Kentucky Business Quarterly Volume1 Issue 3

KBQ VOL 1 ISSUE 3 FOURTH QUARTER • 2015

K E N T U C K Y B U S I N E S S Q U A R T E R LY. C O M

KENTUCKY QUARTERLY

™

LEADERS. NO BOSSES.

RAJKOVICH, WILLIAMS, KILPATRICK & TRUE, PLLC

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Vol. 1 No. 3 Kentucky Business Quarterlyâ„¢ | 3

Staying Connected

Every issue, Kentucky Business Quarterly Magazine® will include RECENT AND RELEVANT NEWS AND INFORMATION on events and matters of importance and interest within the local business community.

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KENTUCKY QUARTERLY

™

CONTENTS FEATURE

14

Leaders. No Bosses. Rajkovich, Williams, Kilpatrick & True, PLLC

6

Are you a Big Fish?

18

BY DEREK D. HUMFLEET 8

When the Media Knocks on Your Door Start 2016 With a Bang to Your Bottom Line

BY BOB WOODS

12

OSHA Ups the Ante for Workplace Violations

NEWS • ANNOUNCEMENTS CURRENT EVENTS • TRENDS

20

Employment Records Retention

22

Want to Achieve Your Goals?

26

Little Known Tax Credit for Growing Businesses

BY BRIAN WRIGHT 10

Staying Connected

BY BEVERLY CLEMONS

28

3 Major Customer Relationship Tips for Small Businesses

BY BRIAN LORD

30

Getting the Most Out of the Sale of Your Business

BY MARK SIEVERS

BY ANDREW VAN HORN

BY JACOB SIZEMORE CPA/ABV, MBA

BY MELANIE KILPATRICK

Brian Lord, PUBLISHER

859-368-0778 brian72676@gmail.com v

Kentucky Business Quarterly™ is Published by Rock Point Sales Marketing & Consulting LLC

Vol. 1 No. 3 Kentucky Business Quarterly™ | 5

Are you a Big Fish?

BY DEREK D. HUMFLEET

My first article identified some overlooked questions you should think about when hiring an attorney or a law firm. My second article looked at some overlooked reasons for calling an attorney.

This article looks at why you may want to consider hiring a small law firm instead of a big law firm, with the big offices, lots of attorneys in the big building, with the big hourly fees.

Not so long ago a big law firm could charge what it wanted and bill however it wanted to give you (the client) the privilege of getting limited attention from a big law firm partner.

You see, big firms used to have all the advantages. They could afford a large law library. They could afford to hire their own library staff to keep the library up to date.

Their technology was better. And they could throw more people at a particular matter. The result was superior response time. Their lawyers had more in-depth experience in the certain areas of law. Their resources were superior.

Times are a’ changing.

Now, any firm can afford a complete electronic library and online research.

Hardware, software, tablets and mobile apps have increased productivity and reduced cost. Electronic storage has reduced the need for large expensive offices to house files.

Think of it this way: if you are looking for a contractor to remodel your bathroom, would you rather have a small local firm that focuses on bathroom design or a large contractor that builds homes, schools and develops commercial property.

Or take the phrase: “that client generated $100,000 in fees last year.”

At a small firm this phrase likely means the client is invaluable. This client is a big fish. All the lawyers know your name. All the lawyers are familiar with your legal issues.

A high quality small law firm wants to impress you with their responsiveness.

Their work product? Immaculate.

Their bills? Much less.

And they will take steps to fully understand your business and your goals.

You will get honest answers, especially on the tough calls, where you need them the most.

At a big law firm the phrase “that client generated $100,000 in fees last year” may mean something else entirely. To a big law firm you are a relatively small client. And you may create an awful lot of conflicts with the firm’s more profitable clients.

Your case may be shuffled off to an associate instead of getting personal attention from the attorney you thought you hired.

Response time will be slower due to the bureaucracy inherent in the big firm model. For those who don’t understand the big firm model, big firms tend to shuffle cases around. They require several lawyers to review documents and work product before it is sent out. One or more

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senior partners usually have to clear everything. And the senior partners are generally extremely busy and hard to reach.

At the end of the day all of the shuffling results in more billable hours paid by the client.

Or you may get sloppy work product because a bigger client has a bigger issue with much bigger stakes that needs an answer yesterday.

Or they didn’t take the time to understand your business and how your legal issue fits into the big picture of what you are trying to achieve.

Or you get an off the cuff answer because your lawyer doesn’t take your problem seriously enough and doesn’t have the time to perform the research necessary to address your legal issue.

On the other hand small firms typically prize efficiency. They can do more with less.

Their main concern is your success and your time. Wasted time is wasted money.

Instead of adding steps that decrease efficiency, small firms work to conclude projects quickly and effectively. They want you to keep coming back and to tell all your friends about the small firm’s high quality work.

Small firms also take pride in accessibility. They make themselves available day and night. When you call a high quality small firm attorney, they generally answer or return your call within 24 hours.

They don’t try to impress potential clients with the size of the firm or a famous name. They can’t.

But small firms have grit.

They have determination.

They are fighters who can pick and choose their clients and can pick and choose their battles. They know when a business picks a small firm, the manager of the business is taking a chance.

Rarely will a manager get fired for choosing the big law firm to handle a lawsuit despite knowing the manager will spend a ton of money on discovery and then get the recommendation from the big law firm to settle. However, if the manager chooses the small firm he will have the best chance to win the case or close the deal in the most cost effective manner.

Don’t get me wrong, some cases or legal issues require heavy staffing due to their magnitude or time pressure. Traditional big law firms are probably in the best position to tackle those cases. Bet-the-company litigation that touches on management decisions and implicate management’s tenure may require a big high profile firm and big high profile lawyers.

But most run-of-the-mill legal issues do not require that kind of staffing or that kind

The next time you find yourself needing legal advice... call a small local firm who either knows your business or is willing to learn about it and will treat you like a big fish.

of expense. And if you hire the right small firm with the right mix of experience you will get much more bang for your buck.

So the next time you find yourself needing legal advice, don’t automatically call the big firm guys. They are too busy dealing with the Microsoft’s, Coca-Cola’s and General Motors of the world. Instead call a small local firm who either knows your business or is willing to learn about it and will treat you like a big fish.

Follow the trend. Think local. Be the big fish.

ABOUT THE AUTHOR Derek D. Humfleet is a partner with Braden Humfleet & Devine, PLC and typically represents individuals, entrepreneurs, startups and small businesses with legal problems ranging from business and construction disputes to unfair business practices to issues with governmental regulatory agencies. He also helps creative professionals make wise choices in complex legal environments.

ON THE WEB: www.bhdlaw.net

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Vol. 1 No. 3 Kentucky Business Quarterly™ | 7

When the Media Knocks on Your Door

BY BRIAN WRIGHT

There isn’t anything more frightening for a business owner then a crisis that brings the media to your door, followed by a potential loss of customers, revenue or reputation. A crisis communications plan is an essential part of any company’s forward thinking. Do you know what to do when: • An employee is killed or injured on the job.

• A union work stoppage closes your plant.

• An accident causes a potential environmental emergency?

• Your company is accused of questionable business practices.

• An employee is arrested.

These examples can bring the media to your door with questions about the owner, employees, working conditions and the company’s past performance.

It’s not a matter of trying to put a good light on the situation, it’s trying to survive and come out the other end with your company intact. A crisis communications plan is a detailed document that gives you step-by-step instructions when a serious incident occurs.

A crisis is a loss of control. Let’s think of a loss of control at the personal level first. Does your family have its

own crisis plan? Have you taught your children what to do if there’s a fire? Your crisis plan should include two escape routes for every room and a designated place to meet outside the house. You should run fire drills a couple times a year.

Now let’s take that fire to the business level. Your crisis communications plan should include: • Possible crisis scenarios.

• A contact list of key personnel.

• Procedures that identify crisis teams and spokespersons.

• Deadlines for meeting target milestones, including media statements and securing the area.

• Contingency plans if members of the crisis team and unavailable.

• Possible media questions and appropriate answers.

But putting the plan together is only the first step. You need to keep the contact information current and follow through with regular crisis communications drills, simulating a situation in which something happens.

Media training is also an important part of any crisis communications plan. There may be several people who will speak on behalf of the company and each of them should be trained by a professional who knows how to deal with the media and can anticipate difficult or embarrassing questions.

Message development is essential to a crisis plan. You need to have a clear and concise message to present to the

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media. That message should include an assurance that everything is being done and all available information is being released. You may be tempted to cut back, but being open to the media and the public provides a perception of community responsibility.

A crisis communications plan is a form of insurance, so when you think about spending your hard-earned cash on a plan, remember this: A crisis communications plan is less expensive than going out of business or losing customers.

ABOUT THE AUTHOR Brian Wright is the owner of Brian Wright Consulting in Lexington, Kentucky. He provides corporations, small businesses, nonprofits and individuals with public relations and brand management. Brian is a national award winning writer, editor and consultant.

He has received awards from the National Society of Professional Journalists, The Public Relations Society of America, The American Society of Political Consultants and he has won 27 Associated Press Awards.

ON THE WEB: www.brianwrightconsulting.com

A crisis communications plan is an essential part of any company’s forward thinking.

Vol. 1 No. 3 Kentucky Business Quarterly™ | 9

BY BOB WOODS

Start 2016 With a Bang to Your Bottom Line

This article is probably the 1,576th one you’ve read about planning for 2016 and making it your most successful year yet in sales and business. Unlike most articles, though, this one will actually show you how to do so by using a combination of sales and powerful social-media tools and techniques called “Social Selling.” So let’s get right to it.

Setting Goals

First, you have to set goals. That’s Business 101. I think this is especially true in Social Selling, an area that sales and business professionals may not “get” when they first hear about it. If you haven’t read my previous articles here, Social Selling is the process salespeople use to utilize social media to interact directly with prospects. The goal is to use Social Selling to provide value through answering questions and offering

thoughtful content throughout the sales process. The ultimate goal is to take such conversations from the online world to the offline one (meetings, phone calls, etc.).

Once one starts to learn about Social Selling, though, they may feel overwhelmed and wonder where to start with it. This is where goal setting comes in. You especially need goals before taking the Social Selling “plunge.”

While I’d love to be able to teach you everything I can about Social Selling goal setting in this article, there’s no way I could do the subject justice in this format. For example, I have a whole chapter on it in my book (available at Amazon.com), and I normally spend a full day teaching it in a seminar. Here’s a great start: Begin with the end in mind. While this is taken directly from general sales goal setting, it applies with Social Selling as well. Here’s the big question: In a year from now, if you said, “this was an amazing social media year for me (and/or our company),” what happened that made it so good for you? When you can answer

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this question, you can then build out your plan.

Measure a few specific items. As you may know by now, the Social Selling process can involve numerous moving parts. My advice: don’t try to do everything at once. Select a few of these elements with which to begin, and then measure the activity around them: • Brand awareness/PR • Lead generation/conversion rate • Conversations/engagement • E-commerce • Education • Market Research • Advocacy • Growing a mailing list If you find you’ve done a good job at integrating two or three items from the above, toss in another one or two. Keep yourself busy with it, but don’t overdo it.

After selecting your items, build out some realistic goals that deal with where you would like to see results in three, six, nine and 12 months.

Determine activities that will help to achieve those goals. Ahh, yes: The

proverbial “to-do” list. Determine what it is you need to do, decide how often you need to do them (daily, weekly or monthly), and then... do them! Here are a few examples of what you can do (all are from LinkedIn-related activities): • Request to connect with the people who view your LinkedIn Profile • Request to connect with current clients • Connect with current prospects • Meet with/call your firstdegree connections to exchange introductions • Make introductions for others • Post status updates • Write and post your own (or company-supplied) Published stories Schedule your “to-do” items in your calendar as recurring events. Put specific times around each of your to-do items, or combine them into a “Social Selling Power Hour/Half-Hour,” which is what I do. Then enter them into whatever calendar you use (Outlook, Google Calendar, etc.) as recurring events for whatever time period you’ve chosen. Just make sure you make the commitment to tick these items off of your list, even if you have to move around some time blocks on your calendar to get them done.

Who is Your Customer?

If you don’t know to whom you’re selling, then why are you selling? You may know the overall market you’re targeting, but there’s an old maxim from Business Network International (BNI) that really applies in this case: Specific is terrific!

(A bit corny? Yes. But believe me, you’ll never forget it. I’ve tried.)

Where that phrase comes into Social Selling is in the development of what’s called “buyer personas,” which are a semi-fictional representation of your ideal customer based on market research and real data about your existing customers.

When creating your buyer persona(s), consider including customer

demographics, behavior patterns, motivations, and goals. And of course, creating a specific buyer persona will bring you those terrific results.

While creating a buyer persona is not that difficult to do, you should take the process seriously, and devote some real time to develop it. Many factors go into developing a comprehensive buyer persona, and when it comes to Social Selling, they cut across multiple social platforms.

You can use LinkedIn to create these personas, too. Here’s how: Start by selecting three specific types of clients with which you would like to do more business, and make them the focus of the research. This could be done by industry, geographic location, and so on. Then look up a couple of LinkedIn Company Pages for those companies.

Also, look up individual Profiles to add more specifics to your buyer persona.

Don’t forget about industry verticals or geographical areas you’ve already served.

You can also develop client profiles from the people with who you have worked both pre- and post-sale, and apply those to personas as well.

Is your research done? Good. You can now use these data points with LinkedIn’s Advanced Search. (Please note that some filters in Advanced Search are only available with a LinkedIn Premium account.) Based on the criteria you have uncovered, you can now very quickly identify lists of prospects you may never have discovered.

What’s more, you can choose the 2nddegree relationship filter in Advanced Search to generate a list of prospects from your first-degree connections. You can then ask your network members to provide a warm introduction—assuming you have a warm relationship with your first-degree connection, of course.

While looking at the pages, take note of these characteristics to create your client personas: Company Page: • Industry • Specialties • Type (Public or Private) • Headquarters location • Company employee size • Related and people also viewed companies on the bottom right of the company page (these will often be ideal prospects for you) Individual Profiles: • Title • Location • Industry (although this may be the same as the company page, often individuals will choose an industry based on their title, not the company) • Their previous employers • Schools they attended • Groups they are part of • Keywords in their summary and skills sections • Years of experience • Shared connections (often the people that know them will know others like them, and since they are already your first-degree connection, they may be a good referral source)

Why Should I Do All of This?

If you haven’t set any goals, you’ll never reach them. If you’re not getting any sales leads and closing business using whatever ways you’ve been using before, those methods won’t get you what you need now or in the future; in this case, closed deals. Social Selling helps with the latter; goal setting is the way to go with the former.

And you have to know who your customer is. If you don’t, then you don’t have a product to sell. It’s that simple.

You can read all of Bob’s articles on Social Selling at LinkedIn: https://www. linkedin.com/today/author/bobwoods .

ABOUT THE AUTHOR Bob Woods is executive vice president at Social Sales Link LLC, the missing link between traditional sales training and social media. We are a business training, coaching and consulting firm that helps salespeople, sales teams and entire companies generate better leads and close more business through the use of Social Selling. You can contact Bob at 888.775.5262 ext. 705, or email him at bob.woods@socialsaleslink.com.

Vol. 1 No. 3 Kentucky Business Quarterly™ | 11

OSHA

Ups the Ante for Workplace Violations

BY MELANIE KILPATRICK

The Occupational Safety and Health Act of 1970 (the Act) covers private sector employers and their employees, either directly by the federal Occupational Safety and Health Administration (OSHA) or by an OSHAapproved State plan, as in Kentucky. The Act contains a General Duty Clause, which requires that employers create a workplace free from recognized hazards for its employees. The Act also requires that employers keep certain records and comply with reporting requirements. The Act grants broad authority for OSHA and State compliance safety and health officers (COs) to conduct inspections, issue citations and propose penalties.

A provision of the budget agreement signed by President Obama in early November 2015 allows OSHA to implement penalty adjustments to compensate for not having been authorized to increase penalties since 1990. The adjustment is tied to the percentage rise in the Consumer Price Index since 1990. The current maximum $70,000 penalty for repeat and willful violations could increase to approximately $125,000, and the $7000 maximum fine for serious and failure to abate violations could grow to roughly $12,000. The adjustments are mandated to take place no later than August 1, 2016. Faced with

the potential for such large fines, it is more important than ever for employers to be proactive in developing a strategy for compliance and to prepare in advance for inspections so that legal rights are not waived and the employer is best able to represent its interests. Key areas of focus include employee training, self-auditing and development of an action plan for when a CO arrives (unannounced) to conduct an inspection.

Training

Employers should implement safety training and employee education programs aimed at eliminating accidents in the workplace. It is critical that employees understand what OSHA standards apply to the employer’s particular workplace, as well as the importance and proper use of safety and health equipment. Employees should be well-versed in hazard awareness and remediation, in addition to recordkeeping and reporting obligations. Likewise, employees should be trained how to react in the event of an accident or emergency at the workplace. The employer should have documentation of its safety program, including training curricula, safety policies and recordkeeping procedures.

Safety Audits

Safety audits can be helpful tools for ensuring that there are no unsafe practices in the workplace. Audits can be conducted by the employer’s own safety or operational managers or by third party safety consultants or counsel. Hazards

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and other concerns revealed during audits should be addressed immediately, and all actions aimed at remediation should be documented. Regardless of who performs the audits, they should be conducted at the behest of legal counsel to protect the audit findings under the attorney-client privilege, whenever possible.

Inspection Preparedness

When a CO arrives at the door, the employer should already have a protocol in place, and all key personnel should be trained in their roles. For instance, support staff who initially greet the CO should know to contact the appropriate company management and OSHA counsel, rather than just allowing the CO to begin an inspection on his own. If a point person is not immediately available, the CO must wait a “reasonable” amount of time (generally no longer than an hour) for the employer’s representative to arrive.

Employers have the right to demand an administrative warrant from the CO before the inspection begins. This right should be carefully considered, as it may send the message to OSHA that the employer believes it has something to hide and it may engender heavyhandedness in any resulting inspections.

Generally, an employer should grant consent to an inspection if it is able to negotiate reasonable ground rules for the inspection.

The employer is entitled to have a walkaround representative escort the CO throughout the entire inspection.

The representative should take

detailed notes on all areas inspected and on all comments from the CO, while refraining from making any admissions on representations on the part of the employer. If the CO takes any photographs or video footage, the representative should do the same. If the CO takes any samples or conducts any monitoring, the representative should coordinate side-by-side testing. The representative must also have authority to call for immediate abatement, if possible, of any violations noted by the CO. The CO may require production of certain documents. Typical requests include documents regarding training, safety and health policies, monitoring results and records of illnesses or injuries.

The employer should require that all document requests be made in writing and should be sure to keep a duplicate copy of all documents produced. The employer should strictly adhere to the scope of the request and avoid volunteering additional documents.

A CO has authority to interview employees. Non-supervisory employees

The current maximum $70,000 penalty for repeat and willful violations could increase to approximately $125,000 have the right to private interviews with OSHA. Nevertheless, the employer should prepare its hourly employees for interviews by advising them of the subject of the interview and reviewing their rights with them (including the right to have an employee representative present). The statements of management representatives are binding on the employer, and interviews with supervisory personnel should include another management representative or counsel.

The inspection process, including the interview and document production stages, is OSHA’s primary means of making a case against the employer.

Having a plan of action enables employers

to protect their rights and maintain control of the inspection process, while also being cooperative and responsive within the bounds of the requirements of the Act.

ABOUT THE AUTHOR Melanie Kilpatrick is a member of Rajkovich, Williams, Kilpatrick & True, PLLC. She practices in the areas of workplace safety, employment law, and commercial litigation.

Melanie serves on the Board of Directors for the Thomas D. Clark Foundation and Radio Eye, Inc. PHONE: 859.245-1059 EMAIL: Kilpatrick@rwktlaw.com

Vol. 1 No. 3 Kentucky Business Quarterly™ | 13

Leaders.

NO BOSSES.

RAJKOVICH, WILLIAMS, KILPATRICK & TRUE, PLLC

by Dan Baldwin “If we have a style, it’s just a teamwork thing. I know that’s a cliché, too, but we’re on the same team here and we all have the same goals,” says John M. Williams, Partner in Rajkovich, Williams, Kilpatrick & True, PLLC. The firm was founded in September 2005 by Marco Rajkovich, John Williams, Melanie Kilpatrick and Noelle Holladay True. Todd Myers joined the firm in January, 2012.

The attorneys’ practice areas are concentrated in civil trial practice and business and commercial matters, including the mining industry. They serve a broad range of clients, from individuals and small businesses to publicly-traded corporations and regularly practice in state and federal courts in Kentucky, and before the Federal Mine Safety and Health Review 14 | www.kentuckybusinessquarterlymagazine.com

Commission and the Kentucky Mine Safety Review Commission.

The firm’s mining clients range from small operators to the largest coal companies in the world. Their mining practice covers a broad range of services.

The firm handles civil litigation and counseling regarding issues affecting the mining industry. They also handle administrative law issues, typically involving mine safety, ranging from accident investigations to litigation of charges and penalties by state and federal regulators.

Rajkovich, Williams, Kilpatrick and True also provides legal services to a broad spectrum of small, medium and large organizations in such diverse fields as insurance, commercial lending, architecture, engineering and other businesses.

Vol. 1 No. 2 3 Kentucky Business Quarterlyâ„¢ | 15

Friends As Co-Workers

John M. Williams Melanie J. Kilpatrick Noelle Holladay True Todd C. Myers

Policy. He has earned an AV® Preeminent™ rating by Martindale Hubbell.

He represents coal operators in all facets of mine safety, including litigation, consultation and regulatory compliance.

He is a Licensed Professional Engineer – Mining, a Licensed Professional Land Surveyor and Certified Underground Mine Foreman in Kentucky. Prior to his law career, he was with U.S. Steel Mining Company, Inc. serving in various positions in engineering and production.

Rajkovich is named in Best Lawyers®, Kentucky Superlawyers®, the 2008 Achievement in Mining Award recipient from the Kentucky Society of Professional Engineers, six-time recipient of the Kentucky Society of Professional Engineers President’s Award, member of the Kentucky Geological Survey Advisory Board, Former Chair of the Professional Engineers in Mining Practice Group of KSPE, and a Kentucky Bar Association Lifetime Fellow. > Melanie J. Kilpatrick received her B.A. degree with High Honors in 1992 from the University of Virginia and her J.D. degree (valedictorian) from the University of Kentucky in 1996.

Her practice areas are mineral and energy, employment law, and commercial litigation. She has argued appellate cases before the United States Court of Appeals, the Kentucky Court of Appeals and the Federal Mine Safety and Health Review Commission. She is admitted to practice before the Kentucky Supreme Court, the United States District Court for the Eastern and Western Districts of Kentucky, and the United States Court of Appeals for the Fifth, Sixth and D.C. Circuits. She is a member of the Fayette County, Kentucky, Federal and American Bar Associations.

Kilpatrick is on the Board of Directors of the Kentucky Coal Association and on the Scholarship Committee for the Energy and Mineral Law Foundation, serves as a board member for The Thomas D. Clark Foundation, Inc. and is a board member of Central Kentucky Radio Eye, Inc. She served as law clerk to the Honorable Eugene E. Siler, Jr. on the United States Sixth Circuit Court of Appeals from 199697. Kilpatrick is also a Kentucky Super Lawyer.™

Marco M. Rajkovich, Jr.

“Not having a single boss can be challenging, and we may debate things here and there, but we’ve always been able to reach a consensus as to what we want to do. I know these people, and they’re all my friends, I know that they are concerned about the wellbeing of this law firm. I know they’re all going to work hard,” Williams says.

Before forming their own firm, the four original partners were co-workers in another firm. After having been approached by other organizations regarding merging their talents, they decided to form their own firm. Williams says, “It was just a timing thing. We’d been at the same place a long time and we’d plowed the same ground and it was time to try something different. As with all new things, it was scary, but it was exciting.” > John M. Williams, a native of Loyall in Harlan County, Kentucky, graduated from the University of Kentucky College of Business & Economics with a Bachelors of Business Administration (Finance) in 1984 and received his Juris Doctor from the University of Kentucky College of Law in 1987. He has earned an AV® Preeminent™ rating by Martindale Hubbell. John is a member of the Kentucky, Fayette County, American and Federal Bar Associations Although his practice is primarily in mineral and energy and commercial litigation, Williams has experience in personal injury, construction claims, architect and engineer defense and collection matters. He also provides general services for a number of small businesses in Kentucky.

Williams is a volunteer counselor for the Kentucky Bar Association’s Lawyer’s Assistance Program and a long-time board member of Special Olympics Kentucky. He is a Kentucky Super Lawyer.™ > Marco M. Rajkovich, Jr., a native of Lynch, Kentucky, is a 1977 graduate of the University of Kentucky College of Engineering where he earned a Bachelor of Science degree in Civil Engineering with the Mining Option and was a member of Chi Epsilon Civil Engineering Honorary.

He is a 1987 graduate of the University of Kentucky College of Law where he was a member of the Journal of Mineral Law &

> Noelle Holladay True, a native of Lexington, Kentucky, received her B.S. degree with Honors in Finance from Indiana University in 1997, and graduated Order of the Coif in 2000 from the University of Kentucky College of Law. She is licensed to practice in Kentucky, and is admitted before the United States District Court for the Eastern District of Kentucky, and the United States Court of Appeals for the District of Columbia Circuit. Her practice areas are mine safety and health, employment law, and commercial litigation. She represents coal companies around the country in litigation matters before the Federal Mine Safety and Health Review Commission, and locally before the Kentucky Mine Safety Review Commission. She represents and advises mine operators during special investigations conducted by the Mine Safety and Health Administration in cases involving accidents, fatalities, and claims of discrimination, and also advises operators on other compliance issues involving federal and state agencies.

True serves as a board member and President-Elect of the University of Kentucky College of Law Alumni Association. She also serves as a member and Chairperson of the Steering Committee for the Southern Hills Early Childhood Program. > Todd C. Myers grew up in Morehead, Kentucky before moving to Lexington. He graduated from Transylvania University in 1997 with a Bachelor’s degree in Business Administration (Finance). Myers then

received his Juris Doctor, cum laude, from the Salmon P. Chase College of Law in 2000. He is licensed to practice law in Kentucky and West Virginia.

Myers represents clients in litigation matters in a wide array of areas including personal injury, employment, construction, professional negligence as well as commercial disputes. He has extensive experience handling cases on behalf of coal operators before the Federal Mine Safety & Health Review Commission and has successfully tried cases throughout Kentucky before federal and state courts and administrative agencies.

Williams says, “The great thing we have going for us is that we’re all friends. After eight years we have had zero problems in this office of being unable to work together.

No one is the boss. No one is ordering people around. Everyone knows what’s going on in the other partner’s lives. We are all concerned about each other’s personal lives. We want our clients to know that we work hard and we’re available to them, but when we cut the switch off here in this office, we understand that people have other things to do.”

lean and keep our rates low we could be competitive and it’s worked out for us. It’s certainly worked out for us in the mining industry. There are not a lot of law firms in the country that do mine safety work and our rates are very competitive,” Williams says.

A fast response to client needs is essential, says Williams. “If you need us, call us. Pick up the phone and call the office.

Call me on my cell phone. Text me. E-mail me. That’s the first thing.”

He says that the firm believes it is important for professionals to live reasonable lifestyles.

The firm is not a sweatshop and all the partners know that everybody on the team has his or her own life outside the office.

“We all work hard here, but we all know that sometimes the whistle does blow,” he says.

Williams, and the other partners and staff of Rajkovich, Williams, Kilpatrick and True agree that work is “a teamwork thing here.”

He says, “I don’t have the vocabulary to say how much we’ve enjoyed working with each other over the years. We all treat this law firm as our baby and we work together as well as a group of people can work.”

Keeping Balance Keeps Things Moving From the beginning Rajkovich, Williams, Kilpatrick and True set up shop to run a lean, responsive operation to provide the expertise found in a large firm at rates that were competitive with firms operating at a smaller scale. “I thought if we could be

The great thing we have going for us is that we’re all friends.

Vol. 1 No. 3 Kentucky Business Quarterly™ | 17

Staying Connected

NEWS • ANNOUNCEMENTS CURRENT EVENTS • TRENDS Stites & Harbison, PLLC is pleased to announce the addition of attorneys Kylie Parker Hofmann and Dwight Young to the Louisville, Ky., office.

Both attorneys join the firm’s Business & Finance Service Group. Hofmann earned her J.D., cum laude, from the University of Louisville Louis D. Brandeis School of Law in 2015. During law school, she clerked with a local law firm in Louisville, Ky. She worked with the Entrepreneurship Clinic (2014-15) and with Business School teams to start an LLC. Hofmann was a board member of the Business Law Society for two years.

She was also a Research Assistant for Professor John Cross (2014-15) and a Legal Intern for The Alley Theatre Legal Young earned his J.D., magna cum laude, from the University of Louisville Louis D. Brandeis School of Law in 2015. Prior to joining the firm, Young worked with a local CPA firm where he worked on estate planning and tax-related issues. His experience also includes performing legal research for an insurance defense firm in Indiana and a workers’ compensation firm in Louisville.

Stites & Harbison, PLLC is a nationally recognized, full-service business and litigation law firm with 10 offices in five states – Kentucky, Georgia, Indiana, Tennessee and Virginia. Tracing its origins to 1832, Stites & Harbison is one

of the oldest law practices in the nation and among the largest law firms in the Southeast. For more information, visit www.stites.com.

Bank of the Bluegrass & Trust Co. expands surcharge-free ATM availability for clients through Allpoint Network.

2015-Bank of the Bluegrass & Trust Co. has joined Allpoint Network, which means Bank of the Bluegrass clients now have access to America’s largest surchargefree ATM network, with some 55,000 surcharge-free ATMs worldwide. Allpoint Network is an affiliate of Cardtronics, Inc. (NASDAQ:CATM), the world’s largest retail ATM In addition to Bank of the Bluegrass & Trust Co.’s branch locations and ATMs, with Allpoint Network, Bank of the Bluegrass clients will never be far away from surcharge-free ATM access to their cash, especially in the United States where Allpoint offers 43,000 cash machines in places they’re already visiting as part of their daily routine. Conveniently located in destination retail outlets including major discount retailers, convenience, grocery and pharmacy stores, Allpoint Network ATMs save clients of Bank of the Bluegrass time as well as ATM fees. “By becoming an Allpoint Network member financial institution, we’ve grown our surcharge-free ATM footprint to more than double that of even America’s largest bank,” said Bill Allen, President for Bank of the Bluegrass & Trust Co. “People want a financial services provider that delivers the most convenient account access and

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management options, and that includes cash access. With Allpoint Network surcharge-free ATMs, Bank of the Bluegrass can meet our clients cash access needs in a way that works best for themin the conveniently located stores that are already part of their lives.

Stites & Harbison, PLLC attorneys named to Super Lawyers List

The 2016 edition of Kentucky Super Lawyers recently honored 64 Stites & Harbison, PLLC attorneys in the Covington, Frankfort, Lexington and Louisville, Ky., offices. The publication named 49 attorneys to the Super Lawyers list and 15 attorneys to the Rising Stars list.

Many Members (Partners) have received special recognition in Kentucky Super Lawyers. Three attorneys are listed among the Top 50 Attorneys in Kentucky: Charles (Mike) Cronan IV, Shannon Antle Hamilton and John Tate.

Three attorneys are listed among the Top 25 Women Attorneys in Kentucky: Carol Dan Browning, Anne Gorham and Shannon Antle Hamilton.

Of special note, Stites & Harbison was listed in Super Lawyers Business Edition for 2015 as the sole law firm earning the honor of “Top Law Firm” in Kentucky for Intellectual Property, one of two “Top Law Firms” for Construction, Real Estate and Environmental, and one of four “Top Law Firms” in Kentucky for Litigation.

Firms were selected based on the number of firm attorneys who have been chosen for a 2014 or 2015 Super Lawyers list in

RECENT AND RELEVANT INDUSTRY NEWS AND INFORMATION ON EVENTS, MATTERS OF IMPORTANCE AND INTEREST WITHIN THE LOCAL BUSINESS COMMUNITY. ALL SUBMISSIONS FREE OF CHARGE! SUBMIT INFORMATION TO: BRIAN72676@GMAIL.COM

the appropriate practice area, the number of years honored on the list, inclusion on a top list, and average blue ribbon panel score.

Macho Nacho opens in Chevy Chase

The Macho Nacho celebrated its grand opening in Chevy Chase recently bringing a new Tex-Mex dining option to the city’s rising Euclid Avenue corridor.

CEO and owner Aaron Rothke said the restaurant, located on the busy corner of Euclid and High streets, is aimed at raising the bar for Tex-Mex and improving the Tex-Mex dining experience in Lexington.

The Macho Nacho’s menu features the classic Tex-Mex entrees, including tacos, burritos and quesadillas, along with menu selections such as wings and shareable appetizers for bar patrons and those who come to watch sports on the restaurant’s 26 televisions. Specialties such as bourbon ancho barbecued chicken and tequila lime shrimp and grits offer an artful Kentucky spin on classic Tex-Mex flavors as well. The restaurant also has plans to offer a Tex-Mex brunch on weekends, Rothke said.

The restaurant features a warm and modern Tex-Mex interior, with a large bar area and booth seating in the dining room. The Macho Nacho has seating for up to 190, including a semi-private dining room for up to 40, which will be available for groups and events.

Dean Dorton Allen Ford merges with Barr Anderson & Roberts Dean Dorton Allen Ford, PLLC (Dean

Dorton) has expanded its presence in Kentucky by merging with Barr Anderson & Roberts, PSC (BAR), a longstanding CPA and advisory firm located in Lexington, KY. The merger will be effective January 1, 2016. The combined firm will operate as Dean Dorton. “The addition of BAR and their team helps us to better serve our growing practice.

We are enthusiastic about continuing the high level of service and expertise BAR has provided its notable client base,” said David Bundy, President and CEO of Dean Dorton.

“Barr Anderson & Roberts has had tremendous growth throughout the past 39 years since our start as Barr and Taylor in 1976,” noted Christopher Anderson, current President and shareholder of Barr Anderson & Roberts. “Our clients’ needs always come first. With the combination of developing client needs and continuous growth, it was critical for us to find a way to continue providing high-quality service efficiently and effectively while providing clients with additional value through a broader range of specialty capabilities, advice, and solutions. In addition, we want to offer more opportunities for our employees and referral partners who are the backbone of our business.”

BAHE COOK CANTLEY & NEFZGER PLC is proud to announce three new associates Patrick E. Markey’s practice areas include personal injury, employment discrimination, nursing home abuse and neglect,

and medical negligence. He received his J.D. summa cum laude from the University of Louisville School of Law in 2014 and was ranked second in his class.

Patrick worked as a court employee in Kentucky for nearly eight years prior to practicing law. Patrick was a member of the University of Louisville Law Review, was selected for membership in the Brandeis Honor Society, and received other awards due to academic achievement.

Sarah Beth Hackman’s practice areas include products liability, personal injury, and medical negligence. Sarah Beth received her J.D. cum laude in May of 2015 from University of Louisville School of Law. During law school, Sarah Beth was inducted into the Brandeis Honor Society and was also a member of the Journal of Animal and Environmental Law. Katie Halloran’s practice areas include personal injury, employment discrimination, medical malpractice, and nursing home abuse and neglect.

Katie graduated magna cum laude from the University of Louisville School of Law in May of 2015. While in law school, Katie served as an editorial board member for the University of Louisville Law Review and was inducted into the Brandeis Honor Society. She also participated in the law school’s moot court teams and its International Service Learning Program.

Vol. 1 No. 3 Kentucky Business Quarterly™ | 19

BY BEVERLY CLEMONS

Employment Records Retention

As 2015 draws to a close and a new year is upon us, it is an ideal time to review your Records Retention Program and Policy, or to establish one.

A sound records retention schedule ensures that an organization retains the records it needs for operational, legal, fiscal or historical reasons, and then destroys them systematically, and within compliance, when no longer needed.

While it would be nice to purge those documents when the filing cabinet becomes crowded, each local, state and federal agency has a different set of requirements and regulations that require that certain personnel records, whether

WHAT TO KEEP AND FOR HOW LONG?

stored electronically or on paper, be kept for a specified period of time and even well after the termination of an employee’s employment. To complicate things further, many of these requirements are worded ambiguously and often cover the same documents so it’s challenging for know what to keep and for how long.

Employers are required to know how long to keep or destroy employee files and documents and to be familiar with all relevant federal and state laws including the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), the Health Insurance Portability and Accounting Act, (HIPPA), COBRA, Uniformed Services Employment and Reemployment Rights Act (USERRA), Occupational Health and Safety Act (OSHA), National Labor Relations Act (NLRA), Equal Pay Act (EPA), the Fair Credit Reporting Act

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(FCRA), and the Lilly Ledbetter Fair Pay Act. The Lilly Ledbetter Fair Pay Act changed how employers treat retention of compensation information. Under the Act, every paycheck may constitute a new claim of discrimination, thereby extending the potential time period for EEOC claims. As a result, employers are documenting and retaining pay decisions including hiring offers and merit increase decisions, to justify actions against future claims of discrimination.

It’s also important to understand the requirements for preserving electronic documents that might become part of litigation to make sure you are retaining the records you need to keep. Some employment laws, such as the SarbanesOxley Act, also have provisions regarding document destruction. When creating or updating record retention strategies, companies should carefully consider the requirements for digital evidence in court to ensure that their electronic files will be admissible in discovery or litigation cases.

The Federal Rules of Evidence require a digital time stamp and digital signature to prove the authenticity and integrity of electronic files presented in court. In addition, if your organization uses social media to promote employee information and benefit changes, consider keeping these records. Screenshots are generally not acceptable in regulatory situations.

You must be able to prove the exact content of your social media pages from any given date. Retain records longer if litigation, a government investigation or an audit seems likely. In the event that a legal action does transpire, immediately cease all disposal activities.

But wait – how do we know what we have to keep and for how long? You have to know what you have and how long to keep it—legally and for your own business purposes—before you can establish an efficient records management system.

Here are some sample time frames for retention of employment records after termination of the employee: Employment Application or Resume

Permanent, do not discard.

Performance Appraisal and Backup

6 years

Absence Records

4 years

Disciplinary Records

6 years

Time Sheets, Payroll Authorizations, Tax Withholding Forms

6 years

Tax Withholding Forms

6 years

(unless due to work-related injury or illness):

ABOUT THE AUTHOR Beverly Clemons is the President and Owner of CMI Consulting. Her firm can assist you with Auditing or Developing and Implementing an compliant Records and Retention Program, as well as other HR Consulting to include Employee Handbook and Policy Development, Talent Sourcing, Development, Retention and Training.

Beverly may be reached at 859.296.2800. www. cmiconsulting.com

The Lilly Ledbetter Fair Pay Act changed how employers treat retention of compensation information.

Of course, as with most other areas of Human Resources, Records Retention and Disposal is becoming increasingly complex. Establishing a clear policy on record retention and destruction including schedule, file location, methods of destruction and appointing a records administrator are the keys to a compliant system. Consult with a specialist in this field who can audit your current policies or implement a program for your organization to ensure that you, and your organization are protected.

Vol. 1 No. 3 Kentucky Business Quarterly™ | 21

BY ANDREW VAN HORN

Want to Achieve Your Goals?

I love the end of the year because it is the time to start planning out the following year. Over the last few years, I’ve helped hundreds of businesses write their one, five, and ten-year plan and what I want to go over with you today are the common mistakes that business owners make when planning.

The most common mistake that I see owners make when planning is confusing a strategy for a goal. For example, I recently had a client say they wanted to buy this new piece of equipment for their business that will allow them to make some more money.

By itself that sounds like a pretty decent goal but if we look at that closer, we realize that is not really what the owner wants. If you are going to buy a new piece of equipment, what is it you want?

It’s revenue, not a piece of equipment. If you are like many of my growth-minded clients, then it is likely that you also are want to increase revenues. Make sure your goal looks something like this:

THEN DO THIS.

We are going to increase our revenue by $______ this year.

The sentence is a simple format that works. You can show this goal to your entire team, and each one of them will know what the business is trying to accomplish.

Clarity in your goals allows the entire team to participate and aim for the same target.

Just for fun, below are my top strategies for generating increases in revenue.

1. Flow-chart your sales process and track conversion along each step of the way.

Then improve each step individually starting with the lowest converting step.

2. Get your current customers to come back more often. Getting them back is accomplished through emails, phone calls, or direct mail. It is far easier and cheaper to get past customers back than it is to bring in new customers.

3. A way to quickly add revenues to your business is to have some set items that can be cross-sold. Think of the checkout lines at the grocery store, they are full of quick add-on purchases that people can make. Every industry has something extra that they can sell at the point of sale.

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Another goal that my clients also work towards is generating more profit. That goal usually looks something like this: We are going to increase our net profit by __% (I challenge my clients to grow 50% or more over a 12-month period).

You might be thinking that is a large amount, but it is very achievable for most businesses out there today. Again once we have a clear goal set it makes it much easier to create the strategies that will help us attain the goal. Here are my top three profit increasing strategies.

1. Sell more of your higher margin goods.

The key to making this strategy effective is knowing what your high margin goods are and creating stellar offers to your database that encourage them to buy those goods.

2. Implement a strong budget that puts the creation of profit before expenses and pay. You start paying your business its profit off the top and then ensure that all other expenses fit into the money that is left over.

3. Start tracking everything, especially advertising. Force all expenditures to create more money for your

The most common mistake that I see owners make when planning is confusing a strategy for a goal.

business. I’m talking about getting your equipment, team member, and advertising working to increase the revenues of the business. If an asset is not performing as good as it should, then cut that asset and turn the cash into something that produces more profit for the business.

Most businesses stop their goal setting here because what they want is more revenue and profits. However, to stop with just a revenue and profit goals we miss out on other areas of our lives that are equally important and often will lead to a creation of more revenue and profit. Here are some of those goals.

1. Set an education goal. The more you learn, the more you can earn. Think through what conferences you want to attend, what sort of training you need, and what books to read for the year. Jim Rohn said it is your job to work harder on yourself than you do on anything else. As you improve so does your business and life.

2. Set a lifestyle goal. Think of this as setting a goal around places you would like to visit in the world. How many hours a week would you like to work?

What sort of house/car/boat would you like to buy this year? This goal is all about thinking through the kind of life you want your business to provide for you. It is about ensuring you make your business an asset that leads to a better life and having a picture of what that life is. If you want a life that allows you to spend 2 million dollars a year, then you know what kind of business you must create to support that.

3. The third area of goals that usually get overlooked is spiritual goals. Spirituality is a component of every culture all over the world. Regardless of what you believe in regards to spirituality it is an aspect of your life that should be planned out. Look at your spiritual beliefs and set some goals that would benefit you and help you grow in that regard.

The last and equally important step of setting goals for next year is to tell others what it is you want to achieve. Tell the people in your life what you want and they can hold you accountable for doing the work to make it happen. I would even encourage you to make a comment online to encourage the entire KY Business Quarterly family to hold you accountable.

Remember as you work your way through this quarter that planning and goal setting are the foundational building blocks of success in business and life. I find it exciting to set goals that help me focus on building a better life that my businesses can support. If you are serious about your goals and having a better business, then add some accountability for yourself.

ABOUT THE AUTHOR Andrew Van Horn is best summed up in one word: Abundance. Abundance simply means having enough time and money to do the things that you want to do. As an ActionCOACH Business Coach Andrew helps owners all over the area in building a business that creates abundance for the owner that can be passed down for generations.

He loves helping businesses grow into their full potential because a growing business creates jobs and money that can bring about positive change in the area. His goal is to help 1,000 businesses in the next five years achieve abundance.

Vol. 1 No. 3 Kentucky Business Quarterly™ | 23

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SMALL BUSINESS PROFILE – ENTREPRENEUR SPOTLIGHT – BUSINESS LEADER PROFILE

KENTUCKY QUARTERLY

™

Spotlight Do you know of a business or leaders we should consider for a feature story? Would you or your business like the spotlight in KBQ? IF SO, PLEASE LET US KNOW.

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Vol. 1 No. 3 Kentucky Business Quarterly™ | 25

Little Known Tax Credit for Growing Businesses

BY JACOB SIZEMORE CPA/ABV, MBA

Little Known Tax Credit for Growing Businesses The holidays are upon us.

For a business owner this time of year is filled with reflection on how the year went, what worked, what didn’t, and how to do better next year. For those businesses that expanded last year or are planning to expand in 2016 there are certain incentives Kentucky currently offers to reward growing businesses. One credit in particular is often overlooked and underutilized. I will discuss the credit below and some of the pitfalls related to the credit with suggestions for how to avoid them.

Kentucky Small Business Tax Credit

The Kentucky Small Business Tax Credit (“KSBTC”) was first enacted in 2009 and was later simplified, in July of 2014, to help stimulate the use of the credit. Certain businesses are eligible for a non-refundable state income tax credit between $3,500 and $25,000. Eligible small businesses include sole proprietors, partnerships, limited partnerships, corporations, limited liability companies, joint ventures, associates, or cooperatives that have fifty or fewer full time employees. The amount of the KSBTC is the lesser of $3,500 per eligible position or the total dollar amount invested in

qualifying equipment or technology, with a maximum tax credit of $25,000 per applicant for each calendar year.

A business may apply for the credit once one eligible position has been created and filled for twelve consecutive months, and the business has spent at least $5,000 in qualifying equipment or technology purchases within six months prior to or after filling an eligible position.

The application must be submitted within 24 months of the fulfillment of the first requirement. Additionally, Kentucky has an annual statutory limit of $3,000,000 with the credit being given on a first come first serve basis.

make 150% of the federal minimum wage, which currently equates to $10.88 per hour. Finally, the eligible position must increase the base employment of the small business. Base employment is a detailed calculation that considers the number of full-time employees a company has the day before hiring for an eligible position.

The idea is that the company’s number of full-time employees twelve months from the hiring of an eligible position should be higher than the base employment. If the employee hired into the eligible position ceases to work for the company then the company has 45 days to refill the position to maintain eligibility.

Example

Qualifying Equipment or Technology

A dentist decides to hire a new dental hygienist and add $8,000 in equipment to accommodate his growing practice.

Assuming the hygienist position meets the requirements of an eligible position and the equipment meets the applicable requirements the dentist would receive a credit of $3,500.

If the dentist instead hired a receptionist and a hygienist which both met the eligible position requirements and spent the $8,000 on equipment the credit would double to $7,000.

Eligible Position

To be considered an eligible position for the KSBTC a business must hire a new employee subject to Kentucky income tax and the new employee must work an average of 35 hours per week.

Additionally, the new employee must

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For investments in business property to be considered qualifying equipment or technology they must be tangible property purchased for use in the business with a minimum cost of $300 per unit excluding non-allowable cost such as shipping. The property must have a useful life of more than one year and be purchased in the previously mentioned timeframes. Examples of qualifying equipment or technology include computers, equipment, furniture, fixtures, furnishings, and vehicles. Some items specifically excluded are real property, buildings, and consumable supplies.

Pitfalls

Through the years as a practitioner I have seen many wonderful tax savings opportunities for business owners to

capitalize on, just like the KSBTC. In my experience these programs are unfortunately underutilized. The biggest challenge to claiming the KSBTC is the timeframe. You must coordinate the hiring of an eligible position with the purchase of enough qualified property.

Once you have done that you must wait up to a year to submit the application.

The other primary issue is that this credit encompasses multiple disciplines that are often performed by different people. You have payroll, accounting, and taxes all involved on some level to claim the credit.

Many times your CPA doesn’t know if you have hired new employees and your payroll provider doesn’t know anything about tax credits. Bookkeepers generally want nothing to do with taxes due to the liability. Generally, the business owner assumes one of the professionals they

work with will certainly alert them of the opportunity if they qualify. However, due to the discussed pitfalls above this doesn’t always happen. This leaves the business owner looking for someone to put it all together.

Solution

So how do you make sure you don’t miss out on this credit and get your application in as soon as possible? For the do-it-yourselfers out there the answer is simple... organization. When you hit the qualifying events put all the deadlines on your calendar. Get the information together for the application as soon as the hire has been made and property purchased. Then set your calendar appointment for submission of the application and wait. For the business owners that are so busy they will never

remember the deadlines they need to seek professional help. For example, Sizemore Strategic Solutions offers a tax credit monitoring service included with our payroll service that alerts business owners to potential credit opportunities and helps ensure deadlines are met. Either way you go don’t leave money on the table.

ABOUT THE AUTHOR Jacob Sizemore CPA/ABV, MBA is co-founder and CEO of Sizemore Strategic Solutions.

He specializes in refocusing business owners from day-to-day tasks to strategic level thinking by utilizing business process outsourcing. With his approach he is able to help business owners improve profits, reduce overhead, and improve efficiencies.

EMAIL: Jacob@sizemorebpo.com PHONE: 859.309.4220

For those businesses that expanded last year or are planning to expand in 2016 there are certain incentives Kentucky currently offers to reward growing businesses.

Vol. 1 No. 3 Kentucky Business Quarterly™ | 27

BY BRIAN LORD

3 Major Customer Relationship Tips for Small Business

For some small business owners and salespeople, the hunt for new prospects can be far more thrilling than taking care of existing customers. But ignoring customers can lead a company down a dangerous path.

In fact, neglecting your existing customer base could be doing your business a great financial disservice. For the majority of businesses, 65% of sales comes from existing customers, according to the Customer Research Institute. Moreover, it is projected to cost five times as much to attract a new customer than to keep an existing one.

Finding new clients on a regular basis can be difficult for small businesses, therefore, keeping clients long-term is key to growth.

Your customers are one of your best assets, so bring the focus back onto them

with these three customer retention tips.

Whether they are consumers or businesses, if they like you they will shop with you and bring others with them.

is getting the attention they need. After all, companies that prioritize the customer experience generate 60% higher profits than their competitors.

Tip #1. Don’t Underestimate the Value of Existing Customers

Tip #2. Solid & Consistent Customer Service is Key to Growth

Your existing customers mean more than you know; businesses live and die from repeat business. Therefore, understanding the value of existing customers is crucial, particularly since these customers can become your most committed supporters and best forms of advertisement. And while customer retention may not be as exciting as obtaining new prospects for some, it’s far more profitable.

According to research from the global management consulting firm Bain and Co., a 5% increase in customer retention can help boost a company’s profitability by as much as 75%. That is huge! With this said, take time to re-evaluate your sales reports to make sure your existing customer base

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Think you know your customers? Think again. According to Bain and Co., 80% of companies surveyed were convinced they offered top-notch customer service, despite the fact that only 8% of their customers agreed with that.

Delivering solid and consistent customer service is key to keeping existing customers on board and maintaining a healthy bottom line. The tendency is to provide problem solving care when there is a complaint, instead of delivering proactive service to show that you care. The saying is true: people don’t care what you know until they know how much you care. We buy from those we trust and we trust those we know.

I can’t have a business relationship with strangers. When asked what would prompt them to spend more with a company, 40% of customer survey respondents said “better overall customer service,” while 35% said “quick access to information.”

To ensure customer retention, small business owners need to focus on delivering stellar & consistent customer service while never giving existing customers any reason to turn to the competition. You took so much time to earn their business, now take time to keep their business.

Tip #3. Take Time to Listen

The stronger your relationships are with your customers, the less likely they are to jump ship. Your business needs to engage with customers through several marketing channels. Not only will this help boost retention rates and build brand loyalty, but it will also build stronger, longer-lasting customer relationships. Some of the tools you use to advertise need to be tools to connect with clients.

Some ways you can connect with customers and clients are through

Facebook, Twitter and Linked-In. Keep them updated on product releases or services through your company blog or social media. Use educational-based marketing to teach people what you do and why you do it.

Ask questions. Ask for customer/ client opinions through live polls on your website. Your existing customers can be your best salesmen. According to a new study conducted by the UK-based Internet Advertising Bureau, 90% of consumers would recommend a brand after directly engaging with them through social media.

Another way is to listen to your clients and show them that their opinion matters is to hold/attend quarterly networking or gathering events. This works well with B2B sales. Bring people in to listen to their needs and frustrations. Listen to their pain and then become their solution.

Another effective way to keep customers actively engaged with your brand is through promotions. Everyone wants to feel valued, and what better way to show your gratitude than through special discounts or loyalty programs? Not only will this keep customers

feeling satisfied and directly engaged, but it will also drive added business to your brand.

In today’s competitive small business market, customers have no problem leaving their existing provider for better customer service, making customer retention more important than ever before. Instead of stacking your sales report with only new prospects, focus on your existing customer base as well; after all, they’re the lifeblood of your business.

It is projected to cost five times as much to attract a new customer than to keep an existing one.

Vol. 1 No. 3 Kentucky Business Quarterly™ | 29

BY MARK SIEVERS

The owners of small and medium sized businesses make many important decisions. One of the most important will be the decision to sell their business and how to go about it. Owners sell businesses for a variety of reasons with retirement being a common one. Other reasons include relocation, loss of interest or interest in another opportunity. Sometimes an entrepreneur will start several businesses over time and must sell one or more in order to focus on the other enterprises.

The following are some key considerations that contemplating a business sale should pay attention to: 1. Business Valuation. This is a critical step and is one that a business broker and/ or accountant can assist with. Business valuations are based on asset value to some degree but to a larger degree the cash flow of the business. A valuation is typically expressed as a range of value. Additionally, most business sales involve three parties (buyer, seller and lender) so it becomes an

Getting the Most Out of the Sale of Your Business

“economic touchstone” that all parties must buy into for the transaction to occur.

2. Organize your financial information.

A buyer ( and lender ) will want to review at least three years worth of financial statements and tax returns. Additionally, the owner should review the information and identify any discretionary expenses plus any unusual and non-reoccurring expenses.

These will become possible adjustments to net income in order to derive Seller’s Discretionary Earnings (SDE) which is the number that will drive valuation analysis .

3. Seller financing. An owner should carefully consider willingness to provide some seller financing even if its only 10-20% of the price. This will broaden the buyer pool and may make it easier to obtain bank financing. Additionally, offering some seller financing makes a positive statement about the future of the business. Another consideration is that seller financing can result in deferring some of the gain on sale for tax purposes.

4. Post closing transition assistance. For some businesses it may be important for the owner to stay involved on some basis to ease transition, maintain customer relationships, engage in business development, impart critical knowledge, etc. This could be over a

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few weeks, months or even longer. In some cases this can be structured as a consulting agreement and may be a way of negotiating the price. To some degree a consulting agreement may be quasi seller financing and is another way to extract value from the sale .

5. Real estate. If a business owner also owns the real estate there is the an option to sell the business and lease the real estate to a new owner and be the landlord. Or it may be more attractive to sell the business and the real estate. Inclusion of the real estate in the deal will increase the price but make the collateral package more attractive to lender plus stretch out the amortization period.

6. Franchise businesses. If the business is a franchise it will be important to understand what issues that might present.

Each franchisor will have its own “process and protocol” to assist the franchisee in a franchise resale. Typically, the initial franchise fee in a resale is less than a new franchise and the difference can be considered a component of value. Some franchisors have other fees associated with a franchise resale such as lease review fee or administrative fee. A review of the franchise agreement should identify those. It is also important to understand that there will be

franchisee screening requirements including net worth and liquidity thresholds .

7. Problems or “soft spots”. If there are problems or difficult issues, it is advisable to understand what those are and then honestly and constructively explain them early in the due diligence process. Not disclosing such issues is unethical plus having them discovered later in the process can be a deal breaker or a reason for renegotiation.

8. Intellectual property (IP). If the business has intellectual property those intangible assets should be organized for review. This could be logos, names, recipes, trade secrets, patents or patents pending, formulas, processes, etc.

9. Fixed Assets. A list should be made of the FF&E (Furniture, Fixtures and Equipment) that go with the business.

Additionally, any items that DO NOT go with the sale should be identified to avoid confusion and misunderstanding.

10. Inventory. Depending on the type and size of the business this can be a non issue or a critical issue. A key issue is to what degree there is old or obsolete inventory.

11. Hidden or non obvious value components. Sometimes businesses have attributes that are of genuine value, but might be overlooked unless identified.

While often not quantifiable, they can help justify a price at the higher end of a

valuation range. Examples include, but are not limited to, the following : • Favorable lease terms • Assumable license value (liquor license or health care provider ID) • Grandfathered code or use value (drive thru window on a liquor store) • Assumable loans • Excess space or capacity • Human resource value – is there staff that offers uncommon tenure or expertise?

• Economic development incentive credits, etc. that are unused • Favorable contracts or relationships with suppliers • Special or exclusive customer contracts or distributorships • Customer lists and/or mailing lists • Social media sites • Computer or administrative systems 12. Business as usual operations. If an owner is contemplating a sale or is in serious negotiations its important to continue to operate the business normally and not cut corners. When a business sale contract is in place but the closing has not occurred, the owner should disclose if there has been any material adverse change in business performance. Additionally, if there are any major decisions that need to be made before

the closing, the owner should discuss with the buyer. Examples could include a capital expenditure or contract renewal or decision regarding a key employee. These actions help ensure a smooth closing and transition.

In addition to the above, unless the owner already has a buyer identified, he/she should strongly consider using a business broker to assist in the sale. This will allow the owner to concentrate on running the business.

Furthermore, an experienced business broker will have a network of contacts, an understanding of the process (including ups and downs) and a keen sense of the market that can become invaluable in the marketing and sale process. A broker will also know many lenders that would be a good fit for a particular transaction. Many business sales are good candidates for an SBA loan but other options or combination of options exist (USDA, creative financing, etc.).

ABOUT THE AUTHOR Mark Sievers is the owner of The Sievers Company LLC and is a central Kentucky based business broker and consultant. Representing both buyers and sellers, he brokers small and medium sized businesses, franchises, equipment, and intellectual property. He also provides small business consulting services.

PHONE: (859) 576 2257 EMAIL: thesieversco@aol.com ON THE WEB: www.thesieverscompany.com

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