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by Scott Becker
Although the significant changes to health care reform take effect in 2014 for small business owners (employers with up to 50 employees) and then again in 2016 for businesses with 51-100 employees, all businesses should be aware of the following changes for 2013.
January 1, 2013
Beginning with the first plan year starting on or after January 1, 2013, employee contributions to a health care FSA cannot exceed $2,500 per employee per plan year.
Beginning January 1, 2013, the employee-paid portion of the Medicare payroll tax will increase for high income individuals earning over $200,000 (or $250,000 if married filing jointly). The employee-paid portion of the Medicare payroll tax will increase from 1.45% to 2.35% on earnings above these high-income thresholds. The employer-paid portion of the Medicare payroll tax will remain unchanged at 1.45% for all earnings.
January 31, 2013
For employers who issued 250+ Form W-2′s for 2011, the 2012 Form W-2′s that are issued by January 31, 2013 must report the cost of the employer’s health plan to include both the portion paid by the employer and the portion paid by the employee. This reporting is for informational purposes only as there is no change to the taxation of the employer-provided health benefits. Even though we are now past January 31st, the W-2s can still be corrected if this information was not included.
March 1, 2013
By March 1, 2013, employers must provide a new notice to all employees explaining the availability of State-based Health Benefit Exchanges, and whether or not the employee may be eligible for insurance affordability programs through the Exchange. The notice must be provided to new employees upon date of hire. Implementation of this section (18B) has been delayed until guidance is provided, which is expected in late summer or fall of 2013.
July 31, 2013
For self-insured plans (November/December 2011 & January 2012 plan years only), the first filing of Form 720 for PCORI (Patient Centered Outcomes Research Institute) annual plan fee will be due. February 2012 and later plan years won’t file the Form 720 until July 31, 2014.
August 1, 2013
Carriers who exceeded the allowed spending on non-medical costs in 2012 must pay rebates to employers. These rebates are based upon the carrier’s costs across its entire book of business within a state and market size – rebates are not based upon an employer’s own claims experience. Employers will have to share the rebate with participants proportional to their overall share of the costs, generally within three months of receipt of the rebate from the carrier. Self-insured plans are exempt from the MLR provision.
October 1, 2013
State-based Health Benefit Exchanges will begin open enrollment for individuals and small employers for coverage effective on or after January 1, 2014.
Beginning in 2014, large employers (at least 50 full-time equivalent employees) will be subject to penalties for not offering affordable coverage under the Affordable Care Act. This means that an employee does not have to pay more than 9.5% of family income for the employer provided plan and the plan pays at least 60% of covered health care expenses.
We continue to monitor this ever-changing healthcare landscape and are available, as always, to answer questions or provide assistance.- See more at: http://www.snydercohn.com/2013/02/health-care-reform-what-this-means-for-2013/#sthash.ahPt0Lvw.dpuf
Other strategies, with scripts for how to
1. Just ask for what you want. Don’t make it emotional. Say this: “Instead of 30-day terms, I need 90 days. How can we make this happen?”
Adds McAdam: “If the other guy senses he’s being perceived as beating up on you, he’ll feel like a jerk and chill out.”
They're both important this time of year. But which is more fun?
But we suggest that now is also a great time to think about three other initials—ROI—and how to influence the components that make up ROI (return on investment). Thinking about these initials is fun because they look forward and don't have nearly so many factors—just three main ones, in fact.
How can you think about ROI?
First, what goes into determining your ROI? Essentially, there are three financial indicators that figure into ROI: margin; efficiency, also known as turnover; and leverage, or risk. Improve any or all of these components and ROI will increase. (Your standing with the IRS will also increase, but let's not think about that.)
Here's another way to look at it:
Right now we're interested in "B" because it breaks out the components of each element and shows how influencing one factor influences the end result.
(The final equation, "D," of course, is the "bottom line" and is the ultimate goal. But to get there mathematically means eliminating sales and assets, which are two areas we can influence to improve ROI.)
Margin (Income/Sales): You can attack margin in two ways: increase prices and reduce expenses. How is this best done?
First, train your sales force in how to better communicate the value of your product or service. This route is harder than it sounds because most sales people simply present solutions instead of helping prospects understand—and appreciate—value. In other words, they educate but they don't persuade. In our experience, it takes about three months for salespeople or business developers not only to learn this skill but also to develop an efficient process for putting it to work. Once that happens you'll increase revenue by making more sales, increasing the amount of those sales, and you'll have a rationale for increasing prices.
Another way to look at it, suggests cash-flow specialist and CPA John Lafferty, is to break the sales element into three more components: number of customers, frequency of transactions, and value of an average transaction. Developing an action plan to build each of those components is the way to go, explains Lafferty, whose business is CFO Pro (www.cfopro.com).
On the other hand, decreasing expenses is much easier in the short term than increasing sales, says Mark Holmes of B2BCFO (www.b2bcfo.com ). If gross margin is ten percent, for example, ten additional sales dollars equal the value of reducing expenses by only one dollar. Yes, assuming your customers are cooperative, increasing prices by a dollar takes you to the same place. But increasing prices presents a danger that decreasing expenses doesn't. Increase prices too much and you lose customers.
Efficiency (Sales/Assets): Efficiency represents the number of sales dollars you can achieve per dollar of assets used to produce those sales. How does that translate into action?
For one thing, it might pay to outsource certain activities you now do internally. If an outside entity can produce sales more efficiently than you can, you'll use fewer assets to produce those sales dollars. Another strategy, of course, is to improve your in-house efficiency.
Depending on your business, there are many ways to improve efficiency. You can emphasize quality (reducing scrap, for example), automate manual operations, provide incentives for labor to work smarter and harder. We are not experts in these areas but can introduce you to resources who are.
Another tried-and-true strategy for increasing this figure is to outsource a portion of your sales process, such as lead generation. And that's something in which we are experts.
Leverage (Assets/Equity) and Risk: The final component of our formula is leverage. This one is easy to influence mathematically because the only way to improve that ratio is to increase debt (also known as leverage). The caveat is that leverage cuts two ways, depending in whether your company is in the black or in the red. If you are leveraged and profitable, a small increase in income can produce a larger return on equity. But if you are leveraged and unprofitable, a small loss is magnified because it reduces return on equity by a multiple of the loss. So, if your company is in the red, risk increases exponentially.
How much leverage makes sense for your company? Consultants like Mark Holmes can help you answer that question.
In summary, the bottom line is more complicated than the two numbers it comprises—net income divided by the equity invested in your business.
If you break it down into margin, efficiency (turnover), and leverage, you can determine where your firm has the best opportunities to actively improve your ROI.
If you decide to increase margin or sales volume see us, we can help through consultative sales training, coaching, and the development of a custom sales process that will enable your sales team to better communicate value. We also offer lead generation and appointment-setting services.
- Bush-era tax cuts are extended indefinitely for individuals with taxable incomes of up to $400,000 per year, joint filers making up to $450,000, heads of household making up to $425,000, and MFS filers making up to $225,000. Taxpayers with income above that threshold will have pay tax at a rate of 39.6% on the marginal income. These thresholds will be indexed for inflation in subsequent years.
- Taxes on capital gains and qualified dividends will continue to be taxed at 15% for most taxpayers with taxable incomes below the above thresholds. The 0% capital gains rate (for taxpayers whose taxable income falls in the lowest brackets) has also been extended. Taxpayers who are subject to the 39.6% rate on regular income will be subject to a 20% rate. Since this income will also be subject to the Medicare surtax, the income will effectively be taxed at a 23.8% rate..
- The personal exemption phaseout (PEP) is coming back.
Taxpayers with AGI over a certain level will have their
personal and dependency exemptions reduced or eliminated.
The thresholds are:
- Joint returns - $300,000
- Head of household - $275,000
- Single - $250,000
- Married filing separately - $150,000
- The Pease limitation on itemized deductions (deductions are reduced by 3% of AGI over a specified threshold; the maximum reduction is 80% of total deductions) is also coming back. The AGI thresholds are the same as for the PEP.
- AMT relief (i.e., the higher AMT exemption, which effectively reduces the number of middle-income taxpayers subject to AMT) has been reinstated retroactively and indefinitely.
- The $5 million exemption for estate, gift, and GST taxes has been extended indefinitely. The exemption will now be indexed for inflation. The top transfer tax rate is set at 40% -- higher than the rate in effect in 2012 but lower than historical rates.
- 50% bonus depreciation is extended for another year; for most eligible property, bonus depreciation will be available for property placed in service before 1/1/2014.
- The increased deductions and limitations for §179 expensing are extended through 2014.
- Many, many other tax provisions that either had expired at the end of 2011 or were due to expire at the end of 2012 have been extended for two years. This means – generally – that provisions that we thought had expired as of 12/31/11 are now available for 2012 and 2013, and provisions that were set to expire as of 12/31/12 are now available through 2014. These provisions include education (the American Opportunity Tax Credit, among others) and energy provisions, research and other business credits, and accelerated depreciation for qualified improvements, among many others.
But if you run a smaller company, plenty of opportunities to play "small ball" with data exist, too. (In baseball, "small ball" implies a down-to-earth way to win: Moving runners base by base to home plate versus launching big home runs into outer space.)
What is big data? It's a name for data sets so large that they can't be managed effectively with traditional software tools. Manipulating big data, for example, may require hundreds of servers with software programs running in parallel. Think the federal government, Wal-Mart, or Facebook.
All this came to mind because recently in the course of one week big data seemed to be a topic of conversation by clients or prospects everywhere I turned.
On Monday, a supplier told me about his ability to manipulate customer transaction data to produce useful analytics to drive new sales and customized solutions. Many casinos, for example, can produce amazing details about any one individual customer; for example, which games he likes, her average bet, how many minutes per day are played, and, most important, the value of each visit.
The next day I heard about a software system that helps users of every-day products change their purchases to match specific goals, such as saving money, supporting the environment, or looking and feeling healthier. On Wednesday, another supplier shared a way to manipulate transaction data to identify prospects that look like our best customers.
The CEO of a health-care client explained on Thursday how putting big data to work could remove $100 billion in avoidable costs from the health-care system. Fewer than 50 percent of the prescriptions physicians write are taken as directed, for example, many of those aren't even filled by the patient, and many of filled prescriptions are never picked up.
Finally, it was time to think small—or, at least, smaller. Most of our clients are businesses selling to other businesses, and they don't have the massive number of transactions consumer companies do. There is no "big data" for these folks.
They can, however, get great benefit from thinking the way the manipulators of big data do. The idea is to assess the data you have, can develop, or buy and use it to work your way around the bases to a score by playing small ball.
1. Learn the deeper buying motives of your customers. Most companies believe they know why their customers buy their products—that is, what value people receive. However, we routinely see clients that correctly identify only about half the reasons people value their products and services over others. They're truly surprised when we help them identify and understand the other half by looking for the need behind the need.
For instance, a buyer may say she wants to lower costs. While that's probably true, the need behind the need here—a more powerful reason she's motivated to buy—may be that she's in line for a promotion or that her job is on the line.
2. Create a statistical profile of your best customers. Match businesses on multiple criteria to develop prospect lists that match your own list of your best customers. The match can be based on the vertical market, the size of companies in sales, the number of employees, the geographic location, and many others. Especially useful for companies opening up new territories, this approach also helps to segment large responses to promotions to determine which group(s) are more likely to buy.
3. Know where your new revenue comes from—and how much.Analyze the sources to identify leads that are more productive. What are those sources? Well, to name just a few: direct sales; indirect sales such as reps, dealers, brokers and distributors; trade shows, Web inquiries, direct mail, and referrals. A surprising number of small and middle-market companies don't bother with this practice. They believe they already know because they know their big accounts. That kind of limited thinking can miss trends, niches, and opportunities to open new markets.
4. Determine your "Net Promoter Score™." The basis for this metric is one question that you ask your customers or clients: "On a scale of 1 to 10, how likely are you to recommend (our company) to a colleague or friend?" Essentially, the NPS measures loyalty and represents the likelihood that an existing customer will purchase from your company again or recommend your company. It's considered by many to be a better predictor of customer loyalty and behavior than traditional customer satisfaction surveys.
Key Point: Just because customers are "satisfied" or even "completely satisfied" doesn't mean that they are loyal and that they will buy from your company again or recommend you to others.
To learn more, see The Ultimate Question: Driving Good Profits and True Growth and other works by Fred Reichheld or give us a call at847-446-0008.
5. Try the twelve-twelve tool. You can use monthly sales figures (or other key metrics) to smooth out data, remove seasonality, and discover true trends. E-mail us (email@example.com), and we will send you a spread sheet with the formulas you need to implement this approach, especially if you have a good amount of historical information, say, monthly sales for ten years.
If we can help you gather, analyze, or take advantage of any type of data need please let us know. We're especially good at finding the data you need—big or small—to sell more of your products and do so more effectively.
In April we published a column—"Is ADHD Affecting Your Sales Results?"—about how ADHD might affect some salespeople, their managers, and their productivity. A number of readers told us they were surprised that the prevalence of ADHD in salespeople may be twice that of the general population.
Others felt they had just looked into a mirror.
A manufacturing CEO—who is also his company's primary business developer—called excitedly and said, "That article seems to be written about me!"
Among the behaviors associated with ADHD (Attention-Deficit/Hyperactivity Disorder) are difficulty with focusing, prioritizing, starting projects (or finishing them), and others. About nine million of 234 million adult Americans—four percent—are thought to be affected by ADHD, reports the Attention Deficit Disorder Association.
Since I was about to board a plane, I could take only a few minutes to reassure him: Increasing his consultative selling skills and developing a customized sales process would structure his sales calls, enabling him to stay focused during a sales call.
Within weeks he enrolled in our consultative selling course, FOCIS. He now tells us he is putting it to work in the field with great success. He has longer meetings, receives compliments on his preparation, gets more advances (that is, prospects committing to "advance" to the next step), and, most important, is winningsignificantly more new business. And by that we mean 30 percent more in business closed and scheduled for 2013.
Key Point: Our article appeared just six months ago.
We are not experts in treating ADHD. But we are experts in building consultative selling skills and creating a sales process that improves both efficiency and effectiveness. The good news is that FOCIS, our consultative selling course, works for people with or without ADHD. Nearly anyone can face ADHD-like roadblocks in their work.
Deadlines or other stressors, for example, can bring such behaviors to the surface, says Dale Davison, an executive coach in Wilmette, Illinois, who works with salespeople and others experiencing ADHD: " 'Choking' under pressure can happen to anyone—on the golf course or in the board room." Her Website is www.dale-davison.com.
More good news is that recent research tends to support the notion that some of the most disorganized people can be the most talented and creative. Testing has shown that individuals with ADHD tend to think in so-called creative ways, explains Duke University researcher David Rabiner, Ph.D: "That means they may be especially well suited for entrepreneurial pursuits and careers that place a premium on divergent thinking skills."
But, warns Dr. Julie Schweitzer, "Raw energy is not enough. Achieving success requires skills. Traditional routes are hard for ADHD people so there are benefits to coaching." Schweitzer is an associate professor of clinical psychiatry at the UC Davis MIND Institute.
What can sales managers do to support a salesperson with self-sabotaging ADHD-like behaviors?
1. Provide a customized sales process that keeps them on track while developing new business. (We can help with this one.)
2. Set up and support an accountability structure emphasizing time management training, supervision, and incremental deadlines. Poor "executive functioning" skills, commonly the result of ADHD, can lead to underestimating how long a project will take or, on the flip side, overestimating how much time is left until a project is due.
3. Take workplace dynamics into account. In traditional office environments, ADHD'ers in sales should have less open space and less distraction. Headphones, work-break schedules of 25 minutes on and five minutes off, limiting disruptive e-mail traffic—each of these tactics and others can be encouraged. Although sales managers can't control home office environments, they can—and should—suggest that home offices are quiet and void of distractions.
But in our increasingly attention-deficited society, it seems, keeping anything quiet and void of distractions is not so easy.
How bad is it?
In one small, Time-Warner study, "digital natives" (Millennials in their twenties who grew up with digital) switched media venues 27 times per non-working hour. That's roughly 13 times in 30 minutes or the time it takes to watch one episode of The Office. "Digital immigrants," who grew up with old-school technology and adapted to digital, switched media venues 17 times per non-working hour.
Keep in mind that by 2020 Millenials (born from 1982 to 2004) are expected to make up nearly half the workforce.
Does this mean society and selling are on a collision course with ADHD? Possibly, but it also just might mean that the number of sales people will keep growing because selling can be a great profession for ADHD'ers and others who like to change their focus 27 times in 60 minutes.
One thing I'm fairly certain of, however, is that Millennials won't just be calling me after looking into the ADHD mirror. They'll be calling and e-mailing and texting and tweeting and . . . whatever. I guess I'll just have to stay focused myself.
As for any questions you might have about consultative selling, please communicate with us any way you want, though phoning 847-446-0008 might be easiest. But no matter how many media venues you use we'll still read or listen to or watch only one venue at a time. That means you'll have our full attention right away.