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1. fall 2012
published by
Advice & information to help you manage your business
No more Why business owners
need to stop waiting
Excuses for the economy to
improve and act now
PLUS: Hot global industries
Ex-employees as assets

2. Advice & information to help you manage your business
Achieving Growth Among Uncertainty Realize your organizational goals through
the one-of-a-kind solutions Sikich, a
Every day, we hear conflicting reports in the news regarding the leading accounting, advisory, technology
condition of the United States’ economy. Some say it’s still distressed; and managed services firm, brings to your
others claim to have evidence of a recovering marketplace. Regardless of
unique challenges and needs. With more
which assertion is more accurate, the one thing we do know is that every
aspect of the economic situation is uncertain. than 400 employees across the U.S., we
rank as one of the country’s top 50
Uncertainty can create a wealth of problems within organizations, making expansion largest Certified Public Accounting (CPA)
and growth seem impossible. However, surviving these uncertain times and even
firms—yet you receive the personalization
achieving a competitive advantage is feasible by taking action.
and attention you need to grow and
Take a look at your organization’s productivity levels. If you’re not producing an experience success.
optimal amount, determine what is causing those low levels. Your employees are
critical to high productivity—do you need to review your current performance-
Get to know Sikich by taking a look at our
management policy and procedures, develop a stricter training program or solicit
employee feedback on a more regular basis? Perhaps your organization’s low new website, launched at the beginning of
productivity levels are due to operations. In this case, consider investing in a business September. There, you’ll find out how you
management solution that can give you daily insight into everything from your can gain value for your organization
financials and sales to manufacturing and supply chain management. through our dedicated industry teams,
Also, talk to a professional about how you can save your organization money. Taxes, for client commitment and extensive list of
instance, can be complex, especially if your organization is multi-faceted or operates services:
internationally. An expert can uncover tax credits that your organization might be
• Accounting, Audit & Tax
missing, saving you tremendous amounts of money now and for years to come. Give
Sikich a call today to set your organization up for growth today and into the future. • Business Valuation
• Dispute Advisory
Respectfully, • Investment Banking & Corporate Finance
• Financial Advisory
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James A. Sikich, CPA • Performance Measurement
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• Information Technology Infrastucture
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2 fall 2012

3. volume 13 • issue 1 • Fall 2012
Leading Edge
www.LeadingEdgeAlliance.com
contents
The Leading Edge Alliance is an interna-
tional professional association of inde-
pendently owned accounting and con-
sulting firms. The Leading Edge Alliance
enables member firms to access the
resources of a multibillion-dollar global
professional services organization,
providing business development, pro-
fessional training and education, and
peer-to-peer networking opportunities
nationally and globally, around the cor-
ner and around the world. features
Members are quality firms who are suc-
cessful, have deep client relationships,
and strong ties to the community. The 4 No more excuses
Alliance provides members with an
impressive combination: the compre- Why business owners need to stop waiting
hensive size and scope of a large mul-
tinational company while offering their for the economy to improve and act now
clients the continuity, consistency and
quality service of a local firm.
Member firms have access to extensive
14 The ‘ex’ factor
teams of business advisors—a peer-to-
peer connection that provides the right How companies can utilize former employees and
business solutions for clients.
other connections to drive growth
To find out more about the Alliance,
contact Karen Kehl-Rose, president, at
+1 630.513.9814 or kkr@The-LEA.com. 16 What’s hot
Leading Edge Advisory
Committee
Despite global pessimism, some global industries
Tricia Egry / Alpern Rosenthal are sizzling with opportunity
George Brust /
Lurie Besikof Lapidus Co., LLP
Jen Lemanski / PKF Texas departments
Gary Voth / PKF Texas
Karen Kehl-Rose /
The Leading Edge Alliance
9 Technology outages:
In affiliation with
How to create an effective disaster recovery plan
Smart Business Content Marketing
www.sbnonline.com
Ann M. Gynn / Editor 10 Identifying waste:
Danielle Toth, Mark Scott, Greg Jones /
Associate Editors
7 improvement opportunities for your business
Stacy Vickroy / Art Director
Andrea Jager Lauren Beck / 11 Higher education:
Graphic Designers
How to manage student accounts receivables
Leading Edge is published four times per
year by Smart Business Content Marketing,
835 Sharon Drive, Suite 200, Cleveland, OH
44145. (440) 250-7000, (800) 988-4726,
12 Client Spotlight: Earth Friendly Products
FAX (440) 250-7001, www.sbnonline.com.
Periodicals postage paid at Cleveland, Ohio.
12 Industry Updates
IRS Treasury Regulations require us to inform
you that any tax advice contained in the body
of this communication was not intended or
written to be used, and cannot be used, by 13 Bits Pieces
the recipient for the purpose of avoiding pen-
alties that may be imposed under the Internal
Revenue Code or applicable state or local tax
law provisions.
18 On the Bookshelf
Leading Edge 3

4. No more
4 fall 2012

5. cover feature
Why business owners need
to stop waiting for the economy
to improve and act now By mark scott
A
recession can be a great excuse to do Most are not big enough to take on
nothing with your business. Just significant risk and recover if it doesn’t turn
don’t try telling that to Bob out well. But many do have some capital to
Mitchell. work with and the wherewithal to make
More than a year after the things happen — if they are willing to be
economy crashed and banks started closing bold and take a chance.
their doors en masse, Mitchells Family of “There are plenty of people who are too
Stores looked to add to its portfolio. cautious and too comfortable,” Mitchell says.
The Westport, Conn.-based upscale “They have the means to do it, but they are
clothing retailer bought the Wilkes Bashford still not willing to take the risk. It’s like
stores in San Francisco and Palo Alto, Calif., investing in the stock market. The best time
in December 2009, at a time when the to invest is when everything is low. Not that
troubled line of stores had just filed for everything is as low as it was three years ago,
bankruptcy. but there is still a lot of uncertainty out there.
For Mitchell and his team, it was an From an acquisition standpoint, things are
opportunity that couldn’t be passed up. still at a different level today than they will
“These may have been things we wouldn’t be when the economy takes off again.”
have done in good times, because things were As a result, if you’re looking for a bargain
good and we didn’t have to worry about it,” and have the means to buy, the time to act
says Mitchell, co-president of the family- may be now. If you’re waiting for the
owned business. “But by doing these things, economy to start growing again in a big way,
it’s energized our team. We’re looking for you may be waiting for a long time.
opportunities when maybe other people are “The recession was declared over in June
being complacent.” 2009,” says Al Lewis, a columnist for Dow
As the economy enters its fifth year of Jones Newswires and The Wall Street Journal.
uncertainty since the 2008 crash, owners of “We’ve had three years of recovery since then
mid-sized businesses face tough decisions. continued on page 6
Excuses
Leading Edge 5

6. continued from page 5
and we still have 8.3 percent unemployment opportunities and forget about the economy,” Mitchell keeps a watchful eye on the stock
and a mortgage foreclosure crisis that won’t Lewis says. “There were people who got very market, but it’s not out of a desperate hope
quit. Now we have people warning we might rich during the Great Depression and there for direction. It just happens to serve as a
go into another recession next year. So we’re were people waiting in bread lines. You just pretty accurate barometer for his business.
going to have two recessions with a three- try not to be the person waiting in the bread “There seems to be a very high correlation
year recovery in between? To me, that sounds line.” that when people feel good about their
like a depression.” It’s too stressful and too frustrating, and at investments, they are more willing to spend
With all that in mind, what is the best the end of the day, just downright futile to on things that are not necessities, like
course of action for an owner of a mid-sized look for signs from the economy that are expensive clothes or expensive jewelry,”
business to take? going to magically help your business. Mitchell says. “The market is probably the
“The only economic indicators I would biggest indicator of how our business is going
Get moving watch, if I watched them at all, would be to do.”
According to the latest report from the housing and unemployment,” Lewis says. Most of the time, Mitchell is keenly
Congressional Budget Office, fiscal year “Those are the things that are hurting the focused on his customers and what he can do
2012 is slated to close Sept. 30 with a economy the most. When we really see to satisfy them, whether the economy is
federal budget deficit totaling $1.1 trillion, improvement in those areas, then we’ll know booming or busting.
the fourth year in a row with a deficit of the economy is indeed turning around.” “We’re just a big believer that, in our
more than $1 trillion. business, it’s all about relationships and
GDP is expected to grow at about customers,” Mitchell says. “You have to have
2.25 percent in the second half of 2012, “Companies need the best products, but that’s kind of a given.
compared with 1.75 percent in the first half,
and unemployment will likely remain above to look at their It’s really the one-to-one personalized service
and getting to know your top 100 customers
8 percent.
Little is expected to change from a
own opportunities intimately. There is always more business
available from your top clients. What things
numbers perspective, but even if those and forget about are you not selling them that you could?”
numbers did change, how does that help you
as the owner of a mid-sized business?
the economy.” Getting in touch with your customers
should not just be your job and it should not
Not much, says Lewis. – Al Lewis, a columnist for Dow Jones just be the job of your low-level staffers on
“Companies need to look at their own Newswires and The Wall Street Journal the floor. It should be everyone’s priority.
“Ninety-five percent of our work force
works on Saturday, which is our busiest day
touching customers,” Mitchell says.
“Everybody from finance to buying to anyone
behind the scenes is there touching
customers on Saturday. That, to me, is rule
No. 1. In good times or bad times, everybody
has to understand the customer is king or
queen. They drive everything. Without
customers, we have no business.”
Lewis agrees that customer
communication is the way to go for any
business searching for a solution to the
ongoing economic malaise.
“You just have to accept that there is going
to be this uncertainty,” he says. “You have to
go find customers. Do whatever you can to
find customers, hold on to customers, get
revenue and find things that are making
money, and get rid of things that aren’t
making money. There’s only so much value
that information from the economy or the
markets really has to offer you. You’re pretty
much on your own.”
6 fall 2012

7. cover feature
Use your experience
For business owners who need data or a
signal to help guide their decisions, John
Graves says there are numbers that can give
you some sense of direction, even if they
don’t solve all your problems.
“Most companies look at backlog or back
order,” says Graves, a chartered financial
consultant and author of The 7% Solution,
a book geared toward helping people make
smarter investments for their futures.
“If orders change or orders are cancelled,
that’s a signal,” he says. “If orders are
Three survival
extended, that’s another signal. You can also
look at your accounts receivable. If people are
30 days late and they extend it to 60 or 75
days, that’s a signal. If we’re cleaning up ARs
and the 90s and 75s are going away and tips for CEOs
1
we’re banking capital more quickly, that’s also
a signal.”
Just because it worked once, don’t assume it will work again.
You can also look at truck utilization
Bob Mitchell could not be more pleased with his company’s
figures, wholesale diesel fuel prices,
underemployment figures, rental property acquisition of Wilkes Bashford. But he didn’t take the move as a
usage and vacancies and residential data, strict blueprint for all future decisions.
Graves says. “The biggest mistake most people make in good times or bad
But once you sort through all that data, it is doing something, having quick success and then trying to
is still ultimately you that has to make the duplicate it very quickly and do it again and again,” Mitchell says.
decisions. The numbers can only take you “We’re much more a believer that 90 percent of all success is
part of the way.
execution.”
2
“We cannot create a formula to describe
the future,” Graves says. “None of us can. So
depending on the company, the industry, the Don’t worry about the economy.
product or the service, there’s a significant Financial columnist Al Lewis says it’s really the best thing you can do.
amount of guesswork. We have to make Make the decisions that you think put you in the best position to grow
decisions. The informed part comes from our and don’t worry about what’s happening on the business pages.
experience, our background, our current “Focus on what matters,” Lewis says. “Find somebody who
backlog of business, our inventory, how quick needs your goods and services, and that’s it. There are still people
we turn it around and what our clients or
out there who need things. Find them. Don’t worry about the
prospects are telling us. That’s all data driven.
economy. If you have to make hiring decisions, don’t just sit there.
Everything else is a guess.”
Do it.”
3
Mitchell made the decision back in 2009
to buy Wilkes Bashford and it has worked
out well for his company. Stay out of debt.
“If you have the capital financially and John Graves calls debt an addiction that you should seek to avoid
intellectually in your organization to do at all costs.
something, this is the time to do it,” Mitchell “People think, ‘If I take on more debt and I put more money into
says. “It will pay itself back. On the flip side, my product or service or inventory and I try to sell more stuff, I’ll
this is not the time to make an acquisition
become a bigger company and I’ll feel better,’” says Graves, a
that would be betting the farm. If it’s
chartered financial consultant. “That’s the wrong answer. Paying
something that is make-or-break, it’s
probably not the right time to do it in case down debt is good. Taking on debt is bad.”
we get into a small downturn again.”
continued on page 8
Leading Edge 7

8. cover feature
continued from page 7
Whatever you do, make sure that you’re
making decisions as a team and using all of
the talent at your disposal to collectively sort
through the pros and cons of a decision.
“I find that, especially in times that are
more challenging, having everybody on the
same page is even more important so that we
all win or lose as a team,” Mitchell says.
“We’re not just dictating any one thing.
We’ve made sure everybody believes in what
we’re doing before we jump into it.”
Don’t be paralyzed
One of the biggest unknowns looming is the
presidential election. The outcome of the race
and the decisions that are made in 2013
could have a big effect on the economy.
But just like all the other financial news
out there, Lewis says you can’t put your life
or your business on hold.
Don’t obsess
“It can be quite paralyzing,” the columnist
says. “It would be better to just look at what’s
going on with your customers and look at
how you can be more involved with them
during these times.” over your
competition
The economy is going to do what it’s
going to do and you can’t be swayed by one
report today and swayed back by a conflicting
one tomorrow. If you do, you will drive
yourself crazy.
“For instance, we can get really good When Al Lewis sees a business owner studying his competition a
employees for a fraction of what we would
little too much, he takes it as a lack of confidence.
have had to pay them during an economic
“You should have intelligence on your competitors and be aware
boom,” Lewis says. “We should be looking at
who we can hire. Who is super smart that is of the tenor in your industry,” says Lewis, columnist for Dow Jones
available? People are suffering from declining Newswires and The Wall Street Journal.
incomes, but what is the value you can deliver “But the most successful business owners aren’t sitting around
to these people so that they can continue to worrying about what their competitors are doing. They’re plowing
use your product or service?”
new fields and they are moving ahead. If you’re focused too much on
Focus on your business and on what you
do really well, and you’ll have the best chance what they’re doing and not on what you’re doing, that means your
to find profitability. vision isn’t very strong.”
“You can’t just sit there and go, ‘Well, we Bob Mitchell doesn’t worry about his competition, but he does keep
can’t hire anybody because we’re worried an eye on it. The co-president of Mitchells Family of Stores is curious
about what Obama is going to do if he’s about what competitors do that works and what doesn’t work.
re-elected, or we’re worried about something
“You can learn from everyone,” Mitchell says. “But our big
else,’” Lewis says. “You hire somebody
because you can employ them immediately differentiating factor is still going to be the environment we create,
and you can make a profit from them.” LE the relationships we develop and the service we provide for clients.”
8 fall 2012

9. inside:
• Identifying waste: 7 improvement opportunities for your business
• Higher education: How to manage student accounts receivables
• Client Spotlight: Earth Friendly Products
• Industry Updates
Technology outages:
How to create an effective disaster recovery plan
I f you have ever been in the
unfortunate position of
experiencing a technology
system and you will begin to
realize what has the highest
priority and what may not be
procedures to use an
alternate site, the
main point-of-
disruption—either due to power equally important to your contact and a backup.
outages, loss of Internet organization. • Plan testing
connectivity, blown battery Plan for common incidents. schedule:
backup devices, lightning damage Learn from history when Describe how you
or, the worst case, natural disaster creating a disaster recovery plan. will test the plan, as
damage—hopefully your disaster What types of outages have you well as how often.
recovery plan was in place, tested already experienced? Are Start small by testing
and working. However, not all lightning strikes, tornadoes, specific areas or
leaders prepare for a disruption, flooding or server failures departments. Often,
which can critically damage your prevalent in your area? To help it is not possible to
business’s technology or overall you begin thinking about this, pull the plug on the
operations. An effective disaster here are the five main losses in entire organization,
recovery plan typically includes order of most common to least declare a disaster and start the so starting small
five steps: common: plan in motion, which during slower demand times
Prioritize processes. • Human error loss: deleting locations are covered by the may be easier. Remember—
Prioritization of processes is files, overwriting data and plan and the critical without testing your plan, it is
sometimes referred to as a everyday mistakes applications and facilities. not complete.
business impact analysis. By • Data corruption: virus attacks In addition, list the major • Recovery plan maintenance:
segregating each significant and application errors departments and their Many changes will impact the
process into one of three • Storage loss: corrupt or process owners. plan, including contact
categories (mission critical—most malfunctioning hardware • Teams and contacts: information, personnel
important; business critical; or • Site loss: flood, fire, tornado List the disaster recovery changes and the computer
organizationally important—least or hurricane team and responsibilities; network environment. Review
important), you are prioritizing • Server loss: CPU failure, theft contact information for the plan once or twice a year
the parts of the organization that or catastrophic virus process owners, IT staff and to keep up with these
should be recovered first in the Communicate the plan. third-party vendors; off-site changes. Also, don’t forget to
event of an outage. This step is key because it’s storage information; and have paper copies on hand,
Determine recovery important for staff at all levels to information about any just in case.
objectives. understand what their roles are in alternate recovery site. • Appendices:
Decide how long you can live a disaster or disruptive situation. • Environmental Include copies of important
without access to a particular The best way to communicate documentation: contracts, agreements and
system. Additionally, ask yourself: the plan is to prepare a Include current network previous plan testing results.
Should a system fail, how current document, place multiple copies documentation such as ISP
is the data from which you throughout all business locations contacts and accounts, Creating a disaster recovery
recover? Define what you and ensure everyone knows passwords, physical maps of plan may sound like an
consider a disaster and set the where it is located. Just as you all locations and recovery site overwhelming and time-
maximum amount of time you know where the fire extinguishers information. consuming task. Start with what
can go without access to your are located, you should know • Disaster you already know about your
system, otherwise known as where the disaster recovery plan implementation tasks: network and processes and then
recovery time objective. Then, set is located. When documenting Detail recovery procedures, start to fill in the gaps. When it
the recovery point objective, the this plan, keep the following in alternate site information, comes to disaster recovery
acceptable amount of data loss mind: what the recovery planning, having something in
from the most recent complete • Organizational information: environment will look like place is always better than having
system backup. Do this for each Define who is entitled to and where to report, nothing in place. LE
Leading Edge 9

10. Identifying waste:
7 improvement opportunities for your business
T he current economic situation
is forcing business owners to
take a good look at their
the resources you have
available in the organization.
• Gather your management
team and conduct a
“whiteboard” session with a
Can you make the workplace
companies to identify waste and more ergonomic for your waste auditor.
key improvement opportunities. employees? When they sit • Write down the seven areas
Whether cutting costs is a down to perform a service or of waste and discuss where
necessity or you just want to run work on a project, do they the company is experiencing
a leaner business, it’s beneficial to have all the parts, tools, plans waste in each critical area.
constantly seek ways to reduce and schematics to complete • Brainstorm at least three
waste. There are seven areas the job, or do they have to get ideas per area about how to
where waste typically up and waste time looking for eliminate some waste. At
accumulates. Explore these and something to complete the this point, do not think
help your management team task? about time or cost
develop and implement an 7. Defects are likely the biggest considerations.
effective waste-reduction plan. waste to your organization. • Estimate how much money
1. Overproduction occurs when Where do defects occur in the company is spending or
a company produces more of your business? The answer is losing because of each area
an order in anticipation of everywhere. Most defects and of waste.
waste or damage. For waste can be eliminated from mistakes occur due to poor • Rank each idea on a scale
example, imagine you need to that path. Think about the processes, lack of training or of one to five, with one
assemble a product that flow of work in your lack of proper equipment. being the easiest to
requires eight component organization and ask yourself Defects and mistakes cost implement and five being
parts. Your purchasing if it makes sense for your money and customers. the most difficult. At the
department may actually buy business. end of this process, it will
10 component parts just in 4. Inappropriate processing After you’ve identified where be easy to identify the ideas
case any parts are spoiled or occurs when you are using the waste accumulates in your that have the highest value
damaged. In a service setting, incorrect tools and processes organization, it’s time to start with the easiest
this happens when staff for a job. For example, do you developing a plan to eliminate, or implementation.
spends too much time on a use a 20-ton press when a at least reduce, this waste. To do • Document your work.
project that can only be billed 10-ton press can do the job? so, follow these six steps: Complete a one-page plan
at a certain price. Is an experienced senior and give a deadline to
2. Waiting is the time your executive doing a job a lower- complete the project. Also,
product or service spends in ranking person should be have all members of the
the system. It waits for doing? management team complete
someone to add value before 5. Inventory is a huge waste their plans identifying
it goes to the customer. If you culprit within organizations. individual strategies and
can eliminate the waiting How often do you “turn” your objectives.
time by 50 percent (which is inventory each year, and how
ambitious), you can reduce much outdated inventory are It is essential that you set the
your cost and improve your you keeping, storing and stage with your employees. This
cash flow tremendously. counting each year that is not last step is critical for any
3. ransport is the critical path
T going to sell? If there’s too improvement objective in your
your product or service takes much, consider finding a new organization because these
through the plant, so consider place for it. plans provide a road map to
the inefficiencies in its way 6. Motion and process ensure that the improvement
and what kinds of time or improvement has to do with plan is complete. LE
10 fall 2012

11. Sikich LLP
Higher education:
How to manage student accounts receivables
E ach year, it’s getting more expensive for students to attend a
college or university. The cost of tuition, housing and books
are all increasing, so students need more assistance and are
taking out more loans. After graduation, student accounts
receivables can be a significant asset of a higher education
institution and, more importantly, can require a substantial
amount of the institution’s resources to bill and collect these
fees. By properly managing student accounts receivables,
colleges and universities can focus on their core mission rather
than spending time collecting past due balances.
The effects of improper management
When your college or university does not manage these
accounts receivables well, it has a considerable effect on the
entire institution. A few of the effects include: • Bill the tuition and fees in a The earlier you send
• Revenue loss timely manner. The earlier students their bills, the
• Slower cash flow you send students their bills, better chance they will
• Improper write-offs of bad debt the better chance they will pay in a timely manner.
• Opportunity cost of not pursuing outstanding balances pay in a timely manner.
• Students registering for future terms without satisfying • Include a signed promissory note. This will ensure a legal
prior debt agreement has been made for all multi-payment plans.
• Shorten the term. Yes, this increases the amount students must pay
Develop benchmarks for comparison during each installment, but it also wipes the debt from their
In order to start improving the way your higher education account more quickly.
institution manages accounts receivables, you should first • Set a maximum receivable balance. If students cannot carry more
outline some benchmarks. These will allow you to compare this than a specified balance, it prevents them from registering for
year’s numbers to last year’s, which will give you an idea of future terms.
where not only your accounts receivable stand but the • Impose late fees. If your institution already has late fees for non-
institution’s overall finances. Some benchmarks to consider paying students, increasing these fees may help.
include but are not limited to: • Place holds on records or transcripts. This is important for
• Total annual tuition students seeking full-time jobs or internships, as they may be
• Total annual amount billed (other than tuition) required to provide these to prospective employers.
• Average receivables balance per student • Block college or university services. This may be something small,
• Percentage of students with receivables balances such as library access, or something significant, such as graduation
• Late fees charged and collected ceremonies.
• Total annual write-offs • Report delinquent students to creditors. Federal law requires that
• Percentage of students placed in collection during higher education institutions regularly update credit statuses, and
the fiscal year credit scores are important to students entering the workforce.
• Receivables collected by a third party
Different ways of improving collections work for each unique
Improve the collection of accounts receivables college and university, but the underlying message is the same for
Now that you have a better idea of where you stand compared all—student accounts receivables affect all institutions’ operations in
to last year, you can determine how to make collection easier one way or another. Regardless of how you collect the fees, it’s
on both the student and institution. imperative you do for your institution’s future. LE
Leading Edge 11

12. Sikich LLP
Client Spotlight: Earth Friendly Products
Founded in 1967, Earth Friendly Products new ways to save money
manufactures more than 150 all-natural through its taxes. Whether
household and commercial cleaning for domestic production or
products that are made from pure research and development,
plant-based ingredients. With more than Sikich has provided support
300 employees and five manufacturing and value to Earth Friendly
facilities across the country, Earth Products’ business by
Friendly Products creates green products catching missing tax
in a sustainable fashion by reducing its credits and going back
carbon footprint and lowering costs. several years to ensure
For example, the company’s corporate the returns were amended.
headquarters is home to the largest Through these savings, as
commercial solar array in Illinois. well as the company’s long-term vision, Friendly Products and learn more about
Since Earth Friendly Products’ Earth Friendly Products has grown by 20 how Sikich added value to the company?
partnership with Sikich began, the percent annually for the last few years. Watch the Client Spotlight video at
green company has experienced many Want to get an inside look at Earth http://youtu.be/JzVXQ0oqxBM
Industry Updates
Keeping abreast of statistics, trends and industry developments allows you to identify risks and uncover opportunities in the market.
With better insight into the competitive landscape, you can make more informed, strategic decisions and gain a competitive edge. Our
quarterly industry updates offer intelligence from First Research* and focus on the critical facts that affect your day-to-day business.
MANUFACTURING PROFESSIONAL ASSOCIATIONS
Consumer confidence drops – U.S. consumer Business travel forecast dims – Business travel is
confidence, a key demand indicator for manufactured expected to slow down for the remainder of 2012 in
goods, fell in July 2012 to its lowest point in the year, light of continued economic concerns in the United
according to the Thomson Reuters/University of Michigan index of States and Europe, a signal that attendance at business and
consumer sentiment. The index reading fell to 72 from June’s 73.2; a professional association meetings could suffer. The Global Business
Bloomberg News survey of 69 economists had forecast a July 2012 Travel Association downgraded its outlook for U.S. business travel
index reading of 73.5. The drop in consumer confidence is likely due from 3.6-percent growth to a more modest 1.8 percent. Businesses
to persistently high unemployment, the European debt crisis and its will also rein in international business travel expenses as economic
contribution to stock market volatility and low home prices. Household uncertainty continues to plague Europe. The forecast is a stark
spending accounts for about 70 percent of the U.S. economy, so a contrast to the relative strength of the business travel market in
sustained decline in consumer confidence could reduce demand for recent years and underscores the concern businesses place on
many types of manufactured goods. overall economic conditions.
*Industry intelligence from First Research, a division of Hoover’s (a DB company). Data
published Aug. 13, 2012
12 fall 2012

13. bits
Does your social
media policy violate
federal law?
Many organizations have been grappling with
writing social media policies for their
employees, but recent guidance from the
general counsel of the National Labor Relations
pieces
How to keep your
star players
If your company can identify its top
performers, and has been lucky in landing
standouts from other companies, it is not
alone. Eighty-six percent of companies have
been able to do that. However, keeping the
stars from leaving is another matter entirely.
Board has shed light on the matter.
NLRB’s Lafe Solomon stresses that all These observations are the key findings
employees have certain rights under federal of an informal survey of 91 human resources
law that can’t be infringed upon in social professionals conducted in July by Sibson
media policies, and there are questions you should ask when defining your policy. Consulting. Almost all of those surveyed
• Does your policy prohibit or restrict “friending” other employees? Workers have indicated they were concerned about losing
the right to do so. A statement encouraging employees to “think carefully about their star employees. At the same time,
‘friending’ co-workers” was considered illegal. companies appear to be more selective in
• Does your policy prohibit your employees from posting about the company? their retention practices; just 58 percent said
Under federal law, employees may criticize their company and how it treats its they were interested in retaining their entire
employees. workforce.
• Does your policy prohibit talking about co-workers? The workforce has the right Companies may be waking up to the
to discuss wages and conditions of employment with employees and others. importance of providing career growth to
• Does your policy ban posting the trademarks, videos and pictures of the their best people.
company, or of others, without permission? If a policy merely urges people to “In general, one of the things that keep
“respect third-party intellectual property,” it is likely lawful. high performers around is giving them a
• Does your policy prohibit talking to the press? Workers have the right to talk to sense that they
the news media in certain labor disputes. have a future
• Does your policy prohibit talking in an indecent manner? A provision warning with your
employees to “avoid harming the image and integrity of the company” was not lawful. company,” says
• Does your policy prohibit discussing inflammatory topics? Employees have the Jim Kochanski, a
right to talk in a spirited manner about working conditions. senior vice
• Does your policy ban the use of social media while at work? A complete president at
prohibition of employees using social media with an employer’s resources or on an Sibson.
employer’s time was unlawful.
Three steps Executives can take some basic steps to 2. Be transparent and consistent in your
to build build trust among employees and improve actions. While businesses often focus on
business results, says Andy Atkins, chief results and ignore the process, if you are
trust among innovation officer of Interaction Associates, transparent and consistent, your
employees a global leadership development firm. employees will learn to rely on you.
1. nvolve people in decisions that directly
I 3. ay attention to relationships. If you
P
affect them. Bring people in before the understand what matters to employees,
call is made. Even if they oppose the they’ll trust you to act in behaviors that
decision, they are more likely to support align with their interests. LE
it if they were involved in the discussion.
Leading Edge 13

14. The ‘ex’ factor
How companies can utilize former employees
and other connections to drive growth
W
hen an employee leaves your
company, do you view that
person as disloyal or as a
future resource?
How you handle your
former employees can make a big difference
in how your business grows. Take Procter
Gamble, the $90 billion consumer goods
giant, as an example.
The PG Alumni Network was started by
a former employee and really took off 11
years ago when then-CEO A.G. Lafley put
his support behind the group. Today, there
are 45 active chapters with 25,000 members
around the world.
“Alumni groups are hard to get started
initially because it takes a little bit of money
and it takes people to volunteer to go do
this,” says Mike Halloran, network director
and board member for the PG Alumni
Network. “The fact that Procter was
supportive of our effort and gave us
encouragement to do this enabled us to get
going and put this together. That was Lafley
recognizing that this wasn’t a threat to PG
but a great asset to PG.”
Lafley was a big believer in the idea that
not everything has to be invented inside of
PG, and the company’s alumni are a key
part of that.
“One way we partner with them is sharing
with them specific innovation needs that we
have where we are looking for solutions,” says
Steve Baggot, PG’s director of global
business development. “We can activate
networks that we have built outside the
company and say, ‘We have this particular
innovation challenge. We are looking for this
particular technology or this particular go-to-
market solution.’ We take that need, and we
14 fall 2012

15. strategic
“The first thing you
need is a strong group
of volunteers to make
this work.”
– Mike Halloran, network director and board member
for the PG Alumni Network
can spread that need very, very broadly in an that former employees still feel like they are programming,” Halloran says. “The last
effort to identify potential solutions.” part of the PG network, that they feel like thing is to develop ways to generate
Alumni are often eager to respond to a they’re connected, they feel like they’re still funding. We’ve really thought through
need because they have previously worked in valued and they feel like their contributions how to develop sponsors for individual
a specific area, or they have a connection in a are still important.” events and how to generate enough cash
specific area that can help get potential To build that kind of network, you need to make those events self-supporting.”
solutions back to the company. to establish that effort from top leadership.
“The other broad bucket of how we interact Executives have to be visible to the alumni Other options
with them would be helping them understand and assist them with programming and While alumni groups are a great resource
that PG is open for business and wants to financial support. The advantage to working to a parent company, not everyone has
do business with alumni,” Baggot says. “Our with alumni is they already know the enough former employees to make the
group provides a portal for alumni to reach business, speak the same corporate language idea work. And sometimes you really need
back into the company to say, ‘I’ve got a and have the same shared values. a fresh perspective.
particular business proposition, technology, a “You start a few steps down the road That’s where a network of industry
new brand, a new capability.’ Our charter is to versus somebody who hasn’t had a history of experts can help.
help them and get that navigated to the right working with your company,” Baggot says. “The benefit that these experts bring is
place within the company.” “It makes it easier for both parties. They that they are on demand,” says Michael
should have better-than-average insight into Rubin, vice president of marketing for
Support is vital to success the types of things that would be Your Encore, an organization that
PG’s level of commitment and support to appropriate for your business, so it’s a good connects businesses with a network of
the alumni group helped it succeed. use of your time to be sure that you engage 7,500 industry experts. “It’s a great way for
“Two things are critical — one is support with them.” these companies to tap into advanced
from the parent company, and the second is As much as company support can help, it expertise that may be difficult to find
that the governance and the organization is still dependent on the alumni to make the elsewhere on the open market.”
come from the members themselves,” Baggot group successful. Many companies are now looking for
says. “It has to be something that comes “The first thing you need is a strong group on-demand talent. Networks like Your
from the population, and they have to want of volunteers to make this work,” Halloran Encore give those companies an outside
to do this. Equally, the company has to say, says. “Too often, some organizations try to perspective that alumni sometimes can’t
‘This is a good thing, and we are very get going with two or three people, and it provide.
supportive of that.’” really takes 10 or 12 to make it happen. “A lot of companies like someone from
Approach your former employees with Second, you have to have a very clear short- the outside, either from their general
support and view them as potential assets or term vision and clear long-term vision. Keep industry or from a totally different
even business partners to maximize their value. it simple, but have a very strong focus.” industry, to come in with fresh eyes,”
“In a lot of companies, when somebody Alumni groups are not just about going to Rubin says.
leaves their employment, they become cocktail parties and seeing somebody from The key is to look for relationships that
persona non grata,” says Lisa Popyk, the past, and they’re not just about having can benefit your business. Regardless of
communications and external relations for guest speakers and talking business. whether it is through ex-employees or
global business development at PG. “You have to figure out what is that right outside experts, viewing everyone as a
“They’re just not seen as part of the family. mix of personal connection events with potential business partner can help move
PG made a concerted effort to make sure business events and build that into your your business forward. LE
Leading Edge 15

16. What’s HOT
W
ith a sluggish global recovery and invented a way to bring sustainable local
bleak news about the recession in housing to people by developing an
Despite global Europe, many are pessimistic
about the world’s economy.
affordable, sustainable building material that
is biodegradable and 30-percent less
pessimism, some However, there are some bright spots,
particularly in the energy, health care,
expensive than other housing materials.
“Sustainable resources are very connected
global industries translation and localization and IT industries,
and experts forecast all of these will stay hot
to affordability,” Bujorean says. “People can’t
afford to pay a lot for energy, so new
are sizzling with in the short term.
technology that can be identified to provide
energy at a low cost that is more attainable is
opportunity Energy
The energy industry is of particular interest
a big focus. In Bangladesh, in particular, it is
important given the flooding and disasters
in the United Arab Emirates, Pakistan, that have happened there. These technologies
Bangladesh and Indonesia, says Ovidiu give them the possibility of rebuilding and
Bujorean, program manager of the Global are also applicable in other countries that
Innovation through Science and Technology can’t afford housing.”
Initiative, which builds entrepreneurship in
countries across the Middle East, Central Information technology
and Southeast Asia and Africa by identifying, As technology continues to advance and
coaching and funding entrepreneurs. The grow, more opportunities are opening up
initiative is part of CRDF Global, an across the globe.
independent nonprofit organization that Spain, for example, has a well-educated
promotes international scientific and population with a strong emphasis on
technical collaboration. advanced scientific and technological degrees,
“The UAE is looking to diversify its says Mary Anne Thompson, founder and
energy resources, so it has put a lot of effort president of Going Global Inc., which
into renewable sources of energy. It wants to provides country-specific career and
reduce its dependency on oil and lead the employment information for 30 countries.
way for other more renewable energies,” Potential areas of growth in Spain include
Bujorean says. “On the other hand, countries open-source software, which has strong
like Pakistan and Indonesia have limited public support and a growing market, and
access to traditional energy sources like oil, so e-health, e-commerce and mobile phone
they are looking to build alternative sources auxiliary services. Spain has one of Europe’s
of energy.” highest mobile phone penetration rates.
For example, the GIST Initiative recently In addition, IT professionals are strongly
recognized an entrepreneur from Indonesia in demand in Ireland. Two years ago, the
who created a company named T-Files. The country issued almost 500 work permits to
company develops marine turbines that turn non-European Economic Area software
ocean currents into electricity, a valuable engineers and computer programmers to
resource for the country. bring these much-needed professionals to
These countries are also focused on the country.
creating sustainable energy. A GIST “The Irish government will also be
Initiative funding winner from Pakistan, for implementing two immigration programs to
example, created a machine that turns farm encourage foreign investment and
waste into natural gas that can then be used entrepreneurship: the Immigrant Investor
as electricity. And in Bangladesh, a man Programme for non-EEA investors and the
16 fall 2012

17. Start-up Entrepreneur Programme for has also been entering emerging markets, This industry has steadily increased
entrepreneurs with proposals in innovation particularly those in Brazil, Russia, India and revenue and created jobs during the recession,
sectors,” Thompson says. “Successful China, which will help the industry expand says Terena Bell, CEO of In Every
applicants will be granted two-year residence and grow. Language, a provider of translating,
permits for themselves and family, renewable The United States is also focusing on interpreting and localization solutions in the
up to five years.” these emerging markets and expects to see United States and abroad.
India is also expected to see strong growth strong growth in this industry. In addition, This industry is hot in the United States
in the IT industry. In the second half of 2011, generic pharmaceuticals are expected to because, according to Title VI federal law,
the sector generated 81,300 jobs, and about grow in the United States because many which prohibits discrimination based on race,
130,000 new positions are expected this year. drug patents expire and the Patient color and national origin, any organization
The sector is particularly thriving because of Protection and Affordable Care Act receiving federal funds is required to provide
strong revenue from the country’s top four IT becomes effective, requiring all individuals translation and interpretation to people with
firms: Tata Consultancy Services Ltd., Infosys to have health insurance. limited English skills, Bell says. In addition,
Ltd.’s IT division, Wipro Ltd. and HCL Bujorean says the GIST Initiative worked the Small Business Administration recently
Technologies Ltd. with many entrepreneurs in health care, issued State Trade and Export Promotion
particularly in Mediterranean countries. The grants that help small exporters in the United
Pharmaceuticals and health care initiative recently saw two health care States pay for the translation of their
People will always need medication, so the entrepreneurs from Lebanon, one who websites and marketing material.
pharmaceutical industry is continually growing. developed a waterproof heart rate monitor Translation and localization is also a big
The industry is hot in Spain right now, that attaches to swim goggles and another trend in Ireland, which has a large
which has about 440 pharmaceutical who created a portable health monitor with concentration of localization and translation
companies operating in the country and GPS that can predict heart attacks and industry professionals and is a hub for
accounts for 18.5 percent of the country’s transmits data that can detect anomalies. multinational companies including Microsoft,
private research and development spending, “With the availability of Wi-Fi Cisco, Facebook, Google and LinkedIn.
according to Thompson. technologies, there are a lot of opportunities In addition, the industry is gaining traction
In 2011, for example, Celgene, a for new, technological health care products,” in China because, with a population of more
multinational biopharmaceutical company, Bujorean says than 1.3 billion, many businesses are looking to
opened its first research center outside of the target the country’s vast number of consumers.
United States in Spain as part of the Celgene Translation and localization “Businesses are looking toward foreign
Institute of Transnational Research Europe, While translation deals with language only, markets as an additional source of revenue,”
which intends to invest 60 million euros, or localization takes into account everything else Bell says. “Selling to these markets means
approximately $75 million, in advanced that is part of converting business from one communicating with them, so savvy
therapies and regenerative medicine. country to another, including in which businesses understand that translation is not
The industry is also big in Japan because currency a price should be quoted or whether a cost center — it’s a profit driver. This
governmental policies offering incentives for a website should be designed for viewing makes it a smart investment in a company’s
generic medicine have driven demand. Japan right to left or left to right. financial future.” LE
Leading Edge 17

18. on the bookshelf
Profiles in Leadership
The fall edition of Bookshelf idiosyncratic business leaders whose Julius Caesar, CEO:
includes volumes on leadership companies’ returns greatly outperformed those Six Principles to
of the SP 500. The subjects themselves are Guide Inspire
under duress, communication, CEO
not household names, although some of their Modern Leaders
transitions, unconventional (but Alan Axelrod
companies are: General Cinema, Ralston
effective) approaches to business Purina, The Washington Post Co. and Sterling
leadership and a look at how one Berkshire Hathaway. The book enumerates 248 pages
of the world’s earliest CEOs, Julius the consistent traits that helped these leaders In this most recent
Caesar, led his organization, the push their companies to exceptional installment in his CEO
Roman Empire, through its most performance, such as focusing on share value series, Axelrod analyzes
successful years. instead of sales, an aptitude for allocating Julius Caesar, the general, statesman and leader
capital and human resources, the conviction of the Roman Empire, in business-executive
that cash flow is more important than terms. He uses a straightforward, informal
Inside CEO earnings in determining a company’s long- style to explore six motivational standards that
Succession: The term value, and a talent for giving managers constitute the core of Caesar’s leadership
Essential Guide to autonomy to foster entrepreneurial thought philosophy. Within each of the six core
Leadership Transition and action. principles are several practical lessons CEOs
Thomas Saporito, can use in their daily work lives. Axelrod also
Paul Winum World Class provides an interesting analysis of Caesar’s life
Jossey-Bass Communication: and applies the lessons learned by the subject
256 pages How Great to modern day events and how they can be
Inside CEO Succession CEOs Win with similarly handled by today’s business leaders.
gives business leaders the tools to execute the Public,
their succession responsibilities with a high Shareholders, Leading With Honor:
level of professionalism to ensure their Employees, Leadership Lessons
companies’ sustained success. The authors from the Hanoi Hilton
and the Media
explain how human dynamics such as power, Lee Ellis
Virgil Scudder,
ego and role relationships can affect the Freedom Star Media
Ken Scudder
processes of relinquishing leadership, preparing 256 pages
Wiley
successors and ceding authority to other Former U.S. Air Force
240 pages
people, and they suggest strategies to prevent pilot Lee Ellis talks
World Class Communication is a tonic for
these and other dynamics from creating candidly about the five
business executives whose narrow focus on the
problems during the leadership transition and a half years he spent
financial aspects of their business can at times
process that can cause new business executives imprisoned in a brutal POW camp in North
be detrimental to their ability to communicate
to fail early in their tenures. Vietnam and offers 14 leadership principles he
well with the public, the media and their
employees. The book furnishes business formulated during that period that helped him
The Outsiders: persevere through his captivity. Ellis, a
leaders with procedures and crisis lessons and
Eight Unconventional corporate consultant and business leadership
provides numerous case studies of situations
CEOs and Their in which CEOs’ communications were coach, helps Fortune 500 executives, small
Radically Rational handled well and poorly. The authors provide business owners and entrepreneurs implement
Blueprint for Success tips on communication techniques to rally these leadership principles to increase their
William Thorndike employee support, speak persuasively in organization’s prospects for success via
Harvard Business Review public, win over the media and deliver coaching sessions provided within each chapter
Press effective messages to shareholders. of Leading With Honor. LE
272 pages
In The Outsiders, Thorndike profiles eight
18 fall 2012

19. Sikich and other members of the
Leading Edge Alliance are leaders in
many key markets, including:
The Leading Edge Alliance is an international professional
Alabama India Palestine
association of independently owned accounting and consulting firms.
Albania Indiana Panama
Afghanistan Indonesia Paraguay The Alliance enables member firms to access the resources of a
Argentina Iowa Paris multibillion dollar global professional services organization, providing
Atlanta Ireland Peru
Australia Israel Philadelphia business development, professional training and education, and peer-to-
Austria Italy Phoenix peer networking opportunities nationally and globally, around the corner
Azerbaijan Jordan Philippines
and around the world.
Bahrain Kansas Pittsburgh
Baltimore Kazakhstan Poland
Bangladesh Kenya Providence Members are quality firms who are very successful, have deep client
Belgium Knoxville Puerto Rico
Bolivia Korea Richmond relationships, and strong ties to the community. The Alliance provides
Boston Kuwait Reno members with an impressive combination: the comprehensive size and
Brazil Las Vegas Romania
Russian Federation
scope of a large multinational company while offering their clients the
British Virgin Islands Latvia
Buffalo Lebanon San Francisco continuity, consistency and quality service of a local firm. Member firms
Bulgaria Lexington Saudi Arabia have access to extensive teams of business advisors – a peer-to-peer
Cayman Islands London Scotland
Chattanooga Los Angeles Seattle connection that provides the right business solutions for clients.
Chicago Luxembourg Senegal
Chile Macedonia Serbia
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Colombia Mauritius South Carolina
Croatia Memphis Spain • Access to extensive teams of accounting professionals and business
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Czech Republic Miami Switzerland
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Fort Lauderdale Nebraska United Arab • The Alliance offers accounting, consulting and tax services through a
Ghana Netherlands Emirates global alliance of firms with over 18,323 professional staff, more than
Germany New Orleans Uganda
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Guatemala New York U.S. Virgin Islands • The Leading Edge Alliance offers global business advisory expertise
Harrisburg, PA New Zealand Venezuela
and experience with innovation, progressiveness and quality.
Hartford North Carolina Washington, D.C.
Hong Kong Norway Vietnam
Honolulu Orange County, CA Virginia/West Virginia
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Hungary Pakistan To find out more about The Leading Edge Alliance, visit
www.LeadingEdgeAlliance.com or contact Karen Kehl-Rose,
Visit LeadingEdgeAlliance.com for a detailed listing of member firms. president, at +1 630.513.9814 or kkr@The-LEA.com.
Leading Edge 19

20. Sikich LLP Corporate Office
1415 W. Diehl Road, Suite 400
Naperville, IL 60563
(877) 279-1900
www.sikich.com
return service requested