Business Planning in Lincoln – January 2022

Just as many of us make our own personal goals at the start of a New Year, businesses often do the same. This is a great time to reflect on your business’s previous year and map out your vision for 2022. We wanted to learn more about business planning for the New Year, so we reached out to several professionals in the Lincoln community for advice.

What to Anticipate in 2022

Eschliman Commercial Real Estate’s (ecrproperty.com) biggest concern of 2022 is the onset of inflation. Owner Ted Eschliman gave us some insight into what business owners should do to combat a price increase.

“This may be uncomfortable to address, but we are recommending our clients take precautions to protect their bottom line and not be afraid to increase their prices,” Ted advised. “Of course, customers don’t like increases, but they also don’t want their favorite restaurants, services, or shops to go out of business, either. Inflation is inevitable. Be gentle, but don’t be afraid to go first.”

Ted reminded us that small, incremental price increases are not only necessary, but most consumers are aware that things are going to go up in 2022. As a commercial real estate expert, he also shared his advice for landlords.

“Landlords who are charging modified gross lease rates should strongly consider breaking down their rent charges into triple net (NNN) pricing in new and renewal leases,” suggested Ted. “Separate out your property taxes, snow removal, landscaping, and CAM charges (common area maintenance) and charge these operational expenses on top of a base lease rate. If you aren’t careful, you can lock your lease into rates that don’t cover these climbing expenses in the long term. Talk to a commercial real estate agent if you need help with this. Eschliman Commercial Real
Estate offers consulting on an hourly basis.”

In 2022, Ted anticipates seeing construction costs, shortage of land and labor, and supply chain delays play a big role in the inevitable increase of business expansion. Be prepared for sticker shock as you expand locations or increase the size of your facilities, or even renew a current lease.

“The good news, though, is business in general is healthier than ever, and it’s still a great time to grow a successful business when you choose the right location and work with a qualified real estate professional.”

Get Ready to Grow

If you put a hold on trying to expand your company in the wake of the pandemic, Cruise & Associates (cruise-associates.com) wants you to know that now is the time to begin to transition into a state of growth.

“Many of your competitors may not be trying to expand because they are still operating in conservative mode,” President Robert Cruise explained. “One of the best ways to grow is through marketing, which is often overlooked. Business owners make the mistake of treating marketing as an expense instead of an investment. When their business is doing well, owners don’t feel marketing is necessary and wait until something happens before trying it. To get your business to grow and expand, you need to invest in marketing and have a plan. Business owners need to look at marketing as a marathon and not a sprint. It builds on top of each other, and what you do in one year will affect the sales and growth the following year.”

Robert says the best way to make sure nothing is getting overlooked is to create written goals for 2022. By taking the time to write things out, you are providing focus and clarity for yourself and your employees. Some key areas to look at when coming up with goals include sales and growth, re-evaluating inventory, and adding new products or services. It’s also crucial to keep in mind the laws of the country that are ever-changing. Business owners need to monitor the pending tax changes that could drastically affect their business. If these changes pass, it is important to meet with your accountant to make sure you understand the new laws and ensure that they won’t negatively impact your business.

“As a full-time accounting firm, Cruise & Associates can help provide direction by meeting to do tax and business planning, lease negotiations, and cash flow projections.”

Another way you can put your business in a position to grow is by joining the Lincoln Chamber of Commerce (lcoc.com). When your business becomes a Chamber member, you will be able to better connect your company to the city of Lincoln and to other businesses. This is a great way to maintain credibility and collaborate with local leaders who are building businesses and the community. You’ll also receive access to special networking events, and you’ll have the opportunity to participate in annual events such as Savor the City and the Lincoln Expo. The Chamber is passionate about supporting local businesses, so join today to put your business in a position for growth and further engage with the community in 2022.

Business Banking

We spoke to Stacia Thiesen, business banker at Union Bank & Trust (UBT, ubt.com), to hear her advice for 2022 business planners.

“Start by analyzing the year’s expenses. While it may be difficult to do away with some expenses, you can set a goal to lower them significantly,” Stacia recommended. “Look at expenses that are a disproportionately large percentage and see how you could opt for lower-cost methods. The more revenue you can keep in-house, the faster you can pay off debt, grow equity, and more.”

UBT can help businesses plan by running a cashflow analysis for business owners. If an owner wants to purchase real estate, UBT can show them the rate and terms for either a UBT or SBA loan, as UBT is a preferred SBA lender. They can show the debt coverage ratio to see if it’s sustainable for the business to cash flow. For example, the Debt Coverage Ratio requirement for a business is 1.20X, which means for every dollar spent, $1.20 should be coming in. Stacia also touched on funding for purchases, and how businesses can prepare to make this request.

“When a business owner comes to us for funding to purchase a piece of equipment or real estate, or they need a line of credit to help with cashflow while waiting on accounts receivable to be paid, the banker analyzes their profit and loss reports to understand their cashflow,” explained Stacia. “More times than not, that business owner has been writing a lot off so that their net income is close to $0 or negative to avoid paying taxes. Unfortunately, that hinders them when asking a bank for funding because we see that their business cannot cash flow the debt they are requesting. So my advice is, if you know that you will be expanding or growing and will need some funding from a bank, report true net income so the business shows it can service the debt needed for growth.”

Financial Planning

It can be overwhelming to plan for the entire year – or beyond – for your business. The best place to start is by setting some goals. When setting goals, SP Group, P.C. (spgrouppc.com) recommends adhering to your overall mission and culture as a company.

“Focus on what you do well and how to improve it,” said CPA Bryce Tarletsky. “In order to reach your goals, everyone in the company needs to be on board. Goals should be achievable with a realistic timeframe to accomplish them. Create specific objectives that will help you achieve these goals, whether it’s a daily to-do list or a weekly/monthly check-off list. Make your goals part of your daily life, evaluate as needed as your plan unfolds, and soon you’ll see great progress towards completing your goals.”

SP Group prides themselves on developing deep and long-lasting relationships with their clients. They don’t want to be considered just a tax advisor, but as an extension of their organization. They truly want to learn about their clients’ businesses, lives, and goals, both professionally and personally.

“Knowing our clients’ goals is vital,” said Bryce. “It allows us to look into specific tax and accounting scenarios that can help them reach these goals. Every client is different; there is no cookie-cutter plan that works for everyone. Since time is the most vital resource for a small business owner, we want to take a portion of that burden off of our clients while still helping them reach their goals. When our clients reach their goals, so do we.”

Bryce also noted that there may be changes in the tax code that could impact business owners in 2022 as part of the “Build Back Better” bill which, as of this writing, was unlikely to be passed into law in 2021 but may be taken up by Congress in 2022.

“Lastly, as everyone knows, you can’t complete goals on your own,” said Bryce. “It takes the full organization working in the same direction to achieve them. Don’t be afraid to reward your team when a goal is reached. Showing appreciation and congratulating hard work will go a long way in completing future goals.”

Let’s Get Moving!

As you plan for the New Year, you may be realizing that your business’s current space is too large or too small, or perhaps you can maintain the same amount of space at a lower cost elsewhere. This is where Guiderock Commercial Realty (guiderockrealty.com) steps in to help.

Owner Cathy Kottwitz suggests beginning by writing down your space needs. This is a great way to start figuring out what square footage you’ll need. Make sure you take into account the space needed for storage, private offices, production, and future growth. If you’re forecasting growth in production and employees, it makes sense to calculate that in as well so you don’t grow out of your new location within the first six months. Think about how you use space as well; do you need a conference room in your space for daily meetings, or would it work to have a shared space elsewhere in the building?

Once you understand how much square footage is needed, research your budget to narrow down the listings for your business and get a realistic expectation on what you’ll pay. Be sure to check different locations around town as some prices will fluctuate based on traffic flow, location, and demographics.

“After you do this, it’s time to start looking for properties that match your needs. Searching online for commercial space can be frustrating and eats away at your time. This is where it makes sense to talk to a commercial real estate agent or tenant representative who is connected within the local market,” Cathy shared. “They’re typically connected to private networks that have commercial listings not open to the public. Tenant representatives also bring a lot of experience and resources to the search so they can lead you in a better direction after looking at business needs and budget. Even if you’ve found a commercial property, there’s still the possibility that the lease terms may not fit your business needs. It’s essential to take the time to read over and understand the terms of the commercial lease before signing anything, and a tenant representative can help you with this.”

Another fabulous choice when looking for commercial property is Greenleaf Commercial Real Estate (greenleafcommercial.com). It’s wise to call a professional for help when searching for commercial space because real estate agents can help locate the best options available on the market, and by comparing properties, they can ensure they are being leased at a fair rate. Greenleaf takes their market research very seriously and releases the Greenleaf Market Report semi-annually to announce trends in vacancy rates, absorption rates, asking rents, building permits, and notable transactions.

“When agreeing to a lease, look at the terms of maintenance and repairs,” President and Director of Asset Management John Linscott advised. “This is the kind of thing people might not pay attention to. For example, you may not realize when you sign up that you are responsible for equipment replacement, which can be a $5,000 to $6,000 bill.”

Greenleaf’s properties include retail, office, warehouse, shopping, and industrial properties. They offer special purpose and vacant land for businesses with unique requests. Many businesses find it challenging
to find the perfect office space that suits their needs; Greenleaf makes it easier.

Office Options

Within the last two years, a lot has changed in terms of workspace environments. If you or your company currently works from home but is ready to move into an established office space, or if your business is looking to reduce workplace costs, Holroyd Investment Properties’ (HIP Realty, hiprealty.com) OffiCenters can assist you. Michael Holroyd has experience assisting clients who aren’t necessarily looking for a traditional office space but desire something that is more flexible and suited to the modern business scene.

“At our OffiCenters, we staff a professional receptionist in a comfortable lobby to greet all of our tenants’ customers,” Michael began. “Our OffiCenters are staffed with a receptionist to professionally answer incoming phone calls for our tenants, which allows them to focus on taking care of their existing clients and building their businesses. Perception is important, and we strive to help you make every experience for every customer the best that it can be.”

If you aren’t ready to settle into an office just yet, but are looking to work outside of your home office, Rock ‘n’ Joe Coffee Bar (rocknjoe.com) has an atmosphere that allows you to focus on your work without feeling like you’re working alone. Their space features exceptional coffee with some great rock ‘n’ roll music to keep you going all day long. In addition, they also have a private conference room for meetings or Zoom calls, making them a great choice for a workplace away from the home office.

Planning Beyond 2022

Lutz (lutz.us) is a business solutions firm for businesses and individuals seeking a partner to help energize and heighten financial and organizational success. They can help you plan in a variety of areas, and one area that they specialize in is business transition and exit planning. Whether or not you’re nearing retirement, creating an exit strategy isn’t only a good idea, it’s highly-advisable. If a business owner spends large amounts of time and resources building and growing a business, it is only natural to want a return on the business once it is time to retire. Having an exit strategy can make this possible. Consulting and M&A Shareholder, Bill Kenedy, gave us more insight into the importance of business owners looking toward the future of selling a business.

“Be forward-thinking. Spend some time gaining knowledge of what drives the value of your business and how you can improve the business’s transferability,” he said. “Lutz M&A can assist business owners in understanding the best long-term business transition options, including the value of their business, given the desired transition structure.”

Often, business owners keep their focus only on short-term goals without thinking long-term. Even then, their inevitable exit from the business is typically still left out of the equation. A successful business transition usually requires several years of planning. Bill and the rest of the team at Lutz are willing and ready to help anyone create the right exit plan to achieve their goals. They help you think of every step needed for a successful transition plan and give you actionable measures to ensure you make a successful exit.

“The time is here!” Bill exclaimed. “Don’t hesitate to be ahead of the game in this area of business planning.”

Have you mapped out your 2022 business plan yet? Knowing where your business is at and what your annual goals are is important in ensuring the success of your business. We recommend reaching out to these local businesses and professionals to prepare your business for another year of success!