Family Businesses See Growth Ahead, But Talent Acquisition and Succession Planning Are Still Troubling Issues

According to an article on the Small Business Trends website, “Family Businesses Gear Up for Growth, But Stumbling Blocks Remain,” optimism for future growth has increased. According to the article 93% of American family businesses feel confident about future growth prospects. The data comes from Price Waterhouse Cooper’s Third Annual Small Business Survey.

Another interesting finding is that over 75% of family business owners plan to pass their business on to the next generation, up from 55% from two years ago. But two issues can challenge prospects for growth and transition. One is difficulty acquiring talent. The other is lack of a documented and updated business succession plan.

FINDING THE RIGHT PERSON FOR THE RIGHT JOB…

Hiring the right person can be a difficult thing to do, especially if a business seeks people with unique skills or a set of skills that few people hold.  Talent acquisition is expensive for all businesses. And it can also be risky.

When a small business brings in key employees, it usually gains a valuable team player and contributor. But it could also unwittingly bring in a predator and eventual competitor.

Such an employee will have access to much of the businesses’ proprietary information. Such proprietary information can include business processes, customer lists, vendor lists, pricing sheets, and other unique and valuable information.

Small businesses (and large organizations) can protect themselves with properly drafted employment contracts, confidentiality agreements and covenants not-to-compete. And all of these documents can be contained in one agreement.

SOMEDAY, (SON OR DAUGHTER), THIS WILL ALL BE YOURS…

Most family business owners wish to pass on their business to their children.  Some business owners know that their children have no interest in the family business, but do want to pass on the value of the business to their children. In either event, a transition plan must be put in place. This succession plan involves estate planning, tax planning, and sometimes transitioning the business or an outright sale to outside interests.

AND THEN THERE ARE THE BUSINESSES OWNED BY MULTIPLE SIBLINGS OR CLOSE FAMILY MEMBERS…

One of the jokes the Author remembers from law school was an alternate (albeit prejudiced) name for Business Organizations class was “Family Law for (entrepreneurial ethnic and religious group).” It was a stereotype joke, but there is a hint of truth in the joke. Small business law, in many ways, is “family law” for business-owning families. Transitioning a business from one generation to another where the business is owned by siblings or close family members should be carefully planned to avoid disputes that can paralyze the business, provide that the business will remain in the family, and provide financing mechanisms to ensure that the remaining family members can fairly compensate the exiting family member. And on a more human level, to keep money from breaking families apart.

Clear business succession planning saves money, jobs, sometimes taxes, and hard feelings.

If I can be of service to you in helping you with any of the issues raised above, please call me at 260.755.0873 or email me at feightnerlawfirm@gmail.com.

 

 

FORT WAYNE BIZ LAWYERS BLOG GIVES HB 1170 A “DO PASS” RECOMMENDATION

State Representative Kathy Huerer of Columbia City and House District 83 has proposed a valuable piece of legislation for Indiana employers and workers. The proposed legislation has had a committee hearing and now moves on to the full house with a “do pass” recommendation.

HB 1170 would allow existing businesses to draw upon Training 2000 funds to upgrade the skills for current workers of existing businesses. According to the Fort Wayne Journal Gazette, “Lawmakers from region press ideas for new laws” 1.20.13, Huerer states that to tap Training 2000 funds businesses must add jobs or make capital improvements. Rep. Huerer thinks this law will help existing businesses that are struggling with worker skills gaps.

And, as the Author notes, by improving the skills of existing workers, productivity will increase, margins may rise, the business may expand, and wages may increase.  Run the table.

It is ironic that we often focus our efforts on attracting new enterprise and sometimes forget the firms that are chugging right along, spending funds in the community, paying workers and sponsoring Little League teams.

Updated HIPAA Final Rule Issued

As some readers may know, the Author holds an LLM in healthcare law and has spent much of his legal and professional career as a healthcare attorney and HIPAA Privacy, Security and Transactional Standards Consultant. He even knows what HIPAA stands for.

In fact, the Author spent almost five years with HIPAA as his primary focus.

The Author may be showing his age, but remember back to Garrett Morris on the original SNL cast and his english-challenged baseball player character, Chico Esquela. Chico had a signature line, "Baseball... been berra berra good... to me."

So, for what it is worth, "HIPAA been berra berra good.. to me."

Below is an article from the American Health Lawyers Association and the Author gives full credit to the AHLA for the content.

If anyone has any questions about the rule, please contact the author. But give him some time to wade through a few of the 563 pages. Reading all 563 pages of regulations and comments is his pennance for spending five years of his meagre life on one freakin' law.



HIPAA Final Omnibus Rule: More Protections for Patients, Expanded Liability for Covered Entities and Business Associates By Trish Markus*
On January 17, 2013, the Office for Civil Rights of the U.S. Department of Health & Human Services (OCR) issued its long-awaited final rule modifying the Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy, security, enforcement, and breach notification rules pursuant to the Health Information Technology for Economic and Clinical Health (HITECH) Act. To be published in the Federal Register on January 25, the final rule becomes effective on March 26, 2013, and compliance will be required by September 23, 2013.
At 563 pages, the final rule addresses four major topics:

1. Revisions to numerous provisions of the HIPAA privacy and security rules (and conforming changes to the HIPAA enforcement rule);
2. Substantial revisions to the HIPAA enforcement rule incorporating the HITECH Act's increased civil monetary penalty tiered structure;
3. Significant revisions to the breach notification rule; and
4. Modifications to the HIPAA privacy rule required by the Genetic Information Nondiscrimination Act.

A few highlights of the final rule include:

• Until the September 23, 2013 compliance date, covered entities and business associates must comply with the breach notification requirements of the HITECH Act in accordance with the interim final rule.
• The determination whether breach notification is required has moved from a subjective analysis focusing on the risk of harm to the individual to a more objective assessment focusing on the risk that the personal health information (PHI) was compromised. The final rule effectively shifts the burden of proof to the covered entity or business associate: on and after September 23, 2013, an impermissible use or disclosure of PHI will be presumed to be a breach, unless the disclosing covered entity or business associate demonstrates there is a low probability that the PHI was compromised. Under this new standard, breach notification is required only if it is determined that probability of compromise is higher than "low." This determination should be evaluated based upon:
  • The nature and extent of the PHI involved, including the types of identifiers and the likelihood that the information may be re-identified;
  • The unauthorized person who impermissibly used the PHI or to whom the PHI was impermissibly disclosed;
  • Whether the PHI was actually accessed or viewed; and
  • The extent to which the recipient, if a covered entity or business associate, took appropriate action to mitigate the breach.
• A covered entity now may combine individuals' conditioned and unconditioned authorizations for research into a single authorization, so long as the authorization specifies which research components are conditioned and which are unconditioned and clearly permits individuals to opt in to the unconditioned research activities.
• Research authorizations no longer need be study specific; rather, they now may be used for future research, so long as the authorization describes such research purposes sufficiently to allow the individual to reasonably expect that his or her PHI might be used or disclosed for future research.

The final rule also:

• Makes business associates and subcontractors who use PHI in performing duties for covered entities and business associates directly liable for complying with many of the HIPAA privacy and security rule requirements;
• Confirms that a covered entity or business associate is liable for violations due to the acts or omissions of an agent acting within the scope of agency, and notes that the federal common law of agency is the standard for determining the covered entity's or business associate's responsibility; and
• Provides that most health plans may not use genetic information for underwriting purposes.

The Indiana Legislative Session is almost Comedy Hour for Lawyers and those with a Sense of the Surreal ...

Many of you have probably heard the old saw about rather than the Indiana Legislature being in session for sixty days every two years it should only be in session for two days every sixty years. I disagree, if only for the comedic effect.

Senate Bill 0436 makes it more difficult for a contractor, subcontractor or material supplier to assert a mechanic's lien on residential real estate. It does this by shortening the time notice and recording time from 60 days to ten days.

Contractors, subcontractors, suppliers and remodelers should take close note of this proposed law and contact their trade associations and colleagues. And if anyone has any questions about this proposed law, feel free to contact the Author. For free.

BUT ON THE LIGHTER AND MORE SURREAL SIDE...

Limited immunity for bowling centers? Probably not enough to save this dying industry, but here goes:

Senate Bill 468 provides a very limited and sort of comical immunity for bowling centers.

"Grants civil immunity to the operator of a bowling center for injuries caused to a bowler who slips or falls in the bowling center due to the presence of a substance on the bowler's shoe that was acquired outside the bowling center and tracked in."

"Acquired Outside and Tracked in." What little kid, big kid, or dumb dad has not tracked in stuff? And what little kid, big kid or dumb dad has not been lectured on the virtues of wiping off their shoes before coming inside?

I guess immunity is one way to address the scourge of acquired outside and tracked in stuff. But if I ran a bowling alley, I would care less about liability and more about making the dirty-shooed scofflaw mop up his mess made in my bowling alley.

IMPORTANT DISCLAIMER: The author has nothing against bowling. In fact, his team was runner up in the Junior High Bowling League.

IF IT IS WINTER IN INDIANA, THE LEGISLATURE IS SESSION-STILL NOT ENOUGH SNOW TO SNOWMOBILE

There are numerous blogs that track new legislative proposals such as Massons Blog.

One proposal merits discussion for several reasons. It is SB88 The law would be an unprecedented change in the Indiana legal system. It would basically turn Indiana into a "Loser Pays" court system. Since the inception of this nation, we have employed the "American System", where absent a statute or contractual provision to the contrary, each  party to a lawsuit pays its own fees.

This is contrast to the "English System," where the loser pays the winner's attorney fees.

Such a change to the American legal system have been discussed, but never seriously considered.

SB88 was authored by Senator Mike Deplh of Carmel. Delph has introduced several of Pence's legislative agenda. Whether SB88 is a part of the Pence agenda is an open question. Delph claims that Pence people asked him to introduce it.
The Pence campaign, is taciturn about the measure and has not embraced the proposal as part of the Pence agenda.

New Governor-No New Business Regulations (at least for awhile)

From Indypolitics.org

Lt. Governor-elect Sue Ellspermann says the first order of business in the Pence administration is a moratorium on new business regulations.

However, Marcia Oddi of the Indiana Law Blog, writes that this "moratorium" is not new for incoming governors.

What Does It Pay?

Lots of people are happy in their jobs and a stable career. Nice work if you can get it. The lifetime job that our grandparents received for their years of loyalty is now just a reminiscence. Lots of reasons, not enough time and space to address it here.

So for some, out of personal interest or quiet desperation, look to become their own boss and start their own business. Of course, that begs the next question.

"What business should I get into?" I approach the question from several directions. First, don't do what is not currently working. A good guide to what isn't working can be found on Craigslist under the "Business" section. The average Joe loves pizza, but the pizza business does not love the Average Joe. There are plenty of pizza restaurants and equipment for sale on Craigslist. Another common item is screen printing equipment. Small town bars are also in great supply and low demand.

A better guide is looking at profit margins. Scott Shane has an article on Small Biz Trends.
He has a list of the most profitable and least profitable businesses grossing under five million dollars. The data was assembled from five years of recent data.

Source: Sageworks Inc.

Mr. Shane draws a few obvious conclusions from the lists. First, education and advanced training do pay off. The top earning firms involve professional, scientific or technical expertise.

The bottom firms have much lower barriers to entry, and the margins are accordingly lower. Competition keeps the profits down.

Remember, though, these are just averages. So there will be outliers in most every industry.

But then again, maybe we should just follow our hearts and dreams. In the short run, we may just break even.

And in the long run, as economist Lord John Maynard Keynes noted, "we are all dead."

Welcome to the Fort Wayne Biz Lawyers Blog

Hello World. (IT geeks will get this reference.)

Welcome to the Fort Wayne Biz Lawers Blog. I had hoped to name it "Fort Wayne Business Lawyers Blog," but that title had been taken by someone. So Biz it is...

About me and about this blog. My name is Rob Feightner and I am the principal attorney at the Feightner Law Firm located at 327 E. Wayne Street, Suite 100, Fort Wayne, IN 46802.

I concentrate my practice in corporate law, healthcare law and estate planning.
  

I graduated in 1988, cum laude, from the Indiana University McKinney School of Law. I also hold an LLM degree in healthcare law from Depaul University. I have been published in numerous legal and business journals on various legal issues.

WHAT IS THE BLOG ABOUT AND WHY READ IT?

The blog will be topical and timely. It will address local business issues, state and national issues, and important legal issues that affect business and business owners. And it will use humor and satire to make some of its points.

WHAT THIS BLOG IS NOT.

It is not a teaser that describes legal horror stories and exaggerated and remote risks, provides little valuable information, and then ends every paragraph with "Call big law firm lawyer for assistance on this matter."

And it is not a newsletter that is "private labeled." Some law firms purchase generic newsletters that address legal matters and then put their name in on the top of it and send it to their clients, prospective clients and attach it to their web page.

WOULD I LIKE YOUR BUSINESS?

Of course. My driving vision and greatest desire is to help my clients make good legal decisions, create profitable opportunities, and steer clear of lawsuits. More simply put, I want to help my clients make more money and acheive their business and personal goals. And I have the experience, knowledge and street smarts to deliver.

So again, Hello World.

Rob Feightner

Feightner Law Firm

www.feightnerlawfirm.com

feightnerlawfirm@gmail.com

260.755.0873