Category

Business Consulting

We lead businesses during challenging times

By | Business Consulting, News

We have seen our world change overnight. Forced to embrace a new sense of normalcy, this is a time of uncertainty when businesses need deep experience and flexibility.

Warren Whitney serves clients in the areas of Strategy, Finance/Accounting, Human Resources, and Technology/Operations. We provide fractional leadership to successfully transition businesses during disruptive times.

Here is how we can help during times of crisis:

Finance and Accounting:

  • Develop financial models
  • Manage cash flow
  • Create budgets
  • Provide financing guidance
  • Optimize working capital
  • Contain expenses

Human Resources:

  • Guide through the new legislative & DOL compliance
  • Plan and implement furloughs or lay-offs
  • Develop business continuity plans
  • Create internal and external communications

Strategy:

  • Provide real-time business strategy to reduce risks
  • Position for the future
  • Adapt business to remain viable and thrive

Technology and Operations:

  • Identify and manage risks
  • Manage internal system changes
  • Provide leadership assistance

Contact us for a no-cost conversation to explore how we can help you and your company. 804.282.9566

We Make Potential Happen.

 

 

March 2020: Learning how to operate in our new business world

By | Business Consulting, News
During the COVID-19 global health crisis, we are forced to adapt to a new way of life. Warren Whitney is committed to serving our clients to guide them through these challenging times. Our firm’s business operations continue and our team has the technology to work effectively remotely. Our priority is to protect the health and safety of our employees, clients, and their families while maintaining a consistent level of service for our clients and businesses in need.
The team at Warren Whitney has compiled their thoughts on how to start thinking strategically to best navigate through these uncharted waters.
DEVELOP A MULTI-LAYERED FINANCIAL PLAN. You need to understand the financial implications and to act quickly. What happens if business reduction lasts for weeks? Or longer? Consider various “what-if” scenarios. Inquire about your business interruption insurance. Do you have an existing policy with dread disease coverage? Be sure to review the following:
1) Expenses – by line item and due date
2) Cash flow – How much cash do you have on hand? How much do you need?
3) Accounts receivable and collection efforts
4) Accounts payable — be in communication with your vendors regarding delays
BEWARE OF HACKERS AND CONSIDER CYBER SECURITY INSURANCE. With companies quickly moving to remote work environments, hackers are aggressively looking to exploit any flaws. Be diligent and don’t click on links from unknown sources. It is not too late to talk to your broker about getting insurance for cyber security or social engineering policies.
REFER TO YOUR COMPANY “EMERGENCY OR DISASTER RECOVERY PLANS”. This should include policies regarding:
1) Remote work.
2) Who is “essential personnel” to adequately keep the business running.
3) Paid time off and how it can be handled. Employees can file for unemployment
if their office is closed and they are not getting paid time off. They do not have
to be in a terminated status to file for unemployment.
4) Allowing employees to stay home if they are scared, at-risk or uncomfortable
at work.
REMOTE WORK IS DIFFERENT FROM OFFICE WORK. Employees need to set their own schedules and be able to deal with different distractions (e.g. kids, phone calls, etc.). Don’t underestimate the change and potential impact. Clearly communicate who employees should call with questions or issues, during and after work hours.
THINK CREATIVELY. In these uncertain times, you may need to be creative. This will mean different things for different companies. Consider unique ways you can make your business stronger.
BRING THE WORK YOU DO TO THE DIGITAL FRONTIER. How can your business adapt to offer services digitally? For example, on-line teaching classes, or offering webinars. The goal is to keep your business top of mind.
CONSIDER CLOUD ACCOUNTING SYSTEMS. To allow for accounting data to be easily accessible, consider cloud-based accounting systems. In cloud computing, users access software applications remotely though the Internet. Remember to ensure adequate security protection.
KEEP WORKING. Unless you have been asked not to work at all (e.g., some non-exempt positions), keep working, most likely from home. Utilize smart tools and practice healthy habits. Limit social engagement and leverage technology.
REMEMBER THE BASICS.  
1) Password protection and current anti-virus systems are critical for remote devices,
 even if they are owned by the employee and not controlled by the company.
2) Companies need to consider whether remote users will be able to print or store
any confidential information on their laptops or Home PCs. Tools are available that
can prevent downloading or printing of any information from personal devices.
EMBRACE SCREEN SHARING, AUDIO/VIDEO CONFERENCING, AND REMOTE ACCESS SOFTWARE. There are many software options to choose from; some are paid services, but several are free. Here are examples of systems that are commonly used:
-Zoom
-Microsoft Teams
-Skype
-Google Hangouts
-TeamViewer
-Join.me
-GoToMeeting
-Web Ex
-Slack
-VPN Connections
-UBER Conference
-Chrome Remote Desktop
-Windows Remote Desktop
If you have any questions or seek further clarifications on these items, please call us at 804.282.9566. Warren Whitney is available to evaluate your new operating environment. Our fractional assistance and project work can help you think through decisions. We can put together cash flow projections, manage HR issues, and devise a strategic plan. We Make Potential Happen.

 

 

December 2019: A CEO’s Guide to Secure Financing for your Growing Business

By | Business Consulting, Finance & Accounting, News

Author: Stephanie Ford

Good news/bad news: Your business is expanding and achieving projected growth. The rush of growth is exciting, but it comes with a new challenge – access to capital to maintain momentum. In any credit market, financing can be tricky to obtain. You might already know this first hand — have you applied for a commercial loan and been rejected? Feeling anxious and unsure how to move forward? Here are steps to best prepare for your next meeting with a commercial banker.

Before joining Warren Whitney, I spent 12 years as a commercial banker. The better prepared a business owner was for the request, the more likely they would receive financing.  Owners that came to me with a binder chock full of financial statements, detailed reports, and a strategic business plan were impressive. Entrepreneurs that provided few concrete materials and simply shared a stream of consciousness of their ideas gave me little to work with. How to position yourself to get funding for your business is critical in today’s credit markets. Preparing a request for financing should be taken seriously, and good preparation will yield better results. Here is a framework for thinking about your approach.

  1. Think hard about why you need to borrow. Specifically identify the purpose and develop a business case for the need to borrow and repayment.  The best way to do this is to prepare monthly cash flow projections of sources and uses of cash.  This prediction of needs and surplus will help to identify how much you need to borrow and how quickly your business can repay the loan.  The purpose of your borrowing need will also help to determine what type of loan is best for your company, such as a revolving line of credit for working capital needs or a term loan for permanent improvements to real estate or equipment purchases.
  2. The more complete a package of information you can provide to the bank, the better. If you have a business plan, share it with your banker.  In addition to 3 years of financial statements and tax returns, also include any other key reports that you use to run your business.  This may seem excessive, yet even routine reports such as an accounts receivable aging and accounts payable aging aid in giving the banker insight to your customer management and diversification.  Be sure to share any key metrics that are valid for your industry, such as inventory turns, job costing reports, days to market, customer returns, utilization rates, etc.  Providing organizational charts and competitive industry details is also valuable.
  3. Just as important as preparing your loan request package, give serious evaluation to the bank and banker you want to work with. Financial institutions vary widely in strength, size approach and focus.  Consider what is important to you: branch convenience, technology & services, commercial focus & approval process, legal lending limit, or ability for the bank to grow with you over time, etc.  Think about whether these needs are best met by working with a large national institution, a strong regional player, or a small community bank.  Once you have a sense of the type of institution that would best fit your business, research to determine the best local contact at that bank for you.  Most commercial banks have several bankers in one department with a manager above them. Finding the right person and personality for you to build a long-lasting relationship with can make all the difference in the growth of your business over time, particularly through the tough years.

The classic 5 C’s of Credit has been an excellent guide for many over the years on the borrowing process. If you can imagine yourself in the shoes of the banker, thinking through their concerns, it will help you prepare your request and business case.

Character

During the entire request process, the banker is also evaluating your character to try to determine if you would be a trustworthy borrower.  So be sure to have your personal finances in order as well.  Complete a detailed personal financial statement (any bank can provide you their form), know your credit score, and clear up any incorrect items with the credit bureaus. Provide background about your relevant experience and track record of profitability and repayment ability. This can also include any prior company experiences. Most of all, be forthcoming with both the good and any downside to your experience.  Bankers never like surprises.

Capacity

You should know that the bank will be examining your financial statements and then calculating certain financial ratios. Two of the most critical ratios are leverage and debt service coverage. Leverage is measured by debt/net worth, and the lower the better.  While the target varies per industry, a good guideline is under 2:1. Cash flow is a measure of income/debt payments or more specifically EBITDA/(prior year’s current maturities of long term debt + interest expense).  It is essential that this ratio exceeds 1.2:1.0, no matter your industry.  The higher the better as you want to show the bank you have sufficient cash flow to service your debt along with a cushion for good margin.

The key takeaway: it is good if you are able to calculate these in advance so that you can anticipate how favorably your numbers will be viewed in the eyes of the bank.

Capital

This refers to your net worth or equity value in the business which is determined by the value of your assets less the amount of your liabilities (how much you own minus how much you owe).   The higher your net worth, clearly the better.

Note: negative net worth is a red flag to the bank and a sign you may still be at the level of borrowing from friends and family or other non-traditional sources such as factoring receivables or venture funding.

Collateral

After the bank examines your cash flow repayment ability, they then look to collateral.  Consider your business assets and personal assets you have available to offer. This may include real estate, investments, accounts receivable, inventory, equipment, and even your personal residences.  How large and liquid are they in relation to the loan you are requesting?  The reality is, they should be larger than your loan request as banks discount the value of most assets and only lend 40%-80% against most assets.

Conditions

Since our economy has been strong for many years, this is a great time to position you and your company for a bank partner – one that will stand with you through the tougher times that may be ahead. However, if you have encountered any difficult spots in your business in the past few years, address them upfront.  Prepare to tell the story of your business and how you worked through the challenging times. Different banks may also have different tolerances for different industries.  This may be based on the performance of the industry overall, the bank’s experience in that industry or their amount of current exposure to that industry.  Ask about their preferences to find a better match and increase your success rate. Remember, no industry was untouched in the “great recession.”  If you were operating your company then, how you faced those challenging times (or any others since) will be insightful.

Be aware that in the technology-driven and cost-conscious banking world, many financiers have moved to automated underwriting and credit scoring for not only personal credit needs, but also for commercial lending in certain cases.  Generally speaking, the smaller a loan request it is (and the larger the bank), the more likely it is to be subject to automated underwriting.  And the larger the loan request and with more complex the companies and legal entities, then it is more likely to be underwritten by a banker or analyst who takes the time to know you and your company’s story.

Navigating financing strategy in today’s market can be complex.  To put your best foot forward, much preparation is needed.  Seek the guidance of an advisor(s) for input into your request and positioning.  Warren Whitney’s team of Fractional CFO’s can be a valuable resource in this process. To learn more, contact Stephanie Ford at sford@warrenwhitney.com or 804.282.9566.

November 2019: Board Governance – Plan for 2020

By | Board Development, Business Consulting, News

Contributor: Janet Marsh

Perhaps you are familiar with the quote often attributed to Benjamin Franklin, “If you fail to plan, you are planning to fail.” There are no truer words when dealing with high-stake initiatives, such as board governance.

Now is the time to develop your board’s Plan for 2020 to reach a higher level of effectiveness. Good governance is a direct reflection on the performance of your organization, and these Top 10 Tips provide ways to develop a high-performing board.

  1. The Power of Relationships: Get to know new trustees and nurture the relationships with existing ones by meeting with them one on one at least once a year. Showing gratitude for their volunteer service will make them feel valued and enhance their engagement.
  2. Succession Planning: We all want to say goodbye on good terms and in an expected time-frame. The on-boarding and off-boarding of your trustees should align with the term limits established in your bylaws. It is recommended the same number of trustees rotate on and off each year (unless you are expanding or right-sizing your board). In collaboration with your Committee on Trustees, develop a multi-year plan to fill Board Officer and Committee Chair positions. Share this plan (when appropriate) with the trustees or nominating committee to create transparency.
  3. Reflect, Evaluate & Plan: In busy times, it can be difficult to evaluate the effectiveness of the past year. But feedback from an annual board assessment is worth its weight in gold and provides the opportunity to shape goals for the coming year. Trustees will also appreciate the opportunity to share their thoughts.
  4. Revisit Your Strategic Plan: Depending on where you are in the life cycle of your organization’s strategic plan, your board’s first meeting of the year should include a discussion on this topic to educate new trustees and refamiliarize existing trustees. During this review, benchmark your organization’s level of success in accomplishing the strategic goals, consider retiring goals that are no longer important or not achievable, and add new ones. During the year, progress on the plan should be a regular agenda item.
  5. Highly Effective Committees: Committees should be established according to your bylaws with ad hoc committees created as necessary. The committee chairs and participants should be finalized prior to the start of the new year and meet before the first board meeting to draft:
    • An annual Board Committee Charter inclusive of annual goals based on action items from the strategic plan
    • A meeting schedule for the year
  1. Fundraising: Trustees must know the financial commitments or other donor expectations before serving. These expectations should be clearly listed in the board handbook and discussed during the recruitment process. For example, make sure trustees know if they need to sponsor a table at the annual gala. Include language that trustees are expected to lead by example and make your nonprofit one of their top philanthropic priorities for the year through direct giving or by recruiting gifts from others.
  2. Maximize Board Meetings: Board meetings should be used to elicit meaningful dialogue and foster discussions that are conducted in a strategic manner. Assess the maturity level of your board to determine if a consent agenda (a technique that groups committee and other business reports into one consolidated agenda item) is appropriate. This will allow more time for meaningful and collaborative dialogue.
  3. Diversity, Equality & Inclusion: Focus on topics and priorities that permeate our society to remain relevant. Make this topic a movement by committing to furthering goals relating to diversity, equality & inclusion in an authentic manner through events, programs and/or board selection.
  4. Board Education: Building and maintaining a highly effective board is achieved by sharing a vision and continually educating trustees on good governance. Each year should begin with a board orientation to on-board new trustees and reacquaint existing trustees with information about your organization, the board and your industry. Carving out time during each meeting for an educational topic or planning an annual retreat are other ways to increase your board’s effectiveness.
  5. Critical Relationships: Yes, we’re circling back on relationships but with a new slant – never underestimate the power of the Board Chair and Executive Director’s relationship! As many of you may have experienced, when the relationship is strong, everything works beautifully, but when this relationship is strained, it can be a painful experience. Think ahead about the dynamics during the nomination and selection process. Equally important, foster strong communication channels by committing to regular conversations and in-person meetings.

Highly effective boards take time and effort to build. Now is always a good time to start!

……….

Janet Marsh brings strategic thinking, innovation, and passion to all she endeavors. She has a proven track record in developing highly effective teams by building on their strengths. Janet also has experience in board governance and has served on many nonprofit boards. She is a Director at Warren Whitney, holds a BBA in Finance and is a graduate of Leadership Center for Excellence in Arlington, VA. To learn more about board governance, email Janet at jmarsh@warrenwhitney.com or call her at 804.282.9566.

October 2019: The New Overtime Rule

By | Business Consulting, Human Resources, News

Contributor: Kevin Grey, Warren Whitney’s Human Resource Director

WHAT BUSINESS OWNERS NEED TO KNOW

On September 24, 2019, the U.S. Department of Labor (DOL) announced a final rule increasing the earning threshold to exempt executive, administrative, and professional workers from the Fair Labor Standards Act (FLSA) minimum wage and overtime pay requirements.

The new rule, effective January 1, 2020, raises the federal overtime exemption threshold from $23,660 per year ($455 per week) to $35,568 per year ($684 per week). This law was last updated 15 years ago.

To better understand the new overtime law, Warren Whitney’s Human Resource Director, Kevin Grey, explains:

  • The meaning of the new federal overtime rule
  • Ways to be cost-effective
  • How to communicate the change to affected employees
  • Penalties for non-compliance

 1) The meaning of the new federal overtime rule

This law impacts employees currently classified as salary exempt that are making over $23,660 a year and under $35,568 a year. For these employees, you will be required to:

  • Reclassify the employee as non-exempt (if appropriate).
  • Compensate the employee at time-and-a-half as overtime pay for any hours worked in excess of 40 hours a week.

Employers should analyze their salary exempt workforce in consideration of the new threshold and communicate any changes to the affected employees before it takes effect on January 1st, 2020. This is a good time to update your position descriptions as you conduct your review.

There are additional provisions under the final rule to consider:

  • The duties requirements for these employees remains the same.
  • Non-discretionary bonuses and incentive payments (including commissions) may be used to satisfy up to 10% of the new salary level requirement.
  • The annual salary level for classified highly compensated employees is being raised from the current level of $100,000 per year to $107,432 per year.
  • The final rule does not include automatic increases to the threshold.

2) Ways to Be Cost-Effective and minimize the impact on your balance sheet

 i. Pay Overtime as Necessary

If your employees typically work 40 hours a week and occasionally or seasonally work overtime, it might be advantageous to reclassify them as non-exempt. In this scenario, you would budget for overtime instead of raising their yearly salaries above the threshold. Limit workers’ hours to 40 hours a week. If possible, redistribute workloads to ensure that non-exempt employees remain within a 40-hour workweek.

ii. Hire Temporary Workers

To limit your non-exempt employees to a 40-hour workweek, you may find the need for the occasional temporary worker to meet business demands. Hiring temporary workers can be more cost-effective than either raising salaries to be above the threshold or paying overtime.

iii. Raise Salaries above the Threshold

If you have employees consistently working more than 40 hours a week and these employees are already being compensated at or near the salary threshold, it might be worth considering raising salaries above the $35,568 threshold. However, keep in mind that the employees’ duties must pass the Duties Test required by the FLSA. In the event of a DOL audit, the job description must support the exemption. If it is not within your budget to increase salaries, you will have to reclassify the salary exempt positions to non-exempt.

3) Be sensitive when communicating the change

There are employees who tie professional esteem to being salary exempt. If you determine that paying on an hourly non-exempt basis is more cost-effective for your business, be sensitive to the affected employees when communicating the changes.  Even if there is no change to their income or duties, they may perceive their now non-exempt position to have less professional status.

In Virginia’s particularly tight labor market, effectively disseminating information to your workforce is important to ensure your employees don’t feel slighted as your business moves to ensure compliance with new regulations.

 4) DOL Penalties for non-compliance under the FLSA

Penalties and sanctions for non-compliance with the FLSA are severe and aren’t a risk worth taking. In addition to the back payment of lost wages to all affected employees, willful violators may be prosecuted criminally and fined up to $10,000. A second conviction of violating the FLSA can result in imprisonment. Employers with repeated violations may be subject to fines of $1,000 per incident.

All businesses must comply with FLSA rules to not only avoid penalties and/or sanctions but to also protect their most important investment; their employees. Warren Whitney’s Human Resource professionals have hands-on experience helping organizations with HR compliance. If you have questions about the new overtime rule or other compliance-related issues, please contact Kevin Grey at 804.282.9566 or kgrey@warrenwhitney.com.

Learn more about Kevin Grey www.warrenwhitney.com/kevin-grey/

June 2019: Our clients share how we are MAKING POTENTIAL HAPPEN

By | Business Consulting

 

In celebration of our 30th Anniversary, Warren Whitney wants to recognize and thank our clients for the opportunity to become a trusted advisor and valued partner. We invite you to watch this video that speaks to the work we have done for a group of our clients.

We are grateful to Trinity Episcopal School, Luray CavernsChild Savers, and Frazier Quarry for sharing how Warren Whitney is Making Potential Happen.

April 2019 Newsletter: Warren Whitney is Celebrating 30 years of MAKING POTENTIAL HAPPEN

By | Business Consulting

 

Thirty years ago, Warren Whitney was founded with the goal to provide a greater impact to clients than traditional consulting. Pioneers in the industry, Scott Warren and Katherine Whitney created the fractional C-suite concept, a revolutionary idea that has gained traction ever since. While the firm has adapted over the years to changing environments, it has stayed true to the integrity of the business model:

Offering value-added, tailored solutions by partnering with our clients to earn trust and respect through our actions.

The firm’s unwavering commitment to being a trusted adviser and valued partner is part of Warren Whitney’s DNA. Cyndy Lowery, a Partner at Warren Whitney, explains: “We work to bring value to our clients every day by collaborating with them to offer tailored solutions. Our professionals make a difference by getting in the trenches with our clients. We don’t tell them what to do, we lead them through it. We routinely hear from our clients ‘thank you, you made a difference.’ ”

Warren Whitney is proud of the work they have conducted with over 800 clients during the past 30 years. As they celebrate this 30-year milestone, the team looks forward to serving you and your business to MAKE POTENTIAL HAPPEN.

Please enjoy this video about Warren Whitney to learn more about us.[/vc_column_text][/vc_column][/vc_row]

Warren Whitney named 2019 Best Places to Work in Virginia

By | Business Consulting

2019 Best Places to Work in Virginia

Warren Whitney was recently named as one of the 2019 Best Places to Work in Virginia. The annual list of the Best Places to Work in Virginia was created by Virginia Business and Best Companies Group.

This statewide survey and awards program is designed to identify, recognize and honor the best places of employment in Virginia, benefiting the state’s economy, workforce and businesses. The 2019 Best Places to Work in Virginia list is made up of 100 companies.

To be considered for participation, companies had to fulfill the following eligibility requirements:

– Be a for-profit, not-for-profit business or government entity;

– Be a publicly or privately held business;

– Have a facility in the state of Virginia;

Be in business a minimum of 1 year.

Companies from across the state entered the two-part survey process to determine the Best Places to Work in Virginia. The first part consisted of evaluating each nominated company’s workplace policies, practices, philosophy, systems and demographics. This part of the process was worth approximately 25% of the total evaluation. The second part consisted of an employee survey to measure the employee experience. This part of the process was worth approximately 75% of the total evaluation. The combined scores determined the top companies and the final ranking. Best Companies Group managed the overall registration and survey process in Virginia and also analyzed the data and used their expertise to determine the final ranking.

The final rankings will be announced at an awards luncheon on Feb. 1, 2019, at the Boar’s Head Inn in Charlottesville.

For more information on the Best Places to Work in Virginia program, visit www.BestPlacesToWorkVA.com