Coming out of a recession, the right employees can help a business thrive during the recovery.

As the economy attempts its slow climb out of the recession, many businesses are once again looking to fill positions. This could spell relief for some of the millions of unemployed Americans. However, a recent survey of job seekers conducted by Infinity Consulting Solutions found 59 percent of hiring managers tend to favor candidates who are currently employed over those who are unemployed.

Smart managers know to file away this school of thought — and the stigma attached to those left jobless —with other outdated thinking. The reason? During the prolonged recession, many highly skilled employees lost their jobs through no fault of their own, and those very people can bring desirable attributes to a forward-looking company.

Taking a fresh look at prospective employees during this historic economic downturn is just one of the challenges, and opportunities, facing human resource managers. New hires made in the next several months will have a significant effect on a company’s success in emerging from the recession. That is why it is more important than ever to make hiring a thorough and strategic process.

Here are several steps a company can take to help avoid costly hiring mistakes:

• Conduct a needs analysis. Smart hiring starts with making sure the company is ready to take on additional staff. A needs analysis should look at whether the current workforce is being properly utilized and whether recent business growth supports the new position. It also should identify essential functions and performance criteria. Additionally, all costs associated with the position, ranging from recruitment and wages to training and benefits, should be determined.

• Develop a good job description. Managers ready to hire should develop clear job descriptions. Not only does this make the recruitment process easier, but a good job description can also serve as an important legal document and compensation tool. A clearly defined job description outlines what is expected of the person hired for the position, including job title and tasks, expectations, goals, skills and education, as well as the working conditions provided. Avoid ambiguity by making sure the information is straightforward and simply communicated. A complete job description helps applicants better understand the company’s expectations, and it can be a useful interview aide for managers. Remember, a job description also provides a candidate’s first impression of your company, so make sure it is well written.

• Don't dismiss the unemployed. Résumé gaps tend to be red flags for hiring managers who view unemployed applicants less favorably that those currently employed. Yet, the huge number of layoffs during the worst of the recession left many talented people idle. Don't dismiss such candidates before digging a little deeper. Taking the time to ask an extra question or two — for example, what did the applicant do during the gap to remain productive? — could turn up a future star. Hiring managers also should consider that some job candidates may have taken interim jobs outside their chosen field to make ends meet. It is no secret that jobs have been scarce, so remain open-minded. What is important is that these individuals have remained active and that their temporary jobs, paid or voluntary, have complemented and even enhanced needed skills in their chosen field.

• Maximize recruiting tools. Managers learned very well how to trim and sometimes slash costs during the recession. But any temptation to cut corners on recruiting can easily lead to mistakes that will be more costly in the long run. Savvy executives need to consider all recruiting options, from conventional methods such as advertising through newspapers’ classifieds to posting on social networking sites, to positively impact the hiring process. In fact, a 2009 CareerBuilder.com job forecast survey found more employers turning to the Internet to find potential employees. A quarter of those surveyed said they plan to use newer media, such as blogs, as well. Industry organizations also can be useful. In addition to providing good networking opportunities, many trade groups maintain online job banks where members can review available jobs and post their résumés.

• Invest in background checks. Assuming that all job candidates provide honest information on their résumés or in interviews can haunt hiring managers. There is little doubt that a percentage of job candidates fudge the facts or simply lie, and a bad hire potentially can hurt a company’s revenue and productivity. Nearly half of hiring managers surveyed by CareerBuilder.com in 2008 reported that they had caught candidates lying on their résumés. A year earlier, a survey by the National Association of Professional Employer Organizations revealed that two-thirds of the small businesses surveyed said that up to half of their job applicants had lied. While no one can control a job candidate’s honesty, businesses can decide whom they want to hire. Background checks are both vital and cost-effective measures to help protect a company and its employees. These include obtaining information on a candidate’s work history, possible criminal record and personal references.

Just as the recession taught companies how to be more efficient with resources, the economic recovery can lead them to new practices for making strategic hires. While it may be tempting to immediately bring in new employees to relieve overworked staff, making new hires without first analyzing the company’s needs and available talent thoroughly could lead to regret or worse: the costly process of finding a replacement.

---

Tim May is a team manager for Administaff (http://www.administaff.com), a professional employer organization that serves as a full-service human resources department, providing small- and medium-sized businesses with administrative relief, big-company benefits, reduced liabilities and a systematic way to improve productivity. The company operates 50 sales offices in 23 major markets.

Decades of innovative technology put Central Florida at the head of the modeling, simulation and training industry.

There’s no doubt about it: One of the most important jewels in our region’s economic crown is the modeling, simulation and training (MS&T) “cluster” concentrated in the Central Florida Research Park and anchored by military partners.

The region currently enjoys the enviable position of being the nation’s epicenter for MS&T, with an estimated 150 companies, nearly 32,000 direct and indirect jobs, average salaries over $70,000, and a Gross Regional Product of nearly $3 billion. Once a best-kept economic secret, this unique alliance of military commands, academia and industry is now a critical part of the community’s strategy for economic diversification.

It all begins with the military command partners of “Team Orlando” — Army, Navy, Air Force, Marines and Coast Guard — and their leading academic research collaborator, the UCF Institute for Simulation and Training.

Managing more than $5 billion in contracts designed to support today’s warfighter, the collective success of these commands is predicated upon the high level of cooperation, collaboration and partnerships that exist within Central Florida. The shared expertise and facilities that are a part of “Team Orlando” include the University of Central Florida; Simulation and Training Technology Center; Partnership I, II and soon-to-be Partnership III buildings; Institute for Simulation and Training; National Center for Simulation; and Florida High Tech Corridor. It should be noted that, alone, the Simulation and Training Technology Center and Partnership I, II and III buildings represent more than a $55 million investment by the State of Florida in shared state (university) and federal (Department of Defense) lab and office space.

In the private sector, names like Lockheed Martin, Northrop Grumman, SAIC, Indra Systems, Silicon Graphics, General Dynamics, Rockwell Collins, JHT and many more further enhance the local MS&T industry, as does the additional prominence in entertainment technology that brings compelling “storytelling” to simulation applications, not to mention significant expansion in areas such as medical, education, transportation, homeland security and digital media. All create high-paying jobs in Florida.

The challenge for Central Florida is that our success has garnered the attention and envy of other communities. In order to preserve and expand this economic cluster, the region's “family of communities” must galvanize political and civic leadership in support of “Team Orlando.”

Working with UCF, Central Florida Research Park, Florida High Tech Corridor Council, Metro Orlando Economic Development Commission, National Center for Simulation, UCF Institute for Training and Simulation, Naval Air Systems Command, Naval Air Warfare Center Training Systems Division, Team Orlando, Orlando Inc. and others, the Central Florida Partnership has adopted MS&T as one of 13 “regional priorities” making up its Shared Regional Agenda.

In support of MS&T, the Central Florida Partnership themed the 2010 Baker Hostetler Central Florida Partnership “Trip to Washington, D.C.,” held June 23-24, around the importance of this industry sector. Joining the official delegation in the nation’s capital were 60 business and community leaders, representing Central Florida from the Gulf to the Atlantic, all focused on bringing the region’s message of continued industry support to elected officials.

Similarly, UCF recently hosted a “community breakfast” designed to showcase the economic impact of the region's MS&T. Both events featured presentations by  Lt. Gen. Thomas L. Baptiste, U.S. Air Force (Retired), president of the National Center for Simulation, who has personally experienced the transition of military training in a cockpit mockup with “pictures” of the instrument panel to state-of-the-art F-16 simulators with 180-degree wraparound visual displays during his 34-year military career. Simulation today includes the sights, sounds — and even the smells — encountered on the battlefield and in disaster zones around the world.

“Today, it is possible to network different simulators that are geographically separated and operate them in a common virtual battle space,” says Baptiste. “Simulators save lives, time, wear and tear, and money, with proven utility in training, planning, analysis, engineering and test and evaluation.”

MS&T isn't just about battleships and Humvees. It’s about communications, as well. Consider a request from soldiers for a lightweight, handheld device that could be used to communicate with Iraqi civilians. Innovative technology resulted in iPod software that allows soldiers to select phrases or instructions from a menu of options. The iPod speaker then plays the phrase in Arabic, a remarkable solution that was accomplished in less than 90 days.

“This is a $5 billion-a-year industry that is critical to Florida’s economic diversification,” Baptiste adds. “It’s an asset which must be vigorously defended and aggressively strengthened.”

Amendment 4 opens the floodgates for special-interest lawsuits.

This November, voters will be faced with a number of tough decisions at the ballot box. Fortunately, one of the most important decisions should also be the easiest. Amendment 4, a “Vote on Everything” proposal, would kill jobs, raise taxes, and lead to endless litigation at taxpayer expense.

Amendment 4 has been referred to as a “stimulus package for special interest lawyers.” And for good reason; this proposal would add costly new layers of bureaucratic red tape to an already complicated planning process. It would be virtually impossible to condense thousands of pages of technical planning data into the 75-word ballot summaries that are required by law. Inevitably, disagreements — and lawsuits — would ensue. Amendment 4 encourages the special interests that lose at the ballot box to take their case to court, at taxpayer expense.

That is exactly what happened to the small town of St. Petersburg Beach, which implemented a local version of Amendment 4 in 2006. The measure has decimated the town's economy and created chaos at the polls. To date, the citizens of St. Pete Beach have seen nearly a dozen lawsuits that have cost local taxpayers more than $750,000 in legal fees. When St. Pete Beach voters approved four pro-economy changes to their comprehensive plan in 2008, Amendment 4 lawyers sued to overturn the results of the election. Nearly two years later, the people of St. Pete Beach are still defending their vote in court.

Ward Friszolowski, the former Mayor of St. Pete Beach, wrote: “Our experiment in Amendment 4 has turned St. Pete Beach into a battleground for special interests.” The same “copy and paste” lawsuits that plague St. Pete Beach would soon spread to every Florida town.

Moreover, under Amendment 4, residents most impacted by local planning decisions will lose influence in a process that inherently favors deep-pocketed special interests. This measure would turn the growth-management debate into a political spectacle. Neighborhoods would lose representation in the public planning process, as communities across town make decisions about schools, hospitals, jails and landfills in your backyard.

Worse still, Amendment 4 will introduce new delays into the planning process. This measure is so extreme that it does not even contain exceptions for vital community projects like hospitals, schools, police stations or fire trucks. Consequently, even important and uncontroversial community projects will likely experience paralyzing delays.
As Florida attempts to recover from this devastating recession, the last thing we need is Amendment 4, a proposal that would empower special-interest lawyers to raid taxpayer’s pockets in order to finance special-interest lawsuits.

This November, VOTE NO on Amendment 4! For more, visit www.florida2010.org.

Media training can help you be ready for planned and unplanned interviews.

Have you considered what a crisis would do to your organization? Think media planning.

Wow, how an image and reputation can be destroyed overnight!

If you’ve had your head in the sand, thinking it can’t happen to you, the recent events that have tarnished confidence in the financial industry, celebrity images, company reputations and brand trust should be enough to make you and everyone else sit up and take notice.

After decades of good business or years of good deeds, it takes only one mistake to make all your hard work vanish. Even knowing this, many corporate leaders and public personalities tend to put off planning for when, not if, something happens that will negatively affect their corporate reputation or personal image. Or, even worse, they wait until the damage has been done and then call in the public relations pros to clean up the mess. It’s not surprising that the image or reputation rarely fully recovers when only reactive public relations has been used.

As most of our society lacks true understanding of the public relations discipline, people of great distinction too often fail to recognize the invaluable asset of planning a proactive approach to crisis management. In much the same way attorneys are involved in and integral to many organizations’ business, PR counselors should be involved in and integral to any organization’s business plan or a well-known individual’s image management. And these counselors should always know the good, the bad and the ugly in real time, not after the fact. When PR practitioners are provided adequate knowledge and time, they will be able to make strategic recommendations and manage issues before they become crises.

Have you considered what a crisis would do to your organization? In better times, we’re so busy keeping up with in-your-face daily demands that we rarely think proactively and plan for the unexpected. I relate crisis communications planning to insurance: you may not need it, and let’s hope that you don’t, but when you do, it’s invaluable. Many organizations have experienced a slowdown in daily operations during this challenging economic climate. Why not use the small amount of extra time provided by the slowdown to commit to a complete communications audit and development of a crisis plan?

Some of you may be thinking, “I already pay enough to our attorneys; let them handle it.” Allow me to suggest to you that your attorney will be valuable behind the scenes of a crisis. But do not make the mistake others have made of having your attorney serve as your spokesperson or even provide talking points for the face of your organization. This is an area where an experienced PR counselor really shines. Such a person is able to step away from the “business side” of the situation, see the entire picture, determine how the crisis may affect each of your audiences and then create channels of communication that speak to each of them.

Different audiences have specific concerns during a crisis, and they need to be heard and responded to appropriately. Public relations can provide (1) A thorough review of the processes you already have in place, (2) Recommendations for what you should modify or create, (3) Ongoing environmental scanning to identify pain points early and (4) Proactive issues management to prevent a problem from becoming a crisis.

How do you communicate to those audiences when there is an unavoidable crisis? This is where media training is so critical to your crisis plan. Even the most experienced public speakers can become weak in the knees when a reporter shows up. Again, you can be prepared if you engage an experienced media trainer to conduct one-on-one sessions with your designated spokesperson. (Note: Your president/CEO/head honcho should not be your spokesperson.)

Media training can help you be ready for planned and unplanned interviews, as well as in-person and telephone interviews. You’re not protected just because there’s a phone line between yourself and the reporter. Also, don’t think that a print journalist won’t show up with a video camera. As online news has become so prevalent, even print reporters will post video on their websites. Speaking of video, camera operators have their own “tricks of the trade” for which you need to be prepared. Media training can help you think big picture and make you aware of pitfalls that may have never crossed your mind.

Don’t be misguided into thinking that “damage control” is a smart plan: It’s like building your house with straw. And don’t take this quiet time for granted. Instead, engage a public relations professional today to prepare yourself for the worst while helping you and/or your organization strive to be the best.

Editor's note: Erin Jenkins Pagán is director of public relations at Patterson/Bach Communications (www.pat-bach.com). Her 12 years of experience with corporations and public relations agencies include media training, crisis planning and management, and media relations.

//> Not to be forgotten, the Imagio has enough bells and whistles to tickle the imagination.

This smartphone actually has little to do with image. Instead, it’s all about multimedia.

Over the past few years, we’ve been paying lots of attention to the “smart” phones powered by the newest cell phone operating systems, such as Apple’s iPhone and Google’s Android. Yet, all along, worthy phones have been coming out on other (sometimes forgotten) operating systems.

This is the case with the Imagio, a multimedia smartphone made by HTC for the Verizon Wireless network and based on Microsoft’s Windows Mobile operating system. While the phone has its issues, it also has some neat advantages, especially for multimedia.

Like other smartphones of recent vintage, the Imagio has the user experience hinged on a full-face touch screen, without a hardware QWERTY keyboard. The screen is bright, sensitive and as accurate as any I have used. (I judge accuracy of these screens by whether the button activated corresponds with the one I think I have touched.) And just in case you have fat, uncoordinated fingers, the Imagio has a hidden stylus that you can pull out to use as a pointer.

If your idea of a perfect mobile phone is one that can be used for calling and multimedia, this one could be right up your alley. Phone calls are facilitated nicely with a good feel and button layout (both hard and soft keys), and the multimedia experience is exceptional.

That experience keys off a high-quality picture and crisp sound. Imagio’s large touch screen provides superb picture quality for watching videos or TV shows you can access through Verizon Wireless’s VCast Mobile TV. If you prefer, you can create your own videos or directly view YouTube videos through a quick-access button. VCast Mobile TV gives you direct access to hit shows on the major broadcast networks (ABC, CBS, Fox, NBC); popular cable networks, including ESPN, CNBC, Nickelodeon, Disney, The Food Network; plus some top cable news outlets (MSNBC and CNBC). An on-screen guide lets you find your favorite shows in seconds. A few weeks ago, I was able to treat myself to a live college basketball game.

As a music player, the Imagio has impressive sound, and it goes beyond simply playing your usual recorded tracks by including an FM tuner with the ability to preset up to 20 stations. It uses your headphone as the antenna.

Microsoft has recently done a pretty good job of upgrading the Windows Mobile operating system. It now sports an easier-to-use menu system with icons like those on the iPhone. Also, it has added nice features like a mobile version of OneNote, a desktop software application that has proven effective for Tablet PC users. And, of course, it still includes mobile versions of Word and Excel, which have always differentiated Microsoft’s mobile operating system.

The only true problem with the Imagio is that the processor seems too small for all it attempts to do. As a result, the performance is often slow at the wrong times. It takes too long to change between portrait and landscape mode, text screens and browser pages don’t change quickly and the phone seems to freeze for long periods. Measured in increments of 3 to 10 seconds, that’s a long time to wait to push the next cell phone button. The good news about the freezing is that it doesn’t seem to affect phone calls, which get priority at all times.

In short, the Imagio is an impressive phone for multimedia – think “iPod substitute” – and a competent smartphone to use as a PDA. It is flexible, has a modern look and feel, and performs admirably for out-of-office functions. Just don’t get annoyed by all the short delays, which can be bothersome.

Editor’s note: David Radin is a national radio show host and business consultant. You can reach him at www.megabyteminute.com.

Is borrowing money for a commercial project still possible? Yes, but be prepared.

So, you think you may want to borrow money for a commercial real estate project when the market improves a little more. You know the rules are likely to change, because you keep reading about it in print or online. You keep hearing businesspeople talk about how hard it is to borrow money today. Conversely, you see advertisements by local banks, telling you they are making loans just as they always have.

A most confusing picture if I ever saw one.

I think a little history will help us as come up with a reasonable answer to the question “Will I be able to borrow money for my project?”

In 1980, a new piece of federal legislation called the Depository Institution Deregulation and Monetary Control Act (DIDMCA) was passed. In essence, it allowed banks to be free to set their own direction relative to interest rates and mergers with other banks. This began the process of consolidation in banking that has reduced the number of banks nationwide to approximately 8,000 from about 15,000. In 1989, another important piece of legislation was passed, the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), which, among other things, established appraisal standards for banks. When you borrow money for a real estate loan today, your application must be accompanied by an appraisal as mandated by FIRREA. The final piece of legislation is the Federal Deposit Insurance Corporation Improvement Act (FDICIA), passed in 1991, which created some mandatory guidelines for bank operations, such as a uniform definition of capital. These three acts provided structure to the banking environment we operate in today.

With financial reform on the top of everyone’s mind today, it’s clear we can expect more of what these three pieces of legislation have in them — rules.  All these rules are intended to minimize risk to the bank’s borrowers, the bank’s depositors or the bank itself. If we take this a step further, banks clearly didn’t manage risk for either their borrowers or themselves in the past several years as effectively as they will need to in the future if our economy is to function successfully.

For commercial real estate loans, this translates into several potential changes. First, it is foreseeable that larger or better-defined equity participation by a project’s sponsor will be required. The days of “appraised value” equity are likely over.

Second, the primary source of repayment will need to be more thoroughly documented (speculative transactions will not be considered) through instruments such as written agreements and escrows. For example, it may become necessary for all proposed tenants to provide financial information to a lender before a construction project will be approved. Activities like sales contract flipping will not be allowed.

Next, a secondary source of repayment will need to be in place. And someone will ask, as they have in the past, “What happens if our collateral value goes down?” I think it is safe to say that, at last, we may have all learned the lesson that real estate values can, and do, go down from time to time. Finally, bankers are likely to ask whether the potential borrower has a relationship with the bank, including deposits.

That last question is to help the bank manage its risks. Banks will have stronger concentration limits for loan groups like raw land, acquisition and development loans, and construction loans. They will want to reserve the availability of these types of credit for their relationship customers. As stated previously, a “relationship customer” is one who has more business with the bank than just a loan.

The banking regulators will be scrutinizing all this more closely. With the criticism leveled at them for their role in the financial crisis, it seems likely that they will become more proactive.

None of this, in my view, will keep good real estate deals from getting done. In our market-based economy, it has always been about better projects getting done, better-operated banks gaining market share and a more diversified economy being more stable. As I look back over the last 35 years in banking and think about the successes and failures of various projects, one thing stands out: The vast majority of successful projects were the best planned.

So, if you want to borrow money for a project, be prepared, which includes talking to your relationship banker early on in the planning process. This will make your banker happy and maybe result in an approval for the loan you want.

Editor's note: Dennis Ward is president and CEO of Federal Trust Bank, with branches in Orange, Seminole, Volusia, Lake and Flagler counties. His 35 years of experience include serving as group president and CEO of Regions Bank and holding several senior-level positions with other banks.

This month's Super Regional Leadership Conference promises to help identify areas where regional collaboration can generate additional economic output and improve competitiveness.

Intuitively, it's always been known that working regionally was a good idea.

The principle is documented — regional economies are, in fact, the drivers of national prosperity. The top 100 largest U.S. metro regions generate 75 percent of the nation’s Gross Domestic Product. The U.S. economy’s performance is driven largely by that of its major metropolitan economies.

With those facts in mind, the Super Regional Leadership Conference, set for May 26-27 at the Gaylord Palms Resort in Orlando, will be held for the second year in a row.

Cosponsored by the Tampa Bay Partnership and Central Florida Partnership, the conference brings together business and civic leaders to promote regional thinking and solutions to meet today’s economic challenges, including:

“Connecting for Global Competitiveness: Tampa Bay-Central Florida Super Region,” an initiative to identify the regional, state, national and global opportunities that could emerge from a coast-to-coast connection. World-renowned urban planner professor Jonathan Barnett and members of his Urban Design Studio will present an in-depth study of the value of operating as a super region. Discussions will center on leveraging economic development opportunities around high-speed rail, job creation and global competitiveness.

Moving Forward with High Speed Rail for Florida, encouraging support and its connection with other rail initiatives being advanced by the Florida Department of Transportation, Tampa Bay Area Regional Transportation Authority, SunRail and the U.S. Department of Transportation, including the approved route connecting Tampa Bay to Orlando.

Invited keynote speaker, U.S. Department of Transportation Secretary Ray LaHood, addressing the link between transportation and sustainable communities and its importance in shaping Florida’s future.

The $1.25 billion awarded to the high-speed rail project is a down payment. When combined with local regional visioning efforts and the work of the Tampa Bay Area Regional Transportation Authority, it's hoped that award leaves the project well positioned for additional federal funding.

“Global Space Activity: Florida’s Opportunity” will be another hot session topic. No other region of the world has the aerospace infrastructure and talent, as well as the related targeted industries and position on the planet’s surface, to deliver what Florida can. In this session, attendees share the challenges the industry faces in ensuring Florida remains at the forefront of the nation’s space program.

Can you say “Pecha Kucha?” Pecha Kucha is the Japanese word for the sound of people talking. In this format, presenters are each allowed 20 slides, automatically. These brief presentations will be sprinkled throughout the day to showcase a cross section of leadership and projects/initiatives from across the Central Florida corridor.

How does working together as a super region benefit Tampa Bay and Central Florida? Do we have an opportunity to bring additional tourists or talent to the region? What assets and opportunities do we need to build upon?

The Super Regional Leadership Conference represents a rich mix of high-ranking community, civic and active volunteer leaders from both the east coast and west coast of Florida. Participants will help regional leaders identify regional collaboration that can generate additional economic output and improve competitiveness.

Editor's note: To register online, go to www.thesuperregion.com.

---

Super Region

Population: Tampa Bay, 3.75 million; Central Florida, 3.46 million (combined population of 7.2 million — seventh most populous in country)

Gross Domestic Product (2008): Tampa Bay, $142.4 billion (19th in U.S.); Central Florida: $142.0 billion (20th in U.S.) (combined 2008 GDP of $284.4 billion — 10th largest economy in U.S.)

Sources: 2009 Bureau of Economic Analysis (BEA) Statistics; 2008 Bureau of Economic and Business Research, University of Florida

Don't neglect intangible assets, which can be equal to or even greater than the value of the tangible assets.

Whether you’re planning a business acquisition or just trying to get a sense of where your company stands, business owners frequently want to assess their financial statements and see what their company is worth. That said, it’s not uncommon for business owners to become frustrated by the process because what’s on paper doesn’t always reflect the “true value” of their companies.

Although determining the value of tangible items — such as buildings, equipment, receivables and debts — is somewhat straightforward, what about the worth of customer relationships? How do you decide on a value for trade secrets or patent applications?

These assets, classified as “intangibles,” have a big impact on the valuation of a company. In fact, the value of these items can be equal to or even greater than the value of the tangible assets. While this is important for all business owners to consider, it is crucial to those companies in high-tech industries involved in research and development. Those types of companies often have a great deal of intangibles, and their balance sheets may not always reflect the true value of the assets.

Whether you’re selling your company or considering gift and estate taxes, it’s important to understand how to individually value those assets — and how they impact the company’s overall value.

---

Intangible vs. Tangible Assets

What is considered an intangible asset? The short answer is anything that cannot be seen, touched or physically measured. Some examples include copyrights, patents, trademarks, trade names, computerized databases, specialty libraries, designs, patterns, technical drawings and goodwill.

The more complex answer is that intangible assets fall into two categories: identifiable and unidentifiable. Identifiable intangibles may have some form of physical substance. A patent, for example, is on file at the U.S. Patent and Trademark Office. Unidentifiable intangibles have no physical substance whatsoever, such as goodwill, which is the difference between what is paid for a company and the value of the tangible and identifiable intangible assets acquired less liabilities assumed. Goodwill can have an impact on the value of the company, but has no physical substance, and as such would be considered an unidentifiable intangible.

---

How to Measure

Generally speaking, there are three standards of value: fair market value, fair value and strategic value. The reason behind the need for the valuation determines the standard of value to be used. Each has its own definition of value, which is why the expert you use should be certified and experienced.

Regardless of the standard of value used, a valuation analyst must choose the most appropriate of the three valuation approaches:

• Income Approach: This is the most commonly used approach to value the majority of intangible assets. The rationale behind this approach is that the value of the asset is based on the present value of future income the company is expected to generate. When dealing with certain agreements, such as noncompete or trade name(s), this may be the best way to decide what the asset is worth.

• Cost Approach: This primarily focuses on the required cost to develop a substitute intangible asset. This approach requires the determination of the cost of labor, materials, time and overhead it would take to create a replacement intangible asset. This approach is particularly useful for valuing patents, software, technical drawings or product development.

• Market Approach: This approach requires relevant market research to obtain examples of sale transactions or licenses to use as guidelines. It isn’t commonly used because it’s often difficult to find transactions to draw comparisons.

The above are abbreviated concepts for deriving an indication of value. The valuation process is complex and requires significant interaction between the company owners and the valuation analyst. There are a number of issues that come into consideration when determining the value of a business. One significant issue for consideration is the value of intangible assets. There is no one specific means of valuing intangibles, but a certified valuation analyst will help navigate these waters and provide a clear look at your company’s true value.

---

Sandra E. Breitenstein is a principal with the Orlando-based accounting firm of Averett Warmus Durkee. She practices in the assurance and accounting department, with wide-ranging responsibilities for business assurance clients. Breitenstein focuses on servicing clients in timeshare development, real estate and common-interest realty associations; she has more than 18 years of accounting and consulting experience in those areas.

It’s that time of year: BusinessForce begins rolling out key regional endorsements in 2010 elections.

Against the backdrop of a challenging regional business environment, and amidst one of the worst ever national recessions, BusinessForce President Mike Ketchum stated: “There’s never been a better time for our business community to protect its interest by becoming fully engaged in the political process.” Read more

To compete in your marketplace, even in the poorest conditions, focus on what you can control — and there is plenty you can control, especially regarding your customers.

The year 2009 was extremely challenging for most industries in the global economy, and the start of 2010 hasn’t been too much better. It is tough to find a silver lining in these lingering storm clouds, but it is critical that we recognize one positive truth: We cannot control the state of the economy. Read more

Next Page »