Banking Business October 2024

Pictured: Serilda Summers-McGee of Portland's Workplace Change

Managing

Paul Dini

Dennis D’Ambrosio

Daryl Fourtner

Beth Meidinger

Riq Molina

John Stearns

I am honored and excited to introduce myself as the new CEO of Heritage Bank. As I step into this role, I want to take a moment to express my appreciation for your continued trust and loyalty, which have been fundamental to our success over the years.

At Heritage, we remain committed to delivering the exceptional products and services that you have come to expect from us. My goal as CEO is to build on our strong foundation and take the company to new heights by focusing on innovation, enhancing customer experiences and expanding our capabilities to meet your evolving needs.

This also includes continuing to offer our business customers with useful and relevant banking news, stories and resources through Banking Business.

In the last issue of 2024, we celebrate a few of our women-owned business customers. On page 2, we hear about their advantages of being a woman in business as well as the struggles and disadvantages they’ve experienced. On page 7, we go over why you should separate your business and personal accounts. In the Nonprofit Corner on page 26, we talk about grant funding and fundraising, including the different types of grants, how to successfully apply for one and some challenges that you might run into. And on page 33, we explore how the advancement of artificial intelligence has transformed the methods used by scammers to exploit their victims.

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Subscribe to the digital version of Banking Business at heritagebanknw. com/bankingbusiness. We'll email you a link to read the latest issue when it publishes and highlight a few of our favorite articles.

We also include additional tips and resources for businesses in the accounting and bookkeeping industry, how SCORE (Service Corps of Retired Executives) mentors guide entrepreneurs towards success and our new lending program, the Washington State Small Business Credit Initiative (SSBCI), that was created to support small businesses and empower them to access the capital needed to invest in job-creating opportunities.

As always, thank you for reading Banking Business and for choosing us as your banking partner.

Sincerely,

Bryan McDonald President and CEO

Bryan McDonald is president and chief executive officer at Heritage Bank. Bryan joined Heritage Bank in 2014 as executive vice president, chief lending officer. He has more than 20 years of managerial experience in sales, credit, operations, commercial banking and residential real estate. At Whidbey Island Bank, he served as president and chief executive officer from 2012-2014. He currently serves on the board of the Washington Bankers Association.

Women Who Mean Business

Women leaders share how they navigate challenges and harness their strengths for business success.

ARTICLE BY JOHN STEARNS

For this article, five women business owners or leaders of nonprofits with whom Heritage Bank does business with were asked via email the same three questions about what advantages they think they have as women in business or in leading their organization, what disadvantages or struggles they think they experience because they’re women in business and their relationship with Heritage.

Women-owned businesses are a powerful economic force in the United States, numbering about 13.3 million with total sales of $2.5 trillion and payroll of about $500 billion.

The number of firms includes about 1.3 million employer firms, defined as those with paid employees, and 12 million nonemployer firms, those without paid employees, according to 2021 data, the latest nonemployer and employer statistics by demographics from the U.S. Census Bureau and provided by the U.S. Small Business Association Office of Advocacy.

The employer firms had more than 10.5 million employees, according to figures from the office, which is the independent voice for small business within the federal government and source of small-business statistics and research.

Meanwhile, women-owned businesses account for about 40% of small business, per data cited in one federal report last year. But access to capital, particularly venture capital, childcare access and affordability and mentoring gaps hinder additional growth opportunities, the Women’s Small Business Ownership and Entrepreneurship Report said. The report was prepared by the majority staff of the U.S. Senate Committee

on Small Business & Entrepreneurship to, as it noted, “understand the challenges women entrepreneurs face at a time when women are making important economic strides” and to offer policy recommendations.

Women comprise more than half the U.S. population, but they struggle to find equality in the world of business, noted one part of the report’s conclusion.

“Optimizing the economic and personal potential of America’s women-owned small businesses and entrepreneurs is vital to the success of the American economy and its standing in the world in the 21st century,” the report’s conclusion added. “Congress must be prepared to do more to improve conditions for America’s women in business or risk losing billions, or more, in annual growth.”

The report highlighted Women’s Business Centers as a key component of the SBA’s entrepreneurial ecosystem to help women-owned small businesses. Another resource cited was SCORE, a volunteer business mentoring program and resource partner of the SBA. (Read more about SCORE on page 24 of this issue.) Both offer numerous forms of assistance for starting and growing businesses.

Serilda Summers-McGee

Founder and CEO of Workplace Change in Portland, OR

“As a female business owner, I believe one of my greatest advantages is the freedom to define my own path. I am free to succeed or fail based on the values and principles I establish for myself, my team and my company,” says Summers-McGee.

When she worked within larger systems, she had to navigate the politics, follow others’ rules and often align with ideas that didn’t fully resonate with herself. While it offered a sense of security, it also stifled her ability to fully embrace her vision.

“Running my own business allows me to take risks on my own terms, recognize the value each person brings to my team and celebrate the brilliance that comes from authentic collaboration. This freedom has unlocked the full potential of who I am, drawing on the strength of my unique identities—being a woman, being Black, growing up in the Midwest, navigating life with a low-income background and learning to hustle early on. Each of these experiences has shaped my resilience, creativity and leadership,” Summers-McGee continues.

Running a business undoubtedly comes with challenges for everyone, but for women, there are struggles that seem especially reserved for them. Summers-McGee explains that one of the most frustrating issues she’s faced is the assumption that, because she’s married, her business must somehow be tied to her husband.

Though they’ve been married for 14 strong, loving years (each pursuing their own careers), there are constant reminders that the world often doesn’t view Summers-McGee’s business as her own. “I’ve had attorneys, CPAs and even banks try to place assets in both of our names—or worse—only his…despite the fact that Workplace Change is a company I built from ideas in my mind and passion in my heart. It’s disheartening and, frankly, infuriating,” says Summers-McGee.

Heritage provided Summers-McGee with her first ever loan as the founder and CEO of Workplace Change. The loan was used to purchase her first physical asset, the Workplace Change building. Heritage has continued to provide a variety of services (lines of credit, operating accounts, etc.), and “they’ve been the best partner I could ever hope for.”

Laurie Demeritt Owner & CEO of The Hartman Group in Bellevue, WA

As a woman in business, Demeritt enjoys providing opportunities and empathy for other women who may be experiencing career ups and downs similar to hers. Demeritt heads The Hartman Group, a food and beverage consulting company.

“While everyone can offer a kind ear or a helping hand to others in the business world, I think women are uniquely advantaged in being able to recognize challenges that others are having and to offer guidance and hope,” she wrote.

That ranges from the practical, such as figuring out how to juggle multiple responsibilities at work and home, to the more esoteric, like determining whether work aligns with one’s personal values and beliefs. She thinks women can seamlessly flow between business decisions and personal commitments in a way that reflects the more modern approach to work today.

Demeritt doesn’t feel like there are specific struggles associated with being a woman in business, but she continues to see a lack of female leadership at the highest levels of many major companies The Hartman Group works within the consumer-packaged goods industry.

“It is disconcerting considering how many qualified women are working at these firms and how many of these companies are still selling their goods primarily to female consumers,” she wrote. “Despite the smaller size of our firm in comparison, I’m delighted that five of our six leadership roles are held by women.”

Heritage is The Hartman Group’s bank and provides a short-term credit line.

Dr. Emily Sabbagh

Specialist in oral & maxillofacial & laser surgery, owner of Federal Way Laser Surgeons, Bellevue Laser Surgeons & Washington Laser Institute

Being a woman business owner, especially an oral and maxillofacial surgeon, Sabbagh found that patients sought her out because she was a woman and, as such, generally perceived to be more empathetic and gentle.

When she started her specialty practice in oral and maxillofacial surgery in 1993, challenges included some referring doctors, whom she relied on for referrals, who were more comfortable referring to male competitors. She also found it difficult as a female business owner to take referring male doctors to lunch.

“It was always easier for men to lunch with men

clients, at least in the ‘90s when I started my business,” Sabbagh said.

Sabbagh in 2008 began transitioning her skills as a longtime oral and maxillofacial surgeon by expanding into the esthetics industry, doing laser treatments for the face and skin, focusing on cosmetic facial surgery and doing advanced injections. She has two med spa businesses, Bellevue Laser Surgeons and Federal Way Laser Surgeons, and she also has a school, Washington Laser Institute, next door to her Federal Way location, where she teaches advanced esthetics to estheticians.

Her relationship with Heritage Bank, with which she exclusively banks, dates to 1993 and Valley Bank, which Heritage acquired in 2013.“Carol Smith was my initial banker at Valley Bank and had the belief in me and my business to finance my first and second building,” Sabbagh wrote. “Her attentiveness to my business needs never faltered and I will always be grateful to her and the bank for financing me and being there for all my business needs.”

Smith, a commercial banking officer in Heritage’s Puyallup office, remains Sabbagh’s banker and specializes in medical and dental lending.

Dr. Emily Sabbagh

LaurieDemeritt

The Hartman Group

Cheri Kilty

CEO of YWCA Yakima in Yakima, WA

Kilty has led organizations providing domestic violence services for more than 30 years and said the advantages she has as a woman are based in her unconditional respect for others.

She loves meeting people and working together to find common ground and solutions, and she said that being able to collaborate and partner with other businesses and organizations gives her an advantage to succeed.

“As a woman, I see and hear different perspectives on things daily and am open to learning and broadening my own views,” Kilty wrote. “This allows me to be able to shift the course of things easily. I lead from a place of love and compassion, keeping the bigger picture in mind.”

Women are expected to navigate and juggle many competing needs simultaneously, she said. Working in a domestic violence organization, someone’s life is on the line every day, Kilty noted. That requires vigilance to help women and children make life-changing decisions and “you have to have confidence in your ability to do that and to hold everyone in place to keep moving forward.”

As for disadvantages, Kilty said early in her career, even sometimes today, people might not take her seriously or realize she’s CEO because she’s confident and quiet. She’s comfortable letting other staff lead in different ways; as such, some outside the organization might mistake who’s CEO.

“As a nonprofit leader, sometimes other business leaders don’t see me as their equal,” she said. “Nonprofit organizations are dealt with differently, even if everyone involved has the same goals.”

Work-life balance is a constant challenge when leading an organization that operates 24/7, she said. That requires sacrifices of one’s personal time due to issues that can include competing demands, including staff support, facility issues or fundraising challenges, Kilty added.

“I have been fairly lucky to have worked in many mostly female-driven organizations,” she said. “I work hard to create an environment where all people are welcome, so some of the issues other women face in the workplace with gender bias and harassment is not common in the nonprofit organizations I have led.”

Working with Heritage, Kilty is the main point of contact with bank staff.

“We choose to do business with Heritage Bank because of how very responsive bank staff are to our needs,” she said. “Heritage Bank supports our organization in many ways by volunteering and participating in our activities. Together, we are making a difference in our community.”

YWCA of Yakima

YWCA of Yakima

YWCACheriKiltyofYakima

Jodi Peterson-Stigers

Executive director of Interfaith Sanctuary in Boise, ID Peterson-Stigers isn’t sure there are specific advantages to being a woman in business.

“In fact, being a woman has often meant overcoming many challenges to get our organization to where it is today,” she said of the organization that provides shelter and other services for the homeless. “These struggles have made me a stronger leader and a fiercer advocate. I’ve learned the importance of grace, action and using my voice to push solutions forward.”

If there is an advantage, she said, it might be that as a woman and mother she brings strength, determination, love and compassion to her job in a softer, kinder way.

Regarding struggles as a woman leader, Peterson-Stigers said she has been criticized occasionally for raising her voice against wrongdoing she sometimes sees in treatment of unhoused people.

“I bring a lot of passion to this work, and I am very open and transparent about my beliefs and very clear about what work needs to be done,” she wrote. “This does not always work to my advantage. It feels like sometimes, because I am a woman, I am heard and treated differently,” which makes it harder to get things done, she said.

The organization provides several services for men, women and families who are homeless, including victims of domestic abuse, persons with mental and/or physical illness, veterans, persons with drug/alcohol abuse issues and those facing under/unemployment.

Heritage Bank finalized an $8.1 million construction loan enabling Interfaith Sanctuary to begin remodeling a former Salvation Army building in Boise that will give Interfaith Sanctuary about four times more space than its existing facility, which it has outgrown due to demand. The nonprofit initially faced challenges securing funding because many banks were hesitant to support a shelter entirely funded by private donations, Peterson-Stigers said.

Heritage took a different approach, she said.

“Recognizing the importance of the project, they collaborated closely with Interfaith Sanctuary to develop a loan structure that safeguarded both the bank and the shelter,” she explained. “We knew it was going to take a very special bank to help us make this dream shelter come true and that was Heritage Bank. When others shied away from this project, Heritage leaned in to understand and chose to be a part of a solution.”

InterfaithJodiPeterson-STigers Sanctuary

Why You Should Separate Business and Personal Accounts

From day one, business owners should have a separate bank account that they deposit their income and pay their business expenses. It can become confusing to pay expenses from your personal account and then try to work out the different transactions at the end of the month. Having a designated business account can make it easier, faster and more accurate to keep track of, especially during tax season. It’s also useful to designate a business-only credit card for any online business purchases.

But there are other reasons apart from the legal requirements to separate personal and business expenses.

Easier to check how you’re doing

Separating personal and business accounts helps get a clearer picture of your finances. Imagine trying to sort through a list of all your personal expenses (and differentiate between the coffees that were work related and those that weren’t). This is not only true for day-to-day transactions but also when you’re with your accountant working out your overall financial position. Drawing a clear line between the two separates your personal money from funds that go towards running your business.

Lower accounting or bookkeeping fees

It’s much easier for your financial adviser to see what’s happening at tax time. The less time they spend sorting through all your records, the less you may be charged.

Tax compliance

Most businesses incur expenses when generating income and often these can be deducted from the income when calculating business income tax.

Having a picture of your business finances will make doing your taxes easier when the time comes to complete your returns. If you don’t separate your business and personal spending, you could spend

hours going through bank statements trying to identify each business transaction. Not only is this frustrating and not a great use of your time, it means you may also miss valid business expenses hidden in your personal bank statements and this means you could lose out on possible tax deductions.

Business credibility

If you transact from your personal account, anyone paying you will enter into the account that has your name as the description. They will know it’s your personal account and if you deal with other businesses, they too will know. Having a business account from which you make payments, as well as lodge payments into, will help your business appear more professional and established to your suppliers and customers. It’s also an opportunity to get your business name out there and hopefully, as a result, build trust and awareness of your brand.

Seamless business transactions

If you have a business account you can link other accounts like a business credit card or a payment mobile solution, making for more streamlined transactions.

As your business grows you may find you have to open a business account in order to get financing and further expand. If this is the case, separating your personal and business accounts now will help you to easily provide any lender with full financial records of your business.

Other reasons

Consider using online accounting software. These tools integrate with your banking and automatically send information back to your accounting system. This ultimately saves you time by making monthly reconciliations quick and efficient. You could also open a separate savings account and regularly deposit money to help with cash flow when your tax liabilities are due or to build up a cash reserve.

Together, we achieve more.

OnSeptember 18, 2024, employees across the Heritage Bank footprint came together for our company-wide Volunteer Day, demonstrating their dedication to community service and social responsibility. This annual event, now in its third year, saw teams from various departments stepping away from their usual roles to contribute time and effort toward meaningful causes in their local communities.

Collectively, employees logged nearly 1,700 volunteer hours in just one afternoon. With our biggest turnout yet, 555 employees and 60 enthusiastic organizations, this event showcased our dedication to giving back and making a meaningful impact. Volunteers participated in a wide range of activities, including environmental clean-up projects, food drives, supporting local shelters and painting houses.

Through events like Volunteer Day, Heritage continues to reinforce its commitment to fostering a culture of responsibility and support. We believe that when employees come together to give back, they not only strengthen

their community but also build a stronger, more connected workforce.

“I am thankful that I got to share this afternoon with my team and that our company is committed to our local community.”

-Yvonne L. Walker, VP, Branch Relationship Manager, Kent

Here are some of the projects employees worked on.

NW Furniture Bank

Fifteen employees successfully built eight bookcases and 11 tables. The furniture bank will provide these items to newly housed individuals and families so they can make their house a home.

Whatcom Humane Society

One of our Bellingham teams worked with the Whatcom Humane Society to clear a deer enclosure for the winter season.

Habitat for Humanity of Central Lane

Our Eugene team helped Habitat with their development project at Fischer Village in Springfield, OR. They finished the rock work around the brand-new

Fischer Village Marquis along with dressing up the retaining wall and pulling weeds.

Gifts from the Heart Food Bank

A team on Whidbey Island helped host a food drive outside Prairie Center Market.

Boys & Girls Clubs of Snohomish Co.

The team cleaned tables, chairs, rooms, bulletin boards and Legos for the Lynnwood Boys & Girls Club. They even had the opportunity to interact with the kids in the game room!

“Thanks so much to you and your team for all the work you did at our family shelter! I drove by last night and the front hedge looks 100 times better than it did.”

-Tracy Montaron, Community Action of Skagit County

Family Education & Support Services

A team of nine helped FESS with miscellaneous tasks around their office, including touching up paint, shredding documents, create holiday wish list tags for children, organize donations and more.

End the Year for 2025 READY READY

Take some time as the year winds down to review your successes and opportunities for improvement, revisit goals and implement efficiencies for a strong start to the new year. Here are some tasks to consider addressing.

ACCOUNTING AND FINANCE

Compare performance from last year

If your profits were lower than expected, you may want to make some changes as you head into the new year. Review pricing, margins, product mix and overhead. Invest any surplus into the business or save for a rainy day.

Review cash flow

Analyze cash flow trends from last year to predict the next 12 months and make any changes in advance. The faster you can identify problems, the quicker you can fix them.

Audit inventory

Check if there are any differences between actual and recorded inventory. If you’re still counting inventory manually, consider making the switch to an accounting system or point-of-sale system to automate record keeping. Find out why inventory is going missing (often theft or waste).

Collect any overdue payments

Try to collect all money owed to you by the end of the year to reduce the risk of bad debts and to improve your balance sheet.

Asset review

Buying fixed assets before the end of the financial year lets you claim depreciation for that part of the year. Identify any assets you never use or that are obsolete to be revalued or written off.

Note advance income

If you were paid for work you don’t complete until next year, you'll record in the following year's income.

Claim all expenses

You’ll want to make sure you’ve documented all the expenses you’re allowed to offset against sales. Expenses paid in advance, like income in advance, are counted in next year's business expenses.

Confirm supplier details

Verify that the contact information and names are still correct for each of your vendors. Delete any inactive vendors or inaccurate information. Now is also a good time to evaluate your vendor relationships and contracts and look for opportunities to negotiate better deals in the new year.

MANAGEMENT

Celebrate business accomplishments

Look back at everything you and your team have accomplished. Document your wins and share them. Your employees will appreciate ending the year on a high note. It’s also a great time to recognize outstanding performers and create career paths for them to follow.

Update your business goals

Set goals for the coming year based on what happened in the last 12 months. Create high-level action plans for each goal to help you achieve.

Build capability

Evaluate your current capabilities to ensure you can handle any increase in sales. Create a list of things to implement to increase output, such as adopting technology, investing in new equipment, adding locations or going online.

Check you have the right people

Conduct a human resource audit to identify if you need additional employees with different skills or if you need to retrain existing employees.

STRATEGIC PLANNING

Check in with your customers

Use their feedback to fine tune your delivery. Ask what else could you provide to meet your customers needs.

Look for new opportunities

Stay current on industry trends and identify businesses you could collaborate with. Look at third-party selling sites and search product or service reviews. Subscribe to news feeds from people that resonate with you who are commenting about your industry or technology.

Check out the competition

Search for businesses that are similar to yours. Review their products and services and look for ways you could improve them. Identify what your competitors are doing differently, and decide if you need to make any changes.

Develop new products or services

Identify new products and services you could introduce to your customers. Research what new products or services customers would like.

Review your business model

It’s always a good time to think about changing, updating or adding a new business model. There may be opportunities as a reseller, wholesaler or subscriber, or through licensing/royalties, manufacturing, contracting, e-commerce, multi-level marketing and franchising. Tiered or subscription pricing could open up budget and premium markets.

MARKETING

Attend events

Allocate budget and register for industry events, trade shows, exhibitions, webinars or podcasts. Join relevant professional and networking associations.

Find new customers

Identify similar customer segments you already sell to and target them with marketing campaigns. Measure the response rate from direct emails, online traffic and focus on what generates leads.

Build positive word of mouth

Encourage referrals from customers, create exclusive offers, set up a loyalty program or document your after sales process.

Improve search engine optimization (SEO)

SEO will increase your website traffic. Spend time determining keywords and phrases so it attracts the right traffic to your business.

Audit your online presence

In a world driven by e-commerce, it’s essential to have an online presence. Have someone outside the business test and provide feedback on your website, online ordering,

social media, SEO effectiveness, booking systems, inventory management and customer data.

Content marketing

Review your strategy to ensure you have an ongoing content plan for next year. Keep your content fresh by writing regular blogs or running demonstrations and workshops. White papers, videos, articles, interactive tools, infographics and customer case studies are all good examples of content marketing.

Create a targeted marketing plan

Outline a marketing strategy aimed at your designated customer segments, then develop an advertising plan to build awareness and encourage purchases.

Find

new markets

Look for markets that are like yours. Offering online purchasing will widen your customer base. Consider if your product or service could be licensed and delivered by another business to find a totally new market you hadn’t considered before.

TECHNOLOGY

Review technology needs

Determine if you need to upgrade internal systems or software. Iron out inefficiencies by streamlining systems and processes, such as properly delegating work, using technology, ditching unnecessary tasks and making sure employees are working efficiently.

Clean up your online security

Backup your computer files, change passwords, check internet security software is up to date and update your security incident documentation. You should also educate staff about the dangers of malware, phishing, email compromise hacking, identity theft, ransomware and what to do if there is a security breach.

ARTICLE BY JOHN STEARNS

Pictured left to right: Patrick Ridenour, Amber Clark, Brandon Posey and Chris Kane

Kim Nguyen

Heritage Bank is providing $7 million in financing for a new surgical center in the Beaverton area that will focus largely on dental and eye surgeries—a project that reflects a key area of expertise within the bank’s Tigard commercial banking team.

“When it comes to dental, our appetite expands outside of the Portland region, as we canvas all of the Northwest—Oregon as a whole state, Washington, Idaho, and we selectively entertain transactions outside of market from trusted sources,” said Chris Kane, senior vice president, who leads the commercial banking team for the Tigard Commercial Banking Center.

That’s because there’s so much dental practice expertise with individual bankers on his team, Kane said.

Those bankers include Amber Clark, senior vice president-commercial banking officer, who specializes in the dental and medical sector, and brings a strong track record in the health care field to her role; and Brandon Posey, senior vice presidentcommercial banking officer, who also focuses heavily on commercial real estate in multifamily, industrial, office, retail and construction, but who also has dental expertise. The surgery center is one of Clark’s projects.

The facility’s majority owner, a dental surgeon, plans to sublease extra space in the building to other medical surgeons for various specialty procedures, Kane said, estimating the center will have about 16 doctors.

Dental-related deals are largely practice acquisitions—one doctor buying out another who might be retiring, for example—but also include equipment loans and real estate purchases for new offices.

When a doctor acquires a practice, there are lots of moving parts; thus, financing that acquisition is a niche specialty for the bank, Kane said.

“Banks all like collateral and things they can kick the tires on, but with practice transitions, or acquisitions, it’s largely an intangible asset (i.e., the patient base), which is really what carries the bulk of the enterprise value,” he said. “You’re buying a recurring revenue stream and that’s not something that you can physically see or touch. So, if you don’t understand the industry or what separates a good fit from a bad fit when you’re talking about changes of ownership, you can trip up pretty easily, resulting in a sizable airball in terms of liquidation value.”

While dental and health care deals comprise the most transactional volume for the office, the most value is in commercial real estate transactions.

The Tigard team also arranged roughly $20 million in financing for an upscale apartment project just across the Columbia River in Vancouver. The project, near the growing waterfront, is nearing completion and will begin leasing in 2025, he said.

“It was pretty cool to have the Heritage Bank name on one of the bigger, more high-profile multifamily properties that was going in there to house some of that growth” occurring in Vancouver, Kane said.

Another feather in the Tigard office’s cap is the recent landing of a third-generation Portland company’s business, Kane said. In part, the auto-parts supplier was looking for a service-oriented bank with a strong focus on small businesses, he said, proud of securing the company’s trust and business.

The office is also in the process of bringing aboard a well-known nonprofit’s deposit relationship, which includes a small lending component, Kane said.

BUSINESS IN TIGARD BY THE NUMBERS

Major industries: Retail, health care, education, technology, clean energy and advanced manufacturing

Highest paying industries: Management of companies and enterprises, utilities and construction

Economy: Approximately 3,400 businesses employing around 45,000 workers

Major employers: Consumer Cellular, Gerber Legendary Blades, LaCie, NuScale Power, Stash Tea Company, Medical Teams International

Employment rate: 64.8%

Source: visitoregon.com

ABOUT OUR TIGARD COMMERCIAL TEAM

Combined banker experience: More than 62 years

Charitable giving in 2023: $15,750

Top nonprofits: Lines for Life, Northwest Utility Contractors Association, American Student Dental Association OHSU, Multnomah Dental Society, Clackamas County Dental Society

CONTACT OR VISIT

10300 SW Greenburg Rd, Suite #180 Tigard, OR 97223 (503) 924-2312

Brian Graham, Branch Manager

Brian started his banking career 20 years ago at a large national bank. Since joining Heritage, he's found more opportunity to connect with his community and build relationships with customers. He specializes in consumer and small business lending as well as team development. Outside of work, he supports the Oregon Food Bank and is learning how to cook Italian cuisine.

Kane highlighted those projects and clients (a surgery center, apartments, family-owned auto-parts supplier and nonprofits) as reflecting the Tigard team’s diverse expertise.

The Tigard commercial crew, in addition to Clark and Posey, includes Patrick Ridenour, vice president-commercial banking officer, with a focus on commercial contractors, financial advisory firms and CPAs; and Teresa Carpenter, vice president-relationship banking officer, with a focus on nonprofits, labor unions and community-based businesses.

The office is located in the Lincoln Center campus at 10300 SW Greenburg Road, Suite 180. Others in the Tigard office include Stephanie Kreiger, assistant vice president-credit analyst senior; Nicci Walker, assistant vice president-credit analyst senior; Lynne Toepfer, assistant vice president-credit analyst senior; Paige Rinde, loan production assistant senior; and Megan Raz, loan production assistant.

Kane, who has about 23 years in banking, the last six with Heritage, also brings a background in the dental sector and health care, plus the commercial and industrial sector and commercial real estate.

He encourages bankers to develop a passion about a certain sector and then immerse themselves in learning it.

“I think what I always try to impart on folks is that whatever you do, pick an industry and become proficient in that area,” he said. “It could be wineries; it could be contractors. You want to be viewed by customers and prospects as an expert. It establishes credibility with prospective borrowers when bankers take the time to dive in and understand their industries.”

That kind of knowledge helps differentiate banks that largely offer the same products and services, Kane said.

“When you have bankers that can all talk the talk with a borrower and really become a consultant because they understand their industry so well, that carries a lot of value, even more so than offering the lowest rate or fee,” he said.

Heritage’s bankers also have become immersed in passions outside the office.

Examples include Clark, who volunteers regularly with the Dental Foundation of Oregon, which provides free care to underprivileged youth. She’s also active in several local dental societies and Oregon Health & Science University’s School of Dentistry.

Posey volunteers at nonprofit organizations that include the Red Cross, Park Foundation and Oregon Food Bank.

Ridenour volunteers with Oregon Dog Rescue as a puppy foster parent and at the Oregon Food Bank.

Kane volunteers at Portland organizations including Metropolitan Family Services, Oregon Food Bank and Trillium Family Services. He also has served as past board president for both the Risk Management Association (RMA) and Oregon Golf Club.

Heritage Bank encourages employees to be active in their communities and to pick organizations with missions that are important to them personally. In turn, this empowers employees to play a vital role in helping the region to prosper, Kane said. “The bank promotes everybody following their passion.”

Empowering local businesses to grow

We're proud to have financed our first State Small Business Credit Initiative (SSBCI) Owner-Occupied Commercial Real Estate Loan

$780,000 new construction commercial building for a machine shop in Mason County, Washington. Access to the SSBCI loan program helped retain seven jobs and created two new jobs.

Empowering Change:

HBCDE Receives

$26 Million in SSBCI Funding That Provides up to a 9% Subsidy Towards

Investment in Owner Occupied Real Estate

WASHINGTON STATE SMALL BUSINESS CREDIT INITIATIVE

This program is exclusive to businesses and nonprofit organizations located in Washington state.

The Washington State Small Business Credit Initiative (SSBCI) was created to support small businesses and empower them to access the capital needed to invest in job-creating opportunities. It’s administered by the Washington State Department of Commerce in partnership with the U.S. Department of Treasury and participating organizations statewide.

The SSBCI program helps promote entrepreneurship, support small business ownership and increase the flow of capital for small businesses and nonprofit organizations. A portion of the program funding is targeted to very small businesses and businesses owned by socially and economically disadvantaged individuals—a population who often faces difficulties in obtaining the necessary funding to start or expand their business.

Through the SSBCI program and the Heritage Bank Community Development Entity (HBCDE), we’re using a combination of our own capital and SSBCI funds to make owner-occupied commercial real estate loans to qualified businesses. Our objective is to help businesses and nonprofit organizations fuel economic growth and create jobs. Priority for program funds will be given to businesses located in a CDFI-eligible census tract with less than 10 employees and doing a project.

Each project will have two separate loans: a subsidized “SSBCI loan” and a conventional “companion loan.”

SSBCI loan*

Lender: HBCDE, LLC

• Forgivable loan for up to 9% of the new project cost

• Repayment structure: Interest due monthly for 10 years, multiple advances available on construction projects, ten-year maturity, loan balance forgiven at the ten-year maturity if not currently in default or previously liquidated

• Pricing: 1% fixed annual percentage rate (APR); no loan fee

• The SSBCI loan shall be in second position and subordinate to the companion loan

Companion loan*

Lender: HBCDE, LLC or Heritage Bank

• Conventional commercial real estate loan underwriting and pricing

If you or someone you know are ready to get started or have questions about eligibility, contact your relationship manager or visit our website at heritagebanknw.com/ssbci. For more information about the program, visit bit.ly/wa-small-biz-loans

The Washington State Small Business Credit Initiative (SSBCI) provides much-needed capital to small businesses and nonprofits throughout Washington, particularly those in historically underserved and under-banked communities. SSBCI is administered by the Washington State Department of Commerce in partnership with the U.S. Department of Treasury and financial institutions statewide. For more information, visit https://bit.ly/wa-small-biz-loans.

*Subject to credit approval and program guidelines. Certain restrictions apply to refinancing options and are subject to program terms. This program cannot be combined with other government sponsored programs (e.g., SBA 504; SBA 7a; USDA; etc.). Financing maximums and terms are determined by borrower qualifications and use of funds. Heritage Bank and its representatives do not provide tax advice. Consult an advisor regarding a particular financial situation. Credit products are offered by Heritage Bank.

Small Business Development Centers: What They Are and How to Find One

ARTICLE BY DAN CASARELLA

Reprinted with Permission from the U. S. Chamber of Commerce

Small business owners can use all the support they can get. Luckily, there are small business development centers (SBDC) to help foster small business growth and development. They offer resources and consulting to help assist local entrepreneurs. Here’s everything you need to know about SBDCs, including how to find one in your area.

What is an SBDC?

SBDCs are administered by the United States Small Business Administration (SBA) to help provide tools, resources and information for small businesses and startups to set them up on the path to success. There are 62 regional SBDCs, with at least one in every U.S. state and territory. They offer businesses with financial, marketing, production, organization, engineering and technical assistance at little to no cost. They also aid businesses that are applying for grants from federal agencies.

What can SBDCs do for small business owners?

Because they are tailored to their local communities, SBDCs have a variety of resources for small businesses depending on your location, industry and needs. Here are some of the most common resources that SBDCs have to offer:

• Financial services: Small business taxes and financial administration can be incredibly complex, especially for first-time business owners. SBDCs can help entrepreneurs organize their taxes and recommend CPAs and financial services to assist with their tax situation.

• Healthcare guidance: When starting a new business, owners may not know whether they are obligated to provide their employees with health benefits or how to insure themselves. SBDCs provide guidelines as to what the state and federal requirements are and how to obtain those resources for themselves and their employees.

• Hiring: If you’re looking to build out your team, SBDCs

partner with recruiters and other services to help connect small businesses with candidates. They can help find you qualified team members that fit your company culture and workflow. SBDCs also can help schedule interviews and provide you with interview techniques so you can be sure that you’re hiring the right person.

• Employee training: SBDCs often provide training for the betterment of small business employees. These can range from technical or software training to management development. The type of training depends on the need, so it’s helpful to be in contact with your SBDC so they know the demand of their constituents.

• Feasibility studies: For entrepreneurs who are unsure about their new endeavor, the SBDC can help them create a feasibility study. This is an analysis of all the factors that can go into starting a new business, such as economic, technical, legal and industry analytics. The study provides insight for the entrepreneur with crucial information as to how to proceed and run their new business.

Who is eligible for assistance from SBDCs?

If you’re starting a business for the first time or are new to the small business sphere, you are eligible for assistance from SBDCs. Any existing small business owner who is looking to grow their business and cannot afford private consulting services is also eligible for services from SBDCs. In most cases, the SBDC you’re working with will review your eligibility when you first reach out.

How can you find your nearest SBDC?

In addition to the 62 SBDCs, there are over 900 service locations across the country. To find one that’s closest to you, visit americassbdc.org and click “Find your SBDC” or visit sba.gov and select “Local Assistance.”

Once you find your nearest SBDC, you can visit their site and see what services they provide. You can typically request consultation by answering a brief survey about your business.

It's in everyone's best interest to have a thriving local economy.

Organizations and municipalities across the country provide training and resources for local businesses. Other resources for growing your business include:

APEX Accelerators

APEX Accelerators are a no-cost service which assists businesses through the government-contracting marketplace. There are APEX Accelerators in Washington, Oregon and Idaho.

Community "MakerSpaces"

These workshops for builders and inventors provide access to advanced design and fabrication tools, business and education resources and skill development. Containing everything from 3D printers to woodworking equipment and commercial kitchens, these spaces provide entrepreneurs access to equipment they need without having to make large purchases. Many times they are operated in partnership with universities, such as the Lacey MakerSpace at St. Martin’s University in Washington and Boise State University's MakerLab. Some are only available to staff and students of the University, others are open to the public for free or by membership.

Women In Business Centers

These centers, in partnership with the SBA, offer no cost one-on-one business coaching with professionals experienced in business startup, finance, accounting, marketing and operations. In Oregon, check out livelihoodnw.org/owbc. In Washington, your center is online at wcwb.org. In Idaho, visit businessimpactnw. org/idaho-womens-business-center for information on programs.

Community Colleges

If you're looking to round out your skills or obtain a specific certification, check out the noncredit professional development courses through your local community college. Options include marketing, technology, bookkeeping, Microsoft certifications and business planning.

Someone from the SBDC team will review your responses and contact you for a discovery call. During this call, you’ll discuss your priorities and plan of action and learn how the SBDC can be of service to you. They’ll set you up with the tools you need so you can start implementing your action plan.

Find more information on starting, growing and running a business at uschamber.com.

ScaleUp Business Training (Washington State)

This immersive program is for experienced entrepreneurs looking to transform their enterprise into an automated business enterprise capable of generating seven figure revenues. The advanced training is delivered in an online learning environment, live instructional sessions with peer roundtable discussions and direct mentorship through a weekly study hall. The program is free to Washington businesses through June 2025, thanks to a partnership with the Department of Commerce. The next programs open in January.

Small Business Incubators

These business centers, such as the William M. Factory Small Business Incubator (williamfactory.com) in Tacoma Washington, provide mentorship, coaching, start-up resources and events in addition to office and meeting spaces by reservation.

And don't forget these resources:

• Your local chamber of commerce

• Downtown business associations

• Your regional economic development council or board

• Local service clubs such as Rotary and Altrusa

• Industry/trade associations (such as the Pierce County Dental Society, Oregon Trial Lawyers Association or The Commercial Real Estate Development Association (NAIOP))

CONTRIBUTOR: DARYL FOURTNER

Daryl started at Heritage Bank in 2011. His proficiency in solving complex financing issues is why many customers seek his expertise. While his overall focus is on commercial banking, he helps customers with dental financing, senior housing, general contracting, commercial real estate, SBA 504, step bond financing, nonprofit financing, investment real estate, manufacturing, equipment financing, operating lines of credit and electrical contracting. Daryl currently serves on the board for the Thurston Economic Development Council and formerly served on the board for the Center for Business & Innovation for the South Puget Sound Community College Foundation. He also volunteers at the Hands on Children's Museum and Junior Achievement of Washington. In his free time, Daryl enjoys playing tennis, spending time with his family and traveling. He even speaks fluent Italian!

Nonprofit Grant Fundraising & Funding A Comprehensive Guide

Nonprofit organizations rely heavily on external sources of funding to carry out their missions. Among these sources, grants represent one of the most significant and competitive forms of funding. Grant fundraising is the process by which nonprofits secure funding from the government, private foundations or corporations, typically for specific projects or operational costs.1 Understanding the dynamics of grant funding is essential for any nonprofit seeking sustainability and growth.

The role of grants in nonprofit funding

Grants serve as a vital revenue stream for nonprofits, and there are several different types of grants a nonprofit might receive.1

• Conditional grants: A conditional grant requires a nonprofit to fulfill certain conditions before it can gain access to the funding. This contrasts with an unconditional grant, where the nonprofit can receive the funding immediately. The condition might include following certain reporting procedures or raising a specific amount of money that the grantmaking organization will then match.

• Project or program-specific grants: Project or programspecific grants are tied to a particular initiative, service or research project that aligns with the grantor’s objectives. They often require detailed proposals outlining the

expected impact, timeline and evaluation plan. Your nonprofit will also need to maintain transparency and only use the funds for the specific project or program you outlined in your application.

• Capital grants: A capital grant provides funding for facility and equipment costs. Governments typically offer these types of grants to help nonprofits improve local infrastructure or living conditions within the community. There are also general operating grants, which are unrestricted funding that nonprofits can use for any purpose, such as rent, utilities, salaries and daily expenses. Though these offer more flexibility for nonprofit operations, funders usually see these as less accountable due to concerns about mismanagement of funds.2

Steps to successful grant fundraising

1. Research and identify potential funders. Begin by identifying funding sources that align with your organization’s mission, goals, programs and future plans. There are tools online, like grants.gov, that provide databases for researching potential funders as well as resources on the different types of grants, who’s eligible and other resources to help you through the process.

Targeting grantmakers whose priorities match the nonprofit's work increases the likelihood of success.1

2. Build relationships with funders. Fundraising is relationship-driven, and this is especially true for grant funding. Funders often have the same intention and goals as grantees: making an impact in their communities or on specific issues. It’s common for an initial grant to eventually grow into long-term, multi-year support funding.3

3. Craft a compelling proposal. Before you can receive a grant, someone must submit a grant proposal. This can be a staff member or a third-party grant writer who you hire. Typically, the funding entity will have a list of requirements and/or documents that your nonprofit must meet or submit. A strong grant proposal clearly demonstrates your nonprofit's impact, the community need it addresses and the measurable outcomes of the proposed project (if applicable). Key elements of a grant proposal include:4

• Executive summary: A concise overview of the proposal and the request.

• Organizational background: A summary of your nonprofit’s mission, history and accomplishments demonstrating its capacity to carry out the proposed project.

• Statement of need: Evidence that demonstrates why the project is necessary and the issue it addresses.

• Objectives and proposed outcomes: Define the goals and state how you will measure whether you’ve achieved them. Provide the specific, measurable outcomes you expect your project activities to produce.

• Project description: A detailed plan outlining how your nonprofit will use the grant, including objectives, timelines and methodologies. Who will do what? When and how will they do it?

• Evaluation plan: Describe how you’ll assess the impact and success of the objectives, often a critical component for funders.

• Budget: Provide a clear, transparent and realistic budget that shows how the grant will be allocated.

4. Complying with grant requirements. Funders often require specific documentation to accompany proposals, such as a copy of your organization’s 501(c)(3) from the IRS, financial statements, a list of your board of directors, your current operating budget and/or letters of support from partners or stakeholders. These documents should be prepared and up to date.4

5. Grant reporting. Most funders require periodic or final reports to demonstrate how the funds were used and the outcomes achieved. You’ll need to track your progress closely and be prepared to submit detailed reports, as this can influence future funding opportunities with the same or other grantmakers.

The challenges of grant fundraising

There could be any number of challenges your nonprofit faces when it comes to applying for grants. Below are just a few common ones you may experience.

1. Highly competitive landscape. The number of nonprofit organizations has steadily increased at a rate of 1.4% annually during the past 20 years in the U.S. alone.5 With thousands of nonprofits applying for grants annually, competition is fierce. Many grants have specific eligibility criteria, and only a small percentage of applicants receive funding. This makes it critical for nonprofits to not only meet but exceed the expectations of funders.

2. Donor fatigue. Many nonprofits need to secure new sources of funding regularly. Relying too heavily on grants for operating expenses can cause donor fatigue. Diversification of revenue streams—through individual donations, events, earned income and other sources—is crucial for long-term stability.

3. Administrative burden. The process of researching, writing and managing grants can be labor-intensive. Smaller nonprofits, in particular, may struggle with the administrative burden that comes with applying for and reporting on grants. To alleviate this, some organizations hire dedicated grant writers or consultants to streamline the process.

Overcoming these challenges may not be easy, but your organization can take steps to improve your chances of success. With the right people, planning, processes and technology in place, you can improve your reach, boost your donation pool and increase your impact.

Conclusion

Grant fundraising is a crucial element of nonprofit funding, providing essential resources to implement programs and services. However, it requires strategic planning, detailed proposal writing and strong relationships with funders. By understanding the grant landscape, creating compelling proposals and ensuring compliance with grant requirements, nonprofits can secure the necessary funds to achieve their missions while also navigating the challenges of sustainability and competition. To thrive, nonprofits should adopt a holistic approach to fundraising, incorporating grants as part of a diversified revenue strategy.

CONTRIBUTOR: BETH MEIDINGER

Beth has more than 30 years of experience in retail and commercial banking, providing loans and banking solutions for nonprofit organizations and for-profit businesses in the Puget Sound area. Since joining the team in 2015, Beth’s responsibilities involve closely working with her customers to build long term relationships and develop strategies to meet their financial goals.

1 kindful.com/nonprofit-glossary/nonprofit-grant 2 instrumentl.com/blog/how-to-find-general-operating-grants 3 resources.foundant.com/blog/the-importance-of-grants-in-yourfundraising-strategy 4 donorbox.org/nonprofit-blog/grant-proposals 5 netsuite.com portal/resource/articles/accounting/nonprofit-fundraising-challenges.shtml

Year-End Charitable Gifting and You

Are you making charitable donations at year’s end? If so, you should know about some of the financial “fine print” involved, as the right moves could potentially bring more of a benefit to both you and your chosen charity. Keep in mind, this article is for informational purposes only and is not a replacement for real-life advice. Make sure to consult your tax, legal or accounting professionals before modifying your charitable gifting strategy.

Evaluate the Impact

How can you maximize the impact of your gifts? First, consider giving to a qualified charity with 501(c)(3) nonprofit status. Also, Charity Navigator, Charity Watch and Give Well have websites that offer information to help you evaluate a charity and learn about how effectively it utilizes donations. If you’re considering a large donation, it’s often wise to ask the charity involved how it will use your gift.

If you’re still working, you may want to check with your employer. Some companies match charitable contributions made by their employees, an often-overlooked opportunity to give back.

Itemize to Optimize

To deduct charitable donations, you must itemize them on IRS Schedule A. So, you’ll need to log each donation you make. Ideally, the charity will provide you with a form to document proof of your contribution. If the charity does not have such a form handy (and some don’t), a receipt, a credit or debit card statement, a bank statement or a canceled check can work. The IRS may want to know three things: the name of the charity, the gifted amount and the date of your gift.1

Remember, itemized deductions may only have tax benefits when they exceed the standard income tax deduction, so be sure to check on the standard deduction amount for your tax filing year.

Show Your Appreciation

Many charities welcome non-cash donations. In fact, donating an appreciated asset can be a tax-savvy move. You may wish to explore a gift of highly appreciated securities. Selling securities can lead to a taxable event. As an alternative, you or a financial professional can write a letter of instruction to a bank or brokerage, which can facilitate authorizing a transfer of shares to a charity.

This transfer can accomplish three things:

• You can manage paying the tax you would normally pay upon selling the shares.

• You may be able to take a current-year tax deduction for the full fair market value of the shares.

• The charity gets the full value of the shares, not their aftertax net value. This can be a winning strategy all around.1

A Policy of Giving Back

Do you have a life insurance policy? If you make an irrevocable gift of that policy to a qualified charity, you can get a currentyear income tax deduction. If you keep paying the policy premiums, each payment may become a deductible charitable donation. (Note that deduction limits can apply.) If you pay premiums for at least three years after the gift, that could reduce the size of your taxable estate. The death benefit may be transferred out of your taxable estate, in any case.2

You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments. Several factors will affect the cost and availability of life insurance, including age, health and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications.

Whatever your situation, getting advice from a tax or financial professional can help you give wisely as the year comes to a close. We’re here to help find a strategy that works for your situation.

WEALTH STRATEGIES FOR NONPROFIT AND NOT-FOR-PROFIT ORGANIZATIONS

Heritage Wealth Strategies is your partner in protecting and growing your nonprofit, offering investment strategies aligned with your investment policy statement (IPS).

We can tailor portfolios to Environmental, Social and Governance (ESG) responsibility metrics. We also integrate cash flow planning into your investment decision-making to prioritize liquidity to cover expenses, allowing you to sustain your operations and fulfill your mission over the long term.

A local partner with meaningful resources

Our team of local financial professionals is focused on meeting the needs of our neighbors in Idaho, Oregon and Washington. Heritage Wealth Strategies is part of Cetera Financial Group, home to more than 12,100 financial professionals overseeing $456 billion in assets under administration as of September 2023.

Visit heritagewealthstrategies.com to find an advisor near you. We’re here to help.

Investment Strategies

Excess Reserves

• Typically funds not needed for 90+ days

• Safety and liquidity are prioritized

Capital Campaign

• Investment strategies supporting multi-year campaigns

• Strategy transitions from accumulate to preserve to distribute

Quasi-Endowment

• Designed to produce sustainable financial support to the organization

• Organization retains access to the account principal as needed

Endowment

• Income distributed according to the endowment terms

• Access to the account principal determined by the endowment guidelines

“Stock”

Donation Account*

• Allows designated nonprofits to receive securities donations

• May provide additional funding source for you and tax benefits to donors

Retirement Strategies

Retirement

Plans for Employees

• 401(k) plan / 403(b) plan*

• SIMPLE IRA

Key Employee/Executive

Retirement Plans

• Deferred compensation*

• Non-qualified executive bonus plan

*Available to select types of organizations.

Resources

American Institute of Certified Public Accountants

aicpa.org

International Federation of Accountants

ifac.org

U.S. Bureau of Labor Statistics

Info on the occupational outlook for accountants and overview of pay rates, nationally and by state www.bls.gov

American Institute of Professional Bookkeeping

aipb.org

INDUSTRY PROFILE: Accountants & Bookkeepers

Accountants and bookkeepers practice as sole practitioners or in partnership with other firms, offering services based around the preparation of annual financial statements, tax returns and advising small businesses. As online tools become more intuitive and cost-effective, small businesses can often access the same information or receive the same insights. This means accountants will increasingly require a more holistic approach to business support to justify their fees.

The main challenge accountants face is the need to evolve with new technology and client expectations. It’s predicted that robotics, software and contracting out compliance or transactional tasks will remove a large portion of transactional accounting work in the near future. The profession will therefore need to invest in deeper strategic partnerships with their clients who will be wanting an accounting partner who not only understands tax and compliance but can advise on how to survive a crisis, recover, build resilience and grow their business with new opportunities.

Success characteristics

As technology such as cloud accounting platforms and artificial intelligence is automating many transactional functions, employers are now seeking professionals with the commercial expertise and analytical skills to drive greater business results. Employees of accounting firms often want alternate ways of working, such as remote working. Firms have realized that it’s possible (and sometimes preferable) to work from home for a portion of the week.

Successful accounting businesses share these common attributes:

• A strong company culture with work/life balance and a feeling of belonging, caring and safety

• Being able to work from home or have flexible work hours based on their needs

• A definitive career path for employees

• Active owners or partners in the business who are highly qualified, of high business intelligence, dynamic, outgoing, proactive and personable

• Focused business objectives, specific marketing plans and dedicated time to pursue client acquisition

• A regular client base and income that is not reliant on contingent or speculative work

• Integrated technology and tools that increase the efficiency of services

• Business coverage and/or specialization matching owners/partners strengths

• Membership in relevant professional associations

• Utilization of progress billing, periodic rate reviews, partner/staff utilization rates and time recording

• Beneficial referral arrangements for financial planning and other consulting

• Effective credit controls and sound debt collection systems

• Budgetary controls to monitor overhead

• Understand and utilize the various grants which are available to small to medium businesses to employ the services of professionals for business growth and development

• Ability to recruit and retain skilled staff

Challenges

As in any professional service business there are issues to watch out for and solve. The changing needs of customers, more complicated supply chains and business models and even the way intellectual assets are valued mean firms will be required to expand their knowledge.

Other specific challenges include:

• Staff who may lack expert industry knowledge

• A billing base that is reliant on a few large customers

• Rapidly evolving tools such as cloud accounting services, online business registration and app bundling that could dilute the services a customer needs

• Creating opportunity for new partners to buy into the practice so the business can continue to grow

• Succession planning as the baby boomers reach retirement

• Outsourcing certain parts of legal or business services to lower costs while maintaining excellent customer service

• Globalization of professional services

Opportunities

There are several new factors continuing to contribute to the growth of the accounting industry. The pandemic pushed many businesses along the development path and accountants are no different.

These factors include:

• Greater overall demand for high-end accounting services, alongside the uptake of computerized accounting packages among businesses

• Partnering with state and federal government in providing services that support local needs

• Increased demand for business growth, succession and resilience services

• Steady growth of the small-to-medium business market. While the pandemic saw a number of businesses close, there has been a surge in new start-ups.

• Various government grants and funds are available to assist small-to-medium businesses with funding professional consultancy services

• Growing diversification in the range of legal services offered (e.g., competencies in tax matters and asset management as an add-on for traditional legal and accounting work)

• More complex business problems associated with management and financial consulting, international trade, free trade agreements, etc.

Accounting trends

Cloud-based accounting solutions

Cloud-based technology will gain even stronger momentum in the future with the continual updating of information which allows accountants and clients to analyze data and make decisions based on daily information. As intelligent technologies progress and more companies move their information to cloud-based systems, accountants need to become proficient in leveraging the cloud to offer clients upto-date financial analysis and to stay competitive.

Growth

of business apps

Increasingly businesses are using apps to manage most of their business; although they can also be the source of growing pains among even the most tech-savvy advisors (namely, the risk of app fatigue and, less discussed, the struggle with managing staff and client expectations regarding the capabilities of automation).

The growing app ecosystem seems to promise that every part of a business’ workflow will be automated. Instead of seeing automation as a “set it and forget it” solution, it’s critical to understand it as an evolution. Committing to cloud technology means trusting in its progression as it continues to create efficiencies in accounting and improves over time.

Using social media to connect

Accounting firms are beginning to use social media to communicate with their peers and colleagues and to get updates on the latest business, political and accounting developments that may impact their work. Today, social media provides businesses with a free and easy way to market services and connect with clients and potential clients.

Automation of the accounting function

Accounting can now be highly automated without the need for significant physical intervention as the latest accounting software requires minimal data entry. Formerly labor- and timecontinued on page 25

Unlocking Business Growth

How SCORE Mentors Guide Entrepreneurs Through Challenges & Opportunities

Navigating the growth of a business often involves confronting the unknown, where understanding what you don’t know can be the ultimate challenge. Finding a mentor can provide valuable insights and help you avoid costly mistakes and wasted time.

SCORE (Service Corps of Retired Executives) is a national nonprofit organization that matches business owners and entrepreneurs with experienced professionals from various industries with the goal of creating vibrant communities through mentorship and education. As a resource partner of the Small Business Administration (SBA) and with the support of over 10,000 volunteer mentors, they are able to provide free support in all 50 states.

According to their 2023 National Impact Report,1 SCORE helped launch 31,167 businesses and helped create 120,948 non-owner jobs. Additionally, 91% of businesses who worked with a mentor stayed in business. SCORE also helps support women and minority-owned businesses. In 2023, 65% of the business owners who worked with SCORE were women, 46% were minorities, 13% were people with a disability and 9% were veterans.

To learn more, we reached out to Paul Dini, our regional commercial lending manager in the north Puget Sound region, who has volunteered as a SCORE mentor since 2016. “One of the advantages of partnering with a SCORE mentor is you have access to an individual who has experience either working with small businesses or having been an entrepreneur themselves. Someone who understands your situation, can see your circumstances through your lens and provide tailored advice to help you achieve your goals. I think that’s different than some of the other resources that are out there.”

SCORE mentors cover a wide range of expertise, including:

• Marketing and communications

• Legal and intellectual property matters

• Government contracting and regulations

• Lending and financing

• Business planning

• Human resources

• Sales and operations

• Supply chain management and sourcing

• Franchising and more

While 57% of SCORE clients are in the ideation and startup phase,2 the program also supports established businesses looking to grow. A SCORE mentor can assess your business, suggest process improvements and guide you on financing expansion. Dini says that he has worked with businesses of all sizes and maturity. “Sometimes an established business will say, ‘We’ve grown so much; I need more capacity. Can you help? I’ve never had a bank loan. I’ve never needed one in my business. How do I go about obtaining financing or finding additional investors or capital? Or what are my options to access the funds I need to grow my business?’”

A SCORE mentor can help with those needs. To find a mentor, use the Mentor Matchmaker tool at score.org. Enter your business information and filter by industry, location and more to find a match suited to your needs. Don’t worry if you have multiple needs, getting paired with a SCORE mentor brings the added benefit of a network of professionals. If your mentor isn’t an expert in a particular area, they can connect you with someone who is.

Dini shares a success story: “In one case I was matched with a small bakery business. They’d stagnated on their sales and were really struggling to make inroads into some of the other marketing channels they wanted to go into. I went out to their business and met with them to understand what their needs were. I realized quickly that financing was important, but they needed someone with expertise in how to market their

product into retail channels. Through the SCORE network, I paired them with another mentor who had expertise in that area. We did a joint meeting with the client…and then he took it from there. Together, they were able to improve their market reach and sales.”

He continued, “That network is incredibly important when you’re starting out and you don’t know what you don’t know, right? It takes someone who says, ‘Hey, I see that you need something here and I think I know someone that can help you with that.’”

Even if you’re not ready for a mentor, SCORE’s website offers valuable articles and templates. Search for your local chapter and register for free virtual workshops and events.

“SCORE is a tremendous resource and asset to small businesses. It helps entrepreneurs start businesses, create jobs and strengthen local economies. I appreciate the individuals who carve out their own time to volunteer in support of small business,” Dini adds.

Perhaps you run a successful business of your own and are looking for ways to pay it forward. Consider becoming a SCORE mentor. The average commitment is two to four hours per week plus one to two hours per month for chapter meetings. You’ll also have the opportunity to attend workshops and community outreach events. As we say at Heritage Bank: When neighbors help neighbors, the whole community benefits. And that’s true prosperity.

1 www.score.org/our-impact-making-a-difference

2 www.score.org/about

CONTRIBUTOR: PAUL DINI

Paul has been in banking for over 30 years, and during that time, he’s held several leadership positions in commercial banking. As a commercial banking regional manager, Paul supports small and medium-sized businesses in his local market. Living in the community for over 20 years now, he also supports many organizations. He is a certified SCORE business mentor, which means he is an experienced business professional who volunteers his time to help others start and grow their own business. Paul also serves on the Board of Trustees for Economic Alliance Snohomish County.

Industry Profile: Accountants and Bookkeepers, continued from page 23

intensive tasks of accounting (audits, tax preparation, banking and payroll) can all be automated. Technological systems will take on repetitive and timeconsuming jobs, leaving the analytical and managerial tasks to humans.

Outsourcing

For businesses, outsourcing their accounting allows them to focus on their core business and better utilize their resources which could result in fewer in-house accountants employed at larger companies.

For the accountant, it’s possible to also outsource back-end functions such as data entry and tax return filling to contract employees in lower wage countries. This reduces the cost for the accounting firm and can speed up delivery, leaving more time for customer-facing business advisory work.

Connecting to bank data

Business owners are asking their accounting professionals to provide their businesses with value through up-to-date insights and analysis as opposed to looking for historical information based on prior year data. Accounting software (like Xero and Intuit) can link via an API into bank data to allow accountants to evaluate and review business data daily.

Changes in accounting standards

Accounting standards are continually being revised and updated, including many of the standards that were developed before the advent of social media, ad-tech (digital advertising) and the “shared” economy (shared rides, lodging, etc.). These new business models have a significant impact on accounting. A good example is the rise of intellectual assets such as brand, number of followers or traffic, which is difficult to value on the balance sheet.

Growth of advisory

Accountants offering advisory services to their small business clients is more important than ever. It’s estimated that only 51% of small businesses will survive more than five years; however, that number jumps to 85% when they work with an advisor. Similarly, seeking proactive advice is often cited as a top reason why businesses switch accountants.

With the increasing significance of and demand for advice, it’s also important to note that client expectations regarding the services they receive from their accountant or bookkeeper are also changing.

Mobile accountants

A new generation of business owners is emerging who are digital natives, and many have never had to conduct business in a world that did not include the internet and smart phones. This new generation of business owners is looking for immediate insight delivered to their devices, whether that is a smart phone, tablet, laptop or other mobile device. Consumers are expecting that their accounting professionals can provide the same instant access.

With the emergence of cloud computing, and acceptability of electronic documentation in place of traditional paper-based documents (invoices, receipts, etc.), accountants are now increasingly more mobile. Accountants can work remotely and there are currently many team sharing tools to enhance remote collaboration and work.

Award-Winning Women Authors from the Pacific Northwest

As the leaves fall and the temperature drops, it’s the perfect season to relax with a cup of something warm and get lost in a good story. Revisit a favorite or discover a new book by one of these notable women authors who grew up or currently live in the Pacific Northwest.

Marilynn Robinson grew up in Coeur d’Alene and earned her PhD from the University of Washington. She has won a Pulitzer Prize, the National Book Critics Circle Award and the Library of Congress Award for Fiction for her novel “Gilead,” a fictional memoir of a minister in a small Midwest town. The book is the first in a highly acclaimed series following the family members of the main character. While raised Presbyterian, she later became a Congregationalist, and her theological beliefs are woven throughout her books.1 Her most famous work, “Housekeeping,” is the story of orphaned sisters who are raised by various female family members in the fictional town of Fingerbone, modeled after her childhood town of Sandpoint, Idaho.

1835-1870,” about women in polygamist marriages in Utah. Her research for the book was drawn from diaries, letters, photo albums and even quilts. While you may not have read her prize-winning work, you will recognize her line, “Wellbehaved women seldom make history,” which came from a 1976 article she wrote about Puritan funeral services. In 2008, she published a book by the same name exploring women who challenged conventional history. She is a past president of both the American Historical Association and Mormon History Association.2

Born in McMinnville and raised in Portland, Beverly Cleary earned bachelor’s degrees from both the University of California Berkeley and the University of Washington. While working as a librarian, she struggled to find books that would appeal to her young students and decided to start writing herself. She once said, “I believe in that ‘missionary spirit’ among children’s librarians. Kids deserve books of literary quality, and librarians are so important in encouraging them

Poet and author Renee Watson is best known for her New York Times best-seller “Piecing Me Together,” which is also a Coretta Scott King Award and Newbery Honor winner. Inspired at a young age by the work of Maya Angelou and Langston Hughes, her books explore themes of belonging, identity, body image and race, inspired by her experiences growing up as a Black girl in Portland. In addition to writing and working as a teaching artist and artist in residence around the country, Watson founded the “I, too” arts collective, “nurturing voices from underrepresented communities in the creative arts”4 from 2016-2019. In 2023, the Highlights Foundation (yes, as in Highlights, the children’s magazine) established a cottage on their campus in her honor as an artist’s retreat for Black women writers.5 Her other books include “Skin & Bones” (2024) and “1619 Project: Born on the Water,” a children’s picture book.

Ursula K. Le Guin (1929-2018) was also a resident of Portland. The second book of her “Earthsea” fantasy series, “The Left Hand of Darkness,” won both the Hugo and Nebula awards for best science fiction novel, becoming the first woman to do so.6 Her work has been classified as speculative fiction, a genre that encompasses science fiction but also fantasy, horror, cyberpunk and magical realism. Her writing, often set in post-apocalyptic or alien worlds, is an exploration of psychology, society, culture and feminist issues. Over her career, she amassed five more Nebula Awards, six more Hugo awards, a Pulitzer Prize nomination, was pictured on a stamp in the U.S. Postal Service’s 2021 Literary Arts series and was named a “Living Legend” by the Library of Congress.7

Kristin Hannah graduated law school from the University of Puget Sound and practiced law in Seattle before becoming a full-time author. She is the award-winning and bestselling author of more than 20 novels, most featuring strong heroines and illustrating love, loss, friendship, selflessness and overcoming extreme adversity. “The Nightingale,” set in France during WWII and told from the perspective of two sisters, was named Goodreads Best Historical Fiction novel and the People’s Choice award for best fiction in 2015. It was named Best Book of the year by Amazon, iTunes, Buzzfeed and the Wall Street Journal. Hannah also penned the award-winning “Firefly Lane,” which was adapted into a Netflix series that debuted at number one around the world.8 Several of her novels are set in the Pacific Northwest, including “Summer Island,” set in the San Juan Islands, and “Magic Hour,” which takes place in the Olympic National Forest. Hannah lives with her family on Bainbridge Island.

Julia Quinn is a #1 New York Times bestselling author best known the historical fictional romance novels behind the record-breaking Netflix series “Bridgerton.” What you probably didn’t know is the first book in the series was published twenty years before the first episode aired. Her books have won multiple RITA awards (the highest nod for English-language romance fiction) from the Romance Writers of America. Julia was featured in Time magazine’s

Other famous women authors from the PNW:

Debbie Macomber, romance "Cedar Cove" series and "Blossom Street" series

EJ Koh, poetry, fiction and nonfiction

"The Magical Language of Others: A Memoir", "The Liberators"

Jean Auel, fiction "Clan of the Cave Bear"

Katharine Dunn, fiction "Geek Love", "Toad", "Attic"

Ellie Alexander, fiction "Bakeshop Mystery" series

Tara Westover, nonfiction and essays "Educated"

“50 Best Romance Books to Read Right Now” list in 2003, was inducted into the RWA Hall of Fame in 2010 and taught the inaugural romance writing course at the Yale Summer Writers Conference in 2016. The Harvard and Radcliffe College graduate, with almost 40 books credited to her, lives in Seattle with her family.9 She also serves as an Ambassador for EveryLibrary, a Political Action Committee building voter support and sustainable funding for libraries, ensuring access for future generations.

Christine Day is an award-winning author of children’s and young adult fiction novels. She is a member of the Upper Skagit Indian Tribe and lives with her family in the Pacific Northwest. She holds a master’s degree from the University of Washington, where she studied Coast Salish weaving traditions for her thesis. Her debut novel, “I Can Make This Promise,” was a best book of the year from Kirkus, School Library Journal, NPR and the Chicago Public Library, as well as a Charlotte Huck Award Honor Book and an American Indian Youth Literature Award Honor Book. As a child, she attended a program with Pacific Northwest Ballet School, where she learned about Maria Tallchief.10 She wrote “She Persisted: Maria Tallchief,” a biography for children inspired by the bestselling picture book, “She Persisted” by Chelsea Clinton and Alexandra Boiger.

1 www.arts.gov/initiatives/nea-big-read/gilead

2 scholar.harvard.edu/laurelulrich/home

3 ischool.uw.edu/faculty-affairs/beverly-cleary-professorship

4 www.reneewatson.net/about

5 www.highlightsfoundation.org/2023/04/27/highlights-foundation-names-cottage-inhonor-of-new-york-times-bestselling-author-renee-watson/

6 en.wikipedia.org/wiki/Ursula_K._Le_Guin

7 www.ursulakleguin.com/biography

8 kristinhannah.com/about-kristin-bio/

9 juliaquinn.com/about/

10 en.wikipedia.org/wiki/Christine_Day_(author)

JESSICA ROBINSON

Finding happiness, meaning and fun in crafting, motherhood and sport

Imay be the loving mother of three young boys, but I’m a game-faced Enforcer every Thursday night.

That’s when my women’s bowling team, The Enforcers, takes to the Westside Lanes in Olympia for our weekly league play. Don’t let the name fool you; about the only thing we enforce is having a good time.

My mother-in-law, Patsy Robinson, needed a spare (no pun intended) player about seven years ago for her team and asked me to fill in. Before I knew it, I was hooked. It’s a big commitment, 31 weeks of league play that began in September, but it’s a great way to have fun, practice my game and socialize outside of work.

Of course, I also have a ball with my sons Ezekiel, 7, Jeremiah, 4, and Malakai, 2.

On Mother’s Day 2023, my husband, Nick, surprised me by following through on something I had previously mentioned after seeing a TikTok video of a family having a paint “war” with each other. As the mother of three boys, I told him that it looked like fun.

Lo and behold, he hired a family photographer, the boys and I donned white T-shirts and shorts as a sort of wearable canvas, armed ourselves with paint-filled squirt bottles and Silly String cans, waited for the countdown and we went crazy painting each other and having a colorful blast for about 20 minutes. Afterward, the boys and I hosed down and hit the showers. It wasn’t easy getting all the paint out of our hair, but it was worth it.

My boys keep Nick and me busy, but our work schedules are complementary for care. He works early as a supervisor at Costco and is off by 1 p.m., giving him time for kid duty in the

afternoons until I get home from work. Our oldest, Ezekial, is playing baseball and our middle, Jeremiah, soccer.

While mothering is a role I cherish, I also love gardening, crafting and photography. My husband got me a nice camera and I’m having a blast photographing our boys’ sports and more. I think photography ties into the crafty side of my brain.

I make wood signs for homes, wall art, the occasional custom t-shirt, apply designs on drinkware and enjoy making Santa plates that kids can leave out on Christmas Eve with snacks for Santa and his reindeer. Crafting is a side hustle at night and on weekends. I occasionally sell my wares at craft shows under the business name Jess Be Crafty. Nick came with up the name; I dream up the crafts.

I’ve loved crafting for years, but I got more into it about six years ago. After Ezekial was born, I endured three miscarriages and I found that making a sign or other craft that brings a smile to someone’s face also made me happy. I found crafting was healing after the miscarriages and I enjoy it when time allows.

One crafting story that affected me emerged from a craft fair where a woman found me, saw my signs, asked if I do

Photos provided by Jessica Robinson

custom ones, took my card and left. Weeks later, she reached out asking if I could do a custom sign. When I delivered it to her, she cried because a similar sign once hung in her mother’s home and she had never been able to find it or re-create it—until she saw my creation. I will never forget that feeling. It helped me realize that I healed a little bit of me when I helped heal a little bit in someone else.

Some of my projects are sort of cookie-cutter, but it’s those special projects that customers trust me to create that make my heart happy.

While watching our boys grow, our family also likes to watch our garden grow. We have raised garden beds that this year produced cherry tomatoes, zucchini and corn. The boys help plant and tend the garden. I love showing them they can grow delicious food. Jeremiah loves eating the tomatoes and I joke with him that they must be the source of his red hair.

That’s not all, we also have four chickens that inhabit the coop that came with our home.

While I don’t claim to be a great bowler, I do have a pretty good dart game. Nick, who was a dart player and won some competitions, taught me the sport when we met in Shelton, Washington. We played a lot at a local bar and my game improved to the point that one of his teammates’ wives asked if I wanted to shoot with her in an in-house tournament. We did well and I joined her team. The two of us played in a couple state tournaments and took first in one of them, competing in the novice category. The win came with a plaque, jacket and cool champagne glass.

With darts largely being a bar sport, and me being a mom, I no longer play. My boys are where I aim my attention now. They are the center of our world, our bull’s-eye, you might say.

Monday through Friday, you’ll find me at Heritage Bank’s Olympia main branch, which I’ve managed since June. Before that, I was assistant manager for almost nine years and before that an account representative. I’ve been with the bank for 10 years and love what I do.

ABOUT JESSICA ROBINSON

Jessica Robinson, assistant vice president-branch manager at the Olympia main branch, has 17 years of banking experience collaborating with and identifying opportunities for local businesses, nonprofits and associations. She focuses on their strengths and goals to help them be successful. Jessica serves on the board of The Little Red Schoolhouse and participates in the Thurston Young Professionals Group. She volunteers with Thurston County Food Bank and United Way of Thurston County.

New Federal Reporting Requirement for Beneficial Ownership Information (BOI)

In 2021, Congress enacted the bipartisan Corporate Transparency Act to curb illicit finance. This law requires many companies doing business in the United States to report information about who ultimately owns or controls them.

Effective January 1, 2024, many companies in the U.S. must report information about their beneficial owners—the individuals who ultimately own or control the company—to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.

Who Has to Report?

Companies required to report are called reporting companies. Reporting companies may have to obtain information from their beneficial owners and report that information to FinCEN.

Your company may need to report information about its beneficial owners if it is:

1. A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or

2. A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.

Who Does Not Have to Report?

Twenty-three types of entities are exempt from BOI reporting requirements, including publicly traded companies, nonprofits and certain large operating companies.

FinCEN’s Small Entity Compliance Guide includes checklists for each of the 23 exemptions that may help determine whether your company qualifies for an exemption.

How Do I Report?

You can file simply, securely and free of charge at fincen.gov/boi. The system provides a confirmation of receipt once a completed report is filed with FinCEN.

BOI reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.

When Do I Report?

• If your company was created or registered prior to January 1, 2024, you will have until January 1, 2025 to report BOI.

• If your company was created or registered in 2024, you must report BOI within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.

• If your company is created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.

• Updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days.

Find guidance materials and additional information at fincen.gov/boi

This is the first in a three-part series of articles on succession planning. Look for part two in the next issue of Banking Business.

S YOUR SUCCESSION TOOLKIT, PART 1 Planning

Successfully exiting a business is a dream for many owners. A financially-sound exit is certainly achievable, but it requires a period of hard work and planning to get the best return. We’ve assembled critical steps to follow when planning your exit, as well as actions you can take to increase the value of your business before you offer it for sale.

Good timing depends largely on what the market’s doing at any given time, but there are some indicators that can help you decide if your business is ready for sale:

• You’re confident of your business’s return-on-investment (ROI) value.

• The business has gone as far as you can take it.

• The next generation are ready to take over.

Map out your exit strategy 01 Consider the end game

Before you draft a succession plan, you’ll need to spend time giving careful thought to your personal and business longterm objectives.

Ask yourself these preliminary planning questions to create a succession plan that is in harmony with your goals.

Personal questions

• What is your main priority? Do you hope to maximize retirement income? Keep the company in the family?

• Would you prefer to maintain a part-time role in your business when the day comes or completely step away?

• What are your desired terms for payout? Would you prefer a one-time lump sum payment or regular payments over time?

Business questions

• What is your long-term vision for your company?

• Who might take over as your successor: a family member, business partner/employee or outside buyer?

• How could current positions in your organization be redesigned to best meet your vision for the future?

• What are your plans for the proceeds if you sell your business?

It’s wise to seek the advice of experienced financial, legal and succession planning advisors to make sure the outcome of the sale meets your objectives. These professionals can help determine the right financial structure for the sale of your business, the best way to market the sale and provide advice on tax and legal considerations.

Work with a business broker to find a buyer and guide you through the selling process.

02 Sell to a family member

Talk openly with family members before you identify a potential successor or successors and plan their development. Conduct these discussions in the workplace rather than at home. There may be only one realistic candidate, but you still need to be sure this person has the necessary skills and commitment. You might let them experience or try out different roles as you prepare for transition.

The most difficult scenarios:

• More than one family member wants to take over, resulting in stress and arguments.

• No one in the family that wants to take over, leaving you

disappointed over the loss of your legacy.

• The only family member who wants the business isn’t suitable, placing the future of the business at risk.

• A key employee is disappointed that they weren't chosen, potentially leaving.

Giving more than one person equal standing in the business could cause conflict. If you do, make sure they share the same vision and plan and establish clear areas of responsibility from the start.

Your children will expect equal treatment. But this does not mean they should all take an active role in the business.

Keep your staff fully informed about key decisions. Your best employees are likely to be the first to jump ship if you keep them in the dark or they feel their prospects of advancing are now limited or blocked.

03 Sell to employees

Your employees may be interested in buying the business. Employees make good buyers because they already know and understand the business, hold relationships with your suppliers and customers and likely want to continue your business legacy.

However, an employee or group of employees may not be able to secure the financing required to give you a clean exit, meaning you will more than likely be asked to carry the financing. For example, you could be offered 25% of the purchase price from an acquiring employee and receive the 75% balance through monthly payments spread over several years. That could be a risky proposition if the new owneremployee doesn't run the business as profitability as you did, jeopardizing their ability to meet your payments as due.

04 Sell to a partner or team

If you have a partner or a senior manager, they may be interested in buying the business or acquiring your portion of the shares. If operating under a partnership agreement, you may already be bound by a buy-sell agreement stipulating the conditions and price for a sale of shares.

A manager who does not currently own shares might be someone you can groom to take over the business and pay you the asking price but, again, it’s more likely this employee will ask you to finance the sale. You might consider allowing them to acquire the business in stages, buying part of it each year for a number of years out of their share of the profits, as you continue to take your own share of the profits until the deal is complete. Consult your advisors for input before agreeing to an arrangement like this.

Give the management team time to raise the money as they will probably have to approach the bank and investors. They will also need to be trained for their new roles as their skills and competence may be a key issue for the bank and any investors funding a deal.

05 Sell to a buyer

This is often the easiest and cleanest exit; find another person or company to buy your business outright. This avenue can be the most difficult to negotiate because you'll likely need confidentiality agreements and various disclosures. Finding the right person to acquire your company also requires accurate knowledge of the market as well as investment in improving or maintaining performance, so your business is a strong strategic or financial asset.

Buyers may come with conditions that can include an extended transition period during which they shadow you to learn every element of the business’s day-to-day operations.

The lion’s share of a business’s value is in its operations rather than its assets. So if you strip it for parts, you won’t get a true return on your investment.

06 Close down

Some businesses just close down. It’s more common with businesses that have a key principal as the owner and it’s difficult to transfer any value or goodwill. Consultants as a operating as a sole proprietor may struggle to find another person to buy their business.

If you decide to close your business, then you’d liquidate your assets.

07 Keep the business and hire a CEO

With this strategy, you decide to keep the business but delegate management of it to a third party. You may decide to retain some or all of your shares, providing ongoing income and some control over the business. This is a popular option when a business is generating a lucrative cash flow and the owner is reluctant to give that up, or the return generated from the business is significantly more than if the sale proceeds were invested.

Your Succession Toolkit, Part 1, continued next page

FINANCIAL DICTIONARY

EBITA

(Earnings Before Interest, Taxes and Amortization)

EBITA is a financial metric that measures a company’s profitability before accounting for interest expenses, income taxes and amortization of intangible assets. It’s used to assess the operational performance of a business by excluding costs that can vary widely between companies, such as financing costs (interest), tax obligations and the non-cash charges related to the amortization of intangible assets (like patents or goodwill).

Here’s a breakdown of each component:

• Earnings: The net income or profit generated by a company.

• Before Interest: Excludes the cost of interest on any debt, allowing a focus on the company’s core operations.

• Taxes: Excludes income taxes to focus on pre-tax profitability.

• Amortization: Excludes the depreciation of intangible assets, which do not impact the day-today cash flow of the business.

EBITA is often used to compare the profitability of companies within the same industry, as it removes the effects of financing and accounting decisions that can differ significantly between businesses.

CONTRIBUTOR: RIQ MOLINA

As a seasoned commercial banking officer with over two decades of experience, Riq specializes in providing comprehensive financial solutions to businesses of all sizes. His expertise in credit analysis, risk management and relationship building has allowed him to consistently help clients achieve their financial goals and navigate complex financial markets. Outside of work, Riq serves as a board member for Cristo Rey Jesuit Seattle High School and One Love Foundation and is a corporate member for Seattle University’s Family Business Exchange.

Decide when to depart 01 Plan ahead

Plan well in advance and consider family, finances, your health, any business goals you’ve yet to achieve and the state of your industry. Choosing an exit date early on, even if it is an estimate, will make sure you can depart when the time is right.

Because succession planning involves complex decisions that can take up to five years to complete, it’s recommended you start early. Early planning will help:

• Have enough time to plan effectively for retirement or the next phase of your life. Instead of being forced to retire because of ill health, a sudden offer to buy the business, the industry is slowing or you’ve just had enough, it’s better to exit on your terms.

• Communicate the idea to family. Some may wish to take the business over, some may not. There will be numerous issues to discuss if you have more than one obvious heir. Early agreement will reduce the impact on the business.

• Prepare your staff to know that you won’t be there forever, and to put in place systems or documents that will help replace your expertise.

• Groom the business to get a better price, by focusing on increasing profit, locking in any contracts or suppliers and generally having a well-run business.

• Sell when conditions are perfect, such as a growing market or seasonal upswing.

• Increase the odds of your business surviving without you, by being able to slowly put in place contingencies and plans for others to take over.

02 Breakdown your exit timeline

Set and work toward deadlines for completing your succession plan. Some business owners break their plan into sections, setting firm dates for completion of each one.

• Personal future planning (retirement, lifestyle, estate considerations)

• Business housekeeping (grooming the business for sale)

• Successor mentorship/training for the buyer

• Handover and transition

A clean exit is easier for you but staying for a period may bring you a higher price as it’s less risky for the new owner.

03 Staying in the business

A buyer may want you to stay on board for a period of time (six months to two years) to help oversee transition of the business (and, perhaps more importantly, to hold you accountable for any promises). Will sticking around impede your future plans to start another business or enjoy retirement? It’s important to determine what you are willing to do for the buyer in terms of your own transition commitment before sell.

AI FRAUD ALERT Protect Yourself from High-Tech Scams

As AI technologies advance, so do the methods used by scammers to exploit them. From sophisticated voice mimics to automated phishing attacks, we’re here to help you protect your personal data and financial assets from emerging threats.

Artificial Intelligence (AI) is a machine-learning technology that uses existing information and data such as images, content and video to generate new content.

While you may be using OpenAI or ChatGPT to help you quickly draft memos, plan a trip or generate a portrait of yourself as Spiderman, AI can also be used to facilitate fraud. Email scams are becoming more difficult to spot as ChatGPT and online writing tools such as Grammarly eliminate traditional red flags like poor grammar and spelling. This leads to more convincing social engineering, phishing emails, texts and calls to convince victims or employees to reveal account information, personal details or login credentials. AI can also be used to automate fraud and money laundering processes, create fake documents or build more sophisticated cyberattacks.

“Deepfake” audio and videos are also an emerging concern. The technology can, for example, create realistic recordings of a family member pleading for help in a fake personal emergency scam or sound like a familiar customer requesting a card limit increase and extended travel notification.

As an example: in August 2024, the newest in a string of crypto scams that have also used AI-generated videos of Warren Buffett, Jeff Bezos and even rapper 50 Cent, used a deepfake video of Elon Musk to con viewers.1 In the video, which was generated from an actual recorded interview he gave, Musk is seen telling people to visit a website and deposit cryptocurrency with the promise that they would automatically receive double the amount they deposited. While the promise itself is a clear “toogood-to-be-true” scam, the endorsement by a wealthy celebrity businessperson turns up the believability. Sometimes even labeled as a “live” event, these deepfake videos can be difficult to discern. AI can mimic the voice, facial expressions and physical movements of the speaker, and it rapidly continues to improve. Internet technology and media companies such as YouTube and Facebook have policies requiring creators to disclose the use of AI in their content, but the policy amounts to nothing more than an absolution of responsibility because the creator is the one saying whether the video is altered using AI. And while

tech companies are constantly developing and refining systems to detect and remove deepfakes, scammers are constantly coming up with new ways to evade detection.

According to an article from The Economic Times, YouTube said that it had removed more than 15.7 million channels and over 8.2 million videos for violating its AI content guidelines from January to March of this year.2

Deloitte’s Center for Financial Services predicts that generative AI could enable fraud losses to reach $40 billion in the United States by 2027.3

How Heritage Bank is preparing for the AI wave:

• Stepping up our customer authentication processes.

• Turning on online banking alerts by default for customers.

• Expanding customer alerting for account and payment change requests.

• Adding trusted account contacts for elderly customers.

• Investing in AI and stronger authentication tools.

• Re-verifying customer contact information annually.

• Enhanced monitoring for our online and telephone systems.

• Educating customers and employees on recognizing scams.

You can help us protect your accounts by being patient when we ask for information to verify your identity, especially by phone or online, and by ensuring your contact information is up to date. An extra minute or two may be a hassle, but having to report identity theft or possibly losing funds that you cannot retrieve could be devastating.

If you believe you’re a victim of fraud or if you have any questions, please contact us immediately at 800.455.6126 or contact your banker directly. You can find additional fraud resources at heritagebanknw.com/fraud-resources.

1 nytimes.com/interactive/2024/08/14/technology/elon-musk-ai-deepfake-scam.html

2 economictimes.indiatimes.com/tech/technology/how-deepfake-musk-became-internetsbiggest-scammer/articleshow/112618750.cms

3 www2.deloitte.com/us/en/insights/industry/financial-services/financial-servicesindustry-predictions/2024/deepfake-banking-fraud-risk-on-the-rise.html

CONTRIBUTOR: DENNIS D’AMBROSIO

Dennis joined Heritage Bank in 2019. He is currently the vice president, fraud risk/ investigations manager. Dennis has more than 25 years of experience in banking and fraud risk management and is vice president of the Northwest Chapter of International Association of Financial Crimes Investigators (IAFCI).

Empowering local businesses to grow

HBCDE Receives $26 Million in SSBCI Funding That Provides up to a 9% Subsidy Towards Investment in Owner Occupied Real Estate

Heritage Bank is investing in our communities with the goal of fueling economic growth and creating jobs.

The Washington State Small Business Credit Initiative (SSBCI) program is designed to assist small businesses in qualifying for financing and lowering their business risk when undertaking owner-occupied real estate loans. The program benefits small business owners with funding for owner-occupied commercial real estate loans* that could be used for tenant improvements, construction, purchase or refinance.

To learn more about eligibility and to get started, scan the QR code or visit heritagebanknw.com/ssbci.

The Washington State Small Business Credit Initiative (SSBCI) provides much-needed capital to small businesses and nonprofits throughout Washington, particularly those in historically underserved and under-banked communities. SSBCI is administered by the Washington State Department of Commerce in partnership with the U.S. Department of Treasury and financial institutions statewide. For more information, visit https://bit.ly/wa-small-biz-loans. *Subject to credit approval and program guidelines. Certain restrictions apply to refinancing options and are subject to program terms. This program cannot be combined with other government sponsored programs (e.g., SBA 504; SBA 7a; USDA; etc.). Financing maximums and terms are determined by borrower qualifications and use of funds. Heritage Bank and its representatives do not provide tax advice. Consult an advisor regarding a particular financial situation. Credit products are offered by Heritage Bank.