Minding your Business/Inside the Deal: Millenials create new challenges and opportunities for middle-market business owners

By: James Cassel
November 15, 2015

For many middle-markJames Cassel headshotet business owners, millennials are creating quite a workplace conundrum. While dealing with today’s over-confident young Americans can be challenging, we must recognize the opportunities and find a way to work with the generation that is fast becoming the largest of our workforce.

The millennial generation (Americans born between 1982 and 2000, and currently ages 18 to 34) currently numbers 83.1 million. It has surpassed the 75.4 million baby boomer generation (born between 1946 and 1964, and currently ages 51 to 69), according to U.S. Census Bureau estimates. Clearly, the tide is turning. While everyone is different and should be evaluated individually, it is helpful to make certain generalizations to assess how to best approach this generation as a group.

Millennials tend to have rather strong views on the workplace — usually with themselves positioned at the center of it, sporting jeans, and with their bosses taking lessons from them. However, these attitudes are not helping them as much as they would like, since their baby boomer bosses are still running the show. For millennials, a healthy work-life balance is a challenge as well as a priority. Employers of all sizes and in all industries are experiencing this and struggling to find the right approach.

Millennials are extremely connected, savvy on technology, entrepreneurial, and eager to jump ship the moment they are no longer feeling “the vibe” at work. It is not uncommon for them to have many different jobs in a short period. While older generations were taught to believe in the value of longevity, loyalty, and tenure in order to grow within an organization, today’s youth find it perfectly reasonable to change jobs once or twice a year. Some experts estimate that most millennials will have five or more jobs before they are 30 years old. This creates a significant obstacle for middle-market business owners who are trying to build a strong workforce with continuity and grow their businesses.

So, how do you deal with this situation? First, you must do your homework and understand the millennial mind. There is no shortage of writing on the subject, and a quick Google search will yield links to countless articles and books.

The MTV poll “No Collar Workers” sheds some light on what they want. Basically, “everything” and “now.” Fast-paced environments and promotions without traditional rules and procedures. Short on attention spans and long on sense of entitlement, they are not necessarily motivated by money (or so they say). Rather, they have a strong desire for constant mentoring, praise and reassurance, flexible hours, and office perks like gym memberships and goodies in the kitchen, including the right coffee. They do not want to be merely given instructions to follow or told what to do — they want to feel they are part of a team and making things happen.

Millennials would love to make the nine-to-five workday illegal. They want to work when and how they want — with flexible schedules that allow them to come to the office sometimes or never. They work in spurts, drifting off at different moments to dabble in social media or do other personal things. In the MTV poll, 70 percent of millennials said they need “me time” while working, compared with 39 percent of baby boomers. They want to “chill” (although I am not sure I know what this means).

As far as managing millennials, you should keep in mind that standard annual or bi-annual reviews do not lead to job satisfaction. They want continuous feedback, ahora. Some say this is partly because they grew up with social media, in which they are given instant gratification and responses whenever they tweet or post anything. Without a doubt, they require more attention than older employees who were raised to be more emotionally mature and work more independently.

Therefore, it is up to you to find ways to keep them engaged and motivated. Knowing that every team is different and has different dynamics, you should keep a close pulse on yours so you can develop the right culture. Consider the physical layout and decor of your office, and look for ways to improve it to help keep them engaged. For example, depending on the nature of your business, you might consider an open floor plan with lots of natural light and areas conducive to collaboration.

Consider also your company attire. If corporate attire is a must, you might strike a compromise by implementing Casual Fridays maybe on more days than just Fridays. The MTV study finds that 79 percent of millennials think they should be allowed to wear jeans to work at least sometimes, with 93 percent of them saying they want jobs where they can be themselves and dress how they feel most comfortable. While this is not uncommon in technology companies or startups, it can be an issue in more corporate environments.

Just as important, do not take it personally — or give up on hiring millennials — when they decide to quit for no legitimate reason only one year after you hired and trained them. Their behaviors reflect more about their unique values and perceptions than they do on anything grounded in reality.

Regardless, while hiring millennials might be challenging, you have no choice. They bring fresh ideas and great value to companies, and they are becoming our workforce. Find ways to make your company more conducive to their work patterns and preferences. By attracting and retaining the right millennials who will support your ongoing growth, you can gain a significant advantage.

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 https://www.linkedin.com/in/jamesscassel
www.casselsalpeter.com

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Micromanagement: Do not let it happen to you

By: James Cassel
October 18, 2015

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News flash: If your team members are accusing you of micromanagement, they are probably right. You are probably doing them, your company, and yourself more harm than good.

Senior-level micromanagement is as common as it is destructive to companies on so many levels. I was accused of micromanagement at one point. While I, of course, like most other culprits, did not believe this accusation at first, I quickly realized that I had to get better at delegating. Thankfully, because I worked with the right people, they embraced responsibility and exceeded my expectations.

Why is micromanagement an unnecessary evil? It hurts company morale and sends a message that you do not believe in your people’s judgment or consider them capable of doing their jobs. It usually is more a reflection of your insecurity and fear than an indication of your team’s capabilities. Micromanagement deflates people, takes away their power and inspiration to grow, motivates them to start looking for more rewarding employment elsewhere, prevents your senior people from focusing on the more strategic higher level work they should be doing, and the list goes on.

As a middle-market business owner, you must escape this common trap. Your role is to be a strong leader who sets policy, provides guidance, inspires and motivates, and creates a framework for growth so that your company can function — with or without you — like a well-oiled machine. You should be able to take a vacation without worrying your company will collapse while you are away.

If you are confident that your people cannot work independently, then they are either the wrong people, in the wrong positions, or probably should not be part of your company and should be replaced. It is a serious mistake to have people in positions where they cannot perform and excel. This is damaging for everyone involved, including your company and your clients or customers.

How do you create a framework for success? This requires building your management team while grooming several people for your senior-level positions. Larger companies do this, and middle-market businesses should more.

You do not want to have a company where your senior people are micromanaging or going around middle managers to your junior people and telling them what to do. While there are situations where this must take place, this practice should be the exception rather than the rule.

Along the way, when your colleagues make decisions or commitments, you have to be careful but you have to support them. Some of the people I work with have made decisions I would not have made, but once they made them, I supported their decisions so as not to undercut their authority. I have learned the vast majority of the time it is not the end of the world when someone makes a decision that differs from what I would have made. There is more than one right way to do things. On more than one occasion, their way has been just as good as or better than mine, and I have learned from my team. This is how it should be.

Clearly, if your people are making decisions that do not have positive outcomes, this issue must be evaluated and rectified. The key is that you must keep an open line of communication and establish different ways to monitor what your people are doing. You can set up a dashboard, but you do not want to be on top of them every minute because they need the space — and self-confidence — to do their jobs. You do not want to drive your people crazy. You would be surprised how often I hear this is going on.

To succeed, people must have well-defined roles and an accurate understanding of the nature of their work and what is expected of them. When they are given tasks, they must have the information they need so they can meet your expectations. They must be trained, mentored and motivated. They must know they can ask questions and get help when they need it. The right people will thrive in this environment.

Trust me, I know it can be difficult for middle-market business owners to let go and delegate. But you cannot be a control freak or you will limit your chances of growth and success. So after you have empowered your team to do their jobs, your job is to empower yourself to let go.

James 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 jcassel@casselsalpeter.com or via LinkedIn at https://www.linkedin.com/in/jamesscassel. His website is: www.casselsalpeter.com

 

 

 

Swings in China stock market: For middle market, impact is more about perception than reality

By: James Cassel
September 21, 2015

For South Florida’s middle-market businesses, the greatest threat from China’s recent stock market swings and economic slowdown is the negative perceptions — more so than any possible bottom-line impacts. Although the recent news of China’s unstable market and slowing economy has given rise to institutional panic, the continued direct volume of business between U.S. middle-market companies and Chinese companies — in China, as well as the current state of Sino-American trade relations — confirm that the situation is not as grim as some folks would have us believe.

One of the key complications of America’s economic relationship with China is a lack of transparency. It is difficult to say with any certainty whether the data is authentic or manufactured by the Chinese government. Either way, the impact of China’s stock market fluctuations is more about perception than reality. If people begin blaming any U.S. stock market drops on China’s stock market or the slowing Chinese economy, they will begin to clam up and buy fewer luxury products and focus more on necessities. Indeed, we have to be careful that perception does not become reality. If your middle-market business sells to Chinese companies or consumers, you may have a problem. Most Chinese consumers are not wealthy, but members of the middle class and even the wealthy who love Western luxury products are significantly cutting back on their purchases. We have seen this evidenced by major brands like Burberry, Chanel and Cartier, whose sales in China have taken a major nosedive. For Burberry in particular, China drives approximately 25 percent of total sales, which is indicative of how much luxury retailers have leaned on China for growth in recent years. It also has an effect on U.S. multinational corporations that rely on China for their growth.

Furthermore, the recent devaluation of the Chinese currency, the Renminbi, may also adversely affect middle-market businesses with ties to Greater China, as Chinese products are likely to become less expensive and thus more competitive on a global market.

In addition, the currency devaluation also may affect the number of middle-market companies that have been reaping the rewards of on-shoring: lower labor costs due to mechanizing and robotics, faster release to market, and reduced shipping costs. Despite China’s increasing labor costs, its lower currency value and production costs today may be beneficial in making it more attractive again to manufacture products in China, or at least stay in China. As China’s economy slows, it will be important to consider that its expected use of fewer natural resources may have a global ripple effect in terms of lowering the costs of natural resources as well as shipping and transportation, which may also negate some of the fiscal benefits of on-shoring.

Beyond this, there are some opportunities for middle-market businesses to reap benefits. Consider: Chinese companies have made a lot of money in recent years, posting an average 9.5 percent year-over-year growth since the 1990s. Wealthy Chinese nationals, eager for an exit strategy, are trying to get as many assets as they can out of the country, so there is a strong opportunity to sell to companies or partner with Chinese nationals who come to the U.S.

Another benefit: Since many U.S. manufacturers buy from Chinese manufacturers, lower prices will give those businesses greater margins, assuming that their sales numbers don’t otherwise dip. Lower costs of natural resources will also help increase margins.

So, what are the likely bottom-line impacts to South Florida’s middle-market businesses? Unless you have direct sales ties to China or have material customers who sell or supply a great deal to Chinese companies, it is not clear whether there will be any impacts. Since the economic fundamentals in the U.S. remain generally solid, the greatest threats will not come from the Chinese market swings but rather from any negative perceptions and concerns about possible impacts. So let us all relax, take a deep breath and keep our perceptions in check — it is in our best interest.

Five Tips to Consider Before Selling Your Business

By: James Cassel
September 10, 2015

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There may not be better time to sell a business in the next few years than now. Values are high and interest rates are low. They may not stay that way for long. If you would like to sell your business now or any time in the foreseeable future, the time to begin planning is now. This can help minimize many of the obstacles that often delay or kill deals and help maximize your value and ensure a successful outcome.

Based on my experience as an investment banker helping clients during the sale, merger, and acquisition process, here are five tips to consider and act upon now:

  1. Early in the process, consult key decision-makers and those who will be affected by the deal. Determine who will have a say in the deal and consult with them, even if they are minority owners. If your business is family owned, talk to your family members as soon as possible. Involving your family at the outset can help minimize potential family problems later. This is particularly important if a second or third generation is involved and family members expect to take over or profit from the business. Making sure that family members understand what is going on can help keep harmony in the family.
  2. Determine whether and for how long you would like to continue to work after the sale. This can be a tough one. You have to be honest with yourself. It is not a bad idea to discuss this with your significant other. This decision is dictated for many by their age, health, and lifestyle preferences. Older business owners may be more prepared to retire and step away than younger ones who may need or want regular incomes to support their lifestyles or remain active. In general, at a minimum, it is a good idea to be prepared to continue working in some capacity during a transition period. In some cases with financial buyers, you might continue to run the business for years until the next sale.
  3. Organize your documents in advance.Well-structured corporate and financial documents and sound record-keeping practices always make good business sense. Getting your books and records in order now will help keep you from scrambling for documents when potential buyers conduct their due diligence. Keep all your financials, vendor contracts, and customer contracts easily accessible. You will derive immediate benefits from this, as you will be in better shape running your business today with good, timely information.
  4. Determine whether you want a partial or total exit. Private equity firms and other financial buyers can either buy control or minority positions. In a total exit, you might maximize the consideration you receive, especially if you sell to a strategic buyer (although financial buyers are currently aggressive when it comes to pricing). In a partial exit, there are many social issues to consider that might be just as important as what you receive. If you are going to partner with a private equity firm, the comfortability factor may be more crucial than the dollar amount, since you will not get that until the final exit when you sell your remaining ownership interest.
  5. Have realistic expectations of value. Ask your advisors to provide realistic guidance on the value of your business. Too often, I hear stories from frustrated sellers who regret having hired advisors who gave unrealistic valuation numbers just so they would get the job. It is equally important for sellers to be realistic and not merely pick whatever numbers they think they need to sustain their lifestyles. A multiple of earnings or EBITDA (earnings before interest, taxes, depreciation, and amortization) is the way most buyers determine what they are willing to pay for a business. The more you earn, and the higher your future projected growth, the more you can expect buyers to pay for your business. The amount buyers are willing to pay also will vary depending upon factors including your company’s size, stability, industry, and working capital needs. It also is important to have a diverse customer base, as your valuation will be hurt if your revenue is heavily concentrated with one or two clients.

Without a doubt, a little planning now can go a long way to help ensure you obtain the maximum value for your business and achieve your specific goals associated with the sale of your business.

James 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. www.casselsalpeter.com

 

 

Flow of private equity deals in Florida slows

By: Nina Lincoff
September 8, 2015

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CASSEL SALPETER & CO.,JUNE 30 2015 REPORT

Private equity deals slowed in the first half of 2015, according to a report from Miami-based Cassel Salpeter & Co.

The flow of private equity into Florida is slowing after a record number of deals in 2012, according to a recent report from Miami-based investment banking firm Cassel Salpeter & Co.

Just 75 private equity deals closed in the first half of 2015, compared to a record 180 in 2012, 175 in 2013, and 199 in 2014.

The lower volume of private equity deals doesn’t necessarily mean that the alternative lending source has dried up in Florida, said James Cassel, chairman and co-founder of Cassel Salpeter & Co.

“It’s hard to really say that it’s a trend. We’ll have to see how it plays out over the last six months of 2015,” Cassel said. “There are still all of the factors that inspire deal flow, expect for one. The availability of quality companies, because they did their deals in 2014.”

It’s possible the market is normalizing after an over-saturation of available deals.

“Even if they are slowing down, it’s not because of the economy. They are not slowing down because they ran out of money,” Cassel said. “They are slowing down because there aren’t deals on the market.”

However, for the companies still looking to close private equity deals in Florida, 2015 and early 2016 is the time to do it, Cassel said. “One of the driving forces is interest rates, because we all know interest rates are going to go up. They’re just not sure which quarter,” he said. Smart companies are looking to close deals before the Federal Reserve hikes interest rates.

“Interest rates will effect valuation, because as interest rates go up, you’ll be able to leverage a little less,” Cassel said.

Other factors that contribute to a wealth of private equity deals include an increase of firms in-state and an overall healthy economy. In the first half of the year, four new Florida-headquarter private equity firm popped up, bringing the total in-state to 41, according to the report. In all of 2014, just three new firms headquartered in Florida.

In terms of industry, business-to-business deals compromised the largest part of Florida private equity deal flow in the first half of the year at 36 percent, followed by business-to-customer at 18.7 percent, and then health care, IT, financial services, and materials and resources, respectively.

The report considered all private equity investments including buyouts, growth, investment in public equity, recapitalization and add-on.

Florida banks grow loans faster than the national rate in Q2

By: Nina Lincoff
September 4, 2015

Florida continued to be a sunny environment for those seeking a loan, as the state’s banks grew loans in the second quarter at a faster rate than banks across the nation.

Total loans held by Florida’s 168 banks in the second quarter rose to $121.1 billion from $118 billion in the first quarter, or a 2.9 percent increase.

That’s a faster rise than the 2.2 percent increase reported by banks across the nation, which collectively grew loans by $185 billion in the second quarter.

The number of banks however, shrunk in the Sunshine State, falling to 168 institutions from 175 in the first quarter. But while the number of banks shrunk, profits didn’t.

Florida’s 168 banks reported a profit of $347 million, up from $236 million in first quarter.

The most profitable Florida banks in the second quarter were:

  • Petersburg-basedRaymond James Bank (NYSE: RJF) with a net income of $51 million.
  • Miami Lakes-basedBank United (NYSE: BKU), with a net income of $47 million.
  • Jacksonville-basedEver Bank (NYSE: EVER), with a net income of $43.4 million.
  • Weston-basedFlorida Community Bank (NYSE: FCB), with a net income of $19.9 million.
  • Coral Gables-basedCapital Bank (Nasdaq: CBF), with a net income of $14.3 million.

The Florida banks with the deepest second quarter losses were:

  • Miami-based Brickell Bank, formerlyEspirito Santo Bank, with a net loss of $2.9 million
  • Tampa-basedBay Cities Bank, with a net loss of $1 million.
  • Lake Mary-basedIndependent Banker’s Bank of Florida, with a net loss of $806,000.
  • Fort Walton Beach-based Beach Community Bank, with a net loss of $740,000.
  • Miami-based Banco do Brasil Americas, with a net loss of $717,000.

 

According to the Federal Deposit Insurance Corp., banks earned a collective profit of $43 billion in the second quarter, the highest quarterly income on record.

“Bankers generally reported another quarter of higher earnings, improved asset quality, and increased lending,” FDIC Chairman Martin J. Gruenberg said. “There were fewer problem banks, and only one bank failed during the second quarter.

Despite the lending and profit gains, Florida banks struggled with tight interest margins. Their combined net interest margin – the spread between interest earned on loans and paid out on deposits – declined to 3.40 percent in the second quarter, from 3.58 percent a year ago.

Across the country, the average interest margin rose to 3.06 percent in the second quarter from 3.02 percent in the first, but still remained below the 3.15 percent reported in the second quarter of 2014.

“Revenue growth has been modest and net interest margins continued to decline – even as banks extended asset maturities to mitigate the impact of low rates,” Gruenberg said.

Loan quality declined slightly in Florida, with banks’ collective noncurrent loan ratio rising to 3.44 percent in the second quarter from 3.42 percent in the first, although that is still less than the 4.15 percent reported for the second quarter of last year.

The amount of reposed property at Florida banks fell to $1.1 billion in the second quarter, from $1.2 billion in the first quarter. Deposits, on the other hand, increased to $131.6 billion in the second quarter from $130.6 billion in the first quarter.

The number of banks on the FDIC’s Problem List continued a nearly seven-year fall, from 253 to 228 during the second quarter.

Low interest rates have been hurting banks, and it is expected that Federal Reserve will raise U.S. interest rates before the end of the year, according to media reports.

“Revenue growth has lagged behind asset growth, as exceptionally low interest rates put downward pressure on net interest margins,” Gruenberg said.

While a hike in interest rates will likely help banks boost revenue in the medium- and long-term, some are saying that there will be an inflection point immediately following a rate hike where banks will lose money due to floors set for loans before the increase.

“One interesting comment has been that most asset-based loans have a floor in them,” said investment banker James Cassel, chairman and co-founder of Miami-based Cassel Salpeter & Co.

With a low interest rate, the cost of banks’ money is very low, but there will be a short period of time where, following a rate hike, banks’ money will cost more than money coming in, Cassel said.

That will normalize, of course, but it is something to consider in the lead up to a rate hike.

Ripples from China’s woes swaying Miami

By: Carla Vianna
August 25, 2015

Although Greece’s debt crisis and China’s volatile stock market are phenomena occurring thousands of miles away, Miami’s increasingly global business and financial communities feel the ripple effects of issues toying with the global economy.

While the contagion effect by Greece may be minimal, China’s ups and downs are felt worldwide.

“It’s not what happens in Greece, it’s what happens after,” said Tom Balcom, founder of 1650 Wealth Management, a private wealth management firm. “Are other countries going to leave also? Who absorbs the loss, and how will that affect the markets?”

Mr. Balcom spoke of fears surrounding a Grexit, or a Greek withdrawal from the eurozone. However, since Greece is such a tiny part of the currency union, direct impact would be minimal, local economists postulated.

The Greece economy is actually as big as that of the Miami metropolitan area. The European country’s gross domestic product was about $282 billion in 2013, while the Miami metro area had a GDP of $281 billion, fact-checking site Politifact reported.

“The effect is psychological,” said James Cassel, chairman and co-founder of Cassel Salpeter & Co., an investment banking firm. “The Greece economy doesn’t have a direct relationship with South Florida.”

China on the other hand is the world’s second-largest economy, and its increasingly volatile stock market coupled with the recent devaluation of the Chinese yuan has shocked markets across the globe. Fears that China’s economy is slowing have sparked heavy selling in all markets, the Wall Street Journal reported. It’s been a tumultuous week for the US stock market, which plunged Monday and felt a spot of relief Tuesday.

“Some of these currencies have an effect on the real estate market,” Mr. Cassel continued. “The weak Euro might mean less Europeans buying in South Florida.”

There’s a push from developers in Miami hoping to attract Chinese investors, perhaps to cushion an expected European and South American slowdown. Miami – often referred to as a safe haven for international money – may attract flight capital from those in China uncomfortable with the long-term prospect of the economy and Chinese government’s reactions to it, Mr. Cassel said.

As the Chinese currency is adjusted or manipulated, he said, it will affect both the purchasing power in the US and its export potential. When the dollar is strong against the yuan, the US can buy more Chinese products but it also stunts US exports, he explained.

On the flip side, he said, the US economy is strengthening, so more product will be absorbed domestically.

“To be overly concerned about a market that was up 150% and is now down 50%, to me, is a little bit naive,” said senior investment strategist Jonathan Hill with Gibraltar Bank about the Chinese market.

“The recent turmoil is unwelcome, but we have been consistent in anticipating this hike in volatility,” read an email Mr. Hill sent to his investors and clients last week. The email calls the situation a “short-term disruption” and points out that traditionally light summer-trading volumes can leave markets vulnerable to “outsized swings,” which is common in July and August.

Ultimately, the Chinese slowdown can affect the growth of international trade and investments with South Florida’s three major partners: Central America, South America and Europe, said Miami economist Manuel Lasaga. Repercussions will further spill over to the local economy if China’s instability affects global growth, he said.

Mr. Lasaga points to the lack of transparency in how the Chinese economy is faring in the midst of its apparent slowdown as a reason for increased volatility in the market.

“I do think China should continue to grow 6% to 7% this year,” he said. “It’s still going to add momentum to the global economy,” but the momentum will be slower than anticipated.

Succession plans are key to protecting your business when the unthinkable happens

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By James S. Cassel
August 17, 2015

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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.

James 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 jcassel@casselsalpeter.com. His website is www.casselsalpeter.com

Attracting and retaining top talent: a growing obstacle for South Florida businesses

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By James S. Cassel
July 12, 2015

Cassel pictureMaintaining a strong workforce is becoming an increasingly significant barrier to growth for South Florida’s middle-market businesses. Finding, attracting, and retaining quality talent is a tricky proposition in a region with a limited labor pool and low unemployment rates.

Deloitte’s newly published “Mid-Market Perspectives: 2015 Report on America’s Economic Engine” identifies employee turnover as a major concern for middle-market companies.

Clearly, there is more value in cultivating existing talent than having a revolving door of employees. So, how can you build a strong, loyal team in South Florida?

First, have the right perspective. Do not feel overwhelmed and assume that sweeping corporate changes will be required. Often, we can achieve a great deal by making a series of small adjustments, and continuing to make other adjustments as we build on our success. Develop a practical plan and identify realistic, attainable goals and objectives.

At all times, keep a close pulse on your employees. It can be easy for business owners to get so consumed by day-to-day operations that they lose touch with their teams, a costly mistake. Are your employees engaged, motivated and happy? How can you maximize engagement? If you have good employees who are unhappy in their current positions, can you find other opportunities within the company so you can keep them around? If not, outplacement may be best for all parties.

Your compensation packages, including cash and benefits, should be competitive. While many companies in recent years have tended to avoid raises, increased competition and poaching of employees is making it critical for employers to become more generous. Competitive compensation packages can reduce your exposure to turnover too. Even Walmart is having to address the need for wage increases.

Usually, employees will reject job offers for lateral moves unless they perceive significant disparities in working conditions and compensation. Keep your eyes and ears open so you know what other businesses in your industry are doing. Websites like PayScale and Glassdoor can help you assess average compensation data about different industries and job roles.

Working conditions, benefits and flexibility also are important. While it is important to offer 401(k) programs (ideally with matching contributions), these benefits will not support retention if your employees do not use them. This is often the case with younger employees who opt not to contribute to their 401(k) plans (although they should). Ensure that your employees are educated on the importance of contributing, no matter how entry-level their salaries.

It also helps if your office has a “cool factor.” Every generation of employees has different needs and wants. Trendy-looking, modern offices in desirable neighborhoods and touches such as free gourmet coffee and snacks in break rooms appeal to millennials and Gen X-ers.

When recruiting and hiring, conduct as much due diligence as possible. Personality tests can help, as well as meticulously following up with references. Your current employees can be great resources for recruiting. Leverage them when appropriate, as they probably know your company better than outsiders and would be more engaged to stay at companies where they are surrounded by colleagues they helped recruit.

Routine evaluations can also boost employee loyalty and performance. Embrace the opportunity to let your team members know how they are performing, praise their strengths and achievements, and provide guidance on how to reach their career objectives. At the same time, use the opportunity to solicit their thoughts and feedback, take good notes, and follow through on their comments.

Encourage employees to interact in structured social environments, such as barbeques, movie nights or whatever tickles their fancy. While many companies have stopped providing annual company picnics, it may be time to resurrect them. The more your employees enjoy each other’s company, the more apt they are to work well together. Consider employee recognition initiatives too, and perhaps pair them with these social activities. Corporate community involvement projects can help increase job satisfaction and engagement. Identify organizations your employees would be most inclined to support.

Career development is critical. Employees who feel challenged and believe they are learning are more likely to stick around. A current issue with the millennial generation, for example, is that most recent college grads will have four or five jobs in their first decade of employment. Bearing that in mind, many companies are offering less training and investing fewer resources to advance employees out of fear of wasting time and money. This can be a mistake: Bored employees are more likely to begin looking elsewhere for stimulation.

Attracting and retaining quality employees is no easy task. By taking the right steps to build a strong team, you can gain a competitive edge and position your business for maximum growth and success.

Middle-market businesses should help growth industries

To view the original article, click here.

By James S. Cassel
June 14, 2015

Cassel pictureWhile 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