identify customeryour profit,” Teachey explains. “A smart marketing capabilities, Von Achen explains. continued on page 86 WINTER 2012
  7. 7. cover feature MANAGE THE OVERLOAD We are constantly bombarded with an alarming amount of information every minute of every day—some we request, some we don’t. Whether it’s beeping email notification messages, constant TV advertisements or millions of Google search results, you cannot escape data. “Information overload is a very big topic, and the impact is universal,” says Jonathan Spira, chief analyst at research firm Basex and author of the new book Overload! How Too Much Information is Hazardous to Your Organization. “In fact, our research demonstrates knowledge workers lose 20 to 25 percent of the day due to information overload. It’s staggering.” Spira says information was limited a few hundred years ago in part because many more people couldn’t read and few books were published. However, as information democratized, everyone regardless of social class could understand and access a wealth of information. “Whether you’re a university professor, a member of Congress or a day laborer, if you go to Google and type in the same search information, you’re going to get the same results,” Spira says. To dial down information overload and gain valuable lost time, he offers a few strategies: Manage your email. For every interruption, it takes the mind 10 to 20 times the length of the interruption to get back to the task, Spira says. So a 30-second interruption requires at least five minutes to recover. To save on interruption time, Spira recommends copying recipients on emails only when they absolutely need to see the information. He also advises to quickly reread your words before hitting “send” to make sure all the necessary information and attachments are incorporated to minimize or eliminate replies with additional questions. Don’t mix topics in one email because it can become confusing and harder to remember. Also, most people won’t read the entire email if it has too much information. If you do need to send a long email, summarize what the email is about in the first sentence so your readers know what it covers. Optimize search engines. Most people don’t know how to construct search arguments using Boolean logic, Spira says. Even simple terms such as AND, OR and NEAR can tremendously narrow down a search (ex: Java NOT coffee for information on the island). Don’t forget to use quote marks around phrases to narrow down the results. Many search engines also offer an advanced search option that allows you to search by file format, website, date, etc. Delete old or obsolete information. Saving all data forever is not the best course of action. Identify a record-keeping policy so employees know when they can delete—and then remind them to delete information they no longer need from their inbox and their file drawers. “Information overload can be controlled with some basic tweaks that have a dramatic impact,” Spira says. “But the worst thing a company can do is bury its head in the sand and say it has bigger fish to fry. The problem will only come back to haunt them later.”LEADING EDGE 7
  8. 8. cover featuredemographic makeup, so you better understand perhaps the company would realize the need For example, Activate Networks turnswho your customers are and how to better to identify a back-up vendor because it relies health insurance claims into a network their needs, Von Achen says. on a single provider for a critical service. Pharmaceutical companies and health care “By looking at your customer data, you can Businesses can access significant plan administrators can see how patientslearn who your top 10 clients are,” she information from publicly available databases, move through the system, how they areexplains. “This is invaluable because of the but many don’t because they aren’t aware of treated and what they are prescribed. The80/20 rule: 80 percent of a company’s the potential. A nonprofit, with which information can be segregated based onbusiness comes from 20 percent of its clients. Teachey worked, used U.S. Census region, therapeutic area or specialty.If you know who these top clients are, you information to determine areas of the “Understanding who is connected tocan better understand what they want and community that were underserved by whom opens up a whole variety of businesshow to give it to them.” commercial services. The nonprofit used that possibilities,” Miller explains. Information from Twitter and Facebook free, professionally collected information to In the corporate world, Activatepages may not be considered business data reach out to sought-after retailers to locate in Networks has evaluated email traffic to mapbut it should be. “If companies can match a the underserved neighborhood. employee relationships. Employees whoTwitter handle to a customer’s account, they Similar data could be used to determine a email each other every day and respondcould capture a whole new understanding of company’s new office locations and areas in quickly to each other’s messages most likelytheir customer base,” Von Achen says. which the company’s key demographics live or have a strong relationship, Miller explains. Consider what other data your company work, enabling concentrated marketing On the other hand, employees who onlycollects. Finance files can be a great wealth of campaigns and deeper customer understanding. email each other once a quarter have a weakinformation that may not be linked together Companies also can turn information connection. This data can help companiesto gain the biggest advantages. For example, created for one-time use or purpose into view the flow of information in theirwhat if your company did more than pay its multiple outlets. Social network analytics workplace and improve their corporateaccount payables and update corresponding company Activate Networks uses data to communication structure.budgets to reflect year-to-date actual? By map social networks—but not just the “We hope to help people realize theyreviewing the compensation to all vendors in a online kind. It goes deeper to map out all should take more inventory in the data theyparticular category, the business could identify sorts of relationships based on virtual and have for whatever reason and understand thepotential for savings through aggregation. Or real-world data. value that might be in it,” Miller says. LE“Understanding who is connected to whom opens up a whole variety of business possibilities.” – Larry Miller, CEO, Activate Networks8 WINTER 2012
  9. 9. INSIDE: • Non-profits face difficulties, but opportunities exist • Changing landscape of accounting and reporting for state and local government pension plans • Cutting through the clutter of HR complianceThere’s gold in your dataBy Jeff Rudolph Once a customer sets thisA ll businesses have data on their customers. In theworst case scenario it is on feature up, it is hard for them to unwind and go to another bank. Therefore, your relationshippaper, in the best case it is in a with your bankCustomer Relationship is “sticky.”Management (CRM) system. In What does all of this have toreality, it is somewhere in do with your customer data?between. Regardless of where Let’s answer that with anotherthe information is kept, many question. If you don’t know whoorganizations do not use this your customers are, how are youdata to its full potential. This is going to sell them more stuff?unfortunate, as the data is The key to reaching yourliterally handed to them for free, customers for additional sales isand has the ability to create a • knowing what they bought loyal customer base and attract from you,new customers. • who their decisionmaker(s) New customer acquisition is is,critical to growing your business, • where they are located, who but if you lose customers faster the business line leaders are,than you can add them, you will • what their revenue is, There are several things you want collect. You can find anot be able to achieve this • when the last time they need to do to tap into your lot of information can on thegrowth. Successful companies bought from you was, customer data: Internet. You might also findnot only secure new customers, • what industry they are in, 1. Locate your data. If it is in it useful to subscribe to anbut they keep their existing and so on. multiple systems, work to online database such asones. There are many facets to This information allows you consolidate to a single Hoover’s or Dun &keeping your customer base: to continually market to them, system. Not only is it time Bradstreet to obtainoutstanding service, fantastic and if you roll out a new consuming to maintain information not readilyproducts, stellar support and product or service, you can multiple systems, but it is available on a company’sselling them more “stuff.” While easily identify the best prospects error prone. website.all these factors are important, in your customer base. Plus, 2. Start with the data you are 5. Finally, dig for gold. Put adata can help you with the there is a 60 percent chance currently collecting and plan in place to market tolatter. However, to be clear, it is they will buy from you! determine what additional your existing customer basevery hard to sell to existing Along with selling to your customer data you want to and adapt your new salescustomers if you do not perform current customers, you can use collect. (Hint: one of those marketing plan to takein the quality department. your data as “free” information pieces better be email advantage of where your It is much easier to sell to an to hone your new customer addresses.) success has come from in theexisting customer. The acquisition marketing. If, along 3. Create processes for entering past. If you think of yourprobability of a sale to a new with your customer data, you new customer data and customer data as a goldcustomer is 5 to 20 percent, tracked how customers came to changing and deleting data, mine—you simply need towhile the probability of a sale to do business with you, you might so you are confident your dig in to see the fullan existing customer is 60 to 70 learn, for example, that 20 information is accurate and potential. LEpercent. Plus, selling to existing percent of your advertising is up to date.customers creates “stickiness,” spent on yellow page 4. Cleanse and backfill your If you have questions or would likewhich means the more things advertising, but it is only data. This can be a very more information, please contact Jeffcustomers buy from you the attracting 2 percent of your new daunting task. Remove Rudolph, Partner-in-Charge,harder it is for them to leave. A customers. What would your duplicate information, make Technology Services & Products,case in point is the free online marketing plan look like for the certain the data is correct Sikich LLP, at (630) 566-8421 orbill pay that most banks offer. following year? and add additional data you EDGE 9
  10. 10. Non-profits face difficulties,but opportunities existGary G. Flori, CPA, partner-in- profits. The number of with less effort. For example, ifcharge of not-for-profit services for Americans aged over 65 will you have written articles aboutSikich LLP, took time out recently increase by nearly 80 percent your organization in the pastto talk about the issues and between 2010 and 2030. Older and gained exposure by runningopportunities non-profits face in Americans have both the the piece in local publications,the current economic climate. inclination and the means to you can now leverage that one make larger charitable article by quickly posting itQ. What is the economic contributions. online and gaining a broadoutlook for non-profits? Internet donations—Many audience. A single article can beA. According to First Research, a non-profits have made it easy posted on an organization’sdivision of Hoover’s (a D&B for donors to contribute over website, a Facebook page, a accounting software. Thencompany), U.S. corporate profits, secure websites. Consequently, LinkedIn page, and a Twitter brainstorm with your accountingan indicator of corporate online giving has joined more account, and used in public software business partner onsponsorships, memberships, and traditional channels as a relations. So, one article to tell ways to make your system dodonations, jumped 26.4 percent mission-critical part of the your story and many easy ways more for you. If your accountingin the third quarter of 2010 fundraising mix. Donating to access channels to get the system can’t handle thosecompared to the same period in online is often more efficient word out. processes, then consider finding2009. U.S. personal income, than offline and can help an accounting package that willwhich drives consumer ability to charities reduce administrative Q. How can non-profits do better meet your needs.donate to non-profits, rose 4.6 costs. Try creating a “donate more with less? Shared-servicepercent in January 2011 now” link on every page of your A. Automation—One way to arrangements—For areascompared to the same month in website so donors can pay by decrease costs is through requiring specialized skills,2010. Total U.S. revenue for credit card right then and there. automation. This allows shared-service arrangementsreligious, grantmaking, civic, This can be facilitated by use of management more time to focus should be considered. One suchprofessional, and similar a well-established service on the “management” of the area is employment-relatedorganizations fell 1.6 percent in provider such as PayPal. Other operations and finances. A great regulations. Today non-profitthe fourth quarter of 2010 donors will want to pay by check example of automation in a organizations of all sizes mustcompared to the same period in so give them a self-addressed non-profit organization is comply with more than 40,0002009. Although this is positive, envelope in direct mail pieces accounting software. Chances pages of employmentthe impact of the recessionary and brochures. Non-profits seem are most non-profits are not regulations. Governmentperiod has been severe and will to have the most success when fully utilizing the full spending on enforcement oflikely continue to negatively they combine traditional appeals, functionality of their accounting these regulations has increasedimpact non-profits for at least the such as direct mail, with the software. Your accounting in many areas including wagenext year. Many non-profits have option to give electronically. software should be handling and hour, equal employmenthad to adjust their services, even Social media—Some non- budgets, allocations, reporting opportunity, and immigration,though the demand for those profits have begun creating and and payroll (specifically, which puts many organizationsservices remains very strong. This maintaining profiles on online allocating payroll and related at risk. Non-profits are reachingis especially true for certain social networking sites to recruit expenses by program). Does out in many directions for helpagencies that are heavily reliant new staff members and your organization have Excel including outsourcing andupon state funding which have volunteers, engage audiences spreadsheets for any of these shared service arrangements tobeen hit hard with budget cuts. interested in their cause, build processes? If so, transfer those tap into the level of expertise supporter lists, and raise money. processes to your accounting needed without committing toQ. What are some Other non-profits are reluctant system. Not only will you save additional staff. LEopportunities on the horizon to explore online social time and eliminate duplicatefor non-profits? networking, primarily due to the data entry but also you will If you have questions or would likeA. Demographics favor significant time investment. eliminate the risk of data entry more information, please contactcharitable contributions— While the thought of social errors with a spreadsheet. Where Gary G. Flori, CPA, Partner-in-Charge,Older people and their estates media may sound like a lot of do you start? Begin by making a Not-for-Profit Services, Sikich LLP,represent a significant portion of additional effort and work, it list of all the financial data you at (630) 566-8517 or gflori@sikich.the donor base for many non- can actually increase visibility maintain outside of your com.10 WINTER 2012
  11. 11. Sikich LLP Changing landscape of accounting and reporting for state and local government pension plans By Frederick G. Lantz, CPA I n late June 2011, the Governmental Accounting Standards Key components of the proposed pronouncements would require a Board (GASB) issued two exposure drafts (EDs) that government to: propose significant structural changes in how state and local • Report a net pension liability in accrual basis financial statements governments account for and report the cost of pensions (i.e., entity-wide and proprietary fund financial statements). The provided to employees. The first ED, Accounting and Financial net pension liability is the difference between the total pension Reporting for Pensions, an Amendment of GASB Statement No. liability and the actuarial value of assets. 27, proposes to alter how an employer determines and accounts • Calculate the total pension liability as the projection of benefit for the cost of providing retirement benefits to employees and payments in future periods, considering the number of how the composition of a pension liability may be calculated beneficiaries expected to receive benefits, the benefit levels and reported. The second ED, Financial Reporting for Pension including cost of living adjustments (COLAs) and other actuarial Plans, an Amendment of GASB Statement No. 25, will impact the assumptions, all of which must be consistent with the American reporting of the pension plan itself, either in a separate pension Academy of Actuaries’ Actuarial Standards of Practice. plan financial report or as a pension trust fund in the • Use the expected future long-term rate of return on the employer’s financial statements. It is important to note that investments of the pension plan as the discount rate for these proposed pronouncements do not require or suggest any determining the present value of the total pension liability. changes to how a government determines its funding policies However, if the employer has a history of not funding the ARC, for contributing to a pension plan, as that is a management the discount rate used would correlate more to a cost of decision. Instead, these proposed pronouncements relate solely borrowing rate (e.g., tax exempt municipal bond rate) as the to accounting and reporting for the cost of pension benefits employer is in fact “borrowing” from the pension fund to pay provided to employees. other costs. Historically, accounting for pension costs by state and local • Use the entry age normal actuarial cost method, using a level governments has been very budget friendly and has focused on percentage of payroll, as the actuarial cost method used to allocate the funding of a pension plan. We only report an asset or the present value of benefits earned. liability for pensions on a statement of position today if a government does not fund the annual required contribution The amount of pension expense to be recorded in accrual basis (ARC) as determined by an actuary and the asset or liability is financial statements would include: only reported in financial statements prepared using the • Normal cost (benefits earned by employees that year), economic resources measurement focus and the accrual basis of • Interest on the pension liability, accounting. This is akin to preparing a personal statement of • Changes in the total pension liability due to differences between position for yourself or your family, listing your house as an assumed and actual economic and demographic assumptions; due asset, but not reporting your mortgage as a liability. Instead, to changing the economic and demographic assumptions; or due you would only report a liability if you are behind in making to changing the terms of the pension benefits (e.g., pension spikes your mortgage payments. and/or retroactive benefit increased) and The GASB does not believe that this is appropriate • Changes in the amount of plan assets due to interest earnings, accounting or reporting for accrual basis financial statements. receiving contributions and paying benefits and differences Instead, the GASB believes that pensions are a form of between assumed rates and actual rates. compensation, like salaries, which governments provide to their employees in return for services provided by the employee. These proposed changes, if passed as drafted, will result in Therefore, the GASB believes that like salaries, the costs and significant changes to accrual basis financial statements of state and obligations associated with pensions should be recorded when local governments. The GASB hopes to issue final pronouncements earned by the employee in accrual basis financial statements, in the second quarter of 2012, with an effective date of fiscal years rather than when contributions are made by the government to a ending June 30, 2013, and thereafter for large plans and June 30, pension plan or when benefit payments are made to retirees. The 2014, and thereafter for smaller plans. LE GASB’s proposal for the two new standards are built on this basic philosophic understanding of the pension transaction and If you have questions or would like more information, please contact Frederick shifts the model from one being driven by funding to a model G. Lantz, CPA, Partner-in-Charge, Government Services, Sikich LLP, at (630) driven by costing. 566-8557 or EDGE 11
  12. 12. Sikich LLPNews & Infofrom Sikich• Sikich LLP announced the acquisition of the Elite HP Networking Team of Integrity Technology Group LLC.• Sikich Financial has expanded its wealth management practice into the Decatur office of Sikich LLP.• Sikich LLP and Indianapolis accounting firm Ent: Imler CPA, PC, have merged.RECENT ACCOLADES:• Sikich was named Cutting through the clutter of HR compliance to INSIDE Public Accounting’s Top 50 Accounting Firms.• Sikich was honored By Joyce Grenis to win the 2011 SonicWALL US Gold Partner of the Year Award. A nyone handling human resources today is faced with an ever-changing landscape of federal, state and even local employment laws. Cutting through this clutter is a daunting task for even the most diligent HR professionals who dedicate their precious• Sikich received our eighth consecutive time to reading professional journals and attending informative seminars. In addition unmodified (“pass”) peer review report. to doing their own necessary reading and professional development, I would This is the highest level of recognition encourage anyone who has HR responsibilities to identify a trusted advisor as a conferred upon a public accounting resource and guide; someone who makes it his/her business to stay current. Who are firm for its quality control systems. some of these people?• Sikich ranked No. 13 in the Accounting • Law firms specializing in employment law. An attorney can be a valuable Today VAR 100 list. resource in articulating the legal ramifications of the laws on the books today and what’s coming on the horizon. Fees for this type of periodic support may not be in• Thanks to our employees, an organization’s budget. Sikich received our first • HR consulting practices. Consultants, while not attorneys, typically help their Chicago Tribune Top clients understand the basics of the law as commonly accepted. These individuals Workplaces Award! also bring experience related to the practical side of human resources and can advise on the pros and cons of a particular course of action in the context of theWELCOME TO SIKICH! organization and what it is trying to accomplish.• Michael Sheehan has joined the firm • Professional colleagues. You can obtain a strong informational network through as a Partner with Sikich Financial and other professionals in HR. However, realize that they’re probably facing the same is doing business out of the Decatur challenges in keeping up-to-date as you might be. office. • Local or national HR groups. These groups can be helpful in gaining a general• Richard Lynch, CPA, has joined the understanding of what is current in compliance. Some of these groups may also firm as a Partner on Sikich’s Non-Profit have useful resources available for members and most have regular meetings Services team in the Springfield office. focusing on topics on interest. Is one type of trusted advisor better than another? Not necessarily, and in some• Carla Paschal, CPA, has joined the situations a combination of resources is advisable. LE firm as Senior Manager in the Rockford office. If you have any questions or would like more information, please contact Joyce Grenis, Senior Vice• Leah Davis, MBA has joined Sikich President, Human Resource Consulting Services, Sikich LLP, at (630) 566-8454 or Financial as Compliance and Operations Supervisor in the Springfield office.12 WINTER 2012
  13. 13. bitsREVISIT MARKETING 101 &Whether your company is just rolling out a marketing plan or reviving anold one, simpler is better, according to The Maids. The residential cleaningcompany offers several low-cost, low-maintenance ideas for getting theword out about your company: Network—Not only should you join local business groups and expandyour contacts, but remember you are a face of your company. Talkingpassionately about what you do is one of the best ways to market your BUSINESS pieces TRAVELERS TALK More than 3,000 business travelers talked the best and worst in a recent survey by Vitesse Worldwide, a land and air executive travel company. Worst experiences included:business. Accept and pursue offers to speak at community meetings to get • Herd-like, impersonalyour face and name out there. treatment by travel and Word of mouth—An extension of networking and speaking passionately lodging staffabout the organization is leveraging others to do the legwork for you. Offer • Overly intrusive security systemsdiscounts or other incentives to customers and/or employees for referrals to • Frequent flight cancellations and delaysindividuals as well as groups to which they belong. Experiment—Every campaign does not work for every business. But if Best experiences included:you want to try something, go for it. Test your idea with an inexpensive • A concierge service with knowledge of their personalcampaign then take the feedback and analyze to preferencesdetermine if it will work on a large scale and • Well-coordinated scheduling for all facets of their tripwhat adjustments may be necessary. • A security detail when traveling in dangerous parts of Communicate—Send periodic print or email the worldnewsletters to customers. Post on LinkedIn groups, “What comes through loud and clear is that an executiveFacebook and Twitter. They are a great way to traveler isn’t asking for high-priced services as much asintroduce new products, special pricing or other high-touch,” says Shawn Abaspour, CEO of Vitesseoffers and news. Worldwide. POOR SKILLS SPELL FAILURE FOR NEW HIRES Thirty-six percent of chief financial officers say the top reason new hires don’t work out, aside from performance issues, is a poor skills match, according to a survey by Robert Half International. The survey is based on interviews with more than 1,400 CFOs of U.S. companies. Other factors that contribute to a failed hire include unclear performance expectations (30 percent), personality conflicts (17 percent), failure to fit into corporate culture (14 percent) and don’t know (3 percent). “Companies can’t afford hiring mistakes, which are costly and can erode staff morale,” says Max Messmer, chairman and CEO of Robert Half International. “Finding the right match requires time and attention, and it’s something even busy managers need to make time for.” Robert Half offers these tips for better hires: Know what you want. Don’t recycle the job description you used last time because it has most likely changed. Take a fresh look at your needs and desired skills. Look for the intangibles. Inquire about and evaluate a potential employee’s soft skills, such as leadership and communication to determine if he or she will fit into your corporate culture. Sell your company. People in high-demand specialties commonly have multiple job offers. Show them why they should choose your organization by communicating its benefits and offering a compensation package comparable to or above market rates.LEADING EDGE 13
  14. 14. SBA loans set record in 2011: What’s next? T he U.S. Small Business Administration loaned more than $30 billion in fiscal year 2011—$7.8 billion more than the previous year and $1.9 billion better than the previous record set in 2007. A major reason for the growth is that the loan maximum rose from $2 million to $5 million in 2011, says Dawn DeRidder, national SBA/government lending sales manager at M&I Bank, now part of BMO Financial Group. “This opened the door for bigger projects many companies were looking to do, whether it was purchasing equipment, capital improvements or anything, really,” DeRidder explains. She adds, “In bad economic times, like the recession we’re coming out of, companies’ Want an SBA loan in 2012? What small businesses need to know SBA loans are bank-financed but expert. There are SBA district offices all across development specialists who can help.) government-backed. The backing depends the country designed to help these businesses, Applying businesses also should understand on the specific government loan program. and they should take advantage of it.” its credit report as well as identify any On the standard 7(a) loans, for example, Researching basic information through hiccups and resolution plans, Hauk advises. the SBA provides an 85-percent guarantee is a first step, Hauk says. The All the documentation is important, but on loans $150,000 and less, and a site is filled with the latest information and the critical component to any application is 75-percent guarantee for loans more than updates, including forms and guidelines a that the applicant truly understands the $150,000, explains Dawn DeRidder of business might need. nature of the business, DeRidder says. BMO Financial Group. In addition, the The next step is to find an expert to help “I can’t tell you how many times I’ve talked SBA-backed loans can have lower interest guide the business through the process. to a client who wants to start a business, and rates and longer terms. Through the SBA website, businesses can when I ask them about their business plan, SBA loans also come with eligibility search for a local SBA office by ZIP code— potential projects or competition, they have requirements that differ from traditional the offices serve as resources to answer no idea and the process stops,” she says. loans. Loan applicants must meet the questions and provide additional information. “Businesses need to be prepared when going definition of a for-profit, small business to a lender because from a lender’s based on either number of employees or Prep before meeting perspective, if the person sitting in front of revenue levels depending on the industry, Existing businesses should prepare and/or their desk doesn’t have a plan of action, the DeRidder says. update business plans, and bring previous tax lender is naturally going to gravitate to and As consultant Helena Hauk explains, returns when meeting with the banker. New approve a business that is more prepared.” “Businesses shouldn’t underestimate the businesses should prepare a business SBA; there are different loan programs to feasibility study. (Unsure about preparing Know it takes time meet different needs. They should take the these documents? Local SBA offices have Rosemary McLaughlin, who obtained an SBA time to pick up the phone and talk to an counseling, training and business loan in 2011 to open an Elements14 WINTER 2012
  15. 15. financialbalance sheets are stressed and liquidity is not sought SBA loans to help cash flow, won’t be seen until potentially 2014,”where it needs to be. Businesses rely more on particularly through refinancing. She expects she to meet their needs.” a similar pattern in 2012.   Rosemary McLaughlin left her job as a “I think the overall tone is cautious $2 billion for early stagehealth care executive in August and used an optimism,” says Hauk, founder of 5th Gear In 2012, the SBA is moving forward with theSBA loan to open an Elements Therapeutic Consulting, a consulting firm that specializes recently launched billion-dollar Early StageMassage franchise with plans to open two in commercial real estate lending through Innovation Fund, which will provide matchingmore in the next two years. She says she SBA loan programs. capital to small business investment companiessought an SBA loan because of the favorable DeRidder says don’t expect 2012 to set a that target early-stage small businesses seekingloan terms—6.25 percent for seven years— new SBA loan record. “This is attributed to private institutional capital.that will help cash flow in the initial a general lack of ‘consumer confidence’ in In conjunction, the Startup Americaoperating phase. the economy,” she explains. “As such, Partnership, a new nonprofit alliance of “I tell every small business owner or companies are not looking to borrow now. entrepreneurs, major corporations and servicepotential small business owner I meet about While banks want to lend money, the providers, announced another $1 billion-plusmy success obtaining this loan,” demand just isn’t there. in commitments from more than 50 private-McLaughlin says. “As much as we would like to see the sector entities, which will provide everything Many of the companies with whom economy turning around quickly, the majority from free software to free consulting andconsultant Helena Hauk worked in 2011 of predictions indicate that a solid recovery legal services, to 100,000 startups over the next three years. LETherapeutic Massage franchise, says the SBA Different lender types You have anloan process is easy, although borrowersshould be aware the loan’s timing depends on DeRidder says SBA loans come with the misperception that the paperwork is SBA loan—the actual closing date. “Schedules, information requests and overwhelming compared to a conventional loan. While the amount of paperwork depends now what?some detailed requirements can add time to on the type of loan, preferred lenders can fillthe process,” she says. “The loan did require out 99 percent of the paperwork. Managing an SBA is no different thantime, but starting a new business requires “There are three different types of SBA managing a conventional loan, saystime. And the SBA website is helpful during lenders—infrequent participant, certified and Helena Hauk, founder of 5th Gearthe application process. preferred,” she explains. “Infrequent Consulting, a consulting firm that “Only four forms are required to start an participant lenders need to send the SBA all specializes in commercial real estateSBA loan application, so fill those out and their paperwork for independent analysis, lending through SBA loan programs.bring to the bank. It shows you take initiative which can take some time. Certified lenders The borrower makes monthlyand are serious,” McLaughlin says. review the loans and send them to the SBA, payments and is required to provide She also recommends finding a bank and which then has three days to review the the lender with at least an annual, butor bank officer that specializes or understands documents. Preferred lenders have the final sometimes a quarterly or monthly,the applicant’s business type. She worked with say on loans. So the process will be quickera bank officer who understood franchises and and simpler if a business chooses a financial statement. The borrower alsostartups. “Once I found a bank that was preferred lender.” must notify the lender of any changesfamiliar with the business model, I was able to Check out the SBA’s website, www.SBA. to the company, as is the case with ahave conversations about Elements gov, to search for your local office, which can conventional loan, she says.Therapeutic Massage that were easily provide the certified and preferred lender listunderstood,” McLaughlin says. for your area.LEADING EDGE 15
  16. 16. Top6thingsto know about doing business in BrazilBY GERD FOERSTER, CPA, CONFIDOR1What should a businessperson know aboutBrazil?First of all, Brazil is a country that has anarea of more than 3 million square milessituated in South America and representsapproximately 50 percent of the continent’sland. It borders almost all countries in SouthAmerica, except Ecuador and Chile. Thenational language is Portuguese, and thepopulation is about 194 million people, about 2 340 percent of whom are children. About 83percent of the population lives in the cities. Since 1994, the national currency has been What are the biggest differences compared What should business know about setting upthe Real (BRL). Brazil has lacked the capital to operating in the United States? a company in Brazil?to supply the needs of the country and its The biggest differences are the many In 1994, the federal governmentpopulation. Consequently, foreign bureaucratic requirements demanded by the tax implemented the “Plano Real,” an economicinvestments (if not for short-term and legal authorities in Brazil. In the Brazilian reform plan that reduced inflation rates basedapplications) typically receive tax incentives tax system, products are taxed throughout the on the strength of the federal government’sfrom the government. In general, foreign chain of production. In the United States, the foreign currency reserves coupled with creditinvestments do not require prior approval of end consumer pays sales taxes once the sale is restrictions that raised interest rates. Initially,the government unless the company is finalized. In Brazil, however, each person income was redistributed to the lower class,interested in obtaining an incentive. However, involved in the process, including the producer, generating a consumption boom. To controlthere are some exceptions, so it is a good idea wholesale dealer, retailer, etc., pays sales taxes, the resulting inflation in the following year,to consult advisors familiar with Brazilian resulting in a higher level of tax burden. Also interest rates increased and credit waslaw and customs before conducting business black markets operate in Brazil, so U.S. restricted. As a consequence, the economyin the country. businesses should be aware of their effects. has grown slowly since then.  16 WINTER 2012
  17. 17. During the last nine years of socialist limited manner to provide the desired Temporary visas are granted to foreign 4government, social policies were adopted and products and services. workers for two years. A foreign companyminimum governmental aid boosted (bolsa-   that wishes to hire a foreign executive with afamília) to help the poorest class, stimulating permanent employment visa must have a What about employment in Brazil?  internal consumption. However, the minimum investment in Brazil equivalent With more than 190 million citizens, thegovernment has not reduced the public to $200,000. country has a significant labor force, 6deficit, which compromises the effectiveness   composed of many semi-skilled or unskilledof the economical targets and increases the workers. There is a shortage of management, What else should someone know aboutrisk of inflation. supervisory and technical staff at disposal for doing business in Brazil? Internationally, trade with other countries Brazilian or foreign companies. One of the Despite all the internal problems in some keyin South America has increased significantly biggest challenges, for example, is to find public areas, such as health, education andin the past few years with the creation of a qualified labor in the high-technology area. transport, Brazil represents a secure shore incommon market among Argentina, Paraguay   which to invest compared with other 5and Uruguay (Mercosul) in 1991. However, countries because of the strong politicalall the countries involved still make What type of work permit is necessary for situation and the fact that the country doesprotectionist decisions, making the non-Brazilians? not have any important enemies or marketeffectiveness of the market a nightmare. Considering the force and influence that the barriers with other countries. There are a lot As a consequence of the improvement in labor unions represent and generate in the of opportunities in the chemical, real estate,the distribution of income to the poorest companies and in the Brazilian government, transportation and food areas. Also severalclasses, the Brazilian public debt has increased there are many limitations for the contract major international events will happen induring the last year. As a result, the Brazilian of foreign labor. Brazilian companies are not 2014 (Soccer World Cup) and in 2016government has adopted the policy to increase allowed to hire foreign citizens who do not (Olympics). For this reason, Brazil has athe tax burden, which varies between 40 to 45 hold the proper visas and work permits. The large, positive and prospective market topercent of the Brazilian GDP. Furthermore, type of visa depends upon how long the present. LEthere is a lack of high-level investments in employee will work in Brazil. To receive thepublic areas such as health, education, authorization for non-Brazilian workers, at Author and CPA Gerd Foerster is a member of Brazil-transport, social welfare, etc., which represent least two-thirds of the company’s employees based Confidor, a Leading Edge Alliance firm. If yougreat business opportunities because Brazilian must be from Brazil and at least two-thirds would like more information, contact Foerster atpublic services do not act or act in a very of total payroll must be paid to Brazilians. or (+55) 51 3222 8933.LEADING EDGE 17
  18. 18. on the bookshelfBUSINESS RESOLUTION TIMEI t’s time again—to set new goals or at least Successful Strategy The Zigzag Principle: revisit previously set goals and long-term Execution: How to The Goal Setting plans to see what’s been happening and Keep Your Business Strategy That Willwhere your company needs to go. This edition Goals on Target Revolutionize Yourof “On the Bookshelf ” offers some reading Michel Syrett Business andsuggestions to help identify what you need to The Economist; Your Lifedo, where you need to go and how to get there. Bloomberg Press Rich Christiansen 164 pages McGraw HillThe B2B Executive Tracking performance is one thing. Tying it 256 pagesPlaybook: The to long-term plans is another. Too many Following a straight line is never the bestUltimate Weapon companies are lost in translation, failing to route—thus the zigzag principle createdfor Achieving compare actuals to projections and adjust by Christiansen. As a leader of well-Sustainable, their plans accordingly. Syrett explores how established and start-up businesses, hePredictable and to implement practical strategy execution brings a unique mantra—don’t bulldoze toProfitable Growth and shares real-life stories of companies reach your objectives; zigzag to achieveSean Geehan implementing strategies to keep their goals them. Well-known author Stephen CoveyClerisy Press on target. writes of The Zigzag Principle, “Rock-solid192 pages principles so simple that you will read thisThe B2B marketplace operates significantly Hundred Percenters: book wondering how you could havedifferent than the B2C marketplace. Yet, Challenge Your missed seeing truths that are so obvious.”Geehan found the more publicly discussed Employees to Give it As Christiansen explains, readers cancase studies and anecdotes shared with Their All & They’ll Give assess their resources, use them to thebusinesses were primarily B2C (Coke, Apple, You Even More fullest and keep the team motivated.etc.) He writes about the unique challenges of Mark MurphyB2B—in particular how a business in this McGraw Hill The Now Revolution:marketplace tends to rely on few individuals, 240 pages 7 Shifts to Makethus key relationships are essential to Most leaders don’t believe employees are Your Business Faster,sustaining growth. Geehan explores the need giving 100 percent and they’re right, according Smarter and Morefor B2B companies to make engaging with to what employees report. Doing fine, getting Socialcustomers their top goal and how that goal by and meeting expectations are sufficient. But Jay Baer & Ambershould drive the company’s internal alignment what if a growing segment of your employees Naslundand operations. As one reviewer on Amazon. thought “let’s push the envelope, let’s be great, Wileycom states, “The lessons learned here can serve let’s do what nobody thought could be done?” 224 pagesas a competitive weapon for those who take Murphy, chairman and CEO of Leadership Customers expect a level of attention andthe time to thoughtfully apply them to their IQ, says a key to reaching that goal is for responsiveness that most companies can’town circumstances.” leaders to care enough to push “Hundred live up to. Can you? That’s the question Percenters” to new heights. Murphy offers posed by the authors who then offer insight practical insight into setting clear expectations, to help your business live up to what your dealing swiftly with toxic employees, customers expect in today’s instantaneous eliminating “de-motivators” and focusing world. They offer a seven-part plan toDo you have a suggestion for a book employees on value-added work. harness the power of the social web for yourwe should feature? Email Editor Ann business including, stripping away silos,Gynn at with the empowering a new type of employee, andtitle and author, and include why the redesigning success metrics for thebook would be helpful or interesting to instantaneous business world. LEyour peers.18 WINTER 2012
  19. 19. 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 or contact Karen Kehl-Rose, Visit for a detailed listing of member firms. president, at +1 630.513.9814 or EDGE 19
  20. 20. PRSRT STD U S POSTAGE PAID WILLOUGHBY OHSikich LLP Corporate Office PERMIT NO 581415 W. Diehl Road, Suite 400Naperville, IL 60563(877) 279-1900www.sikich.comRETURN SERVICE REQUESTED