Use December To Win In April: Thoughts For Year End Tax Strategy

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Use December To Win In April: Thoughts For Year End Tax StrategyThe end of the year can be very hectic for business owners. They spend their time ensuring their projects get completed, customers get billed, and that there is enough time left to spend with family and friends. One task often overlooked during December is an end-of-year adjustment for tax strategy. Optimizing the business’s financial position for the coming year while minimizing its tax liability is a critically overlooked opportunity. With that tax strategy, consideration must also be given to how it may affect the viewing of the financial reports for the business. Potential buyers will want to know that the business is fiscally strong and that the tax history and reporting are accurate.

This is where a close partnership with an accountant can pay dividends in making sure that the business is prepared in advance and taking full advantage of the legal options available for reducing what taxes are owed in April. Having the benefit of a knowledgeable team can provide the business with the best direction and actions to pursue.

There is nothing worse than enjoying the Holiday season with the expectation that you understand and know your tax picture, and then coming across a nasty surprise come April 15th. Tax planning, in the right hands, should be a strategic tool providing valuable insight into how best to close the year and adjust in the future. Some basic strategies to discuss with your accountant include:

  • Tax loss harvesting
  • Reasonable compensation analysis that protects you and maximizes the Qualified Business Income Deduction
  • Timing capital expenditures and when to accelerate or to defer to land your deduction in the proper tax year

Take Advantage of Shelters

Some exclusive offerings are available to business owners that can help provide some relief from taxation while still keeping you financially solid and prepared for your future as a retiree. One example is the Solo 401(k) which is specific to business owners. The Solo 401(k) allows you to put business income as eligible compensation into a 401 (k) account for the business owner, which lowers overall profit for the year of the business, thus lowering the business’s tax liability. Other examples of eligible shelters are SEP IRA, Simple IRA, and a traditional 401(k). Another option for business owners is utilizing Deferred Compensation plans to greatly reduce taxable income.

Business Entity Changes

Depending on what type of entity your business currently operates under, there may be some benefit to changing from a sole proprietorship to an S Corp or LLC. It’s also time to toss the C-Corp and move to an S Corp or LLC! Each entity will have a variety of tax benefits and liabilities that they may offer to your current business model, so making sure you get the expert advice of an accountant is key. Christopher Royalty of Solopreneur Sherpa has noted that sometimes a late S-corp election is just the right move. “This sort of thing requires a complete understanding of the tax code, payroll requirements, and other issues, but more than once it’s been perfect for a given client.”

The entity type will also make a difference when it comes to courting prospective buyers, so partnering with the experts here at Apex can help make sure that your business is desirable for purchase when you are ready to sell.

If you want to know more about how the selling potential of your business may benefit from an improved tax liability strategy, give us a call.

Should You Hire a Marketing Agency?

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Should You Hire a Marketing Agency?No matter how small or large a business may be when starting up, it will always face the question of how to get more awareness for its brand. Most companies lack substantial marketing or advertising budgets to begin with. They find their customers in the most organic way possible through one-to-one outreach. What happens when that route has grown stagnant?

That is when the business owner typically considers paying others to market and advertise for them. With that option comes many questions that can lead to paralysis by analysis. After all, there are a lot of aspects to consider when defining the approach your company will take to reach its next level of growth, including what its value may be currently and what its potential value may be with the correct marketing approach.

Word of Mouth or Word of Agency

When you are ready to spend money on additional advertising, you will look for the most impactful method available. You will find yourself questioning what your best options are for achieving customer growth.

You can continue to pursue sales the same way you have been and redirect any marketing stipends toward product improvements or infrastructure enhancement. After all, your business has reached its current level with only your hard work since you are far from being an absentee owner. Word of mouth has been your marketing approach so far, which has worked. Can a marketing agency make that much of a difference? Well, that depends.

The first question you will ask yourself is if your target customers are in a very narrow or niche market. Will they only respond to a very technically savvy or experienced approach? If your answer is yes then you can continue growing your business through a self-directed approach. For example, you can attempt to gain traction through organic advertising on social media sites. However, only two to five percent of your fans on a site like Facebook will see your posts in their feed unless you spend money with the host to advertise. That is where a marketing agency can be very useful for a business with a narrow market. They can keep you from wasting your money on low-impact pursuits and instead leverage your cash for higher-cost but more impactful advertising.

Ready To Hire

After evaluating your market and realizing that you need to gain new customers and not just repeat customers, you decide to move forward with getting some outside marketing help. A common question for small business owners at this point is at what level of revenue they should hire a marketing agency. Again, it depends. The cost of hiring an agency can vary from thousands of dollars to millions of dollars. You will need to evaluate what it is exactly you require so that you can get an idea of the cost.

The thing to remember when evaluating the need for hiring an agency is if you are looking for targeted areas of advertising or if you require a more holistic pursuit of marketing your business. As your need for more variety grows, so will the potential benefits of an agency.

Best Avenues

Marketing is a scheduled activity that you plan for that is repeatable. If that planned activity is for paid search or SEO, finding an expert in that specific discipline will be more advantageous. You can spend more money on a singular targeted area with an expert than you would be spending for an umbrella of marketing services that you would find from an agency. The downside of choosing a specialist is that you won’t know how effective your advertising budget could be if spent on other approaches.

Another option is to find someone who is very skilled in multiple disciplines of advertising and hire them as an employee. That allows you to have your marketing handled in-house, with all the benefits of having them as an employee. These types of candidates can be difficult to find, however, as it takes years of experience and a gifted person to excel in multiple marketing skill sets. Even then, they are likely to be proficient in all areas of advertising. You will also have the added concern of them being poached by other companies, leaving all of your marketing pursuits unattended.

A final option for bringing in marketing help is to go with an agency that will typically have top-level talent in each area of advertising method. You will likely pay more for these services, but you can utilize their expertise in multiple campaign directions at a single package price.

Deciding how to proceed in improving your company’s reach is not an easy task. Knowing your growth goals and your available budget for hiring assistance to achieve those goals is critical to making the correct decision.

If you want to know some names of agencies we trust to help with your digital marketing, give us a call.

How LinkedIn Can Help Your Business

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How LinkedIn Can Help Your BusinessThe small business owners of today must wear many hats. Even with the introduction of AI technology and an abundance of options for virtual personal assistants, the day still has more tasks than time. So why should you add LinkedIn activity to your daily calendar?

All small business owners should be active on LinkedIn because no one has done more for their business to grow and get to where it is than the owners themselves. They have made the connections, pursued the clients, and delivered the products. They have done all of the hard work already. Letting all that hard work and goodwill wither because of a lack of regular communication is bad for business.

The key to accepting what LinkedIn offers to a business is understanding that it isn’t just another task or to-do item. Posting on LinkedIn is a way to say hello to your friends and colleagues. Posting updates is a way to remind everyone of the services and products you offer and make relationships through connecting personally and on a business level.

Planning

The great news about engaging in LinkedIn is that it doesn’t take much time. The key is to plan and develop a content posting plan that uses singular content for multiple platforms or posts. For example, if you prefer to make a video instead of writing out a blog post, you can host that video on YouTube and your business website. You can then share those links on LinkedIn. After two to three business days, make a follow-up post for your connections that may have missed the original.

Once you develop a content plan, you can identify how much time per day or week should be devoted to LinkedIn and realize that the value of the additional eyes on your content far outweighs the time spent posting. In addition to your weekly content, spend five to ten minutes each day reaching out to your connections and commenting on their posts. Ensure that if any of your content may apply to their posts, you share it with them. That is a great way to get additional viewers and invite new connections for your small business.

Creativity

Many small business owners enjoy the black-and-white of business operations but shy away from the creative aspects of building a business. So, the idea of creating content for LinkedIn can be daunting. What must be realized is that the purpose of content creation for LinkedIn is the act of simply saying hello to your customers and friends. You are using your voice to remind them of your services and your products. If you have a good business then you will have happy customers. So think of content creation as reminding those customers that you have provided something that helped them. This will spur them to re-use your services and share their positive experience with others.

The real focus of content creation is providing something to the reader or viewer that resonates with them. If you want to tell a story of a big win for your business, make sure that the story is structured to provide enough detail to engage the reader without providing too much or too little information that may lose the reader’s attention. If you want to get very creative and add top-notch videography or music then feel free to do so. However, make sure that you don’t lose the message in the details.

Execution

Now that you have your content creation plan and style identified, all that is left is to execute your strategy. This is where daily activity pays dividends. For a small business owner, a once-per-week posting is probably too sparse. Ideally, you are going to want to post updates two to three times per week but engage with your connections daily.

Also, feel free to add your personal life to your posts. You don’t have to stick to only business-focused updates because that squanders any sort of personal relationship you may have with your connections. You are hoping to build connections. Sharing some of your personal life, such as hobbies or interests or even things you are proud of, is an ideal opening to build rapport and find commonality. Providing a personal touch to a story makes you memorable and relatable. The business-related topics you discuss provide value. Combine the two and you become memorable as a person of value to your readers.

Remembering that LinkedIn is just another approach to marketing for your small business is the key to understanding the advantageous ratio of exposure to time invested. People who you have a relationship with want to send you business. Staying top of mind with them through LinkedIn posts helps create those opportunities. Make LinkedIn use easy for yourself by planning your approach, making your content relatable and memorable, and then executing your strategy with regularity. If you can adopt this approach, LinkedIn will be the new tool for your business that helps it to excel.

Need help with LinkedIn strategy for your business? We know people who can help. Give us a call.

Using Tyson’s Recent Struggles to Examine Your Business

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Using Tyson's Recent Struggles to Examine Your BusinessWe may not think about it too often, but there’s a lot of planning that goes into making sure Americans have chicken, beef, and pork waiting for them when they walk into grocery stores to buy. The pandemic threw a curveball at US producers, who didn’t want to miss out on current demand but also needed to forecast into the future. One of those producers who’ve been getting a lot of attention recently is Tyson. We’re going to take a look at the multiple factors affecting their performance and what we as small business owners can learn from a big business like theirs.

Prices Matter

Tyson has been dealing with consumer pushback on higher prices. These higher prices have been caused by two pressures on Tyson:

  • Labor shortages have caused wages inside Tyson to rise
  • Lower supply of meat from producers have led to higher acquisition costs for Tyson

We’ll talk more about both of these issues in a moment, but in the medium term it seems that consumers do have a limit as to what they are willing to pay for meat and Tyson is finding that out firsthand.

Small Business Lesson:

It’s important to get the pricing right for your products and services. What are your competitors charging and how do those prices relate to yours? What is coming up in the short and medium term future that should lead you to consider a price change? What event(s) could lead consumers to buy less from you?

Employees Matter

The pandemic reset a lot of people’s expectations about work. Broken from the spell of the daily grind, many stopped to ask themselves what they were doing with their lives and they sought better answers than what they had been previously pursuing. This has led to a still-visible impairment in the service industry and the same is true at Tyson, though it had already suffered reputational damage for poor employment practices for years prior to this.

Small Business Lesson:

If Tyson hadn’t been so relentlessly focused on the bottom line and realized that there are actual people, not only robots, working in their plants, they would have put together a long-term strategic plan to raise wages and compete for labor, creating a culture that makes people want to work at Tyson, not have to work at Tyson.

Small Business Lesson:

Have you been creating a culture for your employees that makes them want to work there, not just have to work there? If not, why not?

Vendors Matter

Often Tyson is the single largest buyer of meat in a given geographic region, giving them powers resembling a monopoly, which they have abused, both when they buy and when they sell (as lawsuits have proved). Frustrated by long-term issues with the company and the already-thin margins they deal with, many small producers have headed for the exits, leaving Tyson with fewer options to deal with consumer demand.

Small Business Lesson:

Do you show appreciation for the vendors that help your business exist? Or do you just take them for granted, or worse, like Tyson, take advantage of them?

Accounting Matters

As its stock price has cratered as a result of its net operating income losses (the first seen at the company in many years), Tyson has used a one-time goodwill impairment charge to deal with some of its losses. What that means in English to those of us who don’t do accounting for a living is that Tyson took a slice of their intangible goodwill and charged it off to make a quarter not look as bad on paper as it was.

Small Business Lesson:

Small businesses don’t have to be accountable to stock price fluctuations, so they don’t really ever have to worry about writing off their goodwill. But do you know what the value of the goodwill in your business is? You would if you did a valuation. That’s a key step in getting any business ready to sell.

Predictions Matter

It’s tough to navigate the market as a big business, particularly in the industry that Tyson serves, which has to account for multiple inputs that have proven to be less predictable over time. Tyson’s production ramp-up during the pandemic has turned out to be a mistake and they are paying the price for it now in stock, sales, and reputational damage.

Small Business Lesson:

It’s not possible to get every prediction right as you try to navigate the waters of your industry. But too many business owners get excited about the upside and don’t prepare well enough for the downside. As you make big moves for your small business, always remember to cover that downside.

If you need help examining these lessons for your small business, we’re here for you. Give us a call.

How Sports Documentaries Can Help Us Storytell for Our Businesses

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How Sports Documentaries Can Help Us Storytell for Our BusinessesThe sports documentary is everywhere these days. One of the most popular editions in the genre was 2020’s The Last Dance, a masterful storytelling of the final season of Michael Jordan with the Chicago Bulls. A year before that, Netflix premiered Drive to Survive, widely credited with significantly growing the F1 fanbase in America across its now five seasons. Most recently Quarterback premiered, taking us into the personal lives of three NFL quarterbacks, including that of reigning MVP Patrick Mahomes. These sports documentaries are a pleasure to watch, but they also showcase a lesson we can take back to the office and our companies: people love stories. You’ve got plenty of stories to tell about your business.

There Is No I in Team

All three of the documentaries mentioned above underline the fact that there are so many people behind the scenes that support a team sport. There are people who work behind the scenes whose names you’ll never know, who provide key support that helps bring everything together. While many of us come away from these documentaries even more in admiration of the stars they focus on, we also see (and hopefully appreciate) all the people who keep them at the top of their game.

Storytelling takeaway: who are the people in your business who should be recognized? Team members are obvious ones, but what about your vendors, your landlords, your insurance providers? By recognizing the broader members of the “team” that delivers your products and services, you give insight to your customers about all the moving parts that come together to give them something they love.

Lift the Hood

One of the more fascinating segments in the Quarterback series was listening to the quarterbacks explain the process of memorizing plays, which change from week-to-week and from opponent-to-opponent. Marcus Mariota was even featured repeating back the plays to his wife, who helped him in the memorization every week during the season.

Storytelling takeaway: do you share the process with customers? Here’s an example from The Wrap Agency putting up a wall wrap for a customer. There are many ways and formats you can share how you do what you do. Curious customers will share this with others, potential customers will love your transparency and willingness to reach out.

Be Vulnerable

While we often hear “they’re human too,” it’s fascinating to see elite athletes deal with professional ups and downs in their personal lives. That willingness to speak about adversity on camera is attractive. No one wants to hear from someone that he/she is never afraid and never fails. Most folks aren’t going to believe that narrative anyway.

Storytelling takeaway: what are some challenges your business has faced that you can share with the public? Obviously sometimes circumstances don’t allow for talking about every situation, but the stories you can tell of overcoming adversity will help the public realize what it took not just to create a company, but keep it going through challenging times.

By getting in the habit of talking about these aspects of your business, you’ll not only better promote your business now, when it comes time to sell, you’ll have a locker you can go into to give buyers a kaleidoscopic view of how you got started, who helped you get here, and what the future may hold for them if they buy it from you.

Need help telling the story of your business? We specialize in that. Give us a call today.

X Rebrands, Threads Flops

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X Rebrands, Threads FlopsOne of the big social media giants, Twitter, recently rebranded as X, and another, Instagram, launched a product called Threads. We’ve talked in the past about rebranding (and how not to do a brand refresh) and launching new products and we thought these two recent high-profile happenings offered some helpful general reminders for all business owners.

X Marks the Spot

To understand “why X” you have to go back in Elon Musk’s entrepreneurial journey, almost back to the beginning.

In 1999, Elon had just sold a city guide website called Zip2 to Compaq, who wanted it for its search engine. He made $22M on the deal and put $18M of it to X.com, which was to be an online hub for every kind of financial transaction in the world. He would eventually merge with another company called PayPal, which soon became the name of the merged company when Musk was ousted. He bought back the X.com domain from PayPal in 2017 “for sentimental reasons” but clearly he always felt there was unfinished business.

So now that you know there’s a history of “X” with Musk, you have to see his purchase of Twitter as simply an acquisition of a very engaged customer base to offer more products to. His vision of the new company is not simply a messaging, “tweeting” application (which has limited monetizable value) but an “everything” app similar to Grab and WeChat in Asia, offering messaging, social media, food delivery, and crucially, payments. 

Musk wants to create a content hub, then pay the creators in an ecosystem they (and users) can then spend the money in. Business professors who have often never built a single business in their lives are roasting Musk for “destroying Twitter’s brand value” but that brand name wasn’t equipped for what Musk planned to do. So he got rid of it.

Key small business lesson:  If your brand is aligned with your future, don’t change it! But if your brand can’t take you where you want to go, you’ll have to change it, perhaps radically, and try to get your customers to come along with you.

Threads Already Unraveling

Long before Musk revealed the new name for the former Twitter, Mark Zuckerberg had a team working on an app called Threads, which was supposed to be a Twitter killer. Zuckerberg had smelled blood in the chaotic takeover of Twitter that Musk was involved in and rushed to create an app to capitalize on that.

Its launch in early July 2023 was promising. Since Threads used the Instagram infrastructure, users could simply import their account info and would get a feed similar to what they were used to on Instagram. Within seven hours of its launch, Zuckerberg claimed 10M people had joined the app and soon raced past 100M users. 

But six weeks later those numbers are a distant memory. The number of average daily users has declined steadily and as of the time of this article is hovering around 10M. For perspective, Twitter’s number of average daily users is north of 110M.

Apart from the first complaint most people had (“why do I need another social media app?”) Threads lacked functions that users associated with Twitter: search, hashtags, even a discovery page. People also were used to using Twitter to follow current events and pop culture, in which a popular TV show could be discussed side-by-side with political happenings. The experience on Threads seemed to be entirely disconnected.

It seems, oddly, that Zuckerberg may have forgotten how Google tried a “me too” social network some years ago to try to take on Facebook (Remember Google+? Yeah, most people don’t.) and it failed miserably because Facebook occupied that position well and Google miscalculated. People didn’t want to maintain two social networks, or if they switched away from the dominant one, they either needed most of their friends to follow too or they needed great features. Google+ delivered neither.

Key small business lesson: You shouldn’t launch a product just because a big player in your industry leads with one. It needs to make sense for your brand, but more importantly it has to answer key questions:

  • What does it offer that the competition doesn’t?
  • Why would someone switch away from another product to use ours?
  • Does this product integrate well with all our other offerings?

Threads isn’t dead yet, but it soon will be. Zuckerberg and his team will put in some more token effort so it won’t look like all their work was for nothing, but because they didn’t answer these questions, even with all the money behind them, their product launch failed. Don’t make their mistakes. 

We aren’t on X or Threads, but you can find Apex Business Advisors on LinkedIn, where we share relevant news stories and successes for our brokers and clients. See you there!

Kia’s New Logo and the Search for “KN Car”

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Kia's New Logo and the Search for "KN Car"At the beginning of 2021 Kia launched a new logo as part of a brand refresh. Kia chose for symmetry and rhythm. This logo was meant to show a commitment to transformation underlining the new tagline, “movement that inspires.” Yet, while many people can recognize the “KIA” letters within its new look, there are still tens of thousands of searches for “KN Car” each month.

At the moment if you search for “What is KN Car,” you’re going to get a full page of non-Kia websites writing about the confusion regarding the logo. You’ll only find two Kia stories on page one of your search, both from savvy dealers who took the time to write SEO-winning content. These search results, more than two years after the logo change, represent a wasted opportunity for Kia, but some great lessons for business owners.

Know What Others Are Saying About You

Most businesses these days have to have a digital strategy, which includes monitoring what is being said about your business, either by reviews, inbound links, or general chatter (think of Google Alerts for various keywords).

It seems that early on that Kia knew people were confused about the rebrand, but didn’t really help those who were. Even now, as noted above, you only find a couple dealerships that have addressed the issue.

With a fraction of the budget that it spent on the brand refresh, Kia could have built some marketing campaigns to win the search results through paid and organic results.

Paid Strategy

Kia could have launched a keyword campaign to advertise for those searching for “KN Car.” These people were curious enough to ask the Internet after seeing the logo in real life and might even have been potential customers.

The advertising links could have clicked through to explainer pages similar to the ones done by the dealers we mentioned or to something more fun and self-deprecating (though the latter would have assumed some kind of humility regarding the logo failure).

Semi-Paid Strategy

Kia could also have written some of its own content, some of it serious and some of it fun, while encouraging it to be picked up by media outlets always looking for news. They may have tasked some internal assets with creating the content, while the organic reach that the content would garner would be free.

Don’t Abandon Your Branding

Perhaps the biggest mistake Kia made in this brand refresh was going from a globally recognizable logo to something abstract and asymmetrical. Worse, it was so strong a departure from the previous logo as to be unrecognizable for many. 

If we’ve learned anything in the era of Nike, Apple, and Chipotle, it is that consumers gravitate (understandably) towards simple logos. This also makes marketing easier, since complicated logos can be harder to reproduce in various sizes and formats.

If you’ve got something that works and your customers know, go for smaller changes rather than radical ones.

Don’t Be Afraid to Say You Were Wrong

Kia could have done what Gap did exactly six days after releasing their new logo in 2010: go back to the previous one. The backlash against the logo from allies of the brand and even neutral consumers was enough to realize they messed up.

While it didn’t mean Gap didn’t have egg on its face from the attempt at a new logo, it did mean that they at least began to wipe most of that egg away.

Are you thinking about a new logo or a brand refresh in general? We know some experts who can help you with that. Give us a call.

Taxes, Your Business, and Moving

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Taxes, Your Business, and MovingWe’ve talked about the Great Resignation in relation to the changing world of work we’ve seen over the last two years, including some companies moving to a hybrid model. One of the news stories we continue to see is not just people deciding to move because of remote work, but businesses deciding to move for better business and tax conditions. Is it worthwhile to move your business before you exit?

Looking at the Statistics

The low hanging fruit when looking at business relocations is California. The Golden State is losing two $200,000+ income households for every one that comes in (that ratio is inverted for Florida). It’s the poster boy for a larger trend: of the 25 lowest-tax states, 20 enjoyed net in-migration in the last year. Just as individuals have used remote work to make major changes in their lives, so too businesses have chosen to go where they are treated best instead of just where they’ve always been.

The big storylines include tech’s migration to Texas, led by Oracle and HP, as well as Elon Musk’s Tesla and SpaceX, which purportedly saved hundreds of millions in taxes by coming to the Lone Star State.

Why Move?

If a business owner is looking to sell in the next 6-12 months, a move probably doesn’t make any sense. Key employees may not be willing to come and it will take a while to get your business up and running in its new location.

But if you’re a business owner who still has some gas in the tank and is looking to sell 2-3 years in the future, and beyond, there are several reasons why you might be willing to endure the difficulties of a move:

  • A better business and social climate — some retail businesses are having to simply close because local law enforcement is not dealing with crime or drug use, blighting what were formerly thriving downtown areas. Policymakers in some states also offer lots of obstacles for businesses to have to jump through in order to stay in business and after the pandemic, some people have had enough. They want their business to grow and thrive now, and moving can be a solution.
  • Better options for a liquidity event — lower taxes and a better business climate certainly help entrepreneurs in the present, but when they take their business to market, it will help them as well, as the taxes they pay on the sale may be greatly reduced, giving them more chances to keep the fruits of their labor, or give it away to causes they support.
  • Setting up for retirement early — while some business owners had a “sell and move” strategy already, they might opt to invert the process by moving then selling. If they had a place they always wanted to live, and the business can continue to do well there, the owners can reap the benefits of moving to their dream location while running their business. They may then find that same reinvigoration that many remote workers have experienced when given the option to live someplace they’ve always wanted to (and often, at lower prices) and go on to work in the business a few years longer, increasing the valuation of the company while making profits that are taxed at a lower rate in the short-term.

One more cherry on top? Business moving expenses are almost always entirely deductible!

It’s too early to tell precisely what the long-term effects of businesses and wealth creators leaving certain states will be, but it’s unlikely to be anything good. Hopefully that can serve as a wakeup to policymakers, if they’re listening to what people want instead of telling them what they should want.

Thinking about moving your business to another state? We’ve got people who can help you evaluate whether that’s a good financial decision, and we can help forecast the effect on the valuation of your business. Give us a call today.

3 Reasons Your Business Should Take Cybersecurity Seriously

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3 Reasons Your Business Should Take Cybersecurity SeriouslyMost business owners today remember when the big computer concern for their businesses was antivirus software. Then came phishing and those strange links in your email you weren’t supposed to click. But what is coming now is a perfect storm of ransomware and difficult-to-trace cryptocurrency. Before you become one of the many business owners who say, “I didn’t think it could happen to me,” you should take the time to make sure your business is secure… or you might end up losing it entirely.

What is Ransomware?

Ransomware is what it sounds like. Various vectors that can be used to trigger an attack often encrypt all or almost all of a company’s vital systems, making them inaccessible unless unlocked by a decrypt key. Threat actors offer the decrypt key in exchange for a ransom, usually to be paid in cryptocurrencies like bitcoin which are difficult, but not impossible, to trace. As companies without other resorts fold to the pressure, even if they do pay a ransom and get a decrypt key, they face a possible exodus of customers who have lost confidence after an attack.

Why Me?

So often cybersecurity experts will lead off a talk by referencing some Main Street business, say an accounting firm in Idaho with five employees, sharing that the first reaction from the ownership of that business after they got ransomwared was, “I didn’t think it would happen to me.” This is due in part to sensational news stories of high-profile breaches. But those stories should set alarms off, not make business owners complacent.

If large companies, with entire departments dedicated to cybersecurity, can still get breached, how likely is it that you could too? Even LastPass, a company who knew it had a target on its back (because it stores passwords) was breached recently. The threat actors want the same things from these big companies as they want from the smaller ones:

  1. Data: if you have proprietary technology, state-backed threat actors may come to take it to give their country’s industries a nudge forward.
  2. Money: since most people are ill-prepared to deal with a ransomware situation, they are willing to pay up to receive a decrypt key and stop the pain.
  3. Customers: if the threat actor can get their hands on the information of your clients, they have even more opportunities for ransom. Threat actors know that that Idaho accounting firm, even if it only had 50 clients, was an opportunity for multiple hits, especially if they went after the clients of the clients, and so on.

Basic Security Measures

The same cybersecurity experts who talk about the attack on the Main Street business that never expected it also note that even the most basic cybersecurity measures were not in place. Weak passwords were permitted, or weren’t regularly forced to be changed, or were written on post-it notes on the computer. All because people were “irritated” at security measures.

No one wants friction between tasks, or wants to verify a login with a text message code, but these are measures that were not dreamt up by the nerds in IT, but are basic responses to ever-escalating attacks from threat actors who want to exploit basic societal norms of trust. Here are some basic cybersecurity measures all businesses need to take:

  • Keep clean machines: make sure your computers are using the latest security software, browsers, and operating systems and that they are consistently patched for software updates.
  • Have a firewall in place for your Internet connection.
  • Make regular backups of important business data and information and store them in physical and cloud locations.
  • Train your team in cybersecurity principles and establish penalties for violations of company cybersecurity policies. These policies should include the use of unique passwords that should change every 90 days, however annoying that is to everyone. Multi-factor authentication (MFA) is also a must, which requires additional verification beyond a password.

Finally, the “when, not if” plan involves having a cybersecurity action plan, which is a written (printed-out, in case it gets encrypted along with the rest of your data) document outlining how a company responds to incidents. A key partner for creating this action plan, beyond your IT team, will be a cyberinsurance company, like Datastream, who has had experience drafting cybersecurity action plans and keeps up with industry best practices.

Need some help getting your cybersecurity house in order? We know some nerds who can help! Give us a call.

Red Team Your Business

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Red Team Your BusinessFor those who don’t know, a red team is a group that plays the role of an adversary to provide security feedback from the perspective of an antagonist. While such an idea can be traced as far back as the “devil’s advocate” position created in the Middle Ages for canonizations of saints by the Roman Catholic Church, more modern applications have been seen by national security agencies post 9/11, and most recently, by companies looking to test their cybersecurity vulnerabilities.

So the security angle of a red team is obvious: have someone friendly to you try to find your weaknesses and then give you a report and recommendations afterwards. But there’s no reason to limit the red team concept to security only. Why not red team your business as a whole?

Challenge Assumptions

One of the challenges any business faces is the momentum of “we’ve always done it that way.” And, in some ways, that’s a good thing. If something works, there’s no need to be constantly messing with it. But on the other hands, technology and trends changes, pandemics happen, and while “we’ve always done it that way” has its merits, it can also be an excuse holding up necessary change. You can keep saying you’ve always done it that way as long as you add: “but we’re open to doing it better.”

A red team can help you challenge assumptions all across your business:

  • Products/Services: what are the best products/services we have and how could they be better? What are weaknesses that competitors are exploiting? Could our back office run better? How?
  • Workforce: what are similar businesses offering to their team members that we are not offering? What are the most important things for your team members in long-term retention? What would happen if my most important staff were to quit tomorrow?
  • Customers: Is the customer mix you have now what will carry the company into the future, or do you need to develop an entirely different customer base?
  • Industry: what are the larger trends in your industry and are you taking any of those on, or are you zagging the other way?

Remember that a red team is antagonistic. They aren’t looking to find out what’s good or right about your business. They are looking for what’s bad, what’s weak, and what can lead to a loss of market share or value.

Who Will Run the Red Team?

There are business coaches and consultants who have experience running red team analyses. If you can’t find one that you feel comfortable using for this exercise, consider putting together an internal team. The only drawback to an internal team is that they may find it difficult to think creatively, outside of the normal constraints of the company and the assumptions they are themselves trapped in, but as long as they treat it like the exercise that it is, stepping outside of their regular environment into one where there are no limiting beliefs, they can be effective as a red team as well.

Remember that like any exercise, you want clear KPIs. Examples, related to the questions we asked above, include:

  • What are aspects of our products and services that can be improved, and how much might those improvements cost?
  • How long would it take to replace the three most important employees at the company? And how much would it cost?
  • Which of our customers is most likely to leave us? Least likely? Why?
  • What are our competitors doing better and faster than we are?

Business owners don’t red team their businesses because they are afraid of something happening tomorrow or the day after. They do so because they have the long-term future (and value) of their business in mind and are willing to do the unusual and unexpected to keep their company and team operating at the highest level. A red team exercise is one of the more simple ways to do that.

Need some help coming up with a red team plan? We can help with that. Give us a call.