From Greg's Head

Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

This best practice tip is brought to you by Phillip Harper, writer for Microsoft and PKF Texas.

In our last segment on the question of when to add staff, we reviewed 4 key areas that suggest a positive answer. But two other issues rise when you make that decision. 

Full Time versus Temporary

Once the decision to hire is made, the question is whether to hire a full-time employee, a temporary worker or a subcontractor.

If the work is part of the core service of the company, it makes sense to hire [a full timer], Harper says. But if it's more of a secondary thing, or not as important to the customer, it's better to subcontract because you could reduce expenses.

In the case of entry-level support personnel, some companies use temps to cover short-term needs and then end up hiring them for full-time positions. The try before you buy scenario.

Competition with big businessesWhile it can be true that small companies have difficulty competing against major corporations in the area of benefits, workers interested in emerging businesses may have other areas of greater interest to them. Some folks may be looking for real world experience and the increasing pool of skilled workers on early retirements can add depth to your bench very quickly.

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Merry Christmas to all of my readers! I hope today finds you healthy, happy and with loved ones.

The blog will return January 3^rd. See you in the New Year!

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Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

I am often asked on when, and how does as organization begin to look for new employees to join their company. In addition, the economy is pretty hot right now in Houston, so finding good employees can be a difficult challenge. 

Entrepreneurs trying to navigate their ship through the economic waves may not have spent much time wondering about whether to add new employees. However, as the economic recovery continues, they may want to start thinking about it.

But it raises a simple question: How can a small-business owner know when it's time to add staff?

Phillip Harper suggests, “You need to add workers if:

1. The amount of overtime pay is increasing. Aside from spending issues, your workforce may be nearing burnout
2. Your backlog of sales is (or may soon be) growing.
3. Your business’s billing multiplier has risen above the norm. To get the billing multiplier divide your net revenue by your direct labor costs. Check your industry average against your actual results and make adjustments accordingly.
4. Your debt is at a level that allows you to assume additional risk.

Solid advice on all fronts.

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Sheldon H. Eveloff, CPA, CISA, CITP, is Partner-in-Charge of Goldenberg Rosenthal LLP’s Management Consulting Services Division. He can be reached at seveloff@grgrp.com.  Goldenburg Rosenthal LLP is a member of PKF North American Network (PKF NAN).

Each year, the members of the AICPA’s Information Technology Section vote on the top technologies affecting the accounting profession and technology consulting. One of the most important is information security, which has been defined as the “hardware, software, processes and procedures in place to protect an organization’s systems, including firewalls, antivirus protection, password rearrangements, patches, and locked facilities, among other areas.”

Many employees play important roles in information security. Executives develop and approve policy, technology personnel implement it, and end-users follow it. Information security is a team effort; if anyone drops the ball, the entire organization suffers. Most if not all, security mistakes result from ineffective or unenforced information policy, inadequate system controls, or poor education and awareness of end-users and technology personnel. Effective security requires coordinated effort and heightened awareness.

Security policy is at the heart of any information security strategy, representing the objectives from which all security procedures are derived. Formulating effective security policy requires knowledge, time and effort.

Effective information security also requires commitment on the part of management. Management’s commitment is communicated by development of sound information security policy; implementation and enforcement of policy and procedures; effective resource implementation; workforce education; and continuous focus on information security issues. The routine discussion of security issues, in meetings and regular e-mail reminders on the importance of information security, sends a clear message to all employees that information security is important.

Too often, executives and managers pay lip service to information security, authorizing reactive short-term fixes assigning untrained personnel to security tasks, and failing to deal with the operation aspects of security. Unfortunately, most business executives and many technology professionals do not have sufficient knowledge or awareness of the issues at stake, so prudent executives often enlist the help of professional information security specialists.

Business risks underscore the need for management to regularly review its information security policies and procedures, as well as funding. Failure to properly resource an information security strategy will eviscerate policies and procedures, and lead to security failures. Adequate resourcing is necessary for an information security strategy to be effective. Technology personnel require training in security procedures for servers, workstations, and network devices, as well as training on the latest security risks, threats, and developments. End-users, too, must be educated on security issues and policies. 

Employee education and awareness is the most important of all information security measures. Awareness comes from education, organizational commitment and focus, enforcement of information policies, and a proactive technology staff. Employees should receive ongoing training on common security risks encountered in the workplace, what risky activities to avoid, and when and how to report suspected problems. The employer must include a policy on computer use in its employee manual, recognizing that employees are the first line of defense in securing information assets. Both the Electronic Communication Privacy Act and the U.S. Patriot Act make it unlawful to monitor any activity without a usage policy.

The first step toward solving a security risk is recognizing that a business has one. Monitoring the security and health of the information technology infrastructure has become an ever-increasing challenge. There are many areas that need to be addressed in a security plan to provide a comprehensive and scalable security solution that is forward-looking, while fitting into a complete technology plan. Since it is impractical to address everything, each company should evaluate its own set of potential liabilities and develop a unique blend of controls within its architecture.

We CPAs are intricately involved in the flow of information within a business, and have become the logical choice for evaluating and recommending information security strategies. Be prepared to offer a comprehensive overview of security threats when asked. 

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Looks like I’m ahead of the curve again. The December 11, 2006 issue of Information Week  has an article  on “intelligent phones” capable of allowing the user to read and edit Excel, Word and PowerPoint files. The scheduled roll out for this business intelligence software from Cognos, designed for Blackberries is “early next year.”

Sound familiar?

If the author of the article had read my December 4^th blog, she would know that Cingular already offers a phone that does pretty much everything she listed.

We already have cameras, internet, and email built into our phones. So, what’s in your phone? 

With Christmas rapidly approaching, did you ask “Santa” for the latest and greatest phone or pocket pc? Is that even something you would want for Christmas?

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Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

One of the most important steps any entrepreneur should take is to protect the intellectual property of your company.

Securing an intellectual property attorney is the first step. The attorney will be able to provide the advice and the resources needed to file a trademark application with the U.S. Patent and Trademark office.

Trademarks protect words, names, symbols, sounds or colors that distinguish your goods or services from those manufactured or sold by others. 

Some of the benefits of registering and protecting your intellectual property include:

• Notice to the public of ownership of the trademark;
• The exclusive use of the trademark; and
• The ability to pursue legal action concerning the trademark in the court system.

Taking the time to protect your intellectual property will safe guard you in the future from other companies trying to infringe on your rights as an entrepreneur. For more information about obtaining patents or trademarks, visit www.uspto.gov.

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Accounting Today has named Microsoft Dynamics NAV one of the top 100 products of 2006. 

This is the third year in a row Dynamics NAV (formerly Navision) has been on the list.

Dynamics NAV has been a very successful product for us and I’m glad Accounting Today recognizes its value and is willing to recommend it. 

Click here to view the rest of the list.

What products would top your company’s list? Are there any products you think are missing from Accounting Today’s list? What products are you willing to recommend?

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I’m proud to let everyone know that PKF Texas has been recognized as one of the fastest growing accounting firms by CPA Practice Management Forum. 

Ranked 19 out of 100 companies, PKF Texas reported a 29.1 percent growth in net fees for the 2005 calendar year. 

The list is compiled by Public Accounting Report, and published in CPA Practice Management Forum. It includes a variety of distinguished firms from across the U.S. with growth in net fees ranging from 11.7 percent to 131 percent.

Our inclusion on the list is the result of the hard work and dedication by our great team and the great clients we serve.

Congratulations to everyone!

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Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

If exporting internationally is a part of your business, you have most likely heard about changes to the federal income tax laws repealing many exporter benefits. Despite the repeal, there are still several tax benefits available for exporters.

One export benefit called Interest Charge – Domestic International Sales Corporation or IC-DISC, is still available to closely held export companies. 

IC-DISC is an export incentive vehicle which effectively allows exporters to defer a portion of their export income from current federal income taxation.

There are several key ways IC-DISC can help your business depending on how much of your income is export-based:

1. It can minimize double taxation on a portion of export income
2. It can reduce your overall effective tax rate
3. It can help you redeploy cash into your business to create wealth

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Every year Inc. Magazine names the entrepreneur of the year. This year it is Ken Hendricks of ABC Supply, the nation’s larges wholesale distributor of roofing, siding and gutters. Click here to read the whole article. 

In the article he offers some great advice. The point that resonated with me is, “Whatever you do, do the best you can and never set a limit on how far you can go.”

This advice can be applied to both your professional and personal lives. The entrepreneurs I meet through the Aggie 100, FastTech 50 and various other events, all have followed similar advice. 

If you don’t take pride in your business and believe you can succeed no matter the obstacles in your way, you aren’t setting yourself up for success. 

Ken Hendricks is like many “serial entrepreneurs” I’ve met, taking the lessons learned and the successes from one business and using that knowledge in another business venture.

How have you overcome obstacles to run a successful business? Were obstacles easier to overcome when you were 100% dedicated to the venture? What advice can you give to other entrepreneurs?

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I think I may have found and answer to the Crackberry, at least capability wise. The Cingular 8525 pocket PC. It does pretty much everything but wash my car. Click here to read about the full capabilities of the phone.  

One of the best features is the ability to access and edit Word, Excel and PowerPoint documents. You can’t do that on the Crackberry! 

When you access the internet, the quality is great and you can actually read the information you need to read.

The phone itself is fairly streamlined. It’s not as clunky as the Crackberry and similar devices.

Now that I have one, I can just hear my sons now when they come home from school for Christmas break, “Dad, that’s really cool. When are you getting me one?!”

It still doesn’t solve the connectivity problem that comes with being a Crackberry owner, but it definitely makes things more fun.

Have you found a viable alternative for your Crackberry? If you don’t have Cingular, does your phone company offer something similar?

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Note: Running most Fridays in FromGregsHead.com, this is a continuing series of inventory control tips by Jon Schreibfeder. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

Last week we talked about forecasting for inventory management. While most distributors use an average of past usage, we’ve also discovered that an average of past usage is just one element of a good forecast formula.

In fact, comprehensive forecasting considers four elements:

• A weighted average of past usage
• An optional trend factor
• Possible collaborative information from customers and/or salespeople
• Identification of the proper time frame for the forecast, also known as the forecast horizon

Accurate demand forecasts are a critical factor in achieving effective inventory management. If you do not have good estimates of future usage, you are forced to overstock in order to maintain a high level of customer service. This is the equivalent of adding "fat" to your warehouse.

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