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January 2014

Fear the Family (and other related parties)

Joe Kristan is a CPA at Roth & Company P.C.

Iabiz 20140129Judging by income tax law alone, Congress seems to think that "The Sopranos" provides the standard business model for family financial transactions. The tax code is full of special rules that punish transactions between family members, on the assumption that they can't do business without trying to pull a fast one on their tax filings. You can't accrue a deduction to a cash-basis relative, for example, and you can't deduct a loss on a sale to family

A Kansas City entrepreneur recently learned about another related party rule, good and hard.  

Gary Fish started a successful tech company, FishNet Security, described on its website as "the No. 1 provider of information security solutions that combine technology, services, support and training." From 1998 the company was operated as an S corporation, a common tax structure under which the earnings of the corporation are taxed directly on the owner's 1040.

In 2004, he got an opportunity to get some cash out of his investment.  While the technical details were a bit convoluted, for tax purposes it came down to having his S corporation contribute the operating business to a new corporation; a private equity group contributed cash.  Mr. Fish received some stock in the new corporation, along with $9,698,699 of the private equity cash. 

The formation of a new corporation is normally tax-free.  Internal Revenue Code Section 351 allows taxpayers to exchange appreciated assets for stock without recognizing gain, as long as the contributing parties own 80% or more of the company after the transaction. But the tax law triggers taxable gain to the extent a taxpayer receiving stock also receives "boot" -- cash or other non-stock property -- in the deal.  

As with many tech companies, the value of the business was mostly in its intangible assets -- its "goodwill." The new corporation was treated as buying goodwill. The tax law says purchased goodwill can be amortized for tax purposes over 15 years. And here is where things went bad for Mr. Fish.

When "goodwill" is sold, the tax law normally treats it as a capital gain. An obscure part of the Code, Section 1239, can change that result. If you sell anything that can be depreciated or amortized to a related party -- things like machinery, buildings, and, yes, goodwill -- Section 1239 makes the gain ordinary. The idea is to prevent a taxpayer from selling something to a relative at reduced capital gain rates and then getting depreciation deductions against ordinary income, which is taxed at higher rates. This would not be very a attractive trick for goodwill, where the capital gain tax is paid right away while the deductions are spread over 15 years, but nobody ever said the tax law has to make sense.

Among the related parties affected by Section 1239 are corporations where a taxpayer owns over 50% of the stock value. While the capital structure of the new corporation was complex, the Tax Court judge determined that Mr. Fish owned more than 50% of the value of its stock. As a result, the $9,698,699 of "boot" gain recognized on the goodwill transferred to the new corporation was ordinary income, not capital gain.

In 2005, capital gain was taxed at 15%, while the top ordinary income rate was 35% (current rates are 20% and 39.6%; if the Obamacare surtax applies, both rates are increased by another 3.8%). Using those rates, Section 1239 increases Mr. Fish's federal tax bill on the gain from $1,454,805 to $3,394,545 -- $1,939,740 of unhappiness, if it isn't overturned by a higher court.  

Does this mean you can never do business with relatives without, er, sleeping with the fishes, tax-wise? No. But, like Tony Soprano, you need to be very careful doing so. You should work very closely with your tax advisor when engaging in finance with friends and family, including friendly family-owned businesses. Mr. Fish could give you about $1,939,740 reasons why.  

Cite: Fish, T.C. Memo. 2013-270

Building referrals begins with developing the right state-of-mind

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.


Referralmindset (1)Just do it. Who can forget Nike’s wildly popular ad campaign created in the late 1980s? Such a simple, yet compelling statement. But in order to ‘do’ there needs to be knowhow - a starting point, a calculated plan. This is especially true in regard to building your business through referrals. At Rocket Referrals I speak with businesses daily that have made the decision to get serious about a referral strategy - but to many, it is just a black hole. Therefore, I felt it appropriate to share a very simple concept that is essentially the starting point to any strategy to gaining more referrals. It begins with a mindset for you - the business - and that of your customers.

The Approach

Finding the right approach to gaining referrals as a business means understanding why it is that your customers refer you to their friends and family. I get it; businesses want more referrals for several reasons - to help others, and to drop more coins in their piggy bank. But customers really do not care about adding mass to your bottom line. They do care, however, about improving the lives of their loved ones. Therefore, as a business, it is paramount that communication with customers regarding referrals focuses on the reason why they refer. In other words, don’t make it sound like they are doing you a favor - rather that you want to do them a favor by providing awe-inspiring service. This is the referral mindset for you, the business.

The Tactics

A quick tip on how to put a positive spin on the language: make your customers feel like they are part of a growing community or family. Keeping it personal and exclusive will ignite their emotional spark plugs and motivate them to actively refer you. An example would be to send a welcome card with a message including “would love to grow our family” and “extend our hand to your friends and family, we will take extra care”.

The next step is to actively develop a referral mindset in the heads of your customers - right from the get go. Using language that conveys the significance of referrals for your business, subtly, yet consistently, will ensure that you are referred when the time is right. In this approach it is very important to do so by only playing on the emotional reasons why people refer (to help others) that I highlighted above. There are a several ways you can engage your customers that will be effective - and it starts right after they sign up.

Send a welcome email with a couple sentences explaining how your business values referrals and that they are important in growth. Emphasize that this growth is important because you love to extend your service to their trusted ones, to extend your family. This will convey the message that you are referred often and therefore must be doing something right. Follow it up by saying you trust they will find reason to refer you in the near future, because you care that much about what they think of you.

Find a reason to follow up with your customers as often as possible. Each time, give them thanks and let them know you are here to help with anything they need. Remind them that you are interested in extending your service to their loved ones. Over time, referring you will become second nature to your best clients.

Are your employees listening to customers?

Kelly Sharp is the owner of Heart of Iowa Market Place

I went into a local furniture store not too long ago and I was very surprised by the reception I received.

I asked the clerk about a new mattress and it was as much what she didn't say as what she did that made me cringe as a store owner.

She didn't ask what I was looking for. She didn't ask how much I wanted to invest or what was important to me about this purchase. In fact, she didn't ask anything. Instead, her first words were, "Our cheapest is over here."

Those words were a big disservice to everyone on both sides of the transaction. They failed to take the customer's needs into account and they certainly cost the business a great deal of money sale after sale after sale.

Her words might as well have been, "I don't really care what you want." And, the assumption that a customer wants the cheapest product is insulting on many levels.

Customers are looking for value. But value doesn't mean the lowest possible price.

As the owner of a specialty retail store, the Heart of Iowa Market Place in Valley Junction, I know customers are very savvy. They know that true value is much more than finding the cheapest products around. They know that product quality, where products come from and the ethics of the people who provide them are important.

Above all, consumers want products that solve their problems or meet their needs. They want retailers that will help them accomplish that goal and make them feel like they are listening rather than just trying to sell them something.  

To do that, you need to slow down, ask questions and listen. Are your sales people asking the right questions and listening to your customers?

-Kelly Sharp

Brewery brews up green

Rob Smith is a principal at Architects Smith Metzger

Each year the Committee on the Environment (COTE) of the American Institute of Architects selects a list of Top Ten  “green buildings.” This blog post continues my series looking at some of the projects to see what is cutting edge in green design.

The Pearl Brewery Building in downtown San Antonio repurposes a warehouse for a mix of living and retail spaces. A very green move was to add a floor within the high bay warehouse to double the density without affecting the site.

The largest solar array in Texas covers the 30,000 square foot roof and provides 25% of the building's electrical demand. Kiosks allow users to see how much electricity the solar panels are generating and the building demand.

The project also addressed the amount of rain water that usually runs off of large commercial parking lots. Impervious materials were removed and materials letting water through were added as well as bio-swales and wetlands. This creates ways for water to be absorbed and never make it to the storm sewer. Iowa needs to do more of this!

Pearl brewery 2The greatest visible idea was to repurpose many items from the brewery. Large beer vats became cisterns to hold roof water for watering the landscape. Smaller tanks became planters. Even old beer cans were used to decorate studio room doors. Rather than throw things away on projects, we can find creative ways to reuse them!

Next up are trends in sustainable design. Stay tuned.

Send your thoughts to rsmith@smithmetzer.com

How to treat your website like a client

Katie Stocking is the owner of Happy Medium LLC.

Your website is generally the first impression potential clients, employees, or prospects have of your company. It’s obvious the first impression is incredibly important so why don’t more people take time to make sure their website is the exact impression they want to give?

One way to ensure you are prioritizing, is to treat your website as if it was a client. You treat your clients with the highest regard right? So why not your website with these tips:

1)   Check in on it – Generally speaking, if you go a while without hearing from or reaching out to a client, the relationship isn’t going to go anywhere or do much for either party. The same goes for your website. If you set it and forget it, what positive actions can you expect from it? Make sure you are checking your website. Set it as your default homepage in your browser so that it opens up whenever you open your web browser. It’s a very simple way to be constantly checking what is there (and if it’s working!)

2)   Update it – It’s of course important in your relationship with clients to not only check in on them and catch up – you also want to make sure to update them consistently of what is happening with the job they have hired you to do. This is vital with your website content, perhaps one of the most important tasks. I just opened a website today that featured their “holiday specials” smack dab in the middle of their homepage. The holidays were weeks ago and it looks just plain ridiculous to be still promoting them. It seems (to me as a consumer) the business is not organized enough to present itself properly – so how can they be organized enough with the service or product I’m considering purchasing from them? Don’t make people wonder what is (or isn’t) going on behind the scenes at your business. (Remember, first impressions are everything!)

3)   Invest in it – Clients like to be invested in. It commits them to you because they aren’t only spending money with you; you are spending money to be better for them. It becomes a partnership. My company, Happy Medium, builds websites. We always work with clients the best we can to meet their budget and website goals. There’s an old saying that goes “you get what you pay for,” which could not be truer for websites. You should definitely invest in your website. I always tell clients to try and figure out how much/many of their products they would need to sell to pay themselves back for any investment in their website updates. Generally it’s not much, if you have a good website that is the most current technology; you’re going to get leads because of it. Spend the money to make sure it’s right. If you get multiple proposals and a company is significantly under others, find out why. More than likely they are developing old technologies, which won’t do you any good.

4)   Realize its value – Like your clients, (hopefully) your website, although ideally ever-evolving, is with you for a really long time. If you completely ignore the value and potential it has to your business, you are going to miss out on a lot of business. Just look at your own life and how you do business. More than likely for a large amount of your purchases you refer to the Internet, either to find an address, research a product, or find who carries a product. If you’re looking online, so are other consumers. The value of your website is tremendous. Treat it that way.

Action item: Visit your website right now and find something that needs to be updated. Do it – then tweet me because I want to see! Let me know if you have any questions! @interactivekate

--Katie

2014 Iowa Court of Appeals case addressing personal liability in an LLC

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Matt McKinney is an attorney at BrownWinick Attorneys at Law.

On January 9, 2014, the Iowa Court of Appeals published its opinion in Northeast Iowa CO-OP., n/k/a Viafield v. Joel Lindaman et al., No. 3-1058 / 13-0297 January 9, 2014 (Full Opinion Here), an opinion addressing member liability in an Iowa limited liability company (“LLC”).

While the opinion addresses several legal issues, of particular note is a portion of the opinion that covers whether the plaintiff, Viafield, could pierce an LLC’s corporate veil and hold the defendant LLC member, Mr. Joel Lindaman ("Lindaman"), personally liable for the LLC’s debts.

At the trial court level, Viafield requested the Bremer County District Court disregard the LLC's corporate structure and hold the individual defendant, Lindaman, personally liable for the company's debts. The district court, however, rejected Viafield's argument and refused to pierce the LLC's corporate veil and hold Lindaman personally liable. On appeal and before assessing Viafield’s legal theories, the Iowa Court of Appeals acknowledged an LLC’s corporate veil (i.e. shield of personal liability protection) may be pierced in Iowa upon establishing one of six different factors:

Iowa courts may disregard a corporation’s existence if (1) it is undercapitalized, (2) it is without separate books, (3) its finances are not separated from individual finances, (4) it pays an individual’s obligations, (5) it is used to promote fraud or illegality, or (6) it is merely a sham.

Viafield, p. 17 (internal citations omitted).  

One of Viafield’s many arguments for piercing the LLC’s veil and holding Lindaman personally liable was that the LLC “did not hold meetings and no minutes exist.”  Viafield, p. 18.  Citing black letter Iowa law, the Iowa Court of Appeals recognized that under the facts of the case, the LLC’s failure to hold meetings and lack of corporate minutes did not require the court to pierce the LLC’s veil of protection and impose personal liability upon Lindaman for the LLC’s debts:  

Because the statute [Iowa Code Section 489.304(2)] specifically provides the failure to 'observe any particular formalities is not a ground for imposing liability on the members' for company debts, we are not persuaded [to pierce the corporate veil]. 

Id.  As evidenced by the excerpt above, despite the LLC’s failure to hold regular meetings and despite its failure to keep corporate minutes, the Iowa Court of Appeals refused to pierce the LLC’s veil and hold Lindaman personally liable for the LLC’s debts. It is important to note that this opinion only addresses Iowa law relating to LLCs, not corporations, and that each case is factually unique.

To learn more about piercing the corporate veil and personal liability protections afforded under Iowa law, see the business law articles linked below:

(1)  As an Owner, am I Liable for the Debts of my Iowa Limited Liability Company?

(2)  Holding A Corporation's Owners Personally Liable - Piercing the Corporate Veil in an Iowa Corporation.

(3)  Are Shareholders in Small Family Businesses Personally Liable for Business Debts and Liabilities? 

Great stories make even better referrals

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

People love stories. Okay, not all stories, but the fun, exciting, intriguing, inspiring, or otherwise entertaining variety. Because of the delight people find in passing information to others, storytime happens everywhere. Around water coolers, in barber shops, saunas, bar mitzvahs, you name it. As a business, you want to find yourself slipping into as many of these situations as possible. This happens by having an interesting story yourself. One about you or your business that is worth talking about - something memorable that your promoters will not feel awkward plugging into a conversation.

We already know that superb customer service and excellent products are essential to landing positive referrals. Nobody, in their right mind at least, would recommend a bad experience to others. We got that. But more often than not, your customers’ friends and family are not always in need of your products or services. Therefore, it is important to find a way of popping up in as many conversations as possible with a story that is remembered, so that when the time is right, your phone rings.

Find an interesting aspect about your business or yourself that is worth sharing and reserve it for your customers. Tell it as a story - a narrative with an intriguing plot. This will provide your promoters with more beef when they recommend you to others. Rather than just telling their friends “I have a really good agent, he takes care of me” - how boring - they could boast “My agent really takes care of me, you know, he used to be a pitcher for the Iowa Cubs and chose writing premiums over the big leagues”. With stories told by your promoters, you become memorable and are recalled when your services are needed. You will also pave the way to many more conversations because you are no longer colorless to talk about and linked to different areas of discussion.

For those of you who don’t have a nasty curveball, it’s OK. There are many ways you can tell your story that is noteworthy, you just need to find a creative slant. The truth is, people love doing business with actual humans rather than companies anyway. All great businesses have an interesting history of how they began, so start there.

Another approach could be to create unique experiences for your customers that are not advertised. I remember doing business with an auto shop that specialized in rebuilding transmissions. The owner stood behind his work to the extent of actually signing his name on the transmission itself before handing the keys back to the owner. This was never advertised, just disclosed to the client after the work was finished. This type of behavior is subtle, yet interesting enough to pass on to others. These experiences will fuel your promoters with stories to pass on to their friends and family. After all, you are doing them a favor by giving them something fun to talk about as they refer you to others.

Lessons from the 2013 holiday shopping season

Kelly Sharp is the owner of Heart of Iowa Market Place

You'd be forgiven if you're a bit confused after reading all the stories about the just-concluded holiday shopping season.

Some previews warned of a "bleak" season. Some post-season stories trumpeted an overall sales increase of 2.3 percent. Others reported foot traffic was down and that retailers only scored sales increases with over-sized discounts. And, who can forget the two biggest stories: the hackers who stole the credit card information of millions of customers and the last-minute flood of online orders that swamped UPS and Fed Ex and left so many shoppers hopping mad.

I have to admit the 2013 holiday sales season was a great one for my business, The Heart of Iowa Market Place, and I know a lot of other boutique retailers also did very well. There are a few lessons to be had, starting with the fact that when a lot of other retailers are zigging smart small retailers were zagging.

First, we didn't listen to those bleak forecasts. We focused on doing what we do best: Offering a unique experience that builds customer loyalty and keeps folks coming through the door. That's Lesson #1. (Remember to increase your odds of success with a well-executed marketing plan throughout the year.)

We recognized that because we give them something they can't get anywhere else, we weren't forced to offer ridiculous discounts to get people through the door. That keeps our profit margins healthy and keeps us in business. Everybody wins on that deal. That's Lesson #2.

We didn't make crazy promises about overnight delivery on Christmas Eve -- or even the day before -- like some of the "bigs" did. We stuck to our rule that you never promise what you can't deliver. That's Lesson #3.

As for Lesson #4, online sales are going to get bigger and bigger. There's just no two ways about it. So, no matter how big or small you are, you have to make sure every day that your online sales system is secure as Fort Knox.

Savvy retailers are already thinking about ways to have an even more successful 2014 holiday season. These four lessons are great places to start.

-Kelly Sharp

Office buildings can be super green too!

Rob Smith is a principal at Architects Smith Metzger

Each year the Committee on the Environment (COTE) of the American Institute of Architects selects a Top Ten  “green buildings”. This blog post continues my series looking at some of the projects to see what is cutting edge in green design.

Cote office 1The Clock Shadow Building in Milwaukee shows even a modest office building can be very sustainable. The designers wanted to construct a building and use as much salvaged materials from other buildings as possible. Salvaged wood siding, brick, cabinets, and steel panels account for 30% of the materials. That’s a lot!

Even in a dense urban environment, the building takes advantage of 27 wells below the building. Open land is not needed to take advantage of geothermal systems.  This allows the building to use 40% less energy than others.

Cote ofice 2Office buildings are perfect candidates to greatly reduce water consumption since the biggest use of water is flushing toilets.  Rainwater is collected on the “green” roof and held in a 15,000 gallon cistern. The building uses 50% less water than the typical office.

The large southern orientation features operable windows and sunscreens to keep out the sun in the summer and let it shine in during the winter.  Can you imagine a beautiful day at work with fresh air blowing in your window? 

The tenants are predominately non-profit groups and share common spaces such as conference rooms and waiting. Therefore, the building is smaller and uses less energy. The combined use of spaces also creates a community that can challenge each other to ride bikes and walk to work more often.

If you have an operable window in your office, let me know!

Send your thoughts to rsmith@smithmetzer.com

A Seller’s Nightmare

 

Logo only for phoenix

 

If you are thinking of selling or have not even considered it (yet) at some time you will receive an offer.  If the offer is good enough, you may decide to sell.   After all getting a great offer can be hard to turn down. 

Initially, everything will go well but things can get ugly when issues outside of your control take place:

1.  If it is a franchise, as part of the approval the buyer maybe required to make some very expensive upgrades and/or require an expensive and prolonged training period.

2.   The bank or franchisor may feel that the buyer is not financially qualified or has the required management expertise.

3.  The landlord may require a significant increase in rent.

4.  The bank requires the seller to provide some seller financing.

5.  The allocation of the sale price puts a tremendous tax burden on the seller.

6.  The buyer wants to work in the business before the closing.

7.  The buyer wants to keep the accounts receivable while the seller keeps the accounts payable.

8.   The seller is required to put a significant amount at closing in escrow for an extended period for various costs.

9.  A Phase 1 indicates that there is an environmental issue.

10.  The seller’s attorney is not experienced in business transactions and the buyer’s attorney is very experienced.

11.  The buyer is experienced and the seller is not.

Wishing you a successful 2014.

Steve Sink

ss@phxaffiliates.com

  

 

 

 

 

 

Your 2014-friendly website

Katie Stocking is the owner of Happy Medium LLC.

For the 2013 holiday season, it was estimated that 33 percent of sales would be through online shopping. Post holidays it’s estimated a total of 40 percent of retail sales were made online (source: The Seattle Times). That is a 33 percent increase from 2012! If you are a retail business you can absolutely no longer ignore online sales if you want to stay relevant (or in business). 

This amount of online purchasing statistic should also be interesting even if your business is not retail or business to consumer. Hands down, if you take nothing else from it, realize people are looking more towards the online world for everything it has to offer. Convenience, price shopping, and reviews – does your website meet these standards? It’s the new year, make sure you don’t miss out on business in 2014.

Convenience – what is the status of your website? If you visit the site from your desktop – how does it look? Do the graphics look up to date, is the content up to date? If there are pixelated images and out-of-date content, your company is more than likely going to be judged in the same way. Your website is your storefront, keep it in shape. Once you view the site on a desktop – view it on a smart phone, a tablet, and any other devices you have. If the site doesn’t look nice or doesn’t stay user friendly on all platforms, it’s time for an upgrade. Currently 16% of all web traffic is through a mobile device (source: Mashable).  That number has continually doubled year to year; don’t miss out.

Price Shopping – This one is simple. we as consumers obviously want to pay the least amount possible for the products we want. Online shopping makes this possible. If your business doesn’t sell products online – would you consider price matching? Personally, I would shop locally if the local shop would price match (in the same way most retail giants do), what I found online. If you offer that service, the only place to tell people who are shopping online about it is on your website. Make sure your website is optimized to show up in consumer searches.

Reviews – One word: Amazon – the entire reason I personally started shopping on Amazon is because of the reviews. I don’t have to buy things and try them out myself and possibly mess with returning them. I can find the product on Amazon, read the thousands of reviews on it and then make a much more educated purchasing decision. In the same way whether you are retail or business to business - however I am doing business with you – I am more than likely going to search you online first. Make sure your reviews online are a true reflection of you. The best place to start is on your website, where you have full control.

Don’t wait until the end of this year to get your online storefront – your website – shining bright. Do it now – and you’ll be glad you did when the numbers come in next year that over half of all shopping is done online! 

Tweet me your thoughts @interactivekate!

--Katie

How was your marketing in 2013?

A+You survived another year, the holidays have whizzed by and now everyone is ready to get back to work.

2014.  So many opportunities.  

But before we think about that, we need to make the time to look back on the last 12 months.

Pull out your marketing plan for ’13.  If you didn't have one, at least think through your marketing efforts.

  • What actually got done?
  • What worked?
  • Did you try to do too much and stretch yourself too thin?
  • Did you start off great but as soon as you got busy, your marketing efforts died on the vine?
  • Are you guilty of trying something once or twice and then declaring it a failure without giving it the time and room to bloom?
  • What never got off the ground? Is it still a viable idea or has its time passed?
  • What is the one thing that you’d planned on doing that you most regret not getting to? Is the opportunity still there?

Overall, what letter grade would you give your marketing efforts this year?

  • Did you meet your own objectives?
  • Did you protect your brand?
  • Did you build in marketing efforts that continued no matter how busy or overcommitted you became?

Use the following for criteria: effectiveness, consistency, frequency, and ROI. Then, average the grades. How’d you do?

Don’t get discouraged if you couldn’t give yourself an A or even a passing grade. The good news is, there is time to make an improvement as we look the new year. But I'm betting there are some insights on how you should move forward based on last year's performance.

Why not get out of the gate in the right direction by taking a glance backwards?

~ Drew McLellan, MMG's Top Dog

Children learn from their school building

Rob Smith is a principal at Architects Smith Metzger School pic 1

Each year the Committee on the Environment (COTE) of the American Institute of Architects selects a Top Ten “green buildings.” Today, we'll take a look at a school building that made the cut.

California-based Marin Country Day School attained the platinum level of LEED, which is the highest level. The school uses 20,000 Btu’s per square foot compared to the average school use of 110,000 Btu per square. Photovoltaic panels on the roof produces 13,000 Btu’s for a net use of 7,000 Btu per square foot. Sure it’s California but that is not much energy!

How does it do it? Walls of glass with deep overhangs keep the direct sun out of classrooms but let daylight in. Many classrooms don’t use the lights during the day.

A cooling tower evaporates water at night which costs less than energy-intensive, compressor-based air conditioning. The water is stored in a 15,000-gallon underground cistern, and is used to cool the slabs via radiant tubes. These same tubes also heat the buildings with the use of a condensing boiler.

Rainwater from the roof is collected and used to flush toilets and supplement the cooling system.

School pic 2The best part of the project is how it educates the students about energy usage. Each class is metered separately so students can see how they impact energy usage. An online monitoring system shows them how the solar panels, rainwater collection, and energy usage are all interconnected.

When we educate people about how each one of us impacts energy usage, we will become better users. What a better place to start than with young children!

Stay tuned for the next blog in this series, featuring information on a small urban office building.

Send your thoughts to rsmith@smithmetzer.com

Move From Reactive to Proactive PR in 2014: Here's How

Claire Celsi is the Director of Public Relations at Lessing-Flynn.

It seems that some companies just have good luck when it comes to getting attention in the Proactivemedia. You see a new article about them - sometimes every week. It can be frustrating to watch, especially if your company's story is just as compelling. Sometimes, you get lucky when a story falls on you, either through blind luck, or (unfortunately) a crisis occurs. Either way, you're stuck on the wrong side of the proactive PR equation.

What does it take to have a proactive PR program? Here are some basics to follow if your New Year's Resolution is to finally get ahead of the news.

1. Have a plan. This is basic PR 101. Companies who get a lot of publicity PLAN to get a lot of publicity. And they ususally don't sit around and wait for it to come to them. Your PR pro (on staff or agency) should be at the table for all your strategic planning sessions. Have that person listen for opportunities and incorporate those ideas into your plan. Ideally, even the smallest company should have something to offer at least once per month. So, that's 12 ideas.

2. Have something to say. Most companies have a lot going on, but are relatively reticient to talk about it publicly. Unless you are developing a new product that is going to rock your entire industry, or you're in the patent process, or in a silent period before a public stock offering - get out there and talk. Reporters like people who talk to them and tend to gravitate towards people who are willing to go on record with something new and different. If you're not willing to talk, reporters will move on to someone who is.

3. Don't spam reporters with stupid press releases. Your news releases should have a cogent idea and should be explained using very little jargon. Don't hide your lead in the fourth paragraph and make the reporter or editor fish for it. If an eighth grader cannot grasp your main idea after reading the news release, scrap it and start over.

4. Be transparent and proactive. This sounds like a really simple idea, but it's amazing how many companies (who should definitely know better), still decide it's a good idea to hide things for days and even weeks. If you don't tell your story - your way - first, then someone will most certainly tell it for you. And it will come out wrong. Ask Target. When the news came out about its recent Christmastime data breach, details from Target were scant so news outlets ran off the range with their own spin.

5. Be ready with additional information. After your news release is sent, be prepared to provide reporters with details. This might include photos, a quote, an annual report or other prepared information. If you're unprepared, you may not meet the reporter's deadline and cause her to move on to the next story.

6. Limit the fluff. Even lifestyle reporters will want to embelish the story in their own way. Don't add to much "opinion" and flowery, self-aggrandizing prose to your news release. That turns it from "news" to "National Enquirer" in a heartbeat. If you must sing your own praises to make a point, weave it into a quote.

7. Jump on spontaneous opportunities. Just because you're trying to be proacitve doesn't mean you shouldn't look for ways to break into the news cycle when appropriate. When a story breaks in the national media that has anything to do with your company's business, take the opportunity to reach out to national and local media to offer your opinion. Not only does this save time for a news outlet, but it helps to build relationships with reporters and producers who cover your industry.

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