We are getting closer to spring each day according to the world’s most famous furry forecaster, Punxsutawney Phil. Our beloved groundhog did not see his shadow meaning we are set for an early spring!
We update our blog often with posts related to your business. We strive to provide valuable content you can apply to your firm or practice each and every day. It is filled with information we have identified as 4 key performance areas known as the Fundamental 4™, which are required to design, develop and sustain a successful business. You will find articles, research papers, best practice ideas and job aides available for you to download and put to use at your firm!
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Ironstone welcomes guest contributor, Scott D. Calhoun. Scott serves as Ironstone’s Legal Counsel and holds more than 25 years’ experience in corporate law. Scott advises clients on a full range of business matters.
Once you have decided to begin long-term planning for a successful succession of your business, you will need to make sure your plan is properly documented so that it will accomplish your goals. This article concludes our series on succession planning. Part I briefly outlined succession strategies and introduced you to the process. Part II provided a more in-depth review of a number of key factors. In Part III, we provide some insight into the details of properly implementing the successful succession plan from the legal perspective.
USE YOUR TEAM TO FORMULATE THE RIGHT PLAN FOR YOU,
THEN ORGANIZE ALL YOUR PAPERWORK
As we discussed in our earlier articles, formulating a proper succession plan starts with putting together a good team of advisors. At a minimum your team should include your attorney and CPA, and you might consider adding an outside financial consultant to the team. Think of your team as a coaching staff putting together a game plan. Once all the coaches have met and hashed out various ideas, a master plan is put together. As game day approaches, steps are taken so that the detailed game plan can be implemented. Among those steps is putting your legal affairs in order, including:
Update (or make plans to update) your will or other testamentary documents
Make sure your corporate minute book is up to date and complete – including stockholder records and minutes
Confirm that all your corporate registrations and business licenses are current
Put in place all agreements with current employees that are necessary to preserve the value of your business – non-disclosure/non-solicitation agreements, existing shareholder buy-sell agreements, stock option or other equity participation plans
NEXT COMES IMPLEMENTATION DEPENDING ON THE NATURE OF THE SUCCESSION
If your plan calls for an INTERNAL succession (an existing partner or employee, or a targeted successor candidate, or a family member), several different arrangements could be used:
Transfer through existing buy-sell agreement
Establishment of stock option or other equity participation and transfer arrangement
Transfer through gifting program or limited partnership (especially useful with family members)
Each of these structures produces its own legal challenges and requires that specific issues be addressed. With respect to buy-sell agreements, you will need to focus on:
Triggers – buy-sell agreements can provide for the purchase and sale of stock in many circumstances other than death, including disability, separation or retirement, divorce, or even upon achieving certain performance goals
Valuation – how the company is valued at the time of the buy-sell is critical, and the methods of determining value are quite varied. We strongly encourage you to decide on an appropriate valuation methodology at the time of putting the buy-sell agreement in place
Funding – perhaps the most important issue, how the buy-sell is funded can be the difference between a successful succession or the collapse of the business
If you are implementing a stock option or equity participation (or phantom stock) plan:
Appropriate grant percentages and formulas – the goal of these plans is to provide incentive for performance and also “skin in the game.” Careful thought is required to ensure that these incentives are appropriate but not excessive
Triggers for payout – when will the stock be awarded or the compensation paid? On sale of the business? Other restructuring? These are questions that need to be answered
Amendment and correction – these plans need to have flexibility, so the original document should allow for amendment within reasonable parameters
For limited partnership arrangements (can also use LLC) to transition to family members:
Control – this is a critical issue for first generation business owners. The key point is to determine how to use this method of succession and maintain control until you are ready for the transition to be finalized. This requires some care in planning and drafting
Gifting program and valuation – using valuation discounts and gifting of interests allows the first generation owner to leverage the gifts and maintain control
Commitment of family member – this goes back to the issues discussed in our earlier articles emphasizing the importance of selecting the proper persons to take over the business. Make sure your chosen successor is in it for the long haul
If your plan calls for an EXTERNAL succession (sale to strategic partner, wealth management firm, or purely outside investor):
Due diligence – during the negotiation process, you will be asked to open your records for the buyer to conduct its due diligence. As a seller, you should do the same to ensure that your buyer is who has been represented to you and that the buyer will be able to successfully complete the acquisition
Valuation and payment terms – these will be key issues in the negotiation process. An important point to remember is that your notion of what your business is worth will almost never be the same as a buyer’s notion of what the business is worth. Talk to your advisors about expectations
Security for payments – you will want to make sure you will actually get paid the amount agreed to for purchase of the business. Proper security for those payments is vital
DEFINING YOUR FUTURE ROLE AND RESPONSIBILITIES
Part of the succession transaction needs to be a clear understanding of what your future role with the business will be. In this regard, you will need to mindful of several issues:
Consulting or employment arrangements – if the deal calls for you to stay on in some sort of consulting or ongoing management role, your exact responsibilities need to be clarified and your compensation specified. DO NOT allow yourself to believe that just because negotiations went smoothly and professionally, you will be able to “take it as it comes.” Document everything. If there is strong trust, all will go smoothly anyway
Non-compete agreements – you may be asked to sign a non-compete agreement. This may not be a big deal if you are definitely retiring, but if you need some flexibility, you need to pay careful attention to these terms
“Earn-outs” – these are a popular means to keep initial purchase prices low. If your deal includes earn-outs, make sure you are satisfied with the upfront and guaranteed money you will receive. You should NOT count on getting any more
Taking the business back – this issue relates to making sure the purchase price payments are properly secured. If the buyer cannot make the payments, you will want to have the ability to take the business back. But be aware – it may not be worth much if these circumstances occur
NO ROOM FOR HANDSHAKE DEALS
In our previous articles, we have pointed out the need to prepare yourself for the transfer, take care in choosing your successor(s), and communicating with your clients and your employees. These are all important factors in a successful succession plan. So is communicating clearly with your team of advisors, especially your legal and accounting advisors. The successful succession of your business and assuring that you receive proper value for your business depend on numerous factors, and the transaction will require careful paperwork. There is no room for a handshake deal, or for whispered “back-room” arrangements with the potential successor. These transactions do not have to be overly complex, but you need to make sure your advisors know everything that is important to you and then you need to trust your advisors to implement your plan successfully.
Using this approach, IRONSTONE can help you PASS THE TORCH effectively!
Interested in boosting employee productivity, engagement and loyalty? If you haven’t entertained the idea of creating a culture with an office desk on the beach, it is time to rethink the possibilities and go outside of the box. Employers are reluctant to entertain the idea of remote workplaces despite the benefits. Remote, virtual or telecommuting office culture is becoming more and more common as employees thrive and excel in their “beach setting” environment.
As a proponent of remote workplace alternatives, I have found from personal experience the benefits out way any disadvantages. Extending from coast-to-coast across the United States, the culture cultivated by our team provides:
Increased productivity
Increased creativity
Empowerment for employees
Increased loyalty
The virtual culture works for us by providing efficient time management and innovative ways to stay connected. Skype is a tool we use extensively.
Is A Remote Culture Right For You?
Granted, some professions require onsite presence. Firms now, however, have the opportunity to take a more flexible look at the standard office environment; allowing employees to use technology enabling them to connect and collaborate from anywhere.
Small changes can produce significant benefits simply by empowering employees to gain more control over their schedule. Studies have shown that telecommuters increase productivity by eliminating the worry of driving to work, cutting gas expenses and removing office politics. Firms who engage in creating a virtual culture reduce business costs on overhead, reduced sick leave and less turnover.
Research conducted at Stanford with a Chinese company reveals working from home is actually more productive than working in the office, as well as other benefits in the form of increased job satisfaction and fewer people leaving. The study revealed employees who worked from home reported higher job satisfaction and were 50% less likely to leave than their colleagues who worked in the office.
Best Buy, British Telecom and Dow Chemical found that virtual workers are 36% – 41% more productive.
The work-from-home nature of virtual work reduces absenteeism by $1,134 per employee, every year.
79% of traditional workers would prefer to work from home and 61% would take a pay cut to be able to do so.
Virtual workers get an extra 2-3 work-weeks of free time in commuting savings and report they use this time to spend with family, friends and for leisure.
Traditional Employees:
Gallup found that 54% of traditional U.S. workers sleep walk through their day.
An additional 18% are “actively disengaged” (meaning they actively undermine what an engaged worker accomplishes). Together, these groups make up a shocking 72% of the traditional workforce.
Another poll found that 1 in 3 high-potential traditional employees do not put full effort into their job.
Times have changed, and with that, firms need to stay abreast of the options and benefits available to them. Leaders should face the importance of an employee’s autonomy and the increased results of productivity and fulfillment by incorporating or exploring a remote culture. Lifestyle will often trump salary in an employee’s decision making process. Firms who embrace a remote culture can gain an edge in recruiting highly-skilled employees.
Question: Does your firm engage in a virtual employee culture? If so, what advantages and disadvantages are you finding? You can leave us a comment by clicking here!
• Email us at info@ironstonehq.com • Call our office at 800-917-8020 • Connect with us:
“Boss man, I just don’t have enough time to get everything done!” How often are you hearing this from your rock-star team? This time of year we should be feeling a sense of renewal and experiencing a fresh start! Often times, the opposite occurs as we are inundated with year-end reports, implementing new strategies and keeping up with daily business.
Embedded in my mind are the weekends as a youngster. Every Saturday, like clock-work, my mom and I had “chores” to do inside the beautiful farmhouse where I grew up. She always told me, “We have to finish our work first and then we get to go have fun.” Why that is stuck in my mind 30 years later, I have no idea. What I do know is she knew how to manage time.
We have all read hundreds of articles on time management tips, taken time management courses and received multitudes of advice. All of these workshops, articles and advice have provided me exceptional tools as well as vital components to effective time management. Time Management models will vary for each person on your team but the goal will be the same – Effective Time Management. I have found the best way to keep myself on track is through the development and use of a “model day” format where I create blocks of time from my job description. I have taken my so-called short fallings from last year and incorporated time for interruptions, time for NO interruptions and time for unplanned urgencies. Start your new year with these simple steps, perform them yourself and then share with your team.
SWOT Yourself!
Most of us have participated in SWOT analysis projects, but usually related to our overall business plan. Have any of you or your team members performed a personal SWOT analysis? You can incorporate an individual SWOT analysis into your overall business plan; link them to personal team development, tracking goals and performance reviews. Once you have completed your analysis, incorporate your strengths, weaknesses, opportunities and threats into a list of tasks to complete with an action plan and make it happen!.
Having a snapshot of how you intend to perform your day is essential to effective time management. Time and time again I end up with “to-do” lists scattered everywhere, 10 post-it notes stuck on my desk serving the purpose of reminding me what needs to be done. Rather than giving me a sense of organization, I am bogged done with stress, anxiety and a sick feeling in my stomach caused by ineffective time management.
We have created a model day template to assist you to:
Manage time effectively
Improve organization skills
Boost time management skills
Ironstone’s template allows you to organize, track and monitor progress by providing 4 tabs within one worksheet.
My Model Day–Your model day is your intended plan for completing job duties. Use this as a guide to manage your time each and every day.
Time Management– Use the time management worksheet to gain understanding of how much time is spent on projects scheduled in your model day plan. You don’t need to do this on a daily basis; a periodic check will give you insight on how much time you are using wisely, wasting or necessary adjustments needed to improve time management.
Priority Items– At the end of each day, allow yourself time to organize and prioritize the most important tasks you want to accomplish the following day. This will allow you to start each day feeling energized, empowered and organized. Keep your priority items to 5 or 6 tasks depending on the amount of time you anticipate will be needed for each.
Other projects–I like using the “other projects” worksheet to record my never ending list of things to be done. Having this worksheet incorporated into my time management plan allows me to keep my “to-do list” in one location and transfer projects easily to my priority worksheet as others are completed.
Is your social media plan a simple act of dipping your toes in the water? If so, you should be prepared for the consequences of premeditated drowning by your competition. NOW is the time to jump in and get your feet wet. Social media is a critical business tool which is no longer considered a stand-alone marketing option; you must streamline it into your overall marketing strategy. If you haven’t read our article,Ready To Jump On The Social Media Bandwagon, review it now for simple and basic steps to get your toes wet. Today’s blog guides you further with a blueprint to incorporate social media into your overall marketing plan.
Financial advisors are expecting and planning for social media to play a meaningful role in 2013. Research conducted by LinkedIn partnered with FTI Consulting reports seven in ten financial advisors are using social networks for business. Adoption rates will continue to grow as 2013 unfolds representing an 80% increase year-over-year. Advisors face unique compliance challenges unlike other professions, however, the good news is advisors recognize ways to overcome these obstacles.
According to Forrester Research, two-thirds of U.S. online adults with an investment account now have social network profiles.Presented with the adoption rates of clients and prospective clients utilizing social media, advisors are facing their fears head on by linking social media strategies to their overall business and marketing plans.
7 Steps To Create Your Social Media Plan
1. Establish Your Foundation–You know I preach “always begin with the end in mind”. The same holds true in a social media plan. Creating a social media plan requires a solid foundation and a vital first step. Many firms engage in social media but do not have a structure in place to support their efforts. Identify your goals and objectives while ensuring they link to your overall firm goals. Keep your objectives SMART! (Specific, Measurable, Attainable, Realistic/Relevant and Timely). Read our blog, The Gold Rush To Social Media-How To Track Your Success, to gain insight on developing a secure social media foundation.
2. Identify Social Media Channels Best For Your Firm – Find out what networks your clients and prospective clients are engaging. A simple start, and the most common, is to incorporate LinkedIn, Facebook and Twitter.
3. Create A Social Media Calendar – This goes beyond scheduling your own social media content. Schedule time to engage in conversation. Avoiding engagement in online conversation is the biggest reason for social media failure. Tip: use social media streamlining to simplify your social media efforts. Hootsuite, SocialOomph and TweetDeck give you the ability to schedule and simultaneously post to social media channels.
4. Create Content – Schedule time for content creation. One of the best ways to organize your content is to create a library of topics relevant to your industry. Research and save documents in your library to compile information related to your chosen topics. If your firm has adopted blogging, which I highly recommend, use a blogging template.
5. Identify Contacts – Make connections by following relevant conversations. By interacting, connections will happen naturally. Tip: create a list of centers of influence you would like to connect with along with a plan for introduction. Share their content through re-tweets and shares.
6. Research Competition – Schedule time to stalk your competition. Find out what they are doing, what they are talking about and how they are engaging with others. Read their posts, tweets and blogs. In this case, advisors need to keep up with the Joneses.
7. Track and Measure Results –There are many ways and tools available to track and measure your social media efforts. To get started, refer to your goals and objectives you established in step one. Identify the increase in followers, engagement level, connections and leads you have made. Watch for our follow up in another blog with more information for you to use in tracking and measuring your social media results.
Don’t become overwhelmed with social media. Have fun with it, follow these steps and reap the benefits.
Question: What do you think about social media? What challenges or success have you experienced in social media?You can leave a comment by clicking here.
• Email us at info@ironstonehq.com • Call our office at 800-917-8020 • Connect with us:
Social Media is still baffling business owners as well as the question, “Is it worth it?” and “How will I know?” An eConsultancy survey of 1,000 companies found 41% of respondents had no idea of social media’s financial impact. Despite the hearty rush for firms to jump on the social media bandwagon, social media represents only a fraction of most marketing budgets, if any at all. Once firms are using social media, many do not have a structure in place to track results.
“Social media success comes to those that link their social media choices to the firms overall business goals,” as stated by Susan Etlinger. Etlinger represents her findings with 60 social media marketers to understand how businesses measure social media through research completed for the Altimeter Group.
Etlinger goes on to say, “48% of social strategists indicate their primary focus is to develop ROI measurements.” By focusing only on ROI, many pieces to the puzzle are missing, as ROI is just one metric in social media toolkits. Her study further reveals, despite advances in integrating social media into business, the majority of companies surveyed do not have a standard framework in place to measure its value. This was found to be true of businesses scratching the surface and more than half of the companies fully engaged in social media.
Before Choosing Tools-Establish a Foundation
Before a firm is ready to think about analytical tools, a foundation must be established. Entliger sites four steps to follow prior to selecting measurement tools:
Align social media strategy with business objectives: Determine what you want to accomplish.
Determine what success means to you and how you will measure it: Identify benchmarks to measure – such as brand awareness, lead generation, educational resource access, etc.
Evaluate your firm’s readiness to measure social media: This step is the most critical and most overlooked in social media tracking. Firms lack sufficiently trained staff for social media measurement and delegate it to over committed and under-prepared employees.
Choose tools to compliment your overall strategy: Once you have identified what you want to accomplish, how you will measure success and what resources are available, you are ready for tool selection. Keep in mind, there is no one single-best tool for every objective and tools available are changing quickly.
Once you have addressed each of these steps, you are ready to move on to an organizational plan for social media.
Outline Team Roles and Responsibilities
Jeremiah Owyang has written extensively about how companies should organize for social media. I have included some of his findings here.
Identify your social media measurement team. This can consist of a group of team members working collaboratively or be the responsibility of one individual. Regardless of the anatomy of your measurement team, you will need to address the following components and identify solutions for each.
What resources and skills are available within your firm?
What resources and skills are not available within your firm?
Who will design and implement your social media strategy and process?
Who will be responsible for tool selection?
Who will design and implement your tool selection strategy and process?
What education and training will be required?
How will the social media measurement team collaborate with other team members?
A good place to start with each of the above questions is to identify your current situation and identify where you would like to be in the future.
In our upcoming blog, One Size Doesn’t Fit All In Social Media Tracking Methods, we will identify resources to aide you in tool selection.
Question: Is your firm or organization fully engaged in social media? How do you measure your success? Leave us a comment by clicking here!
• Email us at info@ironstonehq.com • Call our office at 800-917-8020 • Connect with us:
TEST YOURSELF!In 60 seconds, or less, can you state your value proposition without hesitation and awkward silence? Try it! Take your 60 seconds now… I’ll wait.
How did you do? Would your team members succeed at this test or better yet, how about your clients? A value proposition is a promise of value to be delivered and a belief from your clients that they will receive value. Creating a value proposition is part of a solid business strategy.
After a most recent coaching session with one of my advisor clients, the question of currency came to mind. Not the dollars and cents kind — the ‘client-centric’ kind. My client said something to the effect; “we may not be a council member team or have been doing this the longest, but our clients trust and love us”. That is priceless currency! This firm has clearly and successfully created a value proposition centered around their clients.
Your value proposition should clearly communicate the benefits your clients and potential clients will receive by doing business with your firm. Describing the features of your products along with their capabilities will not sell. Place focus on demonstrating how your firm will provide a solution to your clients needs, wants and values. A value proposition is essential in showing the world what value you can bring to their lives and create awareness… “that your clients know your services are right for them.”
Steps To Create a Value Proposition
1. Get To Know Your Client – Reverse roles and become your client. Think from their perspective by identifying who they are, what they need, what improvements they are looking for and what challenges they need to resolve.
2. Promote Your Products & Services – A value proposition cannot be a vague description of the products and services you offer. Clearly show your clients the benefits they will receive by solving their challenges or improving their current situation. Achieve this by including actual charts and percentages to visually engage your clients.
3. Identify Your Competitors – You will need to dig deep on this one. Don’t stop at just knowing the names of your competitors. Continue to borrow the mind of your client and research what your competition offers or does to create value. Completing a SWOT Analysis, strictly focusing only on your competition, can be an effective tool in determining how you can position your firm ahead of your competitor.
4. Recognize Saying, “We Are Different” Is Not Enough – Knowing that trust, excellent client service and knowledge will not differentiate your firm is the first place to start. While these are excellent traits, clients expect them.Delve further and answer these questions from your client’s perspective.
Why should I buy this product?
How will it solve challenges I have?
Be specific in your answers by utilizing graphs and factual numbers to illustrate the benefits. You should also answer why your products and services are better than the competition and what your client values most about your firm.
Now that you have completed the above steps, highlight your answers and craft your value proposition.
Your value proposition should not be lengthy but provide enough information to show why a prospective client should do business with you. The trick is being able to articulate your value in 60 seconds or less by highlighting the benefits and how you will solve the needs of your market. Without a strong value proposition, people will search for something better.
Don’t forget to share the 60 second value proposition challenge with your team! If you haven’t already looked at our article on creating a unique value proposition, please do so now – this will provide you with further insight for your value proposition creation.
Question: What challenges or success have you experienced in creating a value proposition?
Let us know! We want to hear from you!
• Email us at info@ironstonehq.com • Call our office at 800-917-8020 • Connect with us:
How do you create a compensation structure that is fair to all employees, attractive to new hires, creates excitement and loyalty amongst your team and engages their learning development while increasing productivity? Reinventing the wheel is not necessary, but creativity, communication and evaluation of your existing plan are essential.
In my years of creating compensation plans for organizations, I have found the overall goals of the firm lack a link to a compensation process. For example, one of my clients would like to establish their firm as “the best place to work in town”. I love the goal but found that it doesn’t link to any current processes. When employees read this statement every week in their staff meeting, it is fruitless, stands alone and has become meaningless. Linking the goal to various processes, specifically a compensation plan, would benefit this firm across the board.
Creating an Effective Compensation Plan
Follow these steps to create an effective compensation plan. Communicating your compensation plan is extremely vital. Communication provides team members with a thirst to stretch themselves to reach higher levels within the compensation structure; therefore increasing engagement, productivity and development.
Compensation Analysis
Perform a SWOT analysis of your existing compensation plan by studying the strengths, weaknesses, opportunities and threats of your current structure.
Complete a cost analysis by focusing on your overhead and human capital costs. Determine the affordability of new hires if desired
Job Evaluations
Create an organizational flow chart or review and update your existing chart.
Review job descriptions and create, clean-up and re-align to match roles.
Determine roles for new hires if applicable.
Performance Management
Audit your current performance management system.
Establish goals expectations and incentives.
Collect and conduct 360 degree appraisals.
Analyze data.
Create professional development plans.
Compensation Plan
Integrate individual performance with compensation.
Base/Benefits/Incentives/Extras – If you haven’t read our blog Compensation Conflict? What Employees ReallyWant, please do! You will find some great ideas on establishing your compensation plan.
Cost Analysis Update
Perform an overall cost analysis of your firm.
When compensation plans are effectively communicated, morale and retention will improve significantly. DownloadIronstone’s Compensation Planning Checklist for use at your firm. 01.15.13IronstoneCompensationPlanningChecklist
Question: What compensation challenges are you facing at your firm?
Let us know by leaving a comment! We want to hear from you!
• Email us at info@ironstonehq.com • Call our office at 800-917-8020 • Connect with us:
What English plural word does not contain any of the same letters as its singular equivalent?
Answer: kine
What is a kine? An old way of saying a cow or ox in plural form
Have a great weekend!
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