Climate change is already starting to affect small businesses in flood zones. Here’s what the experts say about preparing your business for natural disasters.

Last year, a neighborhood in Key Largo, Florida, felt the full effects of rising sea levels. For more than 80 days, the low elevated streets of Stillwright Point were flooded with saltwater, leaving residents trapped in their homes, unable to work.

Mike Turner works as a window tinter who frequently goes to the neighborhood. He said because of the corrosive saltwater, he had to limit jobs in the neighborhood, fearing damages to his car.

“People didn’t want to go out, some of their cars can’t drive through the water,” Turner said. “The water was up to the knees.”

Flooding wasn’t new for the neighborhood, but local news source Keys News reported that the longest previous flooding lasted 22 days. It had been over 80 days. Local meteorologists said in the report that the flooding was caused by rising sea levels due to warmer ocean water temperatures.

Though the flooding cleared by November, Turner said it served as a stark reminder of how extreme weather affects businesses.

The climate crisis will be devastating for the planet over the next century, but it is already impacting small businesses now. Areas prone to wildfires, rising sea levels, or hurricanes pose great personal and financial risk.

Research published in September of last year by Willis Towers Watson, a global insurance and advisory company, categorizes events that will have a high impact on global economic growth. The paper highlights climate change as the No. 1 concern. Climate change first appeared in their rankings in 2013 and has moved its way up ever since.

Higher insurance costs, loss of business, and adopting greener initiatives have been the main threats of climate change, according to the study.

We talked with an investment banker who works with small businesses and Miami’s first chief resilience officer. They said there are several precautions you can take to withstand natural disasters.

Weather-proof your retail location

In Islamorada, Florida, also in the Keys, a famous restaurant located next to the sea, Islamorada Fish Company, has felt the effects of flooding for a few years. One section that houses more than 20 tables overlooking the sea is closed off on days water floods the area.

Cindy Trisha, a frequent customer of the seafood restaurant, said that the unpredictable sea levels will rise and flood the entire section. While there are other sections to host more guests, she said that on busy nights, she estimates a big chunk of business is lost since customers have to be turned away.

“No one can really tell when the levels will rise,” Trisha said. “When it does, they lose a lot of customers. It’s a problem that they haven’t fixed yet.”

Representatives from Islamorada Fish Company did not respond to Business Insider’s request for comment.

Jane Gilbert, the City of Miami’s first chief resilience officer, has worked on resilience projects and initiatives to mitigate flood risks. Her initial findings report that the construction industry and retail sectors are more vulnerable to floods. To help flood-proof, Gilbert said small businesses can get flood panels, elevate critical equipment, or, if possible, elevate their buildings.

“Small businesses don’t think 40 years out, but if you are located in a storm surge zone, whether its climate change or hurricane, those businesses are more vulnerable,” Gilbert said. She added that the city is looking into giving businesses resources to help fortify themselves.

Consider climate risks in business decisions

Apart from shoring up their physical property, Gilbert encourages businesses to work with their insurance company and their local government, who can help businesses get back up and running as soon as possible in the event of a natural disaster.

James Cassel, 64, an investment banker who works with small businesses to navigate through climate crisis, said that weatherproofing stores and getting flood insurance policies are a good investment in the long term, though he understands why businesses are hesitant since it can be costly.

“We are starting to see commercial insurance rates rising with flood policies,” Cassel, the CEO and founder of Cassel Salpeter & Co, said. “It may cost more money, but you [have] got to have a longer-term view than the next 20 minutes.”

Cassel said that when making new investments, have climate risks in the decision-making process, whether it is an adaptation or understanding the risks with insurance.

Greener initiatives can lead to new (and more) customers

According to the Carbon Majors Report, more than half of industrial emissions can be traced to 25 companies. While the listed companies are not small businesses, it illustrates how businesses play a part in the climate crisis.

Cassel said adopting green initiatives will not only help reduce the carbon footprint but will help get new customers.

With more green and climate awareness, consumers, especially the younger generation, have become more socially conscious on what businesses they support. Banning plastic straws has especially increased the chances of businesses getting younger customers.

Cassel said a sustainability mindset starts with the little things. “Young people will patronize businesses because they are adopting green measures, or they will penalize businesses by not going there because they are not doing it,” he said.

In this area, small businesses have an advantage over large companies, since they typically can implement new methods more quickly. Cassel suggested businesses install new lighting, such as motion sensor detectors or lightbulbs that use less electricity, toilets that use less water, and energy-efficient appliances.

“There are so many ways to have a positive impact [on] the environment,” Cassel said. “Every small business has an obligation to do their part. You can’t argue over the fact that the water is rising.”

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As veteran workers wait longer to retire, here’s how you can also keep younger talent

By James S. Cassel

No matter what industry you are in, you will find that older/senior-level workers are waiting longer to retire. These diehards have varying motivations for extending their careers. Their names may continue to offer brand value that attract customers, clients and potential partners; they may feel they still have much to offer; they may have little else that interests them; or they simply may have to keep earning because people are living longer and are rightfully concerned that they may outlive their savings or won’t have enough money for the life they’re accustomed to.

This presents challenges to middle-market businesses that want to keep younger talent who are sometimes impatient to be promoted. But losing younger staff can mean losing the future. So, here is what you can do to keep those mid-level managers on your team and not on the competition’s.

You must show them a path to the top, albeit a slower one. Talk to your ambitious mid-level employees about how they can advance, or at least how they can grow laterally. If they don’t know there’s a path, or can’t see one, the best are more likely to look elsewhere, and once they leave, they are tough to replace given today’s low unemployment and high demand for talent. So, be as specific as you can about growth opportunities.

You may also need to work with senior-level people to alter their positions to allow younger staff more opportunities. For example, a law partner might go from partner to senior status.

Second, be careful with your hiring practices. For example, contracting a search firm to replace top-tier employees while overlooking those just one rung down the ladder sends the message that there is no path upward, leading good employees out the door.

Third, nurture a corporate culture that is challenging but respectful. The #MeToo movement has shown that we are less tolerant of abusive company leadership than ever before. This means keeping a close eye on your employees at the top who often come from a different era and corporate culture. Make sure they are treating subordinates respectfully.

Fourth, create long-lasting incentives as opposed to merely giving one- off bonuses for accomplishments. You can get this done in a variety of ways like providing educational opportunities for employees and linking such professional development to your business goals. If you cannot offer in-house training opportunities, reach out to outside providers. There are many executive programs now available that help employees hone skills and brush up on weak areas.

Also, consider including exceptional mid-tier employees in key decision- making processes. Helping steer a company toward a brighter future strengthens the bond between employees and the company.

Another possibility is offering some type of stock ownership, but not just for the senior people. With proper vesting, and other terms, this helps encourage people to stay long-term and may even give them a path to potentially buying out the founders.

Sometimes you will have to make a difficult choice, selecting who is more important to the future of the business. Remember, when you lose from the middle, rebuilding from the bottom can afford you some additional runway. Sports teams make these tough choices yearly. During rebuilding years, they sometimes have to decide between the rising star and the older veteran. (Let’s see what happens with Tom Brady.) Ultimately, it’s better that you make the decision instead of having it made for you.

There is no escaping the trend of folks working longer and inhibiting advancement opportunities for others, but if you want to have a successful middle-market business, you are going to need mid-tier workers to execute your vision. With too much employee churn, you have instability and lose institutional knowledge as well as your investment into those employees. Take the necessary steps to confront the challenge and prosper, but be prepared to address the loss of talented staff. Patience might be a virtue, but not every employee will be virtuous.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle- market companies. He may be reached via email at or via LinkedIn at

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Q4 2019: Tech Deal Report

The Toughest Job in America? Boeing’s New CEO Faces an Epic To-Do List as He Takes the Helm Today

By Erik Sherman

Beginning today, David Calhoun steps into the cockpit as CEO of Boeing, the company’s fourth chief executive in just under five years.

Calhoun is highly seasoned. His path to Boeing follows a long and distinguished career at high-profile companies in multiple industries. He’s held top positions at Blackstone Group, Caterpillar and Nielsen Holdings, to name a few.

From those who know him well, Calhoun gets high marks as both a smooth operator, adept at making the numbers work, and as a kind of Mr. Fix-It.

Calhoun will have to rely on both skills if he’s to right America’s most troubled company.

Just yesterday, Treasury Secretary Steve Mnuchin dropped a timely reminder of just how much is riding on Boeing’s turnaround. “There’s no question that the Boeing situation is going to slow down the GDP numbers,” Mnuchin said in a Fox News interview. “Boeing is one of the largest exporters, and with the 737 Max, I think that could impact GDP as much as 50 basis points this year.”

Calhoun is heir to one of the biggest messes, not only in the company’s history, but in modern business. Just before Christmas, the Boeing board asked him to step in and achieve a seemingly impossible metric: pilot the aviation and defense giant beyond the twin tragedies of the Lion Air and Ethiopian Airlines crashes that killed 346 people, and into less turbulent times.

To do so, he must regain the trust of investors, suppliers, consumers and employees. He has to repair relationships with regulators, fix the dysfunctional, we-know-best culture that’s created a toxic rift between management and the workforce that was best summarized by a recently released internal employee message that referred to the 737 MAX designers as “clowns” and the company’s supervisors as “monkeys.” Oh, and he’s got to do what his predecessor, Dennis A. Muilenburg, couldn’t—get the 737 MAX back into the air.

He’s under a huge time constraint, too.

Calhoun needs quick progress because of a major cash burn—the company had a cash burn of $4.1 billion in the third quarter—and growing impatience with the company on all sides. He is about to become one of the most scrutinized figures in business, and one who will likely feature in many a b- school case study for a long time to come—whether he likes it or not.

Insider for an outsider’s job

Some suggest that Calhoun isn’t the best choice because of his 10 years on the Boeing board, which oversaw the MAX fiasco. There’s also criticism that he hasn’t run an aerospace company before, and lacks that most Boeing of pedigrees—an engineering background.

Jeffrey Sonnenfeld, senior associate dean for leadership studies and Lester Crown professor in the practice of management at Yale, disagrees. “He is universally admired within and outside the company in every critical constituency,” Sonnenfeld says. “He has a huge amount of good will in Wall Street and in the engineering world. He still comes at it with all the authority of his GE aerospace days.”

Calhoun also has deep experience in managing corporate crises, such as during his time as chairman of Caterpillar when multiple federal agencies raided the company over claims of tax fraud in 2017.

Although not an engineer, during a 26-year tenure at GE, Calhoun ran the company’s aircraft engines and transportation (aircraft and rail) divisions. Jay Apt, a professor of engineering and public policy at Carnegie Mellon University, says that an engineering background isn’t necessarily key to success at Boeing.

“Engineers throughout the organization were in charge during the 737 MAX software issues,” Apt says. “What one really needs is a safety culture. That safety culture can be led by someone who is seriously committed by safety, whether they are an engineer or not. It requires complete commitment from the board, the CEO, and the chief risk officers to say, ‘Schedules are important but [a lack of] safety can kill the company.'”

Another advantage of Calhoun is that a full outsider would lack knowledge of the operations and culture of a sprawling company that employs over   130,000. “The learning curve is 18 months for an outsider to master the [CEO] job, and that’s if you pick the right person,” Sonnenfeld says. Calhoun is a known quantity and has support from Boeing chairman Lawrence Kellner—a former head of Continental Airlines—and CFO Greg Smith (Smith served as interim CEO over the past three weeks). That backing is vital, Sonnenfeld says, calling Calhoun “a culture carrier of the best of the old Boeing.”

Time is of the essence for the company, which is burning through cash. In the first nine months of 2019, Boeing had a negative operating cash flow of (negative) -$226 million, compared to $12.4 billion in the same period of 2018. Boeing is reportedly looking to raise as much as $5 billion in debt to cover costs.

The “sudden drop in the firm’s operating cash flows [is] causing the firm to take on significantly more leverage and potentially disrupt its relationships with suppliers,” according to a client note from Management CV, which analyzes senior management performance at public companies.

The financial problems are in the commercial aircraft division, source of more than 60% of the company’s overall revenues. Until the MAX begins flying again, the financial shortcoming will be impossible to fix without drastic steps like layoffs, which so far have been avoided.

Cash flow isn’t the only issue. Ivan Feinseth, chief investor officer and director of research at Tigress Financial Partners, which advises large investors and also holds some Boeing stock for clients, thinks that by next month the company needs to show a plan to get the MAX back in the air by early summer at the latest.

Bridging the trust gap

Getting the MAX airborne and restoring a sense of trust with others will be difficult. Relations with the Federal Aviation Administration and other regulator bodies around the world have been fractured. “The number one priority Boeing had was to repair its relationship with its regulator,” says Mark Dombroff, partner and co-chair of the aviation law practice at Fox Rothschild.

He noted the recent damning batch of internal Boeing emails that indicate Boeing was above regulatory scrutiny. “Some of these emails, to the extent one interprets them that way, are commenting on the FAA oversight.”

It wouldn’t be a first time that Boeing was truculent with a regulatory body. “We had a very tough relationship with them,” says Peter Goelz, currently a senior vice president of government and public relations firm O’Neill and Associates and a former managing director of the National Transportation Safety Board from 1996 to 2000. The NTSB dealt with two crashes of Boeing 737s in the 1990s that involved a malfunctioning rudder power control unit that, under certain circumstances, would force the rudder in the direction opposite to what the pilots wanted, a situation in many ways similar to the current one. “They battled us right up until the end,” Goelz says.

The FAA now controls whether and when the MAX returns to the air. Repairing that relationship is critical. So is regaining trust with everyone else involved with the plane’s performance. Airline customers the world over have been burned by having to ground MAX planes or hold off on delivery of new planes that they badly needed, messing with business operations. American Airlines Group, for one, fought Boeing in the courts for damages (the airline says the MAX grounding shaved $540 million from its 2019 pretax profits), before reaching a partial settlement.

The shutdown is impacting consumers, too. Some airlines have had to stop flying to certain destinations that would have been serviced by the MAX. Others are having to cut costs and/or boost ticket prices. And, the flying public is leery of ever boarding a MAX again.

Then there are Boeing’s thousands of vendors.

“Boeing typically is super-duper tough with their suppliers,” says Joseph Smith, aviation director at investment banking firm Cassel Salpeter & Co. As the MAX grounding has stopped production, a host of vendors are feeling the pain. Boeing’s biggest supplier, Spirit AeroSystems Holdings, just laid off 2,800 workers, or 20% of the workforce.

Calhoun has to address all these problems at the same time and under a tight deadline. Sonnenfeld calls the task facing Calhoun a “heroic quest.”

Welcome to your first day on the job.

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Looking back at 2019 and at the business year ahead: What’s ahead?

By James S. Cassel

2019 was full of surprises with interest rates unexpectedly reduced, the trade war with China, and other eye-openers — but can reviewing these developments help forecast what 2020 will bring, or will nothing short of a crystal ball help? Are greater curveballs in store as we throw into the mix a highly contentious presidential election and impeachment proceedings? And what are the implications and potential safeguards for your middle-market business?

In 2018, interest rates were raised several times; the Fed predicted two hikes for 2019, but rates were actually lowered three times that year. Meanwhile, the trade war with China resulted in onerous tariffs and serious long- and short-term repercussions for America. According to Fortune, while Beijing enforced a strategy that protected its economy and took intellectual property, the U.S. approach is “forcing our manufacturers and consumers to pay tens of billions of dollars more for imported products and parts.”

American farmers lost close to two-thirds of their exports to China, while China was busy developing relationships with other global markets for its agricultural imports. Countries like Brazil have filled the void, offering China low-cost pork and soybeans that before the imposition of tariffs, were being exported from the U.S. to China at higher prices. Some believe the chances of those contracts returning to the U.S. are questionable.

In manufacturing, the ISM Purchasing Managers Index (PMI) showed that September had the “lowest levels of activity… since the great recession.”

M&A activity didn’t escape unscathed either, as “U.S. M&A sank 40% year-on- year to $246 billion, the lowest such quarterly (the third) level since 2014.” Likewise, the trade war impacted global M&A, which hit a three-year low. But things seem to be going better in the fourth quarter, and the first quarter of 2020 also looks more positive.

We also witnessed a continued squeeze on migrants that is draining the labor pool, causing escalating problems for many U.S. businesses, particularly in tourism and retail, which will result in lower GDP growth.

Additionally, President Trump’s “$1.5 trillion tax cut package appeared to have little impact on businesses’ capital investment or hiring plans.” Despite much fanfare, the fiscal facelift did little to improve the long-term economy, and what it did do, is in the rear-view mirror.

Looking at the year ahead: The Fed has indicated that interest rates are unlikely to be adjusted. Although 2020 is fraught with uncertainty, phase 1 of an agreement with China has been announced, which will purportedly lower tariffs and see China resume buying U.S. agricultural products, but the exact amounts are in dispute. Arguably, phase 1 merely puts us back where we were before the trade war started.

For small and middle-market companies who can’t push back on their suppliers to absorb the tariffs, the truce will spare them from what might have been the kiss of death. Also, our national employee base is not expected to materially grow in 2020, and retaining existing staff — perhaps by delaying retirement or drawing people back to the workforce — will be essential.

The upcoming elections will have the parties championing different views relating to healthcare, environmental issues, regulatory policy and taxes, with varying implications for middle-market businesses. You can safeguard your interests by continuing to monitor economic and political trends.

Even if trade wars fade into the past, you still want to weigh the benefits of staying with your business or going to market to sell. But remember, the sales process takes about six to nine months. Don’t wait to have full clarity on the political and economic future, or it may be too late. If you intend to raise capital, strengthen your position by raising money now, and then see what the next two years bring.

Erring on the side of caution is sound practice, and never more so than in times of marked uncertainty. Build your coffers now: As the saying goes, an ounce of prevention is worth a pound of cure.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle- market companies. He may be reached via email at or via LinkedIn at

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