May 2018 eNewsletter
The Power of Partnership: Celebrating 10 Years with the Goering Center
Joni Fedders, President, Aileron
You can't go very far alone.
With this belief, a popular saying has emerged within the walls of Aileron: "the brilliance is in the room." We believe it's true of our clients, our peers, our vendors, and our community — amazing things happen when you draw on the power of the collective.
Few people realize that a group can accomplish what an individual alone cannot do — even when it comes to individual advancement. If you want the next promotion, you have to elbow that hardworking colleague next to you out of the way, right? Wrong.
Maggie Craddock, HBR
But how? How do you find people that care about the same things, believe in the power of unity, and are willing to invest in collaboration? How do you access relevant resources that are thoughtful and timely?
These questions are at the heart of what makes our partnership with the Goering Center so valuable. For the past decade, Aileron has enjoyed "sharing the brilliance of the room" with our friends at the Goering Center. Although we have unique strengths, our vision is aligned: when you support a business, you support the community.
There's a lot of talk about raising the quality of life in the world, America, and Southwest Ohio. Conversation is good — it lets us plan our path. At some point, however, our talk needs to generate action — focusing on tangible resources and relevant insights that raise the quality of life.
Aileron is proud to have acted with the Goering Center for the past 10 years. We've helped connect family businesses to one another and provided leaders the tools to manage a successful business. We've offered workshops, relevant news, and programs. Together we energize, compliment, and sharpen each other.
It’s our mutual mission that makes this partnership thrive: we both believe in the power of empowering people.
It's easy to feel isolated in the busyness of the day, week, and quarter. We've all got responsibilities and to-do lists that multiply every morning. In the hustle to get things done, it's tempting to believe we must run solo to run fast. But humans run on connections.
People crave connection and intimacy in all realms of their lives, including at work. It’s a critical source of empathy and tolerance — the glue that keeps relationships, projects, and organizations together. Leaders should do more to encourage it.
Tim Leberecht, HBR
If there's one thing our relationship with the Goering Center has reminded Aileron, it's that we're far from alone. Our alliance generates excitement, optimism, and gratitude within us as we look ahead to the next 10 years. Because when our community, businesses, people, and leaders come together, there's not a whole lot we can't do.
Here's to the next decade of partnership.
I Know You Don't Want to Read This
Blake Roe, CPA, Partner, Plante Moran
As a CPA I am well aware that as a business owner the last thing you want to talk or read about are changing Accounting Standards. However, I also know that what would be even worse would be to get a call from your bank saying they have an issue with your financial statements which calls your loan into question.
I don’t want to tell you about the two new pending standards – what I want to tell you about is how to make your life easier related to getting ready for these standards.
They sound like a long way off but you may have a lot of work to do between now and then. The new Revenue Recognition standard that has the potential to change how/when you recognize revenue kicks in for most private entities on January 1, 2019. Then the new Lease standard that WILL change how you recognize operating leases kicks in for most private entities on January 1, 2020. Both of these have the potential to cause material changes to your financial statements that could throw your financial ratios out of whack and compromise your loan covenants.
Here is the TOP TEN list of what you need to do to begin preparing for these changes:
10. Review your loan documents and gain a clear understanding of any debt covenants and related ratios.
9. Take an inventory of all of your lease agreements and get them pulled together in one place. This may sound like an easy task – but I’ve already lost count (and remember that I am good with numbers) of how many of my clients have said this exercise was much more difficult than they had assumed it would be. Often the accounting department is not the department tracking these contracts.
8. Pull together your standard contracts with your customers. If you only work off of a few different contracts life under the new standard will be easier for you. If you have many different contracts or varying contract provisions – you need to get into this NOW.
7. If you have transactions occurring between related entities make sure to have formal written contracts in place.
6. Figure out your need for potential new leases over the next couple of years. Factor this into your overall analysis of how your financials will change.
5. If your CPA hasn’t already reached out to you – then get with them – SOON.
4. Figure out who at the Company is going to take responsibility for dealing with these new standards. There may be a lot of coordination that is required between departments.
3. Talk with you Company’s IT professional or outsourced professional to ensure that the system you have running is capable of implementing the new standards. Some controls, policies or procedures will likely need to change with the transition. The more complex your system, the longer it may take to make these changes happen.
2. Educate all relevant stakeholders about the changes they can expect in the company’s financial statements. No one likes financial surprises.
1. Lastly, have some preliminary communication with your lender – once you are armed with some basic preliminary information as to how these standards will affect your statements.
Impact of Tax Reform on Businesses: Verdict Still Out
Marc Dizard, Senior Vice President, Investment Director, PNC Wealth Management
Within 24 hours of being signed into law, the Tax Cuts and Jobs Act of 2017 set off a domino effect among large corporations sharing the windfall expected from the tax reform by announcing bonuses for employees and charitable donations to benefit their local communities. But what about smaller businesses and their employees? PNC recently asked owners and executives of 500 small to medium-size businesses across the country what they think about the potential impact of tax reform on their businesses.
A significant majority (72 percent) of the business leaders surveyed are familiar with the details of the Tax Cuts and Jobs Act of 2017 (federal tax reform), but only 27 percent report understanding the specific effects on their business. For all tax reform questions, at least a quarter of respondents (26 percent) note it is “too early to tell” the impact. As a result, six out of 10 (61 percent) expect to make no changes to their business in 2018 in response to the tax bill.
These findings are part of the PNC Economic Outlook, a semiannual telephone survey of small and medium-size business owners and executives nationwide, which began in 2003.
When it comes to the bottom line for their business, more respondents anticipate that the new tax legislation will have a positive impact (43 percent) compared to those anticipating a negative (4 percent) or neutral (17 percent) impact. More than a quarter (29 percent) of respondents believe it is too early to predict the financial impact.
Marc Dizard, who is PNC Bank’s Investment Director for Cincinnati, said that the small businesses in southwest Ohio are a critical component to the local economy.
“The tax reform benefits should provide the backdrop for continued growth,” Dizard said. “In turn, we should experience continued regional economic improvements.”
According to Dizard, the labor market in southwest Ohio is improving.
“The U.S. Bureau of Labor Statistics shows unemployment rates being at their lowest levels since before the Great Recession,” Dizard said. “In a competitive job market, tax reform could help businesses that are willing to invest back into productivity. Before the Tax Cuts and Jobs Act of 2017 was signed into law, our region was already seeing positive momentum. We should only see that continue with additional tax reform. While some of the details are still unclear as each business navigates how they are specifically impacted; the general message we are receiving is increased optimism.”
When it comes to paying taxes, more business leaders expect a positive than negative impact. Forty-three percent anticipate a major or moderate positive impact to their business taxes and 36 percent anticipate a major or moderate positive impact to their personal taxes.
A majority of business owners and executives are optimistic about a positive impact of the new tax legislation on sales due to consumer spending (37 percent) and business confidence (41 percent). Slightly more than a quarter of respondents say it is too early to tell.
However, more business leaders expect the U.S. economy to benefit (49 percent) from the tax reform law than the bottom line of their business (43 percent).
“Optimism reached historic highs overall in our current survey, including the outlooks for hiring, wages, sales and profits. It’s not surprising that this general aura of optimism extends to tax reform,” said PNC chief economist Gus Faucher. “With demand continuing to improve and the tight job market making it difficult to hire, businesses were already investing to make their workers more productive and to increase output.”