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Give Executive Fraud Risk Your Full Attention
Occupational fraud can occur at any level of an organization. But misconduct by owners and senior executives can be particularly costly because they usually have greater authority and can override internal controls.
According to the Association of Certified Fraud Examiners’ (ACFE’s) Occupational Fraud 2026: A Report to the Nations, owners and executives account for 16% of all occupational fraud perpetrators. Yet they cause nine times the median loss associated with nonmanagerial fraudsters. Even if you trust your leadership team, strong safeguards can help protect your business and its reputation.
Why it happens
Forensic accountants commonly use the “fraud triangle” to understand occupational fraud. It focuses on three factors that generally need to be in place for people to steal from their employers: pressure, opportunity and rationalization.
Pressure can be personal or professional. An executive facing financial difficulties or aggressive performance targets may be tempted to manipulate financial results. The ACFE found that perpetrators experiencing excessive organizational pressure are associated with a median fraud loss of $532,000 — the highest among the behavioral warning signs identified.
Opportunity exists when someone has the access or authority to commit and conceal wrongdoing. Executives pose an elevated threat because they may approve transactions, influence employees, or override established procedures. More than half of the ACFE report’s cases involve either inadequate or overridden controls.
Rationalization occurs when perpetrators can justify their dishonest behavior. Executives might, for example, believe they’re entitled to steal because their compensation is inadequate or that manipulating results is acceptable because it will eventually benefit the business.
You can help reduce fraud risk by keeping this triangle in mind and promoting an antifraud culture. For instance, try to set realistic, achievable performance goals and intervene if executives seem excessively entitled or secretive.
Strengthen safeguards at the top
Internal controls that protect key functions — such as your accounting, and shipping and receiving departments — are also essential. But preventing executive fraud may require additional measures. For example:
Establish clear rules for overriding controls, including requiring a second approval and documentation explaining why the exception is necessary,
Mandate fraud awareness training for employees, including executives,
Conduct management reviews, surprise audits and financial monitoring activities, and
Offer tiplines or web portals that enable employees to anonymously report suspected wrongdoing.
Reporting systems are especially important because tips remain the most common way to detect occupational fraud. The 2026 ACFE study found that 43% of cases are uncovered through tips, and employees provide more than half of them (other tips come primarily from vendors and customers). Because of the risks of retribution, confidentiality is critical if you want workers to blow the whistle on crooked executives.
Allegations involving a senior executive or other influential individual may warrant engaging an independent fraud specialist to help ensure an objective investigation, including evidence gathering and witness interviews. If fraud is confirmed, your organization should respond based on the circumstances, applicable laws and its own policies, not the perpetrator’s position.
Promote accountability
Executive fraud may never be completely preventable, but you can make it harder to commit and easier to detect. To promote accountability, implement strong controls, effective employee training and confidential reporting mechanisms. Contact FMD for help assessing fraud risks and strengthening the safeguards that will protect your business.
How a Lockbox (or Other) Service Can Benefit Accounts Receivable
For decades, businesses have used bank lockbox services to speed up collections and reduce administrative work involved in processing customer checks. Today, the basic idea remains the same, but modern lockbox services can automate your accounts receivable processes. Automated clearing house (ACH), credit card and instant-payment services can also provide efficient collections. So the question is: With multiple tools available, which service will best save your employees time, improve cash flow and strengthen payment controls?
Traditional vs. contemporary
With a traditional lockbox arrangement, customers send payments to a designated address controlled by a business’s bank or another service provider. The provider collects payments, deposits checks and sends payment information electronically to the business.
Contemporary systems can capture information from checks and accompanying remittance documents, including customer and invoice numbers. That data generally is transmitted to your accounting or enterprise resource planning system to help automate the process of matching payments with outstanding invoices. The result can be faster processing and less manual work for your workers. Instead of opening envelopes, recording payments and depositing checks, your staff can focus on exceptions and other higher-value tasks.
Don’t overlook fraud risk
Security, particularly of paper checks, is another factor that favors lockbox services. According to the Association for Financial Professionals’ 2025 Payments Fraud and Control Survey, 63% of organizations experienced attempted or actual check fraud the previous year. Although lockboxes don’t eliminate check fraud, moving receipt and check processing away from your workplace can reduce payment handling and allow for more controlled procedures.
ACH and other electronic payment methods typically offer lower processing costs and also eliminate some of the fraud risks associated with paper checks. Instant payments are another option. Participating financial institutions can provide payments that settle within seconds, 24 hours a day, seven days a week.
Checking the math
Lockbox pricing varies by financial institution and service level and may include recurring and transaction-based charges. To determine whether the service makes financial sense, compare those fees with what you’re spending internally to process payments. Weigh factors such as:
The number of paper checks you receive,
Time spent processing and reconciling payments,
How quickly payments are currently deposited,
The value of accelerating access to cash,
Ease of integration with your accounting system, and
Fraud prevention benefits.
If your business receives a large volume of checks, a lockbox may make sense. But if your volume is relatively low, you may reap greater benefits by encouraging customers to use electronic payment methods.
Discuss your options
Talk to your bank about available lockbox and electronic receivables services and their costs. Also contact FMD. We can help quantify your current payment-processing costs, evaluate potential cash-flow and control benefits, and determine whether a lockbox (or other option) may be right for your business.
Professional Valuations Provide Businesses with more than a Number
Are you selling your business, soliciting new investors, updating a buy-sell agreement, pursuing litigation or drafting an estate plan? An accurate business valuation prepared by a valuation professional is critical to the success of these and many other activities. Knowing some fundamentals about the process can help you understand your valuator’s conclusions, what drives business value and where to invest resources. Here are some basic concepts you should know.
Fair market and fair value
Although they sound similar, these two terms can have different meanings. Fair market value is the valuation standard used for tax, transaction and planning purposes. It represents the price at which a business or ownership interest would change hands between a hypothetical willing buyer and a hypothetical willing seller. It assumes that both parties are acting independently, have reasonable knowledge of the relevant facts and are under no pressure to complete the transaction.
Fair value, on the other hand, is a legal standard that generally depends on state law and court precedent. It’s commonly used in shareholder disputes, divorce proceedings and certain litigation. Fair market value can serve as a starting point for an appraisal, but fair value generally requires adjustments to reach an equitable outcome. For example, when minority shareholders are forced out of a business through a merger, courts often rely on the fair value standard because those shareholders are neither hypothetical nor willing participants.
Going concerns
Another essential concept is going concern value. This refers to the value of a business that’s expected to continue operating into the foreseeable future.
A going concern is typically worth more than the sum of its individual assets because it includes valuable intangible assets. These might include an experienced workforce, established customer relationships, proprietary processes, operating systems, licenses and a proven ability to generate earnings. In today’s economy, such intangible assets often account for a significant portion of a business’s value.
Premiums and discounts
Valuations aren’t simply based on the numbers contained in a business’s financial statements. Professional valuators also usually consider the ownership interests being appraised. For instance, a business may be more valuable because the owner can independently direct management decisions and influence the organization’s future. This additional value is known as a valuation premium (in this case, for control reasons).
Conversely, a valuation professional may apply a valuation discount when circumstances reduce the appeal of an ownership interest. One of the most common examples is a discount for lack of marketability. This reflects the difficulty of quickly selling an interest in a privately held business. Depending on the facts, other discounts, such as those related to minority ownership, may also be considered when appropriate.
Risks and opportunities
Even if you aren’t facing litigation or don’t plan to sell your business soon, consider obtaining a valuation. Professional valuations often review historical and projected financial performance, economic conditions, key-person risk, competitive position, and other qualitative and quantitative factors. Periodic valuations may alert you to potential threats and measure progress toward long-term goals. Contact FMD for help determining what your business is worth and identifying practical steps to enhance its value.
Ideas for Negotiating Smarter, Not Harder
Business negotiations aren’t about squeezing every possible concession from the other side. Both parties should leave the table believing they’ve protected their interests and gained something of value. This approach not only supports the current transaction, but also lays the groundwork for future deals. The reason is simple: Business owners with a reputation for fairness tend to attract more opportunities.
Before the conversation begins
Every successful negotiation starts before anyone sits down to talk. First, define what success looks like for your business and identify the point at which a deal no longer makes financial or operational sense. Establishing your minimum acceptable terms ahead of time helps prevent emotion-based decisions.
Price often dominates business negotiations. But bear in mind that other factors may matter just as much, including delivery schedules, payment terms, warranties, service levels and future opportunities. Occasionally, something with little value to your organization may be highly valuable to the other party. For example, discounted excess inventory could help solve a customer’s problem while reducing your carrying costs.
When appropriate, establish basic ground rules before negotiations begin. This can be especially helpful when dealing with language barriers, cultural differences or potentially contentious situations where expectations need to be clearly defined.
Making strategic concessions
Once negotiations begin, don’t immediately agree when a concession is requested and try to avoid making the first one. Taking time to consider requests demonstrates that what you’re giving up has real value.
The concessions you do make should be relatively small and deliberate. Large early compromises may signal that your original position wasn’t realistic and encourage the other side to push for more. Also remember that several small concessions can add up, so monitor the cumulative impact throughout the discussion.
Perhaps the most important principle is to never concede something without receiving something in return. Effective negotiations rely on balanced exchanges rather than one-sided compromises. Instead of responding with a simple “yes,” consider saying, “I’d be willing to do this if you can help us by…” This approach keeps negotiations collaborative while protecting your interests.
Protect the relationship
After receiving a concession, resist the temptation to immediately ask for more on the same issue. Overreaching can quickly erode trust and jeopardize an otherwise favorable agreement. Also, be careful about stating potentially unreasonable demands or ultimatums. Maintain a positive tone by focusing on what you can do for the other party instead of simply rejecting proposals.
If negotiations seem to be deteriorating, be prepared to walk away. Assuming you want to preserve the relationship, suggest returning to the discussion another day.
Stronger future deals
Whether you’re negotiating with customers, suppliers, lenders or strategic partners, a positive outcome depends on preparing well before the meeting and keeping a cool head during it. Remember that negotiations should establish trust, credibility and a foundation for future business. FMD can help you get ready for negotiations by identifying reasonable financial parameters and integrating them into your negotiating strategies.
The Right Financial Guidance Can Help Maximize Your Business’s Potential
Financial information is the foundation for every important business decision. Whether your goal is to improve cash flow, launch a new offering, hire additional workers or expand into a new market, accurate data enables you to make decisions confidently. An experienced advisor can help prepare this data and ensure your business is poised to capitalize on growth opportunities.
Organized records
Many business owners don’t realize they need bookkeeping support until problems surface. Are you frequently behind on invoicing, scrambling to prepare tax returns or struggling to reconcile bank accounts? If so, it may be time to seek help.
Professional bookkeeping keeps your records organized. It also provides reliable information that allows you to make informed decisions throughout the year and avoid costly mistakes. Accurate books improve tax compliance, too, and make it easier to apply for financing when you need additional capital.
Key reports
Once your bookkeeping’s in order, review key financial reports regularly. At a minimum, you should always be familiar with your business’s most recent:
Profit and loss statement,
Balance sheet,
Cash flow statement, and
Accounts receivable and payable reports.
When prepared carefully, these reports can provide early warning signs if they show, for example, that revenue or cash flow is slowing. Rather than reacting to financial surprises, you can address issues before they become major problems.
Sustainable growth
Growth creates exciting opportunities, but it also introduces challenges. Before investing in expansion, get a clear picture of your business’s current financial position. Decisions made without accurate information can strain cash flow or increase debt beyond what you can comfortably support.
On the other hand, reliable records allow you to confidently evaluate and pursue your next objective, such as acquiring another business, launching a new marketing campaign or expanding your facilities. Each option may carry financial and tax consequences that deserve careful analysis.
Better cash flow
Even profitable businesses can struggle if cash isn’t managed effectively. Late-paying customers, for instance, are a serious problem when your business needs to pay its own employees, office rent and suppliers on time. Without careful planning, temporary cash shortages can interrupt critical operations.
In addition to suggesting best practices for billing and collections, your financial advisor can help you identify any seasonal trends and develop realistic cash flow forecasts and cash reserve targets. Financial professionals can also recommend ways to control expenses and how to determine when outside financing makes sense (and where to find it).
Informed decisions
Successful businesses don’t grow through guesswork. They flourish because owners thoroughly understand their financial position and use that knowledge to make informed decisions. By working with FMD, you can reduce risk and prepare your business for long-term success.
How to Build a Stronger Workforce with a Strategic Onboarding Process
U.S. Bureau of Labor Statistics data shows that hiring has slowed in recent months. Even so, thousands of people continue to start new jobs, and every new hire represents a significant investment of time and money for organizations. With labor costs remaining a concern for many businesses, it’s more important than ever to help employees become productive members of your workforce as quickly as possible. An effective onboarding process can help you do this.
Start before day one
Successful onboarding begins before a new hire’s first day on the job. Once a candidate accepts your job offer, explain what to expect before, during and after the first day. A welcome email can provide practical details, such as where to park (for on-site employees), when to arrive and to whom to report. Whenever possible, give new hires digital access to employment forms, benefit information and introductory training materials so they can complete administrative tasks in advance and arrive better prepared.
The first day should combine orientation with a personal welcome. Designate a specific person — ideally the employee’s direct supervisor — to guide the new hire through a structured agenda. For on-site positions, ensure the workspace is fully set up with the necessary equipment before arrival. For remote employees, verify that technology and systems access are working properly. In either setting, introduce new employees to teammates and other key colleagues to help them begin building relationships immediately.
Investing in career development
Supervisors play a central role in helping new employees succeed, but experienced peer mentors can make the transition smoother. A mentor can answer day-to-day questions, explain workplace norms and help new hires navigate your organization’s culture. These informal connections often build confidence and accelerate integration into the team.
Training should begin immediately after orientation and continue beyond the first week. Avoid taking a one-size-fits-all approach or assuming employees will simply learn as they go. Instead, develop structured training programs tailored to each role, with clear learning objectives and opportunities for ongoing professional development. Employees who receive meaningful training are generally more confident and productive.
Continuous improvement
Many organizations assume their onboarding programs are effective until negative feedback reveals otherwise. Like any critical business process, onboarding should be regularly evaluated and refined.
Encourage supervisors to check in with new hires throughout the onboarding period, which typically lasts one to two weeks. These discussions should emphasize active listening and honest feedback. If your organization uses peer mentors, ask them to share observations as well. The insights you gather can help you identify weaknesses and improve your onboarding program.
Welcome, prepare and support
Employees who feel welcomed, prepared and supported from their first day on the job are more likely to become enthusiastic contributors and deliver stronger long-term performance. Contact FMD for help evaluating your onboarding process, measuring its return on investment and aligning it with your business objectives.
Stress Testing: A Smart Way to Manage Today’s Business Risks
Business owners today face no shortage of uncertainty. Persistent inflation, evolving trade policies, cybersecurity threats and ongoing geopolitical tensions have made planning challenging. Although it’s impossible to predict every disruption, you can better prepare by evaluating how your business would respond under adverse conditions. One proven approach is stress testing, which helps organizations identify vulnerabilities before they become costly problems.
Some background
Stress testing gained widespread attention in the banking industry following the 2008 financial crisis. Regulators continue to require large financial institutions to evaluate how they’d perform under severe economic scenarios.
However, for most businesses, stress testing doesn’t need to be as complex as a bank regulatory model. Approach it as a practical planning exercise that uses realistic financial assumptions to answer questions such as: What would happen to operating cash flow if a major customer left, borrowing costs rose or a key supplier increased prices? By modeling the financial impact of potential disruptions, you can make more informed decisions and improve long-term planning.
Identify major risks
To launch your own stress-testing initiative, identify your business’s primary risk factors in the following categories:
Operational. These affect the day-to-day functioning of your business and may include supply chain disruptions, technology failures, cyberattacks, natural disasters, employee shortages and human error.
Financial. Risks related to cash flow, access to capital, interest rate fluctuations, fraud, customer credit issues and changes in borrowing costs all deserve attention.
Compliance. Such risks stem from evolving tax laws, industry regulations, data privacy requirements, labor laws and other government mandates.
Strategic. These relate to competitive pressures, changing customer preferences, market disruptions, technological innovation and broad economic shifts.
As you evaluate each risk category, be specific. The more realistic your assumptions, the more valuable the exercise will likely be.
Meet with your team
Once you’ve identified the most significant risks, meet with your leadership team and trusted professional advisors to discuss each scenario. Consider not only the likelihood of each event but also its potential financial impact and your business’s ability to respond.
The goal is to develop practical strategies to reduce exposure and improve resilience. For example, if your business operates in an area susceptible to natural disasters, a comprehensive disaster recovery and business continuity plan is essential. Other vulnerabilities may be less obvious. If your business depends heavily on a single executive with specialized knowledge, stress testing can highlight the importance of succession planning.
Value of continuous improvement
Risk management isn’t a one-time exercise. Economic conditions, customer behavior, technology development and regulatory requirements continue to evolve, creating new challenges and opportunities. So review your stress-testing program at least annually and update it whenever significant changes occur within your business, industry or in the broader marketplace.
Although stress tests won’t eliminate uncertainty, they can help your business respond more confidently when unexpected events arise. FMD can help you analyze potential scenarios and develop reliable financial projections. Contact us to discuss how stress testing can strengthen your risk management strategy.
Open the Door to Investment with a Winning Pitch Deck
Whether you’re launching a start-up, expanding into different markets, developing a new product or pursuing a business acquisition, attracting investors requires more than a good idea. Investors want to see a compelling opportunity supported by solid financials and a realistic growth plan. One of the most effective ways to communicate all of this is with a digital presentation known as a pitch deck. Here’s how to build yours.
Short and sweet
Most investors review dozens of investment opportunities each year. So your pitch deck should capture their attention quickly by explaining what your business does, why it matters and why now is the time to invest.
Early in the presentation, lay out:
Your business’s mission and long-term vision,
The problem your business solves,
Your unique value proposition,
The amount of funding you’re seeking, and
How investment will help achieve specific business objectives.
Keep it brief, with no more than 10 to 12 slides. You can share additional financial schedules and technical documentation later in the process.
Defining the opportunity
An effective pitch deck clearly defines the market opportunity. Be sure to explain the solutions you’re offering by using straightforward language and avoiding unnecessary technical jargon. And describe your target market using credible research and realistic assumptions. Include information about market size, customer demographics, industry trends and expected growth.
Next, discuss revenue generation. Describe your pricing strategy and business model, including whether you’ll pursue sales through subscriptions, direct sales, licensing or other channels. Talk about your marketing plans as well. Investors will want to know how you’ll build brand awareness and acquire and retain customers. Existing customer relationships, strategic partnerships, recurring revenue and a growing social media presence can strengthen your case.
People and financials
Investors often invest in people as much as ideas. Introduce your leadership team and explain why it’s qualified to execute your business plan. Highlight relevant industry experience and previous entrepreneurial success. If your management team has complementary skill sets, emphasize how those strengths work together.
Financial information should reinforce your story rather than overwhelm it. Use charts and graphs to illustrate historical performance, revenue growth, profit margins and future projections. Forecasts should be ambitious but grounded in reasonable assumptions and current market conditions. Investors also appreciate evidence that your business is gaining momentum. If applicable, include key metrics such as customer growth, recurring revenue, retention rates, strategic partnerships, product milestones and other measurable achievements.
Equally important is explaining how you intend to use the capital you’re raising. Break down how the funds will be allocated to, for example, hiring, expanding operations, developing products and purchasing equipment.
Focus on substance
Increasingly, entrepreneurs are using AI to develop pitch decks. AI-powered software can assist with design, organization and content suggestions. However, if you use AI, be sure to review all financial information and statistics to ensure accuracy and content to ensure personalization. Experienced investors can usually recognize generic or overly polished presentations that lack substance.
Be sure to contact FMD for other pitch deck suggestions. We can help you develop reliable financial data that strengthens your overall investment presentation, making you more likely to get to “yes.”
Building Bench Strength for Effective Succession Planning
Every business will eventually face leadership transitions. Whether key people retire, pursue new opportunities or become unable to do their job, your business must maintain continuity. Often, smooth transitions depend on “bench strength.” This refers to the depth of employees prepared to step into critical roles. Developing this internal talent pool is one of the most effective ways to support your succession plan and protect your organization’s stability and well-being.
Why it matters
Succession plans are only as strong as the individuals available to carry them out. Many organizations identify successors for specific positions. But what if a designated successor leaves your business or is unable to assume the role when needed? Bench strength enhances flexibility by preparing multiple employees to step into critical roles as circumstances change.
Cultivating your bench can reduce the risk of operational disruptions and help preserve institutional knowledge. Instead of launching a time-consuming external search if a vacancy arises, your business can promote qualified employees who already understand your culture, customers and strategic priorities. Internal promotions often accelerate leadership transitions while reassuring employees that advancement opportunities exist within your organization.
Deeper talent pool
To build bench strength, start by identifying promising employees and assessing potential leadership gaps. Regular performance reviews can help you evaluate employees’ skills, career aspirations and readiness for future roles. At the same time, examine upcoming organizational needs and determine which positions are essential for your business’s long-term success.
Leadership training, mentoring programs, cross-functional projects and job rotations can help employees gain experience beyond their current responsibilities. For example, a high-performing sales manager might be asked to lead a companywide initiative. A finance leader might participate in strategic planning discussions. These experiences broaden skills and prepare staffers for leadership responsibilities.
Connecting the two
Bench strength and succession planning are closely related, but they generally serve different purposes. Succession planning focuses on identifying and preparing specific individuals for key leadership positions. Bench strength, by contrast, emphasizes maintaining a broader pool of employees who can fill roles as business needs evolve.
The most resilient organizations integrate both activities. Your succession plan should ensure your business has qualified successors for critical leadership positions. Strong bench strength, meanwhile, provides the flexibility to respond to unexpected departures, organizational growth and changing market conditions. Together, these strategies help reduce talent gaps and support long-term business continuity.
Move forward confidently
Leadership transitions are inevitable, but disruption doesn’t have to be. Organizations that consistently develop internal talent are better positioned to manage change and maintain stability. When leadership transitions become necessary, a strong bench allows your business to move forward confidently, knowing capable successors are ready to step in and lead. For help building your bench and planning for succession, contact FMD.
Behind on Bookkeeping? Here’s How to Get Back on Track
Running a business requires juggling countless responsibilities. Not surprisingly, bookkeeping tasks often end up on the bottom of to-do lists. The good news is that falling behind doesn’t necessarily mean your financial records are beyond repair. With a disciplined approach and the right support, you can regain control.
Recognize the issue
Many business owners don’t realize how far behind they’ve fallen until they need, for example, to file a tax return or complete a loan application. Take notice if you:
Haven’t reconciled bank and credit card accounts in months,
Have unfiled tax returns or unanswered tax notices,
Are missing receipts or have incomplete expense records,
Are uncertain about cash flow or profitability,
Can’t generate accurate, timely financial reports, or
Spend significant time searching for basic financial information.
If these issues sound familiar, you’re not alone. Growing businesses often outpace the systems and processes that once worked well. Acknowledging the problem is the first step toward solving it.
Start with the basics
When recordkeeping lags and you try to catch up, it’s tempting to focus on everything at once. A more effective approach is to prioritize the essentials, starting with key financial documents. First, gather bank and credit card statements, invoices, payroll records, and tax filings. Organizing these records by month can make the cleanup process more manageable.
Next, identify which bookkeeping tasks are incomplete. For instance, you may need to reconcile accounts, categorize transactions, record outstanding invoices or update payroll information. Creating a checklist can help you tackle the work systematically and avoid overlooking important items. Technology may also help streamline the process. QuickBooks® and other accounting platforms can automate routine tasks and simplify account reconciliations.
Address tax issues promptly
If your tax filings or payments aren’t up-to-date, address the situation as soon as possible. Delays can increase IRS penalties and interest, as well as complicate administration.
Begin by determining which returns have been filed and which obligations remain outstanding. If you’ve received notices from the IRS or other taxing authorities, review them carefully and respond within the required time frame. This can help limit penalties and prevent small problems from becoming major ones. Accurate bookkeeping plays an important role here. If your records are current, it will be easier to prepare returns, substantiate deductions and respond to questions.
View cleanup as an opportunity
Updating records does more than fix past issues. The process can also provide valuable insight into your business’s current financial position and future growth opportunities.
Once your books are current, you’ll be better equipped to evaluate cash flow, monitor profitability and make informed business decisions. Clean books provide the foundation for reliable budgeting and planning. Updating records may also reveal opportunities to improve efficiency and focus your business strategy on the most profitable activities.
Ask for help
You might be able to address minor bookkeeping issues yourself, but more complex situations call for professional assistance. Don’t wait until the next tax deadline or business opportunity exposes the problem. Contact FMD. We can help you update your financial records and provide the timely, reliable information you need to monitor profitability, manage cash flow and grow your business.
Midyear is a Good Time to Update Your Business’s Strategic Plan
Strategic planning isn’t meant to be a one-time exercise. Your plan should evolve with your business — and the environment in which it operates. Regular reviews help ensure your business remains focused on the right priorities and positioned to take advantage of new opportunities.
Even if you can’t find time for extensive “big picture” thinking, try to conduct some form of active strategic planning at least once a year. Doing so will help you identify emerging challenges and evaluate progress toward short- and long-term goals. A fresh strategic plan also provides stakeholders with an up-to-date map they can use to orient decisions and measure outcomes.
Get going
Sometimes businesses procrastinate on new strategic planning because they’re busy pursuing current goals and are profitable enough not to mess with “the formula.” But more often, businesses delay it because a new strategic plan requires research they may not have time to conduct and fresh ideas that can be hard to generate. If you can’t commit to an annual review, don’t let more than three years pass without productively engaging in strategic planning.
If it makes the undertaking easier, you might want to seek professional assistance — for instance, to perform research, lead strategy sessions, model financial outcomes, identify potential risks and assemble strategic ideas into a workable plan. In addition to freeing up your time, professionals offer experience and objectivity. Facilitators can put attendees at ease, foster creative thinking and adhere to productive agendas.
Brainstorm without distraction
Retreats often facilitate strategic planning sessions. So consider whether an off-site location makes sense given your attendees and project ambitions. There’s potential for excessive spending and counterproductive distractions. But if you plan carefully, you can arrange a distraction-free experience that allows participants to freely brainstorm.
Your first session should review your business’s:
Mission (what it does),
Vision (where it’s going),
Current financial results,
Recent successes and setbacks, and
Future performance based on internal and external trends.
Next, come up with 1) several goals, 2) strategies for pursuing them and 3) metrics for measuring your progress. Some of these may be similar to existing objectives, action plans and measurements and may not require a lot of extra work. New ideas, however, should be thoroughly discussed and outlined.
To ease the pressure of strategic planning, avoid trying to do everything at once. If you can accomplish the three points mentioned earlier in one session, schedule a follow-up meeting to develop a timeline and assign responsibilities. That plan should be formally approved by your business’s owners before it’s put into action.
Helpful voices
Your employees can play an important role in helping your new strategic plan succeed. To the extent practical, involve ordinary workers in the strategic goal-setting process. This will help build engagement and instill a sense of personal responsibility for your plan’s success. When you communicate the final plan, be sure it includes realistic ways for workers and others to be involved.
FMD can help ensure your new plan is supported by sound financial analysis. For guidance on evaluating your business’s performance, identifying growth opportunities and facilitating planning sessions, contact us.
Summer’s for Vacation — Encourage your Workers to Take One
Ahh, summer! You’re probably looking forward to time off from work — anything from a long-anticipated trip abroad to a U.S. road trip to a “staycation,” where you might enjoy reading a good book with an iced drink in your own backyard. But not everyone takes a summer vacation. In fact, several studies say that only about half of Americans take time off in the warmer months.
Despite providing paid time off (PTO) as a fringe benefit, your business may also employ workers who don’t take holiday or sick days. This can be a problem for both workers who lose their valuable benefits and your organization, which may experience lower productivity and higher fraud risk. Let’s look at the problems and some solutions.
Too much time in
The 2025 FlexJobs Work and PTO Pressure Report found that 23% of U.S. workers didn’t take any days off in the previous year. Other surveys have shown that most employees leave at least some PTO unused at the end of the year. Depending on your business’s policies and applicable state laws, employees could lose unused PTO hours when a new calendar year begins.
Unfortunately, your business is also likely to suffer if workers don’t take time off. Overworked employees are generally more stressed, less productive and more prone to making errors. The primary reason workers don’t take time off, according to the FlexJobs survey, is that they feel their workload is too heavy. In addition, some employees fear that taking vacation time makes them look less committed to the job. This can result in poor morale across your organization.
Failure to take time off is a major red flag for occupational fraud, too. Employees engaged in fraud schemes typically decline vacations and time off for illness because they fear exposure if others fill in for them. For this reason, your business should consider requiring workers to take a minimum amount of PTO each year.
Encouraging time off
In addition to establishing an official PTO policy, supervisors should regularly remind their reports to schedule days off. To appease workers who worry about their workload, arrange for other employees or a temporary worker to fill in for them. You might want to tell them that taking accrued time off won’t negatively affect their performance evaluations. After all, the business will likely benefit when workers return from vacation refreshed and newly energized.
For supervisors to play this role, they’ll need access to running PTO totals — possibly through your payroll management system. You may also want to engage a third-party provider to send easily digestible wellness content and vacation reminders to employees.
Other strategies
If some of your workers always end the calendar year with unused PTO, you might want to consider revising your plan to allow them to carry over a certain number of days. Just understand that large amounts of carried-over PTO can add liabilities to your balance sheet. Also, know that some states (including California and Montana) place significant restrictions on PTO forfeiture, which might require you to carry over all or some of your employees’ unused balances.
Another option? Establish a PTO contribution program. These programs allow employees with unused vacation hours to convert them to retirement plan contributions. If you offer a 401(k) plan, it can treat these amounts as pretax contributions similar to employee payroll deferrals. Alternatively, the plan can treat the amounts as employer profit sharing. If your 401(k) plan doesn’t already include a PTO contribution arrangement, you’ll need to amend it. You must continue to follow the plan document’s eligibility, vesting, rollover, distribution and loan terms.
True cost
Contact FMD for details on creating and administering a tax-advantaged PTO contribution arrangement. We can also help you evaluate your PTO policies, determine the hidden costs of unused PTO, and recommend strategies that support both your workforce and your business goals.
Looking for Funding? Consider SBA Loans
If you’re seeking financing to start or grow a small business, don’t forget to look at loan programs through the U.S. Small Business Administration (SBA). Down payments, interest rates and borrowing fees are typically lower, and application requirements may be more flexible than you’d find elsewhere. Some SBA loans also come with counseling and education, which can be particularly valuable if you’re a first-time business owner. But you’ll want to pay attention to the details because SBA loans may restrict how borrowers can use the funds. Here’s a quick overview of some of the more popular programs.
Borrowing basics
The SBA guarantees, but doesn’t actually make, its loans. To obtain an SBA loan, you’ll work with a bank, community development organization or other financial institution.
Your business generally will need to meet a few criteria to qualify. For example, you generally must operate for profit in the United States or its possessions, and you must have tried to use other financial resources (including your own assets) before applying for a loan. Your business also may need to meet specific income or size criteria. And some types of businesses, such as lenders and life insurance companies, generally aren’t eligible.
Although you’ll negotiate your loan’s interest rate with your lender, it can’t exceed maximums established by the SBA. Rates are calculated from a base rate, such as the prime rate (what commercial banks charge their most creditworthy corporate customers), plus a markup. The markup depends on factors such as loan size, repayment terms and your business’s financial profile. Lenders can also charge fees — for example, packaging and legal service fees, as well as out-of-pocket expenses.
7(a) program
The SBA’s most popular offering is the 7(a) loan program. Fixed- and variable-rate loans of up to $5 million are available and can be used to buy real estate, buildings, equipment and furniture, and to refinance existing debt, among other uses. The SBA guarantees 85% of loan amounts up to $150,000 and 75% of loan amounts greater than that.
To qualify for a 7(a) loan, your business must fall within the SBA’s size standards. In general, this means your business is considered “small” within its industry. Depending on the industry, this may be expressed by either the number of employees or your annual revenue. You’ll typically repay the loan in monthly payments of principal and interest.
The SBA also has a 7(a) Working Capital Pilot program designed for growing smaller businesses. Loans are in the form of monitored lines of credit. Borrowers and their lenders receive one-on-one counseling with the SBA’s subject-matter experts.
504 program
The 504 loan program provides long-term, fixed-rate loans designed to help borrowers purchase major assets that help promote business growth and job creation. The maximum loan amount is $5.5 million. Your business should be able to repay the loan from projected operating cash flows, generally over a 10-, 20- or 25-year period.
Again, you’ll need to meet a few requirements to qualify for a 504 loan. Among them, your business’s tangible net worth must be less than $20 million, and its after-tax net income must have been less than $6.5 million during the preceding two years. 504 loans are available only through Certified Development Companies.
Microloan program
The microloan program is designed to help small businesses and qualified nonprofit child care centers establish operations and grow. The maximum microloan amount is only $50,000. However, the average microloan is for much less — $13,000. You can use these funds for everything from working capital to inventory to equipment purchases.
Interest rates depend on intermediary lenders (certain community-based nonprofit organizations), but they’re usually in the 8% to 13% range. The maximum repayment term allowed by the SBA is seven years.
How to apply
Most lenders ask for extensive information before they’ll lend a business money, and the SBA is no exception. For instance, to apply for a 7(a) loan, you’ll generally need to supply a current income statement, balance sheet and cash flow projection.
In some cases, you’ll also need to provide a personal financial statement. Owners with at least a 20% stake in the business may need to sign a personal guarantee. In addition, larger loans usually require some form of collateral.
Get guidance
The SBA’s website can guide you through the process of selecting the most appropriate loan program for your situation — or contact us for help. We can advise you on best practices when borrowing money, including calculating how much your business needs and how you’ll repay your loan.
What You Can Do to Protect Your Business from Rising Costs
For the 12 months ending in April 2026, the U.S. inflation rate was 3.8%, according to the U.S. Bureau of Labor Statistics. Prices for your business’s products, materials and other operating costs may have risen faster in recent months than you anticipated, making planning and forecasting challenging. How can your business counteract inflation? Start by making prudent cost-cutting decisions and acting swiftly when you spot opportunities.
First things first
Given that periods of elevated inflation are typically temporary, it can be tempting to assume inflation rates will fall in a few months. However, movements in inflation rates have been less predictable since the COVID-19 pandemic began. Waiting it out may work for some businesses, but inaction could also eventually lead to more difficult decisions. For example, delaying pricing adjustments could force you to make steeper increases later.
Although it’s always important to monitor expenses, frugal purchasing decisions become even more necessary when prices are rising. If raw material prices jump, consider whether new suppliers might offer discounts. If your cash flow and space can handle it, consider ordering some extra supplies and inventory to help mitigate the impact of future price increases. Also, review your business’s longer-term expenses. If a significant number of employees are working remotely, you might be able to reduce your office footprint or relocate to a less expensive part of the country.
Other ideas
Your ability to slash expenses and boost cash flow will depend largely on your industry and operations. But here are some ideas that most organizations can implement:
Assess the impact. Review the effect of inflation, product line by product line, to help determine whether you need to change your product mix. For instance, it may make sense to boost production or shelf space for items that will appeal to budget-conscious buyers.
Rethink prices. Few customers welcome price increases, but many understand the need for them. Be sure to communicate new prices before they take effect so customers can adjust their budgets.
Consider credit. If your business anticipates needing additional liquidity, determine if it makes sense to secure a loan or a line of credit now. Adequate cash can provide breathing room and enable you to take advantage of unexpected opportunities.
Monitor accounts receivable. If you see customers falling behind on their payments, act quickly. You may need to update your terms and even consider dropping some slow- or nonpaying buyers.
Act on the margins. Be on the lookout for small savings. Can you renegotiate your business’s mobile phone package? Is it possible to reuse packaging materials? Can you place a moratorium on overtime work? Little amounts can add up quickly.
Surviving and thriving
Probably the most important quality for business leaders navigating an inflationary period is flexibility. Be prepared to discontinue lines and strategies if you can no longer contain their costs. Know when to jump on an opportunity that could expand your reach. Remain open to new business partnerships. FMD can help by reviewing your financial situation and proposing measures that will enable you to survive — and even thrive — in today’s volatile market conditions.
What You Need to Know about Business Insurance
Given the many potential threats to your business’s assets, cash flow and human resources, which types of insurance products and how much coverage do you need? Some organizations pay for policies that don’t make sense based on their industry or operations. Others have inadequate coverage where risk may be significant. What about your business? It helps to first understand what’s available.
The basics
The most basic kind of business insurance is general liability. Essentially, it covers claims for bodily injury to third parties and property damage arising from business operations. For example, general liability typically protects your business if a customer slips and falls in your facility because someone failed to clean up a slippery floor. Or, in a more extreme example, it might cover the fallout if a piece of equipment explodes, injuring customers and employees and damaging the property you rent.
Other coverage related to and often included in general liability policies includes:
Product liability. This type of policy protects businesses against harm or injury caused by product defects. This coverage is especially important if you sell products that could potentially harm people, such as chemicals, electronics and automobiles.
Professional liability or errors and omissions (E&O). Sometimes general liability and E&O can be rolled into a single policy, but you might not need E&O. It generally applies to negligence when providing a professional service, including legal, engineering, consulting, accounting and architectural services.
Property. This is the business equivalent of homeowner’s insurance. It protects your organization against the cost of losses from factors beyond your control, such as fires and natural disasters. You might also need auto insurance if your business owns and operates vehicles.
Business interrupted
Even if you have general liability and property coverage, you may also need business interruption insurance. This coverage comes into play when a business must halt operations due to a manmade or natural disaster. So if, for instance, a fire forces you to suspend operations for weeks or months while making repairs to your facility, a business interruption policy could help you pay bills in the meantime.
Your operations might also be disrupted by a cyberattack or data breach. Cyberinsurance can help your business respond to losses related to hacking, ransomware attacks and compromised customer or employee data. Depending on the policy, coverage may include costs associated with business interruptions, data recovery, legal claims and regulatory response.
Key person insurance protects against another type of disaster: The sudden loss of a business partner or executive. If an owner dies unexpectedly, the policy can provide living owners with the cash to buy the deceased owner’s shares. Or it could help cover lost profits associated with a key person’s death or pay for the costs of replacing the key person.
Employee risks
Employment practices liability insurance (EPLI) is valuable to any business with employees, regardless of industry. Typically, it protects against violations of Civil Rights Act. EPLI coverage areas include employment discrimination, wrongful termination, sexual harassment and emotional distress. If such violations occur in your organization and you fail to take necessary remedial action, an EPLI policy can cover your defense fees and settlement costs.
EPLI may also cover wage and hour violations. These generally relate to a business’s failure to comply with the Fair Labor Standards Act, including on minimum wage and overtime rules.
Make informed choices
To make smarter insurance decisions for your business, you’ll need to determine which types of coverage fit your risks and how much protection is appropriate for your operations. An independent insurance broker who isn’t employed by a specific insurance provider can help you evaluate the options. Make sure your broker is familiar with any insurance requirements in your industry. Also talk to FMD. We can help you evaluate potential coverage gaps and manage business risk cost-effectively.
2 Retirement Plans for Small Businesses with Lean Budgets
Most business owners would like to offer their employees a 401(k) retirement savings plan with all the bells and whistles. But for small businesses with lean budgets and small staffs, offering such benefits may be out of the question. Fortunately, SEP IRAs and SIMPLE IRAs are less expensive and easier to administer. Might one of these tax-advantaged options work for your workforce?
SEP: Flexible and zero setup fees
Simplified Employee Pension (SEP) IRAs are individual retirement accounts you establish on behalf of each participant. (Self-employed individuals can also establish SEP IRAs.) Participants own their accounts, so they’re immediately 100% vested. If participants decide to leave your company, their account balances go with them. Most people roll their accounts over into a new employer’s qualified plan or traditional IRA account.
SEP IRAs don’t require annual employer contributions. That means you can choose to contribute only when cash flow allows. In addition, there are typically no setup fees for SEP IRAs. But participants generally must pay trading commissions and fund expense ratios (a fee typically set as a percentage of the fund’s average net assets).
In 2026, the SEP IRA annual contribution limit is 25% of a participant’s compensation, up to $72,000. That amount is higher than the standard 401(k) account contribution limit of $24,500 (in 2026). What’s more, employer contributions are tax-deductible. Meanwhile, participants won’t pay taxes on their SEP IRA funds until they’re withdrawn.
However, there are a few downsides to consider. Although participants own their accounts, only employers can make SEP IRA contributions. And if you contribute sparsely or sporadically, participants may see little value in the accounts. Also, unlike many other qualified plans, SEP IRAs don’t permit participants age 50 or over to make additional “catch-up” contributions.
SIMPLE: Easy and participant-friendly
Another possibility is to offer a Savings Incentive Match Plan for Employees (SIMPLE) IRA. As with a SEP IRA, your business creates a SIMPLE IRA for each participant, who’s immediately 100% vested in the account. Unlike SEP IRAs, SIMPLE IRAs allow participants to contribute to their accounts if they choose.
Other advantages of SIMPLE IRAs include:
They’re relatively easy for employers to set up and administer.
They don’t require your business to file IRS Form 5500, “Annual Return/Report of Employee Benefit Plan.”
You don’t need to submit the plan to nondiscrimination testing.
Participants pay no setup fees and enjoy tax-deferred growth on their account funds.
Participants can contribute up to $17,000 annually in 2026.
Participants age 50 or over can make catch-up contributions of up to $4,000 in 2026 ($5,250 for those ages 60 to 63).
Participants can contribute more to a SIMPLE IRA than to a self-owned traditional or Roth IRA. But SIMPLE IRA contribution limits are lower than limits for 401(k)s. Also, because contributions are made with pretax dollars, participants can’t deduct them. They also can’t take out plan loans. Then again, making pretax contributions does lower their taxable income. Perhaps most important is that employer contributions to SIMPLE IRAs are mandatory, regardless of your cash-flow situation. However, in general, you can deduct contributions as a business expense.
SIMPLE Roth IRAs are available, too. Ask your financial and employee benefits advisors whether this might be a better option for your business.
Lower-cost options
If you’ve thought you can’t afford to offer workers a retirement plan, think again. In addition to SEP and SIMPLE IRAs, there are now some lower-cost 401(k) options available as well. FMD can review your budget, tax situation and benefit needs and suggest how best to proceed. Contact us.
Strategic Alliances: Collaborate Now, Possibly Combine Later
Even if you aren’t currently preparing to sell your business, you might want to think strategically about your eventual buyer. Sophisticated buyers won’t only look at your financials, they’ll also evaluate how your company fits into their long-term business plan. One way to strengthen current profitability and future exit options is with a strategic alliance.
Current and long-term objectives
Strategic alliances are structured in several ways, including joint ventures, revenue-sharing arrangements and co-development agreements. In some relationships, the two companies simply agree to work together on a particular project. Others involve long-term agreements, with the end game being a merger. Alliances can have set expiration dates or be renewed at intervals after they pass performance reviews. Among the many reasons companies pursue alliances are to leverage core assets, expand sales capacities and reduce operating costs.
Your company doesn’t have to enter into a strategic alliance to make it easier to sell one day. It may, after all, be performing well on its own. Instead, look at a potential strategic alliance as a near-term growth and expense-cutting mechanism with long-term benefits.
If you agree to an alliance, focus on financial and operational objectives, including achieving economies of scale. For example, by combining orders for everything from raw materials to office supplies, both partners may qualify for supplier discounts and reduce overhead costs. What about jointly purchasing capital equipment or upgrading both companies’ IT networks? Or you may want to find a partner to improve transportation logistics by consolidating warehouses. Another idea: Sharing intellectual property, such as customized software.
Keys to success
Your strategic alliance may require time and effort to get up and running. But if you’ve thoroughly vetted your partner and have a well-structured agreement in place, you’re likely to realize benefits. If you don’t, and the relationship becomes a drain on resources, take immediate action.
Some problems can be fixed. For example, it’s easy for alliances to drift from their original purpose. A partnership forged mainly to upgrade an IT system could wind up focusing on improving employee productivity instead — with mixed results. In this case, the partners could refocus and reinforce their alliance objectives. But if problems seem intractable, it’s usually better to terminate the alliance.
Profitable arrangements
Not only can strategic alliances be mutually profitable, but they can help both partners envision a permanently combined company. Alliances often begin informally or as short-term agreements that eventually lead to mergers when the companies realize their synergistic potential.
A successful prior relationship can smooth the merger process. Before joining a strategic alliance, companies typically conduct due diligence on one another. Financial and other conditions can certainly change between the initiation of a strategic alliance and the beginning of merger negotiations. But a well-structured alliance allows partners to keep tabs on each other. If one of the companies experiences leadership challenges or has trouble getting financing, the other is likely to know about it. Such knowledge can speed up the merger transaction process and simplify integration.
Exercise in discipline
Regardless of whether your business eventually merges with a strategic partner, the discipline of building and managing your relationship can strengthen operations and expand your market reach. It can also enhance financial transparency and position your business more favorably to potential buyers. Contact FMD for help honing your financial objectives, vetting possible alliance partners and selling your business.
How to Ensure Your Business Really Owns Its Intellectual Property
Whether it’s a trademark, copyright, patent, trade secret or other piece of IP, its ultimate value to your business depends on you owning it. Without airtight agreements with employees and independent contractors, these workers may claim that the IP they research and develop belongs to them.
Some companies learn they don’t actually own IP assets only when they’ve engaged a business valuation professional in preparation for a sale, or when employees leave and take IP with them. To prevent unexpected ownership issues and costly disputes that could create risk and diminish your business’s value, take action now.
What the law says
Federal copyright law and the laws of most states mandate that employees and independent contractors who invent products, write materials and develop software may be the owners of the IP rights. In fact, in some states, employers may only have a limited license to inventions created by employees, even if they were invented “on the clock” or using company resources.
Fortunately, you can help prevent ownership disputes, including litigation. All states permit businesses to require workers to sign copyright, IP and invention assignment agreements, subject to applicable legal limitations.
Work with an attorney who specializes in IP to draft a standard agreement based on your state’s laws. It should require the employee or contractor to turn over or legally “assign” IP rights to your business. In addition, it should mandate that the employee or contractor assist your company’s legal counsel in securing and enforcing these rights. It’s also important to apply these agreements consistently and enforce them in practice, because inconsistent use can weaken your position in disputes and merger and acquisition due diligence.
Go a step further
When you hire workers (or when you require them to sign an agreement), make sure you ask them to identify all pre-existing inventions that are to be excluded from the agreement. For example, they may have patented inventions on their own or created trademarks for previous employers. Then request that they give up claims to any new inventions that are related to your business activities, even if the inventions are developed during their nonworking hours.
For example, let’s say your company develops 3D printing software. Your agreement should prohibit your code writers from creating related design tools at home and then selling them to your competitors. If, however, an employee working on her own time and with her own resources develops software that’s unrelated to your business, that IP likely belongs to her. Some states, such as California, prevent employers from claiming such IP or asking employees to sign away their rights to it.
Legal and financial advice
Ultimately, safeguarding IP isn’t a passive exercise but a deliberate business discipline that requires foresight, structure and legal precision. Although an attorney’s guidance is critical for this purpose, financial advisors also play an important role. FMD can help you address IP ownership issues before you sell your business or before workers leave your employment. We can also help identify financial and tax considerations of IP. Contact us for more information.
Starting a Business? 5 Things You Need to Know
So you’ve decided to start your own business — congratulations! Many new owners open a business to be their own boss and chart their own course. However, along with those benefits come some complications compared to being someone else’s employee. Planning and budgeting are critical, and you’ll have plenty of new tax compliance responsibilities.
1. It starts with funding
Starting a business takes money. To help you gain access to bank loans and attract equity investors, write a formal business plan that tells your backstory, describes your products and services, and highlights your market research. The plan should explain how you intend to use any capital you raise to grow the business and, of course, why your business will be successful.
Because your new business won’t have a financial track record, you’ll need to create a projected balance sheet, income statement and statement of cash flows using market-based assumptions. Lay out multiple scenarios — including best, worst and most likely results — and identify which variables are critical.
2. Accounting matters
When you set up your business, separate its finances from your personal finances. Commingled financial records can cause tax and financial reporting headaches as your business grows.
Next, understand that lenders and investors will want to know whether your business is meeting performance targets. Establish an accounting system to record transactions and generate financial statements that can easily communicate results to stakeholders. We can recommend cost-effective software solutions.
Initially, you may elect to use the cash-basis or income-tax-basis method of accounting to simplify matters. Indeed, it’s often easier for start-ups to maintain one set of books for both tax and accounting purposes. However, if you have an accounting background, you may opt for accrual-basis accounting from the get-go.
3. Tax planning is a must-do
Many start-up ventures aren’t initially profitable. But it’s essential to start planning for taxes from the beginning. One factor that will affect your company’s tax situation is its entity structure. Depending on your tax, legal and other needs, you might choose a sole proprietorship, partnership, limited liability company (LLC), S corporation or C corporation.
Know that C corporations pay tax at the entity level, then the individual owners pay tax when they receive dividends. This results in double taxation. To avoid this, you may want to consider a “pass-through” entity. Pass-through income generally isn’t taxed at the entity level. Instead, it passes through to the individual owners (along with the business’s deductible expenses) and is taxed on their individual returns. However, the top rates for individual taxpayers are higher than the flat 21% rate for C corporations — though the qualified business income deduction for pass-through entity owners can help make up for that.
Another major tax issue to understand is the appropriate tax treatment for your start-up expenses. The timing and amount of expenses are key to determining what’s immediately deductible and what costs must be capitalized and amortized over time.
New businesses need to plan for other taxes, too. You may need systems in place to file and pay property, sales and employment taxes. Look into initially outsourcing these administrative tasks to third-party specialists so you’ll have time to focus on daily business operations.
4. Estate planning now can save tax later
Another smart consideration if you’re starting a business is estate planning. New entrepreneurs often solicit help from friends and family members. In exchange, founders may make gifts of ownership interests while the business’s fair market value is relatively low, removing potential future appreciation from their estates.
A business valuation professional can help determine the fair market value of your new business based on objective market data and financial projections. Proactive estate planning at this phase can save significant tax dollars over the long run as the company’s value grows.
5. Employees may want equity
Most start-ups operate lean, with only a few employees — each wearing multiple hats. Early employees may agree to forgo high salaries for equity-based compensation, which can help your start-up avoid a cash crisis while still attracting top talent. What’s in it for staffers? Business equity can grow into a valuable financial asset. Plus, employees who own equity may feel more invested and, thus, enjoy greater fulfillment.
There are several types of equity-based compensation to consider, including outright transfers of ownership interests in the business, profits interest awards (partnerships, LLCs and S corporations) and restricted stock or stock options (C corporations). We can help you determine the best form of compensation.
Thoughtful execution
Launching a successful business requires more than vision alone. It also calls for thoughtful execution, informed decision-making and ongoing attention to financial and operational details. Approach start-up matters with strategic foresight by consulting legal, financial and tax advisors. FMD can help you get off the ground.
Considering Layoffs? Try these Alternatives First
It’s every business owner’s least-favorite task: laying off staff. But sometimes, layoffs are unavoidable. Labor costs are a significant line item on most companies’ income statements, and reducing your workforce can potentially help restore stability if your business hits choppy waters.
On the other hand, many costs are associated with staff reductions. These include severance payments, legal expenses, reduced productivity, reputational risk, and the future expense of hiring and training new workers when your company’s finances improve. In fact, you may first want to consider less risky alternatives that reduce or delay the need for layoffs.
Last-resort thinking
Think of layoffs as your company’s last resort. For example, is it possible to first trim some perks? Eliminating unnecessary travel, executive seminars, holiday parties and staff retreats may provide some budgetary breathing room. Provide managers with reasonable cost-cutting targets and completion dates. At that point, you can reassess your company’s situation.
Pruning employee benefits can also yield cost savings. Ask your HR staff to scrutinize benefit use and think about discontinuing the least popular offerings. Just be careful about removing benefit options. Your business may be subject to certain contract terms and other legal obligations, particularly when it comes to retirement and health care plans. Consult knowledgeable benefits experts and your attorney as needed.
You might also need more drastic cost-cutting measures, such as temporarily furloughing workers or implementing a four-day work week. Or you may be able to trim salaries. Would a 5% across-the-board wage reduction solve your business’s financial troubles? Could you offer stock options to compensate and incentivize affected employees? Just make sure that any sacrifices you mandate are shared. For instance, if you lower hourly wages and sales commission rates, your senior executives should also forgo any bonuses.
Beyond workers
Be sure to look beyond employees for solutions. You might be able to restructure your business to enhance performance or change your business form to improve tax efficiency. And if you haven’t already, sunset:
Unprofitable products and services,
Obsolete production lines, and
Duplicative efforts.
You may be able to sell equipment you no longer use or nonstrategic assets such as real estate. Also consider divesting or spinning off any noncore business lines.
Act strategically
If, despite all your best efforts, staff reductions appear inevitable, act strategically. Take advantage of any attrition and look at employees who may be willing to take early retirement. To protect your company’s public face, try consolidating back-office operations before terminating customer-facing employees.
We know how heart-wrenching such decisions can be. So contact FMD to review your financial situation and suggest ways to enhance cash flow, manage budgets, deal with debt and restore your business to good health without taking any unnecessary actions.