Featured In This Issue
No one can accuse Bob Goulet, president of Saprex, of thinking too small. His vision is to make the Charlotte region the go-to place for the development and manufacturing of advanced materials. Towards this end, he is working to provide solutions to industry risks and problems—one product at a time.
Started in 2009, Saprex seeks to expedite the innovation and development cycle for advanced material and subsequent products. Its customers are manufacturers who are challenged to find and manage solutions to risks involving extreme environments such as fire, high-heat, cut or chemical attack.
Saprex’s Advanced Materials Lab is located in Grigg Hall on the campus of the University of North Carolina at Charlotte. There, in partnership with the University’s Charlotte Research Institute and local area manufacturers, Goulet conducts research on advanced materials and collaborates with business and industry to apply those materials to specific manufacturing needs.
“Our value lies in the fact that we are helping to integrate a lot of traditional textile companies to do innovative things,” says Goulet. “This will strengthen the economy and provide stable jobs.”
As the company’s primary scientist, Goulet has developed a line of products aimed at industrial safety and beneficial to a variety of end-users such as firefighters, electrical workers, welders, industrial bakers, race car drivers, steel mill workers, mechanics, military personnel—and even the NASCAR pit crews.
Saprex Axis, an exhaust insulation system which will aid the complex diesel emission systems to perform optimally in large trucks, has been approved by several large truck makers.
“We’ve developed a system that will easily stretch over the pipe and then become rigid once it’s heated up. It must perform from -50 degrees F. to 1,300 degrees F. That’s a big challenge from a fiber perspective.”
Speaking enthusiastically about recent innovations, Goulet picks up a piece of fire-resistant, aerogel-infused fabric which uses technology coming out of the space program. According to Goulet, it is the lightest insulation known to man, consisting of 97 percent air.
Saprex is currently marketing four product lines and set to launch three more in the first quarter of 2013. Saprex FLEX is an innovative and patent pending composite material based on knit construction that allows it to be easily shaped and molded to an endless variety of parts.
Saprex AXIS is an infinitely customizable, high-temperature insulation system. Saprex REACT a flame resistance material that reacts to high-heat by releasing a flame retardant to extinguish itself. This material can be found in many of the race cars including NASCAR. Saprex ARMOR is a line of cut and puncture resistant materials used in the Mechanix Wear ArmorCore line.
Saprex customers are diverse. Mechanix Wear, for instance, is a well-recognized company always looking for the newest technology and innovation. A sponsor of NASCAR, the company has a product called ArmorCore which has been built into gloves that provide the highest level of cut, puncture and abrasion resistance available.
Lincoln Industries reached out to Saprex when they needed help with high-heat insulation. They are a manufacturer of exhaust system pipe and were looking for an innovative high-heat insulation. Saprex also works with NASA, and the U.S. military.
Saprex is a young company in an evolution. They started with a few development customers. By the end of 2013, 75 percent of revenue will come from material sales, according to Goulet. “This was a breakout year for us,” says Goulet nodding. “Next year looks even better.
“Saprex serves as a fairly unique business model. We are offering rapid research and development along with integration of a global supply base so that we can provide the best solution quickly. In our industry you typically find that good innovators don’t collaborate well. While there are some large firms doing good work, I don’t know of anybody in our space who is offering an innovative, integrated solution with speed,” continues Goulet.
Benefits to partnering with the University’s Charlotte Research Institute, are multifold.
“They have a high level of infrastructure here that we as a small company couldn’t afford but can definitely use,” says Goulet.
The University furnishes Saprex with a wet laboratory in a building permitted for research. Perhaps the greatest benefit is the psychology of knowing that there is help and support around.
“We want to be leaders in innovation and that requires us to be where people are pushing the envelope in all different directions. Plus, the University has a lot of technology available for license. We are always interested in new technology” says Goulet.
The University’s primary concern in partnering with companies to further research, innovation and product development is how the work will contribute to the state economy and job growth and stabilization. “From fiber, yarn and fabric construction, we help maintain and create jobs,” affirms Goulet.
Essential for Goulet’s entrepreneurial research and development to succeed are partnerships with other textile businesses. Saprex has engaged yarn producers and finishing companies in McAdenville, Kings Mountain and Lincolnton, as well as chemical companies in Charlotte.
The partnership Saprex enjoys with Beverly Knits, Inc. is an excellent example of how innovative product development can work with textile manufacturing for mutual benefit and job growth.
Beverly Knits, Inc. was started in 1980 as a contract circular knitter. Built upon a research and development background, the company develops new and unique fabrics for diverse markets including intimate apparel, high tech underwear and outerwear, shoes, furniture, medical, industrial, automotive and mattress and bedding. Owned by Ron and Janet Sytz, Beverly Knits has grown to 190 employees and from eight to over 200 knitting machines.
Customers include Patagonia, NorthFace, the U.S. military, Nissan and Honda. “It’s quite possible that you might have some of our fabric in your car or in a composite used in the compressor for your air conditioner,” says Ron Sytz, president of the company.
Beverly Knits operates out of four buildings in Gastonia totaling 290,000 square feet. Beverly Knits was the first production facility to knit Lycra spandex into fabrics. It has survived the movement of the textile industry to other countries and the downturn in the economy by its continued diversification. The company has more than doubled in size and employees in the last 10 years.
Beverly Knits and Saprex work together to develop products and businesses that will create more jobs. “Bob supplies the product development and the customer; Beverly Knits makes the fabric needed,” explains Sytz.
When large chemical companies such as DuPont and Monsanto moved their textile operations offshore, they took their research and development programs along, according to Sytz. “In order to develop products for different industries and markets, you need a research company like Saprex that will speed up the innovation cycle,” explains Sytz. “Many times manufacturers will go to the universities in an area looking for solutions. Partnerships such as Beverly Knits and Saprex are the future of textiles.”
“What Beverly Knits brings to Saprex is first class manufacturing. I can focus on the product development because I have a knitting partner in Beverly Knits that can handle all our knitting needs,” says Goulet. “What I bring to Beverly Knits is a customer and integrated development. It’s provides a great synergy.”
Speed to Market
Saprex is able to work quickly, an important factor in today’s world. Usually, a product is being researched and developed in response to the identification of a risk. These may or may not be accompanied by demands for greater regulations.
“We live in a highly litigious society,” says Goulet. “If there is a problem, you must fix it—now. There is a socially driven conversation to solve risks. Tolerance for a long development process doesn’t exist.”
Walking around his laboratory, Goulet points to shelves and drawers.
“We are focused on rapid development. We stock a wide range of materials and equipment parts. We can build and test a new product in a matter of hours. From chemically treating, to sewing a prototype, to testing it—we have it all here. If we need a need a new piece of test equipment, we could probably have something up and running tomorrow.”
When asked about challenges, Goulet was quick to respond. “Surviving the fluctuation of an early start-up—the on-and-off-again revenue; choosing the right projects with the right people. When you are young, every decision is a big decision because one really bad decision can close the doors.”
Goulet has been in new product development since graduating from the University of Connecticut with a degree in chemical engineering 17 years ago. He came south to earn his master’s degree in chemistry from Clemson University. While there he worked with Milliken doing research. After graduation, he stayed with the company for 10 more years, working in product development, research and marketing and earned his MBA from Duke.
He went on to work in companies in Lexington, Ky., and Salt Lake City, Utah, before returning to the South in 2009 to start Saprex and establish partnership with Beverly Knits.
“I moved to Charlotte because of what’s left of the U. S. textile industry is here,” says Goulet. Working out of an incubator office at the Ben Craig Center, Goulet became familiar with the infrastructure of the city and was introduced to UNC at Charlotte. “There’s a lot of support here once you know that it’s here.”
A single father, Goulet spends his time between running the company and raising his son. He is passionate about the outdoors and enjoys backpacking, fishing, hiking and climbing. Always working, he is also passionate about the equipment and gear related to outdoor activity—how to make it more functional.
“I have a drive to build things better; to find the next generation of things,” says Goulet.
Goulet aims to help Charlotte be a global leader in materials. “We need to create a vision and tell our story. We have all the resources for textiles here: a great history in textiles, a good work force, facilities and a number of innovative companies.”
Goulet believes that as business, government and community leaders in the Charlotte region take an appraising look at all of the advanced textiles that are part of our everyday lives and realize that many of the innovations over the next hundred years will involve fibers and fabrics, they will start to wonder, “Is developing a city in the heart of textile country into a world leader in advanced materials that big of a stretch?”
Still, that may not be enough for Goulet. His personal goal is to have an impact as powerful as reaching for the stars.
“I want to be on the first human flight to Mars. No,” he corrects himself. “I want my advanced material to be on that flight; material that breaks the paradigm of what we thought possible.”
Dot Metrics Technologies, a Charlotte-based technology company, in conjunction with the Charlotte Research Institute at UNC Charlotte, has developed a new cutting-edge technology product that can purify water in a compact system using mercury-free ultraviolet LEDs.
The system, trademarked UV-Pearl, can be easily transported and rapidly switched on and off with negligible warm-up time, which could provide advantages for the pharmaceutical and health care industries, and may also have applications for military and consumer use.
“The UV-Pearl is a good example of how a small company like Dot Metrics can use its size and expertise to develop a product utilizing emerging UV-LED technology,” says Rosanna Stokes, president and CEO. “Working with our partner, Aquionics, we were able to produce the world’s first water disinfection system that uses UV-C LED technology.”
From the Wellspring
Rosanna and her husband, UNC Charlotte electrical engineering professor Ed Stokes, co-founded the company in 2003. The couple, both formerly research scientists at GE Global Research in Albany, wanted to return to Charlotte—their hometown—and start a technology company to pursue innovation opportunities.
Rosanna brings research skills, along with new product, global and business development experience to Dot Metrics. Her background includes identifying new product development opportunities and creating strategic partnerships, along with manufacturing and introducing successful new products to the market.
Ed brings his experience from the university and business worlds, resulting in numerous real-world opportunities at the company for his engineering students, both undergraduate and graduate.
Together, the Stokes formed a company savvy enough to produce exciting new innovations and agile enough to pivot through the pits and challenges of new product development. The ability to work in a small research lab and innovate with competent partners, without bureaucratic tedium, has attracted numerous young researchers, including current Dot Metrics director of research Jennifer Pagan, and research leader Paolo Batoni.
Both Pagan and Batoni, former graduate students at UNC Charlotte, were pursued by larger companies but chose to stay with Dot Metrics.
“Companies like Intel, GE and Motorola were making me offers, but I turned them down,” says Batoni. “They asked, ‘What’s wrong? Aren’t we offering you enough money?’ But I wanted to stay in Charlotte and be at a small company.
“We engineers are natural-born control freaks, so it’s nice to be able to work on your own product and have control over it,” he affirms.
“It’s a tough business model for a small technology company like Dot Metrics,” says Rosanna. “The lack of available venture capital money makes the company strategically focus on its partners and ways to use partner channels, such as sales and marketing, to help put its product in the marketplace.”
“We can develop the technology but we have to look for synergy with our partners to make our company’s products successful,” she explains.
The Charlotte Research Institute (CRI) at UNC Charlotte is Dot Metric’s partner for facilities and infrastructure, while Aquionics is its executive partner for sales and marketing of the UV-Pearl. The company is continuing to search for additional executive partners for different products, she says.
“There is about a 10x multiplier advantage in being able to work with CRI,” says Rosanna.
“We’re just a small company, but we’re housed in Grigg Hall, a big, beautiful building. We can use the various conference rooms when we need more space to host guests and we have access to other office amenities. And, we’re right across the hall from Ed, so it’s easy for us to interact with him,” she says with a nod.
“One challenge to the company,” says Ed, “is operating on real time while the rest of the university operates on ‘campus time.’”
“The University operates in terms of months and semesters, while Dot Metrics looks at weeks and hours because that’s how you run a business,” he explains.
Dot Metrics is one of 16 companies located at CRI, according to Gail Keene, financial and administrative operations manager of the CRI Millennial Campus at UNC Charlotte.
Pagan says the company has worked with the CRI team to write grants together, including Small Business Innovation Research (SBIR) grants that provide money to both university and private, innovator partners. Some research money awarded to Dot Metrics also flows back to UNC Charlotte. That money, totaling between $300,000 and $400,000 over the years, is used to help pay for office and lab rentals and graduate student stipends.
“That’s important,” says Pagan, “because the company is a small business and runs lean so funding is always tight.” SBIR grants initially funded R&D at Dot Metrics and are likely to be continuing funding sources, she says.
Another advantage of Dot Metrics being located at the CRI is the access to technology and equipment.
“We can use equipment for our research and development that would otherwise be very expensive for us to buy or lease,” Pagan points out. “It would cost us about $1 million to own the kind of equipment that we need to do our research.”
Private companies like Dot Metrics are encouraged to lease or rent time on advanced technology equipment in the UNC Charlotte Optics User Facilities, says Ed, noting that much of this equipment was purchased using a 2001 congressional earmark intended to encourage regional economic development in optoelectronics through UNC Charlotte and the CRI. Dot Metrics is an example of this development.
Source of Talent
Students are a big factor contributing toward the success of Dot Metrics’ operations.
“We are able to hire exceptional students,” says Batoni. “It’s a win-win situation—it’s convenient for students and it’s great for us to have students interested in research who can work in our labs.
“We rely heavily on guidance from the research and tech people at UNC Charlotte. They augment our ability,” he says. “We can tap into many brains at the University and regularly work with professors to help us solve problems that may be outside our area of expertise.”
Their student interns, says Batoni, leave and go on to pursue Ph.D.s at top research universities or work for top companies like Siemens.
At one point, CRI stepped in to help when a University lab partner of Dot Metrics was having some equipment issues. Batoni says a piece of University equipment necessary to complete some testing—an autoclave—was damaged.
“We tried for a few months to work with the University lab and get the repairs done. It was slow and frustrating,” says Batoni. “Finally, I reached out to Gail Keene, our CRI contact, and told her that the University’s damaged equipment was hurting our customers. She went right to work and got the repair done in one week!”
Keene offers the business an interface to the University that is invaluable to a small company, says Batoni.
“She gives us administrative and marketing help,” he says, “even things like supplying a notary public when we need one. She also helps us solve problems or conflicts with other entities on campus.”
“The University provides research support facilities, equipment and intellectual power,” says Keene. She names other services provided to clients including mail services, parking sticker purchases, data connectivity, local phone service, and networking opportunities, that offer invaluable support to small business partners.
“University-driven research development, outreach and partnership are the foundations to making UNC Charlotte the state’s urban research university,” affirms Keene. “These partnerships both strengthen the University’s campus research platform and drive innovation and economic and job development in the Charlotte region.”
Driven to Innovate
Key to any small business is funding and Rosanna acknowledges that Dot Metrics was fortunate receive funding from SBIR grants to begin operations and their continued funding has helped support the first 10 years of its operations.
“A Phase 1 SBIR grant is usually around $100,000 and a Phase II grant is usually around $500,000 to $750,000. We have received a few Phase I grants and a few Phase II grants,” she says.
The grant program, part of the Small Business Innovation Development Act begun in 1982, encourages high-tech innovation and entrepreneurial spirit to meet specific research and development needs. Dot Metrics, says Pagan, applied for grants that encouraged innovation in the LED field.
“It’s a very competitive process—there’s about a 10 percent win rate for grants in Phase I and a 30 percent win rate for Phase II grants,” explains Pagan.
“We were optimistic that we could focus on one competency—LEDs—and integrate them into a system,” says Rosanna.
The company recently launched its first commercial product, the trademarked UV-Pearl, in association with partner Aquionics, a UV water treatment company. Pagan says its patent is pending and it is “branded for water or other fluids disinfection.” The UV-Pearl is the world’s first water disinfection system to use UV-C LED technology.
“We’ve designed a chemical-free way of effectively disinfecting water, and it’s much safer,” says Pagan. “The system uses solid state light emitting diodes that work like LED light bulbs to emit wavelengths that kill inactive bacteria, viruses and cysts that can make you sick.”
The portable system uses UV LED lamps, which emit waves of light in the deep UV spectral (UV-C) range to destroy microorganisms, explains Rosanna. Another advantage is the portability of the UV-Pearl, allowing it to be configured to meet different needs, including integration into water generators and loops, and medical sterilization.
“By designing the system so it can be rapidly turned on and off without warm-up time, you can realize some energy savings,” adds Batoni. “The UV-Pearl is not sensitive to the temperature of water, making it convenient to use in different environments.”
“When the water is flowing, turn it on; when it’s not, shut it off,” continues Batoni. “The UV-Pearl can work on line voltage power (it can be plugged in) or on batteries, and we are working to allow the system to utilize solar-powered batteries.”
Rosanna sees several application uses for the system, and expects with continued R&D, production costs will decrease, spurring even more consumer applications such as use for emergency water treatment in catastrophe settings such as Hurricane Sandy, or providing humanitarian relief efforts to people who need food and water.
A second product of Dot Metrics is Tetra, a UVA LED array that offers a versatile narrow band transfer source based on the application needed. It includes a variety of configurations, based on how many units are added, and can be used in lab applications. Tetra was launched just a few months after the UV-Pearl, last August.
“We’re looking for some partners to help us bring it to the market,” Batoni says. “We’re working on the sales strategy.”
The company’s future is bright, says Rosanna. “At this point we need to get our products out in the market and make some sales.
“With the combination of an excellent technical staff and our combined business experience, we will drive toward commercial success. It’s all about focus.”
The conference room is decked out in Florida Gators gear, and the bulletin board boasts a picture of “Weebee,” the company mascot. In one corner is a giant trophy with their names on it: Bill Crawford, 2008. Scott Crawford, 2012.
They’re the first father-son team ever to have both been awarded the trophy, recognition for receiving the National Vehicle Leasing Association’s Lifetime Achievement (NVLA) Award. Bill is understandably proud of his son.
Scott is a little more reticent. “I’m only 43, so it’s a little premature for me,” he says wryly.
But he was president of the association when the recession hit, and he guided it through the worst possible times for the industry. They froze the board in 2008 due to the recession, and as a result he served two years in a row, keeping the lights on during what was an otherwise grim period for the association.
The Weebee mascot atop the bulletin board represents the Crawford team’s dedication to “Working In Your Best Interest”—WIYBI, or Weebee. It’s that dedication, combined with determination and business acumen, that carried both the NVLA and Wilmar through.
In 1969, Bill had been into and then out of the Navy after graduating from the University of Florida. He was married with two children and a third on the way when he decided to join up with Hill Truck Rentals, a full-service truck leasing company founded four years earlier.
The company was based out of an old Amoco Service station in Orlando. Bill’s office was a 14-foot travel trailer plugged into the lady’s restroom for power, and he was paid $500 a month for his work as a salesman.
He was so successful as a salesman, that the company asked him to move to Charlotte in 1973 to open a new branch. After two years in that role, he moved into finance leasing with Leasing Consultants of Charlotte. Five years later, he decided he could do better on his own, and left the company in 1979.
Bill and his wife Marilyn, who was a Charlotte Country Day School teacher, had just bought a house and had $700 in savings. It wasn’t much, but Bill felt confident he could make it fly.
“Thanks to First Union, anyone could become an independent used car dealer,” he says. “They would back the financing, and you’d just find people who wanted to lease a vehicle.”
So he obtained a dealer’s license, and started working out of his very young daughter’s bedroom, the only room in the house with a phone jack. He named the company for himself and his wife: “Wil” for “William,” “Mar” for “Marilyn.”
Wilmar did well, and before long Bill had moved his office into the Key Man building, and then a small house they purchased for the purpose on Monroe Road.
Meanwhile, those three children were growing up. Both boys attended Bill’s alma mater, the University of Florida. In 1990 the eldest, David, graduated and joined the family business. Scott followed the year behind him. Elizabeth, a University of Georgia graduate was not far behind.
David is still in the business as vice president and salesman, and Elizabeth recently stepped out in order to become a full-time stay-at-home mother. Scott says that initially, he joined the company part-time, “just to keep me busy and make a little money while I decided what I wanted to do with my life.”
What he decided, is that he loved the family business and wanted to run it. He now serves as president.
In 2004, Bill and his children worked with their accountant to structure an ownership transfer in conjunction with re-branding the business. At that time, the legal entity name was Wilmar Leasing, Inc. That year, Scott and his siblings founded Wilmar, Inc and took over the overhead, rent, and employees. As leases expired under Wilmar Leasing, they were taken over by Wilmar. Seven years later, nearly all the leases—some 3,800 of them—are now handled under Wilmar Inc.
Full Menu of Services
The change in name from Wilmar Leasing, to Wilmar, Inc., represents not only a change in leadership, but also a clearer understanding that leasing is only one element of the company’s offerings. From fuel management to acquisition and financing, Wilmar provides customers with a full a la carte menu of services designed to help make the most beneficial fleet decisions for their companies.
Leasing is often at the core of these services. According to the Crawfords, more than 80 percent of U.S. corporations lease some or all of their equipment. Often, leasing makes more sense than buying because it offers financial flexibility, tax advantages, and the ability to leverage new technologies as they emerge.
Still, many companies avail themselves of other Wilmar services regardless of whether leasing is in the picture for them. Services include maintenance plans, administrative services, fuel management, acquisition, disposal, fleet policy, replacement cycling analysis, motor vehicle records, financing, roadside assistance, accident management, and expense control.
All of which is offered up with an old-fashioned dose of committed customer service. Bill explains: “I grew up in a time when your name meant something. You didn’t do anything to affect the reputation of your name. You didn’t blemish that.”
For Wilmar, this means that they work hard to uphold their company motto: “Working In Your Best Interest”—even when it may not be in their own short-term interest.
For instance, Bill relates a recent incident in which a customer called to ask about leasing a $45,000 truck. The customer had just won a large new contract that would require transporting large quantities of material, and he was excited and eager to enlarge his fleet to accommodate the work. Bill thought he might need to know more.
“I said, let me come out and visit with you,” says Bill. After understanding the situation, Bill told his customer he did not need a $45,000 truck, even though it would have meant a nice profit for Wilmar. Instead, he suggested that the customer buy a $5,000 trailer, and hook it up to the pick-up truck he already had in his fleet.
“You can load it up, drive it where it needs to go, leave it there, and pick it up again in the afternoon,” he explained. “Instead of insurance and maintenance and fuel, and another lease payment, you can tow it with what you already have.” Bill helped the customer purchase the right trailer, even though Wilmar made no money off the deal.
Bill explains that their business approach has always been to take care of the customer so that instead of trying to make a lot of money at once, you can make a little bit of money, every month—forever.
“A retail car salesman works on a commission and he’s trying to make as much money off each sale as he can, because that’s his income,” he says. “Our business is totally different. We don’t care what car you lease, and we don’t care about knocking a home run on every deal. If we help our customers make the right choices and set up the lease correctly, that customer will come back year after year.”
Because Wilmar doesn’t need to lease a particular make, model or year of vehicle, they are able to provide customers with unbiased information necessary to make the very best decision for their company.
When a new customer contacts Wilmar, a salesperson takes the time to understand what their business is like, take a look at what they’re driving, and help them make good selections based on their needs. In addition to cost per mile, they look at company role and the needs of the drivers.
For instance, a highly paid salesperson will require a different sort of vehicle from an entry-level technician. They likewise take the time to understand how much cargo each vehicle may need to carry and choose an appropriately sized vehicle with the right capabilities and options.
Wilmar lives and breathes numbers, using them to help customers make smart choices about their fleet. “We know what a vehicle is worth the day you buy it, what it’s worth every month through its life, what it costs to fuel it, and what it costs to maintain it.”
“It’s about cost per mile,” explains Scott. “That’s the bottom line. You take the lease payment, plus what you paid in fuel, insurance, and maintenance, plus what you lost or gained on the sale at the end, and divide that by the miles driven. That’s the equalizer.”
Wilmar prides itself on providing this kind of information to customers so that they can make intelligent fleet decisions for their companies. It’s this commitment to work in the client’s best interest that helped Wilmar and many of its customers make it through the recession.
Few industries were hit as hard as the auto industry by the recent recession. Scott says that for Wilmar, the downturn began in 2007, and by 2008 the entire business came to a near standstill.
Wilmar had been through three previous recessions, and outlived them all. But this one was something different, and they could see that from the beginning. Previous recessions had driven more owners and managers to seek Wilmar’s cost-saving services. This recession simply drove businesses to a standstill.
“Owners began to drive vehicles into the ground,” says Scott. “They were so afraid to commit to another vehicle. Our revenue dropped 20 percent in ’07 and 45 percent in ’08.”
Times were tough, but some of the revenue drop was a deliberate and conscious choice on the part of Wilmar. “When things started to go south, we saw it wasn’t going to be good,” recalls Bill. “We got all the sales people in here and we said, ‘Go out and visit all your clients and see how they’re doing. Find out how you can help them.’ And they did. They helped a lot of them downsize.”
For instance, an HVAC company that ran 15 vans continuously during boom times found that it could only keep 10 of them busy in 2008. Wilmar met with them to see how they could help, and found a way to take five of the vans and either sell them or lease them to other customers who needed a good used vehicle.
As a result, Wilmar’s total fleet portfolio shrunk by 33 percent during the recession years. Many company leaders would see those numbers as a bad sign, but Bill and Scott knew better. As a result of their aggressive efforts to help their customers, almost none of their customers ever defaulted on a lease. Even during these difficult recent years, with a portfolio of nearly 3,800 vehicles, they have had only two defaults in three years.
Because the company carries no debt except what is tied up in vehicles on lease, it can afford to take a deep cut in revenue and continue to function. And because the business model is based on long-term leases, even if there were no new accounts or eliminated and reduced accounts, the company’s revenue stream never just goes away.
Says Scott, “We have learned to be more efficient and to control costs tightly, but have never had to cut staff or take other drastic measures to continue to stay afloat. Our customers are still in business, and still paying on their leases. And most of them are devoted, lifetime customers. And the trend is turning upward again.”
Wilmar has been serving Charlotte since 1980, and their client list includes many well-known Charlotte brands like Bojangles, Belk, and Lincoln Harris. With revenues of $18 million, and a fleet of nearly 3,800, the company is poised to serve pent-up demand when the economy improves.
While they specialize in fleets of under a hundred vehicles, Scott says size doesn’t matter as much as whether the company has an inside person dedicated to managing its fleet. He points out that in many small businesses, the owner or controller is responsible for managing the vehicles, and usually it’s a job they don’t relish.
For those companies, Wilmar’s team acts like an outsourced fleet management team, allowing executives and operations managers to focus on their core business. With the customer’s best interests at heart, Wilmar acts like a dedicated employee, ensuring the fleet is managed as efficiently and effectively as possible.
If Scott’s NVLA lifetime achievement award was “premature,” it’s only because he’s not done achieving yet. He has every intention of building Wilmar even bigger and stronger, and looks forward to seeing where it can go in the coming years.
The story of Park Sterling Bank is actually two stories. The first story is about the startup and growth of a bank from the idea and vision of a handful of people. The second story, as important as the first, is about a sense of community and an understanding of a region. Where these two stories intersect is Park Sterling Bank.
Park Sterling Bank, founded in 2006, is a Charlotte-based commercial bank that offers both consumer and commercial products and services including traditional deposit and loan services as well as wealth management, residential mortgage and commercial and industrial lending services. But its goal and beginnings are what makes its story.
From a Seed
The seed of Park Sterling began with Bryan Kennedy. Kennedy helped start Park Meridian Bank in 1991 where he served as executive vice president. Prior to Park Meridian Bank’s sale to Regions Bank in 2001, Kennedy served as North Carolina president at Regions. But in late 2005, other bankers around him started suggesting it was time to, once again, start another bank.
“You start a bank,” Kennedy explains, “because you think you can put together the right people and resources to deliver a higher level of service to the customer than they can currently find in the market. Our founders saw a need for a more comfortable, more personal banking solution.”
With that intent, Kennedy, as CEO, put together a board of directors, some from the old Park Meridian Bank, and started raising capital in March of 2006. By June, they had finished with the largest startup bank capital raise in North Carolina history—$45 million. Park Sterling Bank officially opened for business in October of 2006.
Kennedy is serious about his responsibilities to Park Sterling’s shareholders. “When you sit across from folks and say, ‘I want to start a bank. Please trust me with your money and I’ll do something good with it,’ you feel a real obligation to do just that. We never forget that we need to make a return to our shareholders.”
Kennedy had the intention of growing the bank quickly and had a definite strategy to do it. “I put an infrastructure in place that would support growth. You can either put the right people and the right technology into place from the beginning or you can try to shortcut things and have people wear different hats, none of them well, and continuously play catch up.”
Kennedy’s plan for Park Sterling’s growth got an unexpected boost in 2010 when an industry associate introduced him to Jim Cherry and David Gaines. Cherry had spent more than three decades in banking in both North Carolina and Virginia for the former Wachovia Bank working as head of trust and investment management and as chief executive officer of Mid-Atlantic banking.
He also served as president of the Virginia Banking Association and even after officially retiring from his day job in 2006, Cherry stayed on to chair the association.
“I wanted to remain involved,” Cherry says. “I continued to look for ways to get back into banking. I started meeting with people in the industry. Meanwhile, we had the economic crisis of 2008. At the same time, in the banking industry, it was clear that there was going to be a unique opportunity for consolidation. A combination of low interest rates and an increasing regulatory environment was making the small banking business model untenable.
“I began by recruiting David Gaines who is now Park Sterling’s CFO. He was the controller for legacy Wachovia and their chief risk officer for corporate and investment banking after their merger with First Union, so he had significant finance, merger integration and risk experience.
“We started talking with regulators and other bankers and realized there was a void of regional banks in the Carolinas and Virginia. This was surprising since this area used to be the home of the regional banks—NCNB, Wachovia, First Union, BB&T, Southern National, CNS, Sovereign and Signet. There was just a whole cadre of regional banks and all of them, either one way or another, merged or consolidated or grew up and for some reason, unlike other regions of this character or size nationally, no one had followed in between. There were virtually no banks in this area in the $5 billion to $20 billion in asset size.
“This was significant because those were the banks that were typically large enough to have a broad array of products and services and some geographic diversity but still small enough to serve customers in a community banking framework. We recognized we had an opportunity to fill a need.”
A Shared Vision
Cherry wanted to partner with a bank to take advantage of that opportunity and in anticipation of that, Cherry and Gaines recruited a prestigious prospective board including Walter Ayers, retired president and CEO of the Virginia Banking Association; Jeffrey Kane, retired senior vice president of the Charlotte branch of the Federal Reserve, and Bud Baker, former chairman and CEO of Wachovia.
At the time that Cherry and Gaines met with Kennedy, Park Sterling was three and a half years old with about 50 employees, $500 million in assets and offices in Charlotte and Wilmington, N.C. It was a good match with shared philosophies on risk and customer service and Cherry admits he was impressed with the “smart things Bryan had done up front with Park Sterling.”
“It was state of the art,” Cherry says, “with a technology platform ready for growth and a quality management team in place.”
When an offer to partner was extended, Kennedy says he and the Park Sterling Board had to “do some soul searching.”
“It came down to our mission,” says Kennedy. “Was this the best thing for our shareholders? Should we go with a slower growth strategy, raising capital in small chunks or change direction, partner, and go with a larger capital raise? In hindsight, the decision to partner was 100 percent the right choice.”
“Bryan and the board had an even larger purpose to consider,” adds Cherry. “Which way would better serve the customer? How could they provide more products, services and capabilities to a growing customer base without more capital and other resources? It really was a continuation of the original vision but it was an acceleration of it. When most banks were retreating, this was an opportunity to advance. We agreed we had a vision to create a regional bank in the Carolinas area.”
In August of 2010, Park Sterling Bank became Park Sterling Corporation, trading on NASDAQ, and raised $150 million in an initial public offering. “It was one of the last and largest successful bank IPO’s in the current credit cycle,” explains Cherry. “As part of that capital raise, we were hired by Park Sterling.”
Kennedy left his position as CEO, becoming president and Cherry was named the new CEO. Gaines came on as the new CFO, a position previously held by Steve Arnold who became treasurer. The board was reconstituted but much of the key management was retained.
“We immediately began a two-pronged strategy,” Cherry explains. “First to expand in Charlotte and Wilmington, and go into other high growth markets like Raleigh, Charleston and Greenville, S.C. and recruit what I call the ‘A’ talent in those markets. We’d look for the very best people who were already doing business there and well regarded in that particular market, to build the Park Sterling franchise.
“The second part of the strategy was to use our capital and industry knowledge to partner with other banks in order to gain deposits, talent and other products and capabilities for our customers.”
Partnering for Growth
Park Sterling’s first partnership with Community Capital Bank in upstate South Carolina closed in November of 2011. Not only did the 25-year-old Community Capital fit well with the investment Park Sterling was already making in the Greenville market, it also brought them a mortgage brokerage product, a wealth management and a cash management product that they could now import into other markets.
Plans for their second partnership with Gastonia-based Citizens South came in March of 2012. Citizens South, which began in 1904 as Gastonia Mutual Building and Loan Association, had, prior to the merger, $1.1 billion in assets with 21 offices located in Gaston, Iredell, Rowan, Mecklenburg and Union counties in North Carolina, York County in South Carolina, and Towns, Union, Fannin and Gilmer counties in Georgia.
The merger further enhanced products, providing more robust cash and wealth management and providing capabilities for C&I (commercial and industrial) lending in addition to the real estate lending previously available to Citizens South customers. The merger also expanded the Park Sterling footprint into a new state—Georgia.
When it closed on October 1, 2012, the acquisition of Citizens South made Park Sterling the largest community bank in the Charlotte metro area and next to Bank of America, the second largest bank headquartered in Charlotte.
With current assets of $2 billion, Park Sterling’s acquisitions have essentially caused it to twice double in asset size in the last 14 months.
But along with growth, something else is just as important to Park Sterling’s management. “Because the banks we’ve acquired are community banks, they share our commitment of service to our area,” says Cherry. “This is our home. We grew up here and spent our careers here. We love this area and we know the people here and understand their needs and want to be a solution for them.”
A Solution for the Community
“Banking is a people business,” Cherry continues, “and people like doing business with people they know that live and work here and care about their community. We want to be an alternative to the larger, more impersonal banks. Our objective, in its simplest form, is to be large enough to help our customer achieve their financial aspirations and still small enough to care that they do.”
Their message appears to resonate with customers. Bill Crawford, who is founder of Wilmar Leasing and current chairman of the board for Wilmar Inc., has been a customer of Park Sterling since its beginning.
“We’re a vehicle leasing company so we use Park Sterling’s lending services,” says Crawford. “It’s been a wonderful experience. They have a great group of people. Bill Newbold handles our account and he’s the finest commercial loan officer I’ve ever worked with. He knows our business better than anybody and represents us well to the bank. With a community bank, character matters. When we meet with Park Sterling’s credit committee they know who we are, they know our business; they know our character.”
“With Park Sterling, relationship banking is not just something printed on a business card,” says Bob Salvin, founder and CEO of Salvin Dental Specialties, Inc. “Park Sterling took time to get to know us and establish a solid relationship. Several members of their management team, including the CEO, came out to our business to get to know us. They understand business entrepreneurs and, unlike some of the big banks, they view our business as unique.”
Customer Chris Moffat says he’ll “never go back to a big bank.” He uses Park Sterling not only for commercial banking and corporate borrowing in his role as vice president of Morehead Properties but also his personal banking. “I like their people,” he says. “They know us and anticipate our needs.”
Park Sterling currently has 44 branches with 17 in the greater Charlotte area and while further expansion may be in their future, Kennedy assures that there is “no build and flip strategy here.” “We want to build something we can turn over to the next generation of leadership,” he says.
“All of our executive management have had full careers in banking,” Cherry adds, “and have achieved their career aspirations. Now we share a common motivation. We want to recreate a strong regional community bank here. We’ve all come together to create something special in this community.”
In his book, The Coming Jobs War, Gallup CEO Jim Clifton describes the global jobs war and what he thinks every leader must know about the future of job creation. Clifton maintains that local tribal leaders, super mentors and universities, need to come together, creating “supercolliders” for job creation.
With regard to the first component, he says, “A city with highly talented local tribal leaders is essential for creating the jobs that will re-ignite America’s GDP and save its economy.”
With regard to the second, he says that whether the U.S. stays a world leader or even solvent will be determined by three kinds of people: entrepreneurs, inventors, and super mentors described as university leaders, chancellors, presidents and deans in addition to bankers, venture capitalists, private equity executives, and government leaders.
With regard to the third component, he continues, “A prime foundry or petri dish for the energy and brilliance of these people is the university system. Universities are a critical part of new-company formation everywhere in the world, but America has a decided advantage. Why? Because America’s top…universities are its most differentiating global strength in this war for jobs.
“Great universities are the origin of most highly successful startups. Universities have, by design, the best ecosystem for entrepreneurship and innovation. More super mentors of all kinds are highly involved and swirling around the top…universities in a wider variety of activities than anywhere else.”
This combination of active tribal leaders, entrepreneurial mentorship, and universities—he says, “This is America’s supercollider for sudden job growth.”
Clifton seems to be describing the Charlotte region, its local leadership, its business community and UNC Charlotte—the Charlotte Research Institute, in particular.
Charlotte Research Institute
UNC Charlotte has experienced several names changes since it was first created in 1946. First known as Charlotte Center and then Charlotte College, it was re-created by the state of North Carolina in 1965 as The University of North Carolina at Charlotte, more commonly UNC Charlotte. Its focus has always been service to the Charlotte region and its businesses.
When Jim Woodward assumed the mantle of chancellor at UNC Charlotte in 1989, the University was 43 years old and still did not have a single doctoral program. The problem, he diagnosed, was speed or the lack of it. He likened the school to a Galapagos tortoise while other universities raced forward like English hares.
“The Ph.D. is critical to continued growth in both research and service,” maintains Woodward, a Georgia Tech Ph.D. in engineering mechanics. Under his watch, UNC Charlotte ramped up its evolution.
In 1993, four years into his chancellorship, UNC Charlotte inaugurated doctorate programs in electrical engineering, mechanical engineering and applied (not theoretical) mathematics. Today, the University boasts 19 doctorate programs turning out 100 new Ph.D.s a year.
But Woodward thought more was needed. “We asked, ‘What could we do to be more aggressive in service?’” he says. “How could we make the University more available to the greater community?” The University’s answer was, “Research.”
In 2000, UNC Charlotte broke ground on a 102-acre free-standing research campus adjacent to what is today the new football stadium. The Charlotte Research Institute (CRI) nicely blended the last two steps in university evolution—research and service. By 2014, there will be 12 buildings at CRI with 1.6 million square feet of academic, research, and partnership space.
These evolutionary giant steps were capped by the Millennial Campus Financing Act of 2000. With that important legislation, the North Carolina General Assembly not only stimulated the development of research campuses throughout the state, they also lifted restrictions on who could work there.
“We could bring companies to campus, charge them rent and collect the money,” says Woodward. “A research campus was another step in enabling UNC Charlotte to engage the community at the right level.”
The Charlotte Research Institute is often confused with the act that created it. It is UNC Charlotte’s version of the “millennial campus” referred to in the act.
“North Carolina State University calls its research campus Centennial Campus,” says UNC Charlotte Chancellor Philip Dubois “We have never formally taken the name Millennial Campus. We have always called it Charlotte Research Institute.”
CRI connects businesses, researchers, governmental agencies, and academia with exceptional facilities and equipment to enhance intellectual capital, accelerate technology commercialization, cultivate the development of entrepreneurial and start-up ventures, create global educational and industry partnerships, and spur economic growth regionally and nationally.
CRI supports interdisciplinary research centers that tackle complex problems in bioinformatics and genomics, biomedical engineering and science, optoelectronics and optical communications, precision metrology, cyber defense and network assurability, energy production and infrastructure, environment and sustainability, life sciences, nanoscale sciences, motorsports engineering, visualization, and biology and translational research.
Most CRI buildings are concentrated just off of North Tryon Street, along Snyder Road, north of the new football stadium, but the campus also includes Woodward Hall, Cameron Applied Research Center and other academic buildings on the main campus.
“CRI looks like a congressional district,” says Dubois. “Despite its amorphous shape, CRI’s message is crystal clear,” he continues. “The University is open to business.”
Open to Business
Teaching, the first step in a university’s evolution, was not overlooked in the development of CRI. Companies that either come to CRI or spin out from faculty research often need graduate and undergraduate students. For students, that means combining the practical and the theoretical during the school year and part-time employment during the summer.
Dr. Robert Wilhelm has directed the evolution of CRI since 2005 when he was named CRI’s executive director. Prior to that, he was a UNC Charlotte mechanical engineering professor. Wilhelm was appointed to his present position, vice chancellor for research and economic development, in 2011.
The traditional yardstick for measuring a research director’s impact is how much he or she spends. CRI’s “spend” is currently $30 million with 80-82 percent from federal grants and 15 to 20 percent company-based grants.
The Department of Defense accounts for most of CRI’s government dollars. Older and larger research campuses like North Carolina State University or Clemson University have a $150 to $180 million spend. Wilhelm’s goal for 2020 is to boost his “spend” to $50 million.
“Bob Wilhelm is the perfect person for this job,” says Woodward. “He is a full professor, a status that was earned because of his outstanding teaching and research, and he started his own business. His role is to encourage and coordinate, to be engaged in the business community, learn what they need and bring that back to UNC Charlotte to get it done.”
Wilhelm has had a place at the table for all decisions regarding CRI since 2005, Dubois’ first year as University chancellor. Decisions to significantly expand CRI to include a more than $4 million motor sports facility as well as to lobby city government for two light rail stops were initiated since that pivotal year.
“UNC Charlotte has never been better prepared to engage the Charlotte regional business community than we are today,” says Bob Wilhelm. “We are ready, willing and able to help businesses advance their products and services.”
Currently there are 16 small, rent-paying companies residing at the research campus. “These companies work with faculty members to produce prototypes or small quantities,” says Wilhelm. “We are not really in the quantity business here.”
For techno-centric start-ups or spin-outs, CRI is a dream location. It combines high powered Ph.D.-level talent, top-end lab and office facilities, new equipment, a university library, campus eateries, information technology experts, Internet, maintenance and local phone service. Annual rent ranges from $19 to $21 a square foot.
Cutting-edge insights, advice and assistance provided by faculty members may result in inventions with great commercial potential. That benefit belongs to CRI’s rent-paying business partners, not CRI or the University. CRI is a landlord with oodles of assets for its partners, but it doesn’t own their patents, trademarks, copyrights or ideas. If it did, few would come knocking on their door.
That sweet deal takes a different track for the University’s faculty and staff. Professors must disclose their inventions to CRI’s technology transfer office, which reviews the invention and tries to determine the best strategy for commercializing it. That could involve filing for a patent or patent protection, but neither option shuts out an entrepreneurial professor. Faculty inventors may obtain a license to produce or commercialize a patented invention from the University.
“We are a little different from other universities,” says Associate Director Brad Fach of the Office of Technology Transfer. “Our policy is to encourage faculty and staff to be entrepreneurs. We help them do that.”
Partnership, Outreach and Research
In early 2014, Charlotte Research Institute is expecting a giant uptick in its real estate. That’s when the 96,000-square-foot PORTAL building opens its doors. A portal is an entry way and the new building is another way for business to enter into the life of the University. PORTAL is Wilhelm’s acronym for partnership, outreach and research to accelerate learning, and he played a large role in its design.
Ten thousand square feet of PORTAL’s first floor will be devoted to a sensitive compartmented information facility (SCIF). The acronym is pronounced “skiff” and in defense and security parlance may be referred to as a Red Room. The “information” in SCIF is derived from federally-funded and classified CRI research. Access to the SCIF is limited and all activity, even casual conversation, is restricted from the public.
There are 13 other SCIFs at UNC Charlotte. Foreign students are excluded from working in these sensitive areas. Like Greta Garbo, SCIF may want to be alone, but there will be other commercial enterprises and research facilities near its first floor sanctuary.
PORTAL’s second and third floors will house Ventureprise, Inc., formerly the non-profit Ben Craig Center. Since 1986, the University-sponsored, CRI-affiliated Ben Craig Center has provided coaching, mentoring and business incubator services to startups, early-stage businesses and client tenants. Currently it has 22 client tenants; all are expected to make the move to PORTAL.
President Paul Wetenhall explained the difference between CRI’s business partners and his client tenants. “For companies to succeed commercially they must produce a superior product and compete in the marketplace. That is not something a university research facility can figure out. Business incubators provide day-to-day help with strategies, plans and models. They build commercial capability.”
Wetenhall encourages small businesses to move to PORTAL incubators where rent is even more reasonable than CRI’s research locations. A small commercial office runs $400 a month; larger space rents for $16.50 to $17 a square foot with all coaching, mentoring and normal office accessories included.
Ventureprise has adopted a new mission to go with its new moniker: Help the Charlotte region establish a strategy for entrepreneurship. Wetenhall added flesh to that intriguing skeleton. He is working to recruit and retain inventors. Ventureprise wants to secure venture capital, provide access to public sources of money and encourage favorable public policy all on the inventor’s behalf.
PORTAL’s benefit to business begins in 2014. Its benefit to tax-payers has already taken place. “It was built with receipts from federally funded research and long-term bonds,” says Dubois. “There were no state appropriations involved.”
Strategies for Entrepreneurship
CRI has many success stories. One is Camber Ridge, a tire testing company. It graduated from CRI’s Motorsports and Automotive Research Center to CRI’s business incubator at Ventureprise. Dr. James Cuttino, a mechanical engineering professor on leave from the University, is its president and owner.
Cuttino’s invention is a testing machine that pulls a tire around a 1.25 mile paved oval track at speeds approaching 200 miles per hour. Race fans and visitors to the NASCAR Hall of Fame know that tracks at American racing venues have different surfaces. The Camber Ridge track, now in the planning stages, will have four asphalt textures. The company is anticipating five to 10 technical jobs to initially run the facility and one to two engineering staffers.
Cuttino’s potential clients are tire companies, auto and truck manufacturers, the defense industry, auto racing teams and suspension systems manufacturers. “His process is a more efficient and less costly simulation than building an entire automobile to test tires,” says Ventureprise’s Wetenhall.
Cuttino was a finalist in the 2010 Charlotte Venture Challenge, a fact that contributes to his status as an up-and-coming entrepreneur. Formerly called Five Ventures Business Innovation Competition, the Challenge is CRI’s showcase for some of the region’s most successful early-stage companies.
In 2012, 18 finalists out of 117 applicants were awarded cash prizes totaling $113,500. Each pitched their company to a panel of venture capitalists that winnowed the field to nine and then one overall winner. All applicants attend workshops that hone their verbal and oral presentation skills.
Will Camber Ridge and other fledgling businesses survive the harsh realities of the world outside the campus? “We create the conditions for success and make introductions,” says Wetenhall. “But at the end of the day, the individual entrepreneur has to have the spirit and drive to make it happen.” That may be a researchable topic for UNC Charlotte’s psychology department. The social sciences now have a small folding chair around CRI’s techno-centric table. They may need more room.
If Charlotte is prepared to engage its own “supercollider for job creation,” it appears that everything is in place to make our very own. It will ultimately depend upon civic leaders, business leaders, university officials, faculty and staff, entrepreneurs, innovators; they must participate and come forward with new ideas, challenges and insights from their own experience to boost innovative thinking in our regional economy.
Charlotte can do this and have a significant impact on wealth and job creation nation within the global marketplace.
As we begin the new year, most HR departments will be rolling out a menu of benefit choices. What is the purpose of these benefits, and what is the advantage or value of each? Let’s explore the most common choices offered by employers and ways these may benefit you.
Many of these options will allow you to contribute pre-tax dollars to an account, which will reduce your tax liability when you file your return by lowering taxable income. To fully appreciate the value of pre-tax dollars, let’s assume you are in the 25 percent tax bracket for federal taxes. For every dollar contributed, you will save a combined 40 cents on federal, state, and payroll taxes.
Flexible Spending Account (FSA)
A flexible spending account allows an employee to contribute up to $2,500 (for 2013) in pre-tax dollars to an account which can be used for doctor co-pays, prescriptions, insurance deductibles and other qualified medical expenses. Over-the-counter medications are no longer eligible for this program unless prescribed by a doctor. One important characteristic of these plans is any amount remaining in the account at the end of the year is lost, and this account cannot be taken with you if you leave your current employer.
Dependent Care Flexible Spending
A dependent care flexible spending account is a type of flexible spending account wherein employees can contribute up to $5,000 annually on a pre-tax basis. These accounts are used to pay for childcare services for children under age 13. Dependent care dollars can also be used for adult dependents (as long as they are claimed as a dependent on your tax return). The caveat of these accounts is that if you are married, both parents must have earned income to qualify for this benefit. As with FSAs, unused amounts do not roll over to future years.
Health Savings Account (HSA)
A health savings account is owned by the employee and used in conjunction with a high deductible health insurance plan. The purpose of these accounts is to allow the employee to accumulate dollars to pay for qualified medical expenses that are not covered by insurance. The types of medical expenses that qualify are very similar to those that qualify under an FSA.
Both employer and employee can contribute to an HSA account. A maximum of $6,450 for a family can be contributed per year. If you are over the age of 55, you can contribute an additional $1,000 per year. Employer contributions are tax deductible to the employer and the employee contributions are made pre-tax. These accounts grow tax-free similar to a 401(k) plan and unused dollars are rolled forward to next year.
Similar to an individual retirement account, you can use contributions to an HSA as a tax planning tool to reduce your tax liability. If you have not already reached your maximum contributions for the year, you can make contributions up to the due date of your tax return to count towards last year’s contribution. The account is portable unlike FSA accounts, which means that if you change employers the money in the account stays with you.
Health Reimbursement Arrangement (HRA)
Health reimbursement arrangements are becoming a popular way for employers to limit their health care costs. In an HRA account, only the employer contributes money. A maximum contribution per employee is set each year by the employer. Unused amounts are never spent and are saved by the employer. This allows the employer to limit its health care costs. As the employee spends money on medical expenses, the employer will write them a reimbursement check on a tax-free basis.
Many employers offer group long-term and short-term disability policies to employees. In most of these programs the employee contributes money on an after-tax basis; however, if a claim is made and benefits are collected, these benefits are tax-free to the employee. A good rule of thumb is to purchase a policy that provides two-thirds coverage of your salary in the case of disability.
The benefit options available for both employers and employees are many and can be a confusing choice of letters and acronyms. The items described here are some of the more popular choices available. With health care costs continuing to rise, employers who want to continue to offer their employees this benefit have to become creative to keep their costs manageable.
If you have any questions about the tax implications of the benefit choices offered to you or any other tax concern, you should contact a CPA.
Like many, I am optimistic that the worst of the downturn is behind us, and that brighter days are ahead. As a result, I’m seeing many people starting new businesses, and current business owners that are considering moving to a new location to accommodate anticipated future growth.
Regardless of whether a business requires office, retail, industrial/manufacturing or some other type of property (or all of the above), there is a threshold question: Should I lease or buy the real estate where I will be operating my business?
Here are a few considerations which most any business owner should consider when deciding whether to find real estate to lease or buy.
Cash Flow. Cash flow is always a concern for business owners. Often, leasing is appealing as it normally involves less upfront cost than buying, but can involve greater long-term cost, without the benefit of building equity in the property and realizing on any appreciation in the value of the property (depending on the market, of course).
If you need liquidity and cash to maintain the flexibility to build your business, the upfront costs of purchasing a property may not be the best move. As a practical matter, many small businesses and start-ups without a history of performance or current cash flow may have trouble finding the financing to purchase a property, which could make leasing the only viable option.
Flexibility to Move vs. Being “Stuck”. A lease provides the freedom to relocate when your lease expires. If you love your location and do not want to move, you could end up either overpaying to secure a renewal, or not coming to renewal terms and having to go through and undesired, disruptive moving process. For uses that rely heavily on location, the prospect of having to move is frightening. For more “fungible” uses, this may not be a big deal. If you buy a property and it doesn’t work out for some reason, moving can be a more complicated (and expensive) process.
Do You Need Room to Grow and Expand? If you are certain of your short- to mid-term needs, a lease of X square feet can suit you just fine. But what if there is a chance that next big line of business comes through, doubling your needs in the near future? You could buy a property that currently accommodates (or with some renovation/expansion, could accommodate) that growth potential, so you have the ability to meet current and future needs.
Typically, people do not want to lease (and pay for) more space than they know they will need, and subleasing excess space that you lease is often subject to landlord approval, whereas excess space that you own can be subleased as you see fit. In an office building, it may be the case that the landlord can offer you an expansion right on adjacent space, but that assumes that there is space available at your office property of choice, and that the expansion space of predetermined size/dimensions will suit expansion needs. However, if you purchased a 50,000-square-foot manufacturing facility with a current need for 30,000 square feet of that, you have space available to meet future needs as they arise.
Do You Need Control of the Property? Purchasing affords the owner more control over the use of the property than leasing the same property would, as landlords often want to restrict the extent to which a tenant can use, operate and renovate/improve the property.
Splitting the Difference—Making Real Estate Part of Your Personal Planning.Many business owners have realized the benefit of forming a limited liability company (LLC) for the purpose of owning their real estate, and leasing the real estate back to their operating company. There are tax and other advantages to this structure which may allow your operating company some of the benefits of leasing, while securing the longer-term economic advantage of ownership for yourself.
These are just a handful of the myriad issues that arise when a business owner is faced with a decision about where to set up shop. Be sure to consult with a qualified professional when evaluating what approach works best for you and your business.
Content contributed by Wishart, Norris, Henninger & Pittman, P.A., which partners with owners of closely-held businesses to provide comprehensive legal services in all areas of business, tax, estate planning, succession planning, purchases and sales of businesses, real estate, family law, and litigation. For more information, contact Andrew McCullough, J.D., at 704-364-0010 or Andrew.McCullough@wnhplaw.com.
In today’s digital marketplace, the photographs on your company’s website and social media are the equivalent of your firm handshake. They should be thoughtfully presented and represent you in the very best light. No matter how eye-catching your headline or snappy your copy, it is imagery that first attracts a viewer to an ad, article or website. It’s also the first and sometimes only thing later recalled by a viewer.
Photographs of your building, offices, executives and/or staff can begin humanizing your company long before a prospect actually meets or talks to a member of your team. If they make a favorable first impression, the viewer often experiences what psychologists call the “halo effect”—whereby the perception of positive qualities in one respect gives rise to the perception of similar qualities in other respects or in the whole.
Studies have shown, for example, how being physically attractive skews judgments favorably towards individuals in terms of likability, competency and trustworthiness, and advertising is predicated upon the effect of selecting attractive candidates to represent products and services. The more positive a viewer reacts to photographs of your business or executives, the more likely they are to favorably view your products and services.
And, according to a 2005 Princeton University study published in Psychological Science, people make those decisions about competency, trustworthiness, and likability in less than 1/10th of a second. Literally the blink of an eye. People will continue to use a website or read written material that makes a favorable first visual impression; if unfavorable, they will leave your site and toss your mailed pieces before they learn you may be offering more than your competition.
You can’t afford to risk your business’s reputation with poor-quality photos that will infer poor-quality on your services and products. But you don’t want to waste money either. So what is the best way to get your company represented in the best possible photos?
Sending company executives to an outside studio for portrait shots will require a great deal of time by all concerned and result in less than engaging photo formats. Oftentimes, in fact, environmental portraiture can tell more of a story than a traditional seamless background photo.
Attempting to use Jim from the mailroom for corporate photography because he also “does photography” could be equally foolhardy, especially considering the expenses of time spent and business interrupted whilst employees are diverted for less than professional results.
The best option is to outsource the project to a professional photographer that specializes in location studio work. Such an image-maker can set up backgrounds and lights in a meeting room or other space and/or can utilize visually evocative elements of the building or interior office for environmental portraiture.
Additionally, good photographers have a great deal of knowledge regarding different lenses and lighting to create different effects or evoke particular emotions; good frame visualization and selection of background effects; suggestions for scene layout, perspective and even posing and dress; and, frankly, experience assuaging even the grumpiest of executives.
In short, the professional can pose the company’s people and premises in the most favorable and engaging light possible while providing a continuum and consistency to the photography taken.
Equally important to obtaining a quality photo is the knowledge and skill in processing it post-production. Processing encompasses overall adjustments to the photo’s temperature, contrasts and saturation, and retouching. An experienced professional will want to get the photo right in the camera at the outset, with proper lens work, composition, exposure and lighting…i.e. not a lot of befores-and-afters.
A lot of the photos that people think are retouched actually aren’t—the colorful effects in the Firebird photo shown here, for example, were not created in Photoshop, but are mostly a product of the exposure time through a very small aperture and polarized lens. Likewise, the airplane shown here was shot using green gels over the lights and white balanced for fluorescent; it’s not a composite sky.
To avoid the appearance of fiction, good retouching in business photography is necessarily subtle and age-appropriate. Skin should never have a blurry or waxy appearance. To retain skin’s qualities, the retoucher should work at the pore-level with little brushes. Blemishes should probably be removed, unflattering shadows lightened and flattering ones darkened, and the appearance of wrinkles reduced. Ill-fitting collars and waistbands are often smoothed. Usually specific requests can be made between the processing and retouching stages.
When searching for the right professional, beware of faux-tographers. Anyone with a business card, a consumer-level camera, and a $50 website template can market themselves a professional photographer. The down economy has washed many green amateurs into the market hoping for a little under-the-table income. The web mixes the good and bad and makes it easy for the unscrupulous to misrepresent their abilities and experience.
Recently, a Texas-based image-maker charged that the portfolio of a Charlotte-based studio advertising on one of those daily deal coupon sites was full of images stolen from her site. Charlotte consumers have likewise been burned buying from photographers with fake portfolios on Etsy. Of course there are more Craigslist horror stories than can be recounted.
To ensure continuing confidence in the professionalism of the field of photography, many image-makers are choosing to undergo certification from the Professional Photographic Certification Commission. Certified Professional Photographers (CPP) must pass stringent standardized tests and a portfolio review by a panel of experts, and adhere to a stringent code of conduct. Certification must be renewed on a periodic basis, through further exams or continuing education.
Finally, in selecting a professional photographer, you’ll want to shop around and look at lots of portfolios. Look for range and a consistent quality and cohesive visual style across the artist’s portfolios. Determine how long they’ve been in operating as a professional and how much executive portrait work experience they have. Take a meeting to talk about your company’s brand and what emotions and messages the photos need to evoke.
When you find a photographer’s whose work you love and like and trust, book them. You won’t regret it.
Contrary to recent public opinion expressed by local business executives at their annual economic outlook, I expect that our economy will grow at twice the rate of the gloomy growth predicted by most commenters.
Retiring executive Dan DiMicco from Nucor says that the economy will be “hard pressed” to match the 2 percent growth in the GDP that was expected for 2012. Duke CEO Jim Rogers adds that structural unemployment will continue to be high…around 6 percent rather than the consensus of 4 percent before the Great Recession. Given the political debate around the “fiscal cliff,” it is no wonder that they are so pessimistic.
From my small business perspective, I think that 2013 will be an important year of transition and that economic growth will move upwards as we begin to face the new direction that has been set in place as the “new normal” since our Great Recession.
Here are 10 reasons for believing that our way of life will be rebounding.
- Federal lawmakers will soon/have substantially resolved the “fiscal cliff” issues setting taxes and spending targets in place that essentially provide a platform for government and for business for the next four years. The votes come easier in 2013 because it will be a tax cut instead of a tax increase. Once these rates and packages are passed, we can all get back to business and apply them to our cost structures.
- The mere fact that President Obama was re-elected for a second term resolves much of the political debate all by itself. He has a limited time to steer public policy before the mid-term elections and following that, our democracy will begin to sort through candidates for 2016. The second term of a President is a “lame duck” term where his political capital will wane as he gets closer to the end of his Presidency. At the same time, President Obama will be free to implement his agenda and conduct the business of the nation in his own way.
- The Affordable Care Act will continue to be implemented. Many small business owners are concerned and even frightened by the act. At the same time, few people really understand the full impact of the act and how it will affect them. As details become clearer, more business owners will learn how they can benefit from this reform. The mere fact that small businesses with fewer than 50 employees can direct their employees to health insurance exchanges will relieve them of the annual exploration of health care costs for their employer benefit packages.
- We are four years into an economic recovery. It is, as predicted, a slow and arduous recovery. Having lost so much manufacturing and jobs overseas, our work force is going through a huge transition to new jobs and new skills. That will continue, but more business sectors are improving. Housing, health care, technology, banking and advanced manufacturing are growing again.
- Larger businesses and banks with substantial excess reserves will be looking to increase their returns on their assets. Their investments will likely stir even greater economic activity. In addition, American energy resources will expand and provide us greater flexibility and opportunity. We just need to grow it safely.
- We are on the cusp of a new wave of technological growth. For the last 20 years, we have learned about computers, memory and processors carrying information for communication exchange and education. The application of that information that has and is being gathered will continue to drive costs down and advancements forward. With new avenues for growth and innovation, we will gain renewed confidence about our economic future.
- Our engagement in the War in Afghanistan will wind down and we will withdraw troops. Our long national nightmare with terrorism will not end, but our efforts will be more targeted and focused to regions and pockets rather than countries.
- The global marketplace will continue to evolve. We will learn more about our customers around the world and what they can contribute as well as what they will consume. At the same time, the United States will get more focused on what can be created and built inside our borders.
- The U.S. economy and cities, in particular, will be looking at new ways to grow and learn and improve the quality of life. Our economic dominance is being challenged, but Americans are great innovators and entrepreneurs. We will design, explore and discover new avenues for growth that will be fun, fascinating and bold. That is our nature.
- We will continue to learn how to do more with less. We will apply “green” technologies. We will find greater comfort in smaller places. We will earn more in a broad spectrum of ideas, thought, art, music and culture.
While I may be accused of being overly optimistic, I figure that we all need to look for the opportunities of the future and how we might engage them. We are smart people living in a great place with great resources. We simply need to apply our brains and mix with other people who will stimulate and challenge us to be better than we might be by ourselves. We are in a new year and we have great prospects ahead!