Archive for category: General

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By James S. Cassel
August 17, 2015

Although there are probably many things you would rather discuss with your CEO than how to proceed if he or she unexpectedly dies or falls victim to some other tragedy, the fact is that you must. Companies without crisis-succession plans are at significant risk.

History has proved that the way companies handle these crisis situations can make or break them. A 2014 survey by the National Association of Corporate Directors reveals that two-thirds of publicly and privately held companies in America had no succession plan. This is for planned or unplanned succession.

Public companies are more likely and may be required to have succession plans in place, but very few private companies do, particularly those that are family-owned.

Losing a CEO to an unforeseen circumstance such as a tragedy, termination or resignation can create more turmoil than losing a leader to a situation you can see coming, such as a terminal illness or an orderly, planned change. Sudden losses can leave employees and other key stakeholders devastated and bewildered. Without a designated leader or clear path to the future, the business can suffer. This can be particularly disastrous for smaller companies.

While it is not uncommon for people to think their company could never survive the death of the CEO, the fact is that more often than not, it could survive with proper planning. Well strategized, efficiently executed succession plans bring benefits on multiple levels. In addition to providing a roadmap to help your company deal with the crisis, they put investors and shareholders at ease.

Of course, the core of your succession plan should be more than processes — you also must identify who will assume your CEO’s responsibilities. You should build a bench of candidates. In some family businesses, a family member with little history with the company might step in, so it is critical to have a succession plan to ensure the successor has adequate background and knowledge.

You also will have to address training: What kind of knowledge will the ascending CEO or interim leader need? Was there sufficient knowledge transfer prior to the need for it? Appointed successors, like an understudy in a Broadway production, must be well informed and ready to hit the ground running. This preparatory training should be an ongoing process.

Some businesses may need outside help on an interim basis, and there are companies that provide interim leadership assistance.

Succession planning should not only apply to your CEO; it should also include other senior positions such as President, CFO, CTO and CMO. Passwords, systems and processes should all be documented so your business can continue operating as usual.

A sound succession plan will contemplate how you will communicate with clients, customers, vendors, employees, investors and partners. Your key audiences should not learn about the death of your CEO from the news media, so you will need a public-relations and crisis-communications strategy that outlines how to best notify all your key internal and external audiences. It is interesting to observe the upfront, open manner in which Warren Buffett of Berkshire Hathaway (NYSE:BRK.A) is dealing with his succession. Buffet’s approach is much more well received than the way former U. S. Secretary of State Alexander Haig announced that he would be in charge after former President Ronald Reagan was shot (especially given the fact that the transition plan in the Constitution calls for the vice president to assume the leadership role).

If your business is family-run or family-owned with one family member playing a key role such as CEO, part of the succession plan should include not only a replacement CEO, but should also ensure there is an appropriate family member designated to maintain communication between the business and the family.

Consider “key person” insurance policies that can be owned by the company. The liquidity of these policies can offer the company the breathing room to survive a crisis. Some bank loans provide for calling the loan due if a certain person passes away, and that can be strategically insured around with a key person policy.

Another key consideration: bereavement services for grieving employees. In Miami, the Children’s Bereavement Center, which provides assistance to people of all ages, offers varied support groups and other services for bereaved adults, and resources for professional organizations and businesses dealing with trauma or crises. They are available on short notice.

Although the days and weeks following a tragic loss will certainly not feel like business as usual, they should be guided by a sound succession plan to keep the company on track with as few disruptions as possible. Investing a little time now to put the necessary plans and infrastructure in place can make all the difference when the unthinkable happens.

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By James S. Cassel
June 14, 2015

While the technology and healthcare/biotech industries in South Florida continue to gain strength and momentum, the region’s middle-market businesses are not properly positioning themselves to serve these industries and benefit from their growth.

There can be significant revenue opportunities for those that make the financial and other commitments necessary to position themselves to fulfill the needs of these growth businesses for highly qualified suppliers, subcontractors, and service providers. Too often, these growth businesses feel a need to look beyond South Florida for support because they do not believe their needs can be handled locally — a void that must be addressed. Right or wrong, this is the perception in the marketplace.

Based on our experience advising middle-market businesses seeking growth opportunities, the following is practical guidance for businesses that cater or want to begin catering to these growth industries:

Create a business-development strategy. Identify the key businesses you want to serve and pinpoint the ones you are best-suited to begin serving in the near or long term. Develop a plan for getting in front of these businesses to assess their needs and offer your services.

Identify the areas of your business, including products or services that you provide, which you may need to trim or expand in order to serve growth industries. Some of this may require partnering with or outsourcing work to other companies, locally, or in other parts of the United States, or internationally.

Consider investing in your team by providing educational or training opportunities and/or by adding head count. Hiring the best talent can be an expensive commitment, especially for business owners who are not sure if they will ultimately have enough business to support the additional head count. Thus, it may be wise to consider hiring temporary personnel or independent contractors who can eventually become permanent team members after you have gotten to know them and confirmed that they are a good fit, and when you are sure you have enough business to justify their compensation.

Consider acquiring or merging with competitors in the market. This is a great way to acquire quality talent. It is not uncommon in some industries, such as technology, for companies needing talent to buy younger, smaller companies to gain a competitive advantage.

Evaluate your client roster and eliminate the bottom 10 percent of your clients that may be too problematic, unprofitable or a disproportionate drain on your resources. One of the main obstacles for South Florida’s middle-market businesses is that many of them are running at or near capacity and lack the necessary talent and infrastructure to effectively handle the higher level of work required by companies in these growth industries. While parting with paying clients can often be a difficult decision, it is critical for long-term success. Part of the trouble with keeping clients that are cumbersome or not profitable is that they can drain your business in terms of time, energy and other resources. They can diminish your ability to provide quality service to other customers. Just as important, they can hurt your company’s employee morale and job satisfaction. For these reasons, bottom-tier clients might not be sustainable over the long term. Simply put, these clients are not good business and should be let go in order to make room for clients that will better support your growth.

Consider increasing your capacity by incorporating advanced solutions. Manufacturers, for example, may consider using robotics to reduce costs and increase capacity and productivity. 3D printing is another great way to increase efficiency. For example, manufacturers can use 3D printing to put together product prototypes that are quicker, less expensive, and easier to produce, and are thereby speeding up the manufacturing process and using technology to enhance their productivity and competiveness.

Develop a marketing-communications strategy. In order to hire you, companies need to know you exist and that you are able to serve them. When you have completed your business plan and implemented the necessary changes within your company to execute on those goals, you should work with experienced marketers to determine how to best position yourself to your target audiences, differentiate yourself from competitors, elevate visibility of your company among these audiences, and motivate them to want to hire you or buy your products. Your marketing strategy also should include a plan for building direct relationships with key decision-makers by attending key events, providing seminars and workshops, distributing e-newsletters, etc.

Without a doubt, South Florida’s middle market is missing opportunities to serve local companies in industries that are growing right in our own backyards. Serving these growth industries is not only important to our local middle-market businesses — it will also bring significant benefits to our local economy by creating more local jobs, financial opportunities and economic growth.

James Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC. He may be reached via email at jcassel@casselsalpeter.com or via LinkedIn at https://www.linkedin.com/in/jamesscassel. His website is: www.casselsalpeter.com