Friday, June 24, 2016

SBDC Advisors collaborate to help clients navigate aquisition

Washington state SBDC advisors frequently collaborate to help our clients. In this case, advisors from Tri-Cities and Seattle worked together with a client for almost a year to develop a transition plan for a firm recently acquired by a larger firm.

One benefit of working with your local SBDC is that you not only get access to the local advising team, but the entire network of 27 advisors and two international trade specialists across the state.

Read more about the Polestar story:

Polestar Team

Friday, June 17, 2016

New overtime rules effective December 1, 2016

Plan now: New Rules for Payroll Overtime

By Jim Fletcher, Certified Business Advisor, Wenatchee SBDC

In May 2016, the Fair Labor Standards Act (FLSA), which governs federal minimum wage and overtime pay requirements, was amended. Those changes are effective December 1, 2016.  

What's in your manual?
Do you have an employee handbook?
It is time now to prepare for changes in employee positions. 

If your employees are already eligible for overtime pay, these changes do not affect those positions in any way. However, if you have employees who are classified as exempt from overtime then those position classification are affected. 

What FSLA changed is the limit on when exempt position are eligible for overtime pay. Presently exempt employees making more than $23,660 doubled to $47,476; resulting in a situation where some employee positions will need to be reclassified to non-exempt and will be eligible of overtime pay. 

For some businesses the reclassification of positions can result in other HR issues such where the decision to reclassify workers as nonexempt requires further decisions, such as whether to:

  • Maintain workers’ pay rate and pay additional overtime.
  • Maintain their pay rate but limit their hours.
  • Reduce their pay rate to maintain cost neutrality for overtime worked.
  • Newly nonexempt employees retain their professional duties even though they are now paid overtime.
  • Newly nonexempt employees lose some or all of their professional duties. 

In addition, for employees being reclassified, there are options with respect to their duties, including:
  • Newly nonexempt employees retain their professional duties even though they are now paid overtime.
  • Newly nonexempt employees lose some or all of their professional duties.

Do you need to revise or
develop job descriptions?
As business owners we are keenly aware that changes to any employees position and pay can start a series of adjustments for all employees, an emotional fall out form those who feel they were not given fair consideration. 

Owners and managers need to review their employee positions. Identify any presently exempt positions that will be impacted and plan for appropriate changes.  It is highly recommended that you planning include talking to an HR advisor as well as your payroll accountant. 

Discuss with your advisors overtime controls and policies, setting clear overtime work expectations, compliance with eligibility rules, how to present changes to employees.

Some additional reading:

Overtime is more than an issue of compensation. Effective employee relations strategies can alleviate common confusion and dilemmas surrounding overtime.

As a supervisor of non-exempt employees, you’re responsible for seeing that employees accurately record the time they work and receive overtime when it’s due. This article looks at managing overtime issues through workplace atmosphere, communication, and expectation setting. 

Those businesses that aren’t good at managing employee overtime hours effectively could easily be creating problems for themselves for the present and for the future. 

4 Overtime Traps to Avoidby Chris Kelleher 
Overtime. It's been a law for almost 70 years. If you thought that after all that time every business would know how to follow it, you would be very, very wrong.

Alleging violations of the overtime law is a new "growth industry," with employees (and their lawyers) going after everyone from mom-and-pop businesses to industry giants. To keep your business from becoming yet another lawsuit statistic, here are four common overtime traps and how to avoid them:   

OvertimeManagement Techniquesby Lisa McQuerrey, Demand Media 
Overtime, or time worked beyond a standard 40-hour workweek by hourly, non-exempt employees, can wreak havoc on the operating budget of a small business. 

While there may be times when overtime is necessary and cost-effective, overtime pay can begin to drain your bottom line if not managed correctly. Advance planning and scheduling can help reduce the need for employees to work in excess of their scheduled hours.  

Wednesday, June 15, 2016

SBDC offers Succession Planning for Small Business Owners

By: Certified Business Advisors Jim Fletcher, Wenatchee SBDC and Linda Johnson, Yakima SBDC

Every year hundreds of businesses owners try to make a successful exit by selling their business. Of all who try, 20% are in the best position to find qualified buyers and receive a full offer, 30% fail completely and sell for a liquidation value, if anything.  That means 50% of all who try could do better.

Do you have a plan to sell your business?
Our goal is to help that 50% get a better outcome.  

Planning to sell includes a review of existing financials, preparing a business value assessment and identifying business improvements and actions that can be implemented over the next two to three years to improve the business value when it’s time to sell.

Why are business sales so difficult to finance?

The recession and lack of a meaningful recovery has taken its toll.  There is less buyer’s equity to invest.  In recent years, too many businesses are chasing too few or a limited number of buyers and financial resources. 

In some cases, businesses attempt to keep taxes low and deduct as much as they can, sometimes showing (on paper) a loss to the business each year. A bank is hesitant to finance a loan for a business that shows a loss. In other situations, a business may be made up of intangibles or 'blue sky' that are difficult to determine a value.

If an owner does want to sell the business:
They need to focus their time and energy creating a business that buyers will want. This means working on:
A. Profitability.
B. Competitive edge - to stay profitable.
C. Sustainability - to survive economic downturns.
D. Scalability - so the business grows.
E. Business culture - so good employees stay.
F. Most efforts to transition a business fail because the owner remains an entrepreneur, not a manager.

Business Exit Planning = systematic process.

  • Maximize Business Value.
  • Maximize the number of Possible Transition Models Available.
  • Minimize Cost to the business owner.
The process helps identify:
  • Real transition opportunities
  • Business strengths and weaknesses.
  • Risks to a successful exit or succession.
  • Needs of both the business and the owner, now and for their life after business.
  • New wealth opportunities: keeping businesses successful and local.
Cost: There can be costs for an outside planning-level evaluation. Clients may choose to use their own accountant or recommendations can be provided.  

Advising services of the SBDC are at no fee and confidential.  

For more information contact: 

Jim Fletcher, CBA, ABPA  at 509-888-7252;
Linda Johnson, CBA, ABPA at 509-454-7612;

Or contact your local SBDC office in Moses Lake,  Okanogan, Pullman, Spokane, Tri-Cities, Walla Walla, Wenatchee or Yakima.