Archive for year: 2020

By Anne Field
July 7, 2020 

Businesses across the country are opening up. That’s good news, of course. Or is it?

Fact is, for many companies, from retail stores to interior designers re-opening involves a great many challenges. And the situation has been made even more formidable as such states as Florida and Texas order the re-shuttering of some businesses, while others, like New York, slow down schedules or change the parameters of the re-opening phases. Here are some of the top challenges facing small companies as they attempt to make their COVID comebacks.

Unpredictability

“The single biggest issue for small businesses is uncertainty,” says James Cassel, chairman of Miami-based investment banking firm Cassel Salpeter & Co. That’s especially true for enterprises serving customers from a physical location. Perhaps their patrons aren’t ready to spend a lot of time inside. But even if they are, there are logistical questions for staff, both now and down the road: Are camps and day-care centers opening? what about schools holding in-person classes in the fall? If they don’t, how to juggle childcare and work schedules? And of course, underlying it all: Will a new surge of cases force companies to close up again?

The result: Small businesses are struggling to plan in an unpredictable environment. “They’re trying to determine an optimal strategy that will enable their businesses to be profitable when there are so many variables out of their control,” says Johana Schwartzman, who heads Go Blossom Consulting, a business and marketing strategy consulting firm in Toronto.

Ideally, according to Schwartzman, businesses can develop at least a “plan b” to fall back on, if not a “plan c,” too–different options to follow depending on, say, whether they face a second COVID wave or employees need to stay home with children. She points to a company that typically teaches art to students at their physical location. In case the business has to close again, the owner is considering stocking up on art kits to sell to parents and holding classes via Zoom.

Perhaps the most pressing issue related to uncertainty is cash flow. According to Brian DeChesare, founder and CEO of finance blog Mergers & Inquisitions, about half of small businesses are concerned about how much cash they have on hand. “They might be able to afford to reopen, but they won’t be able to sustain operations for an extended period of time if profits are down significantly,” he says.

Safety Concerns

Companies need to take steps to ensure the safety of not only customers, but employees, as well. In March, Sumita Batra, CEO of Ziba Beauty, an Artesia, Cal.-based eyebrow threading salon, closed all 14 venues, selling supplies like gloves and hand sanitizers to keep the business alive. Because the service is high-touch, requiring close contact between client and employee, however, Batra’s employees, many of whom live with elderly parents, are wary of returning. “How can they keep social distancing? It’s impossible,” she says.

The upshot: In June, although she was allowed to open under California’s rules, Batra chose to remained closed through July. (Several counties also pushed back their opening dates to later in the month.) With customers clamoring to schedule appointments, Batra launched a social media campaign on Facebook and Instagram to explain her decision to stay closed. That included a video in which eyebrow threaders address customers, explaining their reluctance to return. According to Batra, customers have responded positively.

Once she opens up, like many business owners, Batra will face another safety-related problem: paying for PPE and other cleaning and sterilization measures. According to Batra, the equipment is both more difficult to find and more expensive than usual. To cut costs, she’s trying to renegotiate the terms of her leases with her landlords.

New and Old Business Models

Since March, many retailers, as well as wholesalers that sell to brick-and-mortar stores, have expanded their e-commerce sales to stay afloat. But that creates a conundrum: As stores open up, how much resources to put into traditional channels vs. new ones? “It calls for a re-prioritization of funding,” says Alexander Kehoe, who runs Caveni Digital Solutions, a digital marketing company in Philadelphia.

Kehoe points to a wholesaler that added a direct-to-consumer e-commerce capability about six weeks ago. Now that many of its regular retail customers are opening up, however, it’s unclear how to divvy up dollars, and directives. The firm is dealing by staying loose: Should those older clients experience normal levels of demand, then the company will most likely focus more on its original market. On the other hand, if that business is slow, the e-commerce side will require greater attention. “It means being ready to do both,” says Kehoe.

Re-Connecting with Customers

Just because a company has reopened, doesn’t mean it’s business as usual.

And that can affect relationships with new and existing customers.

Take Ryan Novak, the owner of Chocolate Pizza Company, a gourmet chocolate maker in Marcellus, NY. While the company’s manufacturing facilities stayed open during lockdown, Novak had to close his retail location, which he re-opened in June. But, according to Novak, an essential ingredient in his company’s success has been the ability for retail employees to chat with customers and build a rapport. Now, however, employees are separated from patrons by Plexiglass, face masks and social distancing, while customers tend to get in and out quickly rather than spending time to browse. “It’s hard to build a relationship,” says Novak.

To create more of a personal connection with customers, Novak recently asked his retail staff for patrons’ most frequently asked questions. Then he added wall art with interesting, eye-catching tidbits about the company to answer those queries, like the single largest order (31,000 “chocolate pizzas”), and pictures of far-flung places they’ve shipped to.

Pent-Up Demand

As they rev up, some companies are scrambling to meet a backlog of orders (admittedly, a good problem to have). Case in point: TAKA Interiors, a Lyndhurst, NJ, interior design firm. Under normal circumstances, according to co-owner Tamara Ramos, she and her partner provide in-home one-on-one services. But while clients were sheltering in place, they switched to virtual consultations, and projects that required entering client’s homes were put on hold.

As a result, when clients started allowing the partners into their homes about a month ago, there was a pent-up demand not only for projects placed on pause but also for more extensive renovations. “People who just wanted their living room changed before lockdown now also want a home office and a playroom,” says Ramos. That also means large-scale projects lasting three-to-four months versus the usual six weeks or so.

To meet the demand, Ramos and her partner decided to change their usual design approach. Instead of joining forces and working together on, say, two projects at one time, now each woman is operating solo, while still touching base with the other. “We’re dividing our forces,” says Ramos.

Handling the backlog of projects also requires a triage, of sorts. Clients who had to postpone work during the lockdown period go to the top of the list. “Anyone who signed a contract in March, we’re getting to them first,” says Ramos.

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By Ashley Portero
July 1, 2020 

Private equity companies invested more than $700 billion in U.S. businesses last year, with billions of dollars directed to South Florida companies.

Florida’s 23rd congressional district – representing sections of Miami-Dade and Broward counties – attracted $12 billion in new private equity investment in 2019, according to a study from the American Investment Council, a lobbying and research organization that promotes private equity growth.

That district, represented by U.S. Rep. Debbie Wasserman-Schultz, ranked third in the nation for new PE investment by dollar amount, following New York’s 12th district and Wisconsin’s 4th district. Less than 30 companies in Wasserman-Schultz’s district received private equity capital, the study said.

Statewide, private equity companies invested $47 billion across 292 companies in 2019. Florida follows California, with $90 billion of new PE investment in 656 companies, and Texas, which received $75 billion across 529 companies.

Together, the business services (32%) and information technology (18%) sectors attracted half of U.S private equity investment last year. The financial services (7%) and materials and resources (2%) sectors received the least investment.

Drew Maloney, president and CEO of the American Investment Council, said private equity firms invested an estimated $64 billion of new capital into more than 1,000 U.S. companies in the first quarter of 2020.

“In cities and towns across America, private equity firms are investing in businesses of all shapes and sizes,” he said in an introduction to the report. “These findings… remind us how private equity has the potential to play an outsized role in the [Covid-19] economic recovery.”

Private equity firms are formed by investors who want to invest directly into a company, rather than buying stock. PE funds use investor capital to purchase companies and then enhance their value for a future sale, often by cutting costs.

South Florida leads the Sunshine State in private equity firms and private equity-backed deals, according to a recent analysis from Miami-based investment bank Cassel Salpeter & Co. The region accounted for 45% of the state’s private equity deals in 2019.

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By Yamil Berard

Some pass along costs to consumers while others turn to insurers, government for help

Having a family history of glaucoma, Liz Coyle was quick to schedule a visit to her eye doctor once coronavirus restrictions were lifted on some Georgia businesses. Around the same time, she wanted to catch up on her oral health by scheduling a visit to the dentist.

At each check-up, she was pleasantly surprised by what she saw – employees in masks, disposable gloves and isolation gowns; examination rooms sterilized between patients; chairs in waiting rooms roped-off to ensure social distancing; pumps of hand sanitizer everywhere.

What shocked her: A $40 fee tacked on to her dental bill.

“At the end of the day, I was, OK, fine,” said Coyle, who is executive director of the consumer advocacy group Georgia Watch. “But $40?”

It’s a new cost of doing business in the age of the coronavirus. As Georgia businesses attempt to recover from the financial shock of the pandemic and cover the skyrocketing prices of infection-control measures, consumers may be hit with additional fees or higher charges.

So far, the separate infection-control charges tend to be concentrated among health care providers.

On social media, metro area patients are reporting being billed for extra fees their insurance doesn’t cover following dental visits.

Nancy Jones, a health care consultant, says some of her clients — particularly specialists such as cardiologists, surgeons and physicians who serve patients with chronic illnesses – also have raised fees to compensate for the costs of personal protective equipment.

“If you’re going in before your scheduled surgery and you’re going in for a consult meeting with a general surgeon in his office to talk about the process, you may be seeing a surcharge fee for PPE,” said Jones, senior consultant with Atlanta-based JW Healthcare Consultants.

Instead of imposing separate surcharges to help cover additional PPE costs, other businesses, such as hair salons, have hiked prices.

Chris Clark, chief executive officer of the Georgia Chamber of Commerce, told the AJC he wouldn’t be surprised to see more businesses consider price increases.

Merchants from big-box retailers and corporations to mom-and-pop shops have been hit with additional costs under the new infection-control standards. He doesn’t see fast food restaurants, mostly restricted by fixed price menus, as likely to adopt the fees. But a bowling alley might be able to convince customers to pay a little more.

“Most small businesses I’ve talked to haven’t had revenue for four months,’’ Clark said. “Now, they can reopen, but there are all these things that the government requires them to do.”

The balancing act

 As they weigh the benefits of charging more, businesses are walking a tight rope with consumers, said James Cassel, an investment banker who handles mergers and acquisitions for companies across a broad spectrum of industries.

“Businesses are faced with – do they believe they have the pricing power on the one side, or simply do they have the customer base that understands it and is willing to pay a little more,” said Cassel, who is co-founder of the Florida-based Cassel Salpeter & Co.

Healthcare providers are struggling with that question already. Dentists say they were hit hardest because they were among the first to shut down. Now, patient volumes are still low, but their costs have shot up.

“All dental offices have been hit hard with huge costs that were unexpected,” said Florida dentist Keith Hutchinson, who is charging an extra $10 per appointment to try to offset the $60,000 he spent in recent weeks on office partitions, PPE, filtration systems and sanitation supplies. Hutchinson said he sees dozens of Georgia retirees and seasonal residents at his five clinics in the Tampa Bay area.

State Rep. Lee Hawkins, R-Gainesville, also a dentist, concurred that costs are becoming unmanageable for dentists. “Here’s the deal,’’ Hawkins said. “Our (shields) and masks do not last long. The burn rate is much faster on all this stuff, and the availability is still tough and that keeps prices very high.”

Still, Hawkins, whose son, Ben, is also a dentist, said their offices aren’t likely to charge fees. “I think most folks don’t like to see add-ons on their bills,’’ Hawkins said.

Dr. Andrew Reisman, a family care physician in Gainesville and the president of the Medical Association of Georgia, is sure his patients would be deterred. Many just can’t afford it.

“We are not charging for PPE,’’ Reisman said. “We probably should because it has been so expensive, but we don’t want to give patients yet another excuse not to come to the doctor’s office.”

Coyle said the fees will be a barrier to Georgians in critical need of essential services. “We are in the middle of a public health crisis,” she said, “it seems that we need to do more to make sure people don’t fall through the cracks.”

Teetering on insolvency

 Rather than pass along higher costs, some cash-strapped businesses are looking elsewhere for financial help. Healthcare providers pushed the federal government for additional relief payments, and last week the Department of Health and Human Services announced it would distribute up to $15 billion to those with heavy Medicaid patient loads. In addition, HHS mentioned it was working on an additional allocation for dentists but provided no details.

Meanwhile, some business groups are pursuing other strategies.

The American Dental Association, for example, is asking that insurers and other third-party payers alter their fees to help cover the increased infection- control costs.

Insurance companies are also being asked to help cover losses through their business interruption policies. Insurers, though, have largely rejected the claims because the policies often don’t outline provisions for pandemics.

Such disputes are winding up in court. Around the country, restaurants have sued insurers for pandemic-related losses. And last month, Hartford, the insurer for many of Georgia’s 33,000 dentists, was served with a putative class-action lawsuit for failure to cover pandemic-related businesses losses.

Marietta attorney Roy Barnes, the former governor representing plaintiffs in the lawsuit, said he is likely to expand the suit to include other health care professionals who are teetering on insolvency because of the closures and the additional costs to meet infection-control standards.

“Here’s the deal. Our (shields) and masks do not last long. The burn rate is much faster on all this stuff, and the availability is still tough and that keeps prices very high.” —State Rep. Lee Hawkins, R-Gainesville, who is also a dentist

 “There’s no question that this virus has affected a broad spectrum of businesses,” Barnes told the AJC.

Dr. Roy Johnson, the lead plaintiff in the suit, said he was lucky to qualify for the Paycheck Protection Program under the federal relief package, which delivered $100,000 in loans to ensure that the 11-member staff at his Smyrna dental office remained employed.

However, healthcare providers with a heavy debt burden and significant overhead before the pandemic hit will be severely strained, he said. “It’s been very hard,” Johnson, who has practiced dentistry for more than four decades. “There are going to be some dentists who have a lot of trouble.”

Among them is Dr. Robert Lee, who said he is struggling to survive as the only dentist in nine counties in one of the poorest corners of southern Georgia. “Our fees are the lowest in the country,’’ Lee said. “And now they are being eaten up by PPE.”

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By Mark Henricks
June 12, 2020

Automated accounts payable offers companies long- term benefits that extend to past the pandemic.

A few months ago, many companies were content with the analog approach to accounts payable (AP), having employees send paper invoices, manually process payments and deliver paper checks through the mail. However, as lockdowns forced businesses to migrate AP functions to employees’ homes, some businesses decided to automate AP services, discovering an additional suite of benefits that is likely to carry over even as more and more states emerge from lockdown and business begins in the next normal.

In addition to enabling employees to execute AP functions from virtually anywhere, automated AP can generate cost savings, faster turnaround, and improved accuracy in payment reporting. As more and more organizations look for ways to drive efficiencies and modernize, businesses that have yet to automate their AP services may want to consider doing so.

Automated Accounts Payable

For remote workers, the technological requirements for implementing modern automated accounts payable solutions are minimal. Virtually any desktop, laptop or tablet can be used by off-site employees to run the required software, most of which is cloud based. Some can be used with smartphones.

The main switch is to electronic payments — paper payments have become much less common.

“More and more businesses today don’t cut checks,” says James Cassel, co- founder of Miami-based investment banking firm Cassel Salpeter. “They’re paying with electronic transfer.”

In addition to businesses increasingly settling with vendors through automated clearinghouse (ACH) transfers and instant payment systems, card payments are also growing. In ordinary times, vendors like card payments because they receive payment instantly.

Today, many vendors simply don’t want paper checks at all. One reason is that no one is in their offices to receive them or visiting bank lockboxes to pick them up. As a result, there is little demand or need for employees to set up blank checks and check printers at home.

Businesses that are reluctant to abandon paper checks can instruct their banks to mail checks for them. The same goes for paper invoices. Businesses can ask vendors to email PDF-format copies or scanned images of printed documents. Smartphones can take photos of documents for the same purpose.

How to Start Automating Accounts Payable

Getting started with automated accounts payable starts with analyzing the payables workflow. Businesses can begin by tracking how invoices are currently being received and processed and who approves and initiates payments.

Part of this process is to set up the workflow that will be implemented in the automated solution. The workflow will describe a set of actions and a path that invoices and payments must follow from receipt to payment.

Next, the automated accounts payable software can be connected to the business’s existing accounting software. Accounts payable software can connect to many popular business accounting packages. This way, vendors are paid automatically on the due date and the payment information will flow instantly, automatically and directly to the accounting software.

That said, automated accounts payable solutions aren’t the only way to go. Accounting software can be configured to make automatic payments, and bank accounts can be set up to send repeating payments.

Ideally, whatever method is used will have the flexibility to stop or delay payments when needed. Flexibility can be especially important during a broad-scale business interruption like the one being experienced now.

Managing AP Automation

Managing accounts payable remotely can raise some issues, as well. For instance, businesses need to make sure payments leave an audit trail and that policies and practices conform to compliance requirements, Cassel says.

Alistair Bambridge, CEO of New York-based Bambridge Accountants, says maintaining communication between the various points in the payables chain may be challenging when people aren’t working in the same physical space.

Bambridge says his firm and his firm’s clients are turning to videoconferencing and messaging apps to stay in touch with team members.

Another consideration should be identifying an accounts payables solution with a view to the long game. That means one with integrated communication as well as tools for compliance and appropriate sign-offs. When employees are distributed, they can’t step into one another’s office to discuss a payment, for instance.

Those types of solutions are already available. Synaptic AP, for example, is a cloud-based solution that is compatible with Salesforce and other ERPs.

Synaptic AP clients can automate supplier payments via virtual card payments, automated reconciliation, and flexible payment options.

Ultimately, having employees remotely handle accounts payables is a technological and process challenge most businesses can handle. And no matter how businesses solve the accounts payable puzzle during the current crisis, it’s likely to have a lasting and ultimately positive impact.

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By Ilana Kowarski
May 21, 2020

The ability to manage money is a skill that can be applied in nearly any industry, experts say.

PEOPLE WHO ENJOY working with numbers, excel at math and take pride in their ability to manage money wisely should consider pursuing a finance degree.

Find B-Schools That Lead to Good Jobs

“Is the field you want to enter associated with quantitative and logical thinking? If so, a finance degree might be a good challenge for you to consider,” Ahmed Mir, who earned a master of science degree in finance and investment from the University of Nottingham in the United Kingdom, suggested in an email.

Mir – the founder of Nature & Bloom, a London-based firm that sells CBD supplements – notes that a finance degree can pave the way for a career as an entrepreneur. “If you intend to own your own business, the ability to manage and understand your own finances is crucial to long term success and as a result, a degree in the field would set you up well to manage cashflow.”

Furthermore, individuals who prefer to work for an established company rather than for themselves can expect to qualify for a variety of jobs with a finance degree. Though it is common for finance professionals to work at banks, they can find employment elsewhere, experts say.

Mir, for example, entered the tech sector after obtaining his finance degree and spent more than six years working for Amazon. His personal experience aligns with the observation of recruiters who say that finance credentials are highly marketable in many industries.

“A finance degree qualifies you for careers as a financial analyst, financial advisor, accountant, or financial manager for businesses of all sizes and industries,” Matt Erhard, a managing partner with Canadian recruiting firm Summit Search Group, wrote in an email. “This is one of the reasons these degrees are so valuable and versatile. Every company needs people who are knowledgeable about finances and accounting in order to run and grow effectively.”

What You Can Expect to Learn in a Finance Program

The field of finance focuses on the many strategic considerations involved in monetary decisions, including choices about borrowing, lending, saving, spending and investing, according to finance academics and practitioners.

Finance students are typically taught the art and science of financial analysis and financial modeling, including lessons on how to interpret complex data and create solid forecasts.

Knowledge of this academic discipline can help someone determine where to allocate limited financial resources when drafting a budget, and it can also inform financial predictions and facilitate financial planning. A sophisticated understanding of finance can clarify which business opportunities have the greatest profit potential as opposed to ventures that are unlikely to be successful, experts note, adding that such insight is essential for investment careers.

[ SEE: Best Graduate Finance Programs. ]

Finance training is also valuable when calculating how much an asset or company is worth and determining what price a company should charge for its product or service.

“Finance and the understanding of how money flows is the foundation of every business,” Adam Sanders, who has a bachelor’s degree and an MBA in finance, explained in an email. Sanders says the wide range of job options for finance grads is a significant advantage of pursuing a finance degree. “Any type of general business or money-related career is an option with a finance degree.”

Risk management is a career path where a finance degree often comes in handy, notes Sanders, an alumnus of Northwestern University’s Kellogg School of Management and director of Successful Release, an organization that helps former felons reenter the workforce. “It prepares you to better understand, evaluate and address the many risks that companies face. Risk management ultimately comes down to how much it will cost if things go wrong and how much it will cost to prevent it which is where finance professionals shine!”

[ READ: What You Need to Know About Becoming a Finance and Financial Management Services Major. ]

Finance degrees cultivate problem-solving skills that are attractive to employers, resulting in numerous career opportunities, according to experts. Degrees in finance-related fields such as economics, accounting and actuarial science can yield similar job prospects and serve as viable alternatives to finance degrees, experts say.

Additionally, industry-recognized certifications in finance such as Chartered Financial Analyst, or CFA, and Certified Financial Planner, or CFP, are extremely marketable and allow finance grads to differentiate themselves from their peers when competing for jobs.

Experts say the following positions are the sorts of jobs where finance training is especially helpful:

• Financial analyst
• Financial associate
• Financial planner
• Investment analyst
• Budget analyst
• Corporate planner
• Portfolio manager
• Wealth manager
• Financial manager
• High net worth money manager
• Product manager
• Head of product
• Head of planning and analysis
• Comptroller
• Chief financial officer
• Chief executive officer

Finance careers can be highly lucrative, especially for individuals who become managers in the field. According to the U.S. Bureau of Labor Statistics, the median annual salary among U.S. financial managers in 2019 was $129,890.

However, experts caution against pursuing a finance degree simply because of a desire to become rich, warning that it’s important for prospective finance students to think about whether they would actually enjoy a finance job and perform well in it.

[ READ: How to Choose Among the Many Types of Business Programs. ]

Andrew Temte, who has a Ph.D. in finance and a CFA certification, says liking money isn’t a good enough reason alone to enroll in a finance program, noting that he has witnessed many students make that mistake.

Temte, CEO of Kaplan Professional, which provides licensing exam preparation and continuing education, cautions that entry-level finance jobs aren’t necessarily glamorous. He encourages prospective finance students to arrange informational interviews with practicing finance professionals to get a sense of whether a finance career is a good fit.

Finance jobs require creativity and people skills in addition to hard skills, Temte notes. A finance professional must be able to make sense of numbers and explain those numbers, he emphasizes.

James Cassel, co-founder and chairman of the Miami-based investment bank Cassel Salpeter & Co., acknowledges that it is possible to work in a finance job without a finance degree. Cassel notes that he hires some individuals who have that credential and others who lack it.

Experts emphasize, however, that the technical skills gained via a finance degree can be very useful.

Steve Shreve, a mathematical sciences professor and co-founder of the master of science in computational finance program at Carnegie Mellon University, notes that quantitative finance programs are ideal for mathematically gifted students who are looking for practical ways to apply their numerical abilities.

The enormous amount of financial data available nowadays signals a growing need for data analysis, Shreve says.

Richard Bryant, the program’s executive director, says students who obtain more general, less math-focused finance degrees can follow a wide range of career paths ranging from mergers and acquisitions analysis to private equity investing.

Finance programs ultimately teach students how to use money optimally and increase wealth, a valuable skill no matter which sector they enter, experts say.

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