Articles

By Lori Moen, CEPA Business Coach | Catalyst Group ECR

The legacy you leave behind when you’re no longer part of leadership isn’t just about your accomplishments and accolades. It has to do with how you approach any and all issues that fall in front of you. In the modern business world, leadership legacy is all about moving towards sustainable success.

It’s important that companies begin thinking beyond their short-term goals and toward the long-term impact of those who are in leadership. There is a lot of value in investing in each moment and considering the consequences your decisions will have both in the present moment and in the future.

Let’s take a look at a few leadership legacy examples to inspire you as you plan your future.

Leadership Legacy Examples: Graham and Schultz

When looking back at successful business leaders, there are a lot of people who rose above expectations, allowing them to leave their mark on the organization.

Take, for instance, Katharine Graham, who took the helm of The Washington Post in 1972 and became the first woman named CEO of a Fortune 500 company.

After breaking through the glass ceiling, Graham went on to fight relentlessly for the Constitutional right to free press after she was slapped with a restraining order for her attempts to publish The Pentagon Papers. Her efforts led to a Supreme Court decision that “defended the First Amendment right of free press against prior restraint by the government,” and reaffirmed one of the nation’s most fundamental values.

Another leader who’s left a lasting legacy is Howard Schultz. As the former CEO of Starbucks, he’s left a legacy that’s had an impact greater than just the delicious coffee. His legacy has impacted all of those who make the coffee and those who work in their stores. Schultz made it a point to prioritize the well-being of his employees by offering comprehensive healthcare benefits and supporting various communities.

One of the ways he did this was through expanding educational access through the Starbucks College Achievement Plan. This program provided a tuition-free college education online and hired thousands of military veterans and spouses, as well as refugees and underprivileged youth, allowing people to create a better life for themselves and loved ones. He chose a legacy that gave opportunities to those around him, and as a result, he built a successful company that fostered the professional growth of its employees.

By The Acquira Team

Loose lips sink ships. The same can be true when selling your business.
If word gets out to your employees, customers, or vendors prematurely that you’re selling – it could have a dramatic impact, possibly jeopardizing how much you can get for all your hard work.

Breaches in confidentiality can lead to several adverse outcomes, such as destabilizing employee morale, alerting competitors, unsettling customers, and potentially devaluing the business before the sale is finalized.

Your employees may fear for their job security and start looking for new positions, which can lead to a loss of key staff. Similarly, customers and suppliers may perceive the sale as an indicator of instability, prompting them to seek alternatives.

Here’s a look at the importance of confidentiality during the sale of your business.

Breaches in confidentiality can lead to several adverse outcomes, such as destabilizing employee morale, alerting competitors, unsettling customers, and potentially devaluing the business before the sale is finalized.Protecting Business Interests.

Non-Disclosure Agreement (NDA).

Sensitive information, including financial statements, customer lists, proprietary processes, and strategic plans, must be protected during the sale process.

The inadvertent disclosure of such data can compromise the competitive edge of your business and, by extension, its market value. 

Strategies for safeguarding this information include secure document management systems that track and control access to sensitive documents and ensuring that all digital communications are encrypted.

Potential buyers should be required to sign an NDA before receiving any sensitive information.

This legal document ensures that the information shared during the due diligence process cannot be used for any purpose other than evaluating the purchase of the business.

Preserving Employee Morale

The uncertainty generated by the sale of a business can significantly impact employee morale and productivity.

Rumors of a sale can create anxiety among the workforce, leading to decreased productivity and potentially prompting key employees to leave. 

To manage this, communication should be carefully planned.

While it’s important to maintain confidentiality, finding the right time to inform employees about the sale is crucial.

This decision requires a delicate balance between preserving the integrity of the sale process and respecting the rights of employees. It’s ultimately up to your discretion but as a general rule, making sure the news comes from you – and not the buyer – is preferred.

Your management team plays a crucial role in mitigating the impact of sale-related uncertainty on employee morale.

By maintaining normal operations and showing confidence in the future, leaders can reassure employees.

In cases where confidentiality is maintained until the sale is finalized, preparing a comprehensive plan to manage the announcement to employees is vital.

This includes addressing their concerns, outlining any changes they can expect, and highlighting the opportunities the sale presents for the business and its workforce.

Sustaining Customer Relationships

Breaches in confidentiality during the sale of a business can severely impact customer trust, a cornerstone of any business’s success.

Customers who learn of a sale through unofficial channels might fear disruptions in service or changes in product quality, leading to lost confidence and business. 

To mitigate these risks, maintaining open yet carefully managed communication with customers is crucial.

Strategies include segmenting customer communications to ensure messages are tailored and relevant, and proactively addressing any concerns they may have about the sale’s impact on their service.

Ensuring business continuity is key; customers need reassurance that the quality and reliability of what they’ve come to expect will remain unchanged.

Best Practices for Confidentiality During the Sale Process.

Establishing clear protocols for handling confidential information is essential to maintaining confidentiality.

This includes training employees on the importance of discretion and the potential consequences of leaks.

Within the organization, fostering a culture of open communication and transparency helps manage rumors and misinformation.

By being transparent about the processes in place to protect the businesses and stakeholders’ interests without divulging sensitive details, employees can feel more secure and less inclined to speculate or spread rumors.

Data rooms

Data rooms serve as secure platforms where documents can be viewed but not easily removed or copied, reducing the risk of leaks.

These digital rooms allow for selective disclosure, where information is only available to parties directly involved in the transaction and whose intent and legitimacy have been vetted.

The use of data rooms facilitates the organization and tracking of document access, ensuring that sensitive information is not broadly disseminated and is only seen by those with a legitimate need to know.

Selective disclosure emphasizes the importance of sharing information on a need-to-know basis.

This approach minimizes the risk of confidentiality breaches by limiting the number of people aware of the sale and the details of the transaction.

By carefully managing who receives what information and when, sellers can protect the integrity of the sale process and the business’s value.

Pre-Sale Confidentiality Planning

Before initiating the sale process of a small business, you should establish a robust confidentiality plan.

This serves as a foundational step in protecting the business’s sensitive information, including financial records, client lists, proprietary technologies, and strategic plans.

Identifying what constitutes confidential information early on prevents inadvertent disclosures that could jeopardize the sale or the business’s competitive edge.

Equally important is determining who needs to know about the impending sale. 

Limiting this knowledge to a select group of individuals minimizes the risk of leaks and ensures that the information is only shared with those who have a direct role in facilitating the sale.

This selective sharing is crucial for maintaining an environment of trust and security, laying the groundwork for a smooth and discreet sale process.

Role of Intermediaries in Maintaining Confidentiality

Intermediaries, such as brokers, advisors, and legal representatives, play a pivotal role in maintaining confidentiality during the sale of a business.

These professionals act as buffers between the seller and potential buyers, ensuring that sensitive information is only shared under strict confidentiality agreements and after vetting the seriousness and capability of the interested parties.

The choice of intermediaries is significant; opt for those with a strong track record of discretion and expertise in handling confidential transactions.

Experienced intermediaries understand the stakes involved and are skilled in crafting communication and information-sharing strategies that protect your interests. 

By managing the flow of information and negotiating on the seller’s behalf, these professionals help preserve the integrity of the sale process, ensuring that confidentiality is maintained from the initial stages through to the conclusion of the sale.

Confidential Business Sale: Monitoring and Enforcement

Monitoring compliance with confidentiality agreements is essential to safeguard the sensitive information involved in the sale of a business.

Employing systematic methods to track adherence and regularly auditing the handling of confidential data ensures that all parties involved are complying with agreed-upon measures.

This might involve periodic checks on how data is accessed and shared within data rooms, reviewing access logs, and confirming that information is not being disclosed improperly.

Conducting regular audits of confidentiality measures involves assessing the security of document storage, both physical and digital, verifying that only authorized individuals have access to sensitive information, and ensuring that all electronic communications are secure.

These audits help identify any potential vulnerabilities or breaches in confidentiality protocols early, allowing for timely corrective actions.

The consequences for breaches of confidentiality should be clearly outlined in the confidentiality agreement and can include legal action, financial penalties, and termination of the sale process.

Enforcement mechanisms are crucial as they underscore the seriousness of the agreement and the commitment to protecting the business’s confidential information.

These measures serve as a deterrent against unauthorized disclosure and provide a clear recourse for the selling party should a breach occur.

Conclusion

Remaining confidential during the business sales process is critical to safeguarding its value and stability.

Breaches in confidentiality can destabilize employee morale, alert competitors, unsettle customers, and potentially devalue the business. 

Protecting sensitive information through robust confidentiality agreements, secure document management, and controlled information disclosure is essential.

Industry Trends – IWF, By Warren Shoulberg

It may not be back to the good times during low interest rates but Telsey Advisory Group’s Housing Scorecard shows more positives than negatives.

If you’re looking for good news about the housing market – especially when there doesn’t seem to be too much as the most recent data suggests the sector remains weak and mortgage rates are even going back up a bit – a new analysis from prestigious Wall Street firm Telsey Advisory Group is going to bring a smile to your face…and to your business bottom line too.

In its regular “TAG Housing Scorecard” which ranks a number of factors influencing the industry, Telsey sees five positives, three even scores, and just two negatives. “Our latest Housing Scorecard reflects a housing market that has bottomed out and is improving,” it wrote in its latest report. “The latest data have resulted in our total index rising to 65 from 35 in October 2023, August 2023, February 2023, and December 2022, 50 in July 2022, and 55 in February 2022.”

That’s still down from its index of 80 in April 2021, but “better than 2022 and 2023.” Still, it said the market is “not back to strength.”

Positives on its scorecards were: private fixed residential investments, the value of construction put into place, the S&P/Schiller Home Price Index, new construction starts and permits and housing formations. On the negative side were 30-year fixed mortgage rates and existing house sales. It judged remodeling rates, employment and consumer confidence as “mixed.”

It continued to see those retailers and other businesses that service the housing market as long-term solid prospects even if right now they remain challenged.

by Alicia Esposito – Small Business Exchange

The Federal Trade Commission (FTC) has issued a final rule that bans non-compete clauses nationwide for all workers, including senior executives. FTC Chair Lina M. Khan describes the move as a stride towards bolstering competition and freeing workers to pursue new career opportunities and participate in healthy business competition.

“Non-compete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once non-competes are banned,” Khan said in a statement. “The FTC’s final rule to ban non-competes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”

Existing non-competes with workers other than senior executives are not enforceable after the effective date, which is 120 days after Federal Register publication. However, (for) senior executives, which are defined as workers earning more than $151,164 who are in “policy-making positions,” (existing non-competes can remain in force), The FTC estimates that these executives account for less than 0.75% of U.S. workers. (Click here to read the rule in its entirety.)

Implications for Small Business Owners and People Managers

Non-competes have been a standard for many organizations, especially in media and tech. However, non-competes can have rippling effects for workers in all industries, preventing them from tapping their expertise and bringing new, innovative ideas for market. The FTC outlined how the new rule will impact all businesses, however, the data points to significant value for small businesses and startups in particular:

• Boost in Innovation: The FTC estimates that an additional 17,000 to 29,000 patents will be filed annually under the new rule. Small businesses and startups will get to benefit from  a richer ecosystem of ideas and inventions.

• Increase in Startups: The FTC projects a 2.7% increase in new business formation, which is equivalent to more than 8,500 new companies annually. Entrepreneurs previously restrained by non-compete agreements can now venture into new businesses without legal hindrances, creating a more dynamic business landscape.

2. Economic Growth: Without non-competes, workers are expected to earn an additional $524 yearly. This increase in disposable income could boost consumer spending, indirectly benefiting businesses across sectors.

3. Competitive Hiring: Small businesses need top talent (which significant experience) in order to grow and thrive. However, they often lose out to large corporations with strict non-compete agreements. The new rule levels the playing field, allowing smaller firms to attract and retain skilled workers by focusing on competitive wages, better working conditions, and opportunities for growth, according to the FTC.

Reactions and Preparations

The FTC initially proposed the Non-Compete Clause Rule on Jan 19, 2023. Since then, the commission has conducted extensive research on how non-competes impact competition and collected more than 26,000 public comments. The response from the public was astounding, garnering more than 25,000 comments in support of the proposed ban.

With non-competes off the table, the FTC recommends that companies lean into alternative legal protections such as trade secret laws and non-disclosure agreements (NDAs), practices already employed by 95+% of workers with previously enforced non-competes.

For small business owners, founders, and leaders, the removal of non-compete agreements is poised to create new avenues for growth, innovation, and competition. It encourages a business landscape where success is determined by the ability to attract, develop, and retain talent through merit and differentiated benefits rather than restrictive legal agreements.

By David Lawder, additional reporting by Daniel Burns and David Shepardson in New York; Editing by Stephen Coates and Josie Kao

WASHINGTON, (Reuters) – The catastrophic bridge collapse that closed the Port of Baltimore to ship traffic on Tuesday is causing some logistics headaches, but is unlikely to trigger a major new U.S. supply chain crisis as competing East Coast ports are poised to handle more cargo, economists and logistics experts say.

With six people presumed dead after a container ship collision destroyed the Francis Scott Key Bridge, it remained unclear how long the span’s twisted superstructure would block the harbor’s mouth.

But port officials from New York to Georgia were busy fielding queries from shippers about diverting Baltimore-bound cargo from containers to vehicles and bulk material.

“We’re ready to help. We have ample capacity to absorb any surge in container traffic,” Port of Virginia spokesperson Joe Harris told Reuters.

The Norfolk-based port is expected to be a major beneficiary due to its proximity to Baltimore, but ports in Savannah and Brunswick, Georgia, also were poised to absorb some traffic, a spokesperson for the Georgia Ports Authority said.

U.S. Transportation Secretary Pete Buttigieg told MSNBC on Wednesday that while there were many ports on the East Coast, “there is no substitute for the Port of Baltimore being up and running,” as it is the top U.S. port for vehicle imports and exports, including farm and construction machinery.

Treasury Secretary Janet Yellen said a federal supply chain task force was meeting on Wednesday to assess the port’s closure but said the Biden administration “will do everything as quickly as we possibly can” to reopen it.

Supply chain experts say U.S. port infrastructure is more resilient than during 2021 and 2022, when they were understaffed and clogged with ships and containers, spiking prices and contributing to inflation as Americans binged on goods purchases during the COVID-19 pandemic.

“The collapse of the Francis Scott Key Bridge in Maryland is another reminder of the U.S. vulnerability to supply-chain shocks, but this event will have greater economic implications for the Baltimore economy than nationally,” Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a note.

“We don’t anticipate that the disruptions to trade or transportation will be visible in U.S. GDP, and the implications for inflation are minimal,” he added.

NO SHIPS, NO WORK

The impact on the Port of Baltimore’s more than 2,000 workers who load and unload cargo vessels could be significant if the closure lasts more than a few days.

The dockworkers are day laborers, said Scott Cowan, head of the International Longshoreman’s Association Local 333 in Baltimore, meaning they only work when there is cargo to be moved. He estimated there might be about a week’s work clearing the existing inventory at the port.

After that, the workers could lose a collective $2 million a day in lost wages, he said.

The port directly generates, opens new tab over 15,000 jobs, with an additional 140,000 jobs dependent on port activity, according to Maryland Governor Wes Moore’s office.

VEHICLE PORT

One area of concern is higher shipment costs for imported cars and trucks and for exports of farm tractors and construction equipment as Baltimore is the largest U.S. port for “roll-on, roll-off” vehicle shipments, with over 750,000 cars and light trucks handled by state-owned terminals in 2023, according to Maryland Port Administration data.

Ford Motor Co (F.N), opens new tab and General Motors (GM.N), opens new tab said they would reroute some affected shipments but the impact would be minimal, while Volkswagen (VOWG_p.DE), opens new tab is unaffected because its new Sparrows Point vehicles terminal is located at a former steel mill site on the bridge’s Chesapeake Bay side.

The risk of car price spikes is further dampened by a recovery in automotive inventories to their highest level since May 2020, after being drawn down sharply during the pandemic. The industry’s inventory-to-sales ratio is near its 32-year-average of 1.96 to 1 according to Census Bureau data, and sales incentives have risen in recent months as high interest rates dampen demand.

COASTAL SHIFT

Ryan Peterson, founder and CEO of logistics platform Flexport, said that with Baltimore handling only 1.1 million twenty-foot equivalent containers last year – ranking 12th in the U.S., any impact on container rates and shipping costs from the disruption would be far less than increases caused by cargoes diverted from the Suez Canal because of attacks on Red Sea shipping by the Houthi militant group in Yemen.

But the port outage could contribute to a shift of container traffic to West Coast U.S. ports that was already underway over the past several months because of the lack Asian shippers’ access to the Suez route and reduced capacity in the Panama Canal due to low water levels. Peterson said the potential for an East Coast longshoreman strike in late September – at the height of Christmas-season imports – also has some shippers considering West Coast shipments.

“East Coast volumes are down and there is the ability for those ports to flex up to handle this,” Peterson said.

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The Corporate Transparency Act (CTA) was enacted back in 2021, but few businesses have considered whether they’ll be impacted. Now that the law is officially in effect (as of January 1, 2024), small business owners now need to ensure compliance.

An estimated 32 million businesses will now need to report detailed information about their operations. However, in a survey of its members, the NFIB found that 90% have never heard of these new requirements. This article will outline critical information you need to know.

What is the goal of the Corporate Transparency Act?

The CTA was passed to tackle money laundering, tax fraud and other unlawful activities. Specifically, it targets “non-employer firms,” or entities that have no employees, according to Thomson Reuters. The reasoning is that many “bad actors” have concealed their ownership of corporations, LLCs and similar entities in the U.S. to cover up fraud, financing of terrorism and more.

As a result, many small business owners who have “one-person operations” will need to provide greater transparency into business operations by reporting Beneficial Ownership Information (BOI).

What is a Beneficial Ownership Information Report and who needs to file it?

Millions of small businesses will need to file a BOI Report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Specifically, companies created or registered to do business before January 1, 2024, will have until New Year’s Day 2025 to file their initial BOI report, according to the FinCEN.

However, entrepreneurs who created or registered their businesses in 2024 can wait until receiving actual or public notice that their creation or registration is effective to file their BOI report. They will technically have 90 calendar days to file. Any company created on or after January 1, 2025, will need to file their reports within 30 calendar days of receiving actual or public notice that the business is effective.

Both domestic and foreign companies need to file, according to Thomson Reuters, with reporting companies typically including:

• Limited liability partnerships
• Limited liability limited partnerships
• Business trusts
• Most limited partnerships created by filing with a secretary of state or similar office.

Companies stared within the U.S. and required to file a BOI are called “domestic reporting companies,” while entities created in foreign markets but registered to do business in the U.S. are called “foreign reporting companies.”

Domestic reporting companies created before January 1, 2024, have to provide information about the company and its beneficial owners. Any domestic reporting company created on or after January 1, 2024, needs to provide information about the company, its beneficial owners and company applicants.

Which companies are exempt from filing a BOI report?

Exempted companies include securities issuers, domestic governmental authorities, banks, and others that don’t fall into the above categories. “Large operating companies” are also exempted from filing BOI reports, according to Wolters Kluwer. These are entities that:

• Employ more than 20 full-time employees in the U.S.
• Have an operating presence at a physical U.S. office
• Have filed a federal income tax or information return in the U.S. for the previous year, with more than $5 million in gross receipts or sales

What information needs to be reported?

Primary company details:

• Full legal name
• Any trade or “doing business as” names
• Current street address of principal place of business
• Jurisdiction of formation
• Taxpayer identification number

Beneficial owner and company applicant details:

• Full legal name
• Date of birth
• Current residential street address
• Unique identifying number and the issuing jurisdiction from a current U.S. passport, state or local ID document, driver’s license or a foreign passport and an image of the document from which the unique identifying number was obtained

Who is a “beneficial owner” and “company applicant”?

A beneficial owner is anyone who either exercises substantial control over the reporting of the company or who owns at least 25% of ownership interests. A company applicant is someone who directly files the document that creates the domestic reporting company and oversees the filing of the document. Company applicants can only be an individual who directly files the document to create the business entity — or files for the entity to do business in the U.S. The company applicant also can be the person primarily responsible for directing or controlling the filing.

Both beneficial owners and company applicants must report their information directly to FinCEN.

What happens if BOI report information is wrong or needs to be updated?

If information in a report is inaccurate, a new report must be filed within 30 calendar days. The same guidelines apply if existing information needs to be updated. For example, if a beneficial owner’s address has changed, or there has been a legal name change, the BOI report may need to be updated. It also would need to be updated if a company’s main headquarters changes.

 Where can I go for more information and support?

The U.S. Chamber of Commerce encourages small business owners to consult lawyers or tax and accounting specialists if they need help filing their BOI reports.