Car Insurance

Most closely held business owners spend 10 years (often 20 years, or even more) working on tax-related planning. You know, that not-so-easy stuff like business succession, estate planning, asset protection and related areas. If you’re a member of this club, smile. And read on. You just might find the answer (you’ve been looking for) in this article.

First, let’s see why most business owners (whether you own 100% of the business or less) search and search for the Holy Grail of business tax planning, but never find it. A review of a real-live case (a reader of this column) should open the right planning door for most readers. Why? Because most of the problems and concerns are what we call “core goals” and apply to almost every business owner.

This is the story of a business owner (Joe, age 62), his wife (Mary, age 59) and their three boys (Pat, Paul and Peter, ages 39, 37 and 32). All the boys are married and are active in the business (Success Co.)., which is a successful leader in its industry. There are six grandchildren.

Before we continue with the rest of the story, it is important to understand that unless you work with a knowledgeable and experienced expert, who has an organized System for coordinating and integrating the various laws, options and solutions into a comprehensive plan, YOUR EFFORTS WILL FAIL. No matter how many years you try.

A System?… Yes, an absolute must. Just like the best, most expensive car won’t move an inch without gasoline to fuel it.

John Constable needs a car to accommodate his wife who suffers from spinal trouble and very bad problems with her knees. He wants to buy a new car with automatic drive, power steering, high seats and easy entry and loading.

Yet again, it is driver and passenger health which is the priority here and we could always refer John to many of the answers that we have given before.

As ever it is going to be a question of trial and error and sitting in as many cars as John and his wife can bear to find out exactly the car that is most suitable. I agree that high seating position needs to be a priority and there should be plenty of room for his wife’s Zimmer frame, plus all the other bits of luggage and shopping that we have to squeeze in these days

The obvious choice is a small people carrier. John does not mention whether they need to carry any other passengers but it is safe to assume that they probably will. The question is, though, whether to go for a micro or compact people carrier as they seem to come in all sorts of sizes. I would not want to restrict John and his wife in any way, so something in the medium sector would probably be best.

The Toyota Yaris Verso is an odd looker, but there is no shortage of space. The front seating position is pleasingly upright, which means good visibility for the driver and There is plenty of room for oddments in the cabin and at the back there is a wide, square boot which is easy to load. However, the rear door is side hinged which does not suit everyone because sometimes John will need to be mindful of where he is parking so that it can be opened fully. When John needs more room the rear seats split and fold flat. These seats are light to move and so getting a Zimmer frame in should not be a problem.

Air conditioning is not available on the basic model and comes with pounds 11,945 T Spirit. The 1.3 petrol engine should be fine because it is economical returning 44 mpg and is lively enough. Being a Toyota Yaris it will be very reliable and the running costs are reasonable, so this Verso is a no-brainer buy.

As a budget characterful buy it has to be the Renault Kangoo which has bags of space, sliding rear doors and reasonably supportive front seats. Prices start at under pounds 10,000 too, but it might be too basic and not that comfortable or refined on the move.

Better, then, to go for the more focused Renault Scenic. The front seats are set very high and that’s without adjustment which could suit John’s wife perfectly. It may be classed as compact, but the Scenic is still pretty big. Take a look in the boot which even without folding the rear seats is massive.

It isn’t the cheapest smallish people mover; for value and ability the Citroen Xsara Picasso is probably the best option, but the Scenic is more refined and civilised.

Inside the Scenic is always a nice place to be and it feels like a high quality product. However, the entry level 1.4 Authentique model does not have air conditioning, which costs pounds 500 extra. Never mind, because it is possible to get discounts on the Scenic and decent fuel economy, around 38mpg and low insurance group four, means that running costs are low.

Even before the baby, 32-year-old Robin Williams was heavy. “Not obese,” she says, “but definitely overweight.” When she gained 80 pounds during a pregnancy in 1991, Williams, a railroad safety manager in Bossier City, La., figured she could slim down later. After the baby was born, she tried numerous fad diets and exercised with coworkers on her lunch break. But because the diets — such as one “grapefruit diet” — were so difficult to follow for long (not to mention unhealthy), she always reverted to her old habits. “I would lose 10 pounds in three months, but then gain it back in one or two weeks,” she says. In 1997, she became pregnant again and gained 12 more pounds, followed by an additional 20 postpartum. Reaching 245 pounds at 5 feet 2 inches by age 30, Williams had become clinically obese and was at high risk for complications such as heart disease and diabetes. Now she was dieting not just to look better, but to ease increasingly high blood pressure and chronic leg and back pain. Nothing worked.

“Then I ran into a friend who’d had weight-loss surgery,” Williams says. “I was shocked. She had lost 105 pounds.” Williams immediately explored surgery for herself. News reports about singer Carnie Wilson’s successful weight-loss surgery fueled her interest. Still, Williams was cautious. “The first doctor I saw gave me a canned speech. I didn’t get a chance to ask questions,” she says. “I felt like I was being herded into surgery.” After consulting a second doctor, who answered all her questions, she decided to undergo gastric bypass, a common weight-loss, or bariatric, surgical procedure. The operation went smoothly, and Williams lost 115 pounds, most of it within a year. “I never dreamed I’d now be in a size 6,” she says.

The appeal of a quick and permanent solution - is, in many ways, typical. So is her course of action: Bariatric surgeons now perform about 45,000 operations annually, 85 percent of them on women. The number is up dramatically from several years ago, says Kenneth Jones Jr., M.D., president of the American Society for Bariatric Surgery (ASBS), an educational professional association whose membership has doubled in four years. But it’s not just prevalent obesity and high-profile cheer-leading that are driving these numbers. Also, new techniques are allowing operations to be done as laparoscopic “keyhole” procedures, which don’t require the large abdominal incision necessary in standard operations. For skilled surgeons who are flocking to this market, weight-loss procedures are relatively easy to learn and extremely lucrative. Operations can run from $14,000 to around $50,000 and are often (but not always) covered by insurance.

Alarmed by this double-edged enthusiasm from patients and doctors, some observers fear that women might be steered into inappropriate procedures or suffer serious complications. “There’s concern that a lot of surgeons are getting into this who don’t have enough experience in bariatric care, especially when it comes to managing complications,” says Harvey Sugerman, M.D., professor of surgery at Virginia Commonwealth University in Richmond.

Meals: one ounce at a time

It’s easy to see why side effects are a major concern with weight-loss surgery: They’re part of the package even when things go well. Every form of bariatric surgery fundamentally alters the way the gastrointestinal system works. Though the operations can be reversed (often with difficulty), the gut will never be the same. In the most common operation, vertical banded gastroplasty, surgeons use a special band and staples to crimp the upper stomach into a small pouch and narrow the outlet to the small intestine. This lets only an ounce or two of food enter the stomach at a time, significantly cutting calorie intake. Increasingly, doctors combine gastroplasty with a bypass in which stomach contents are detoured around the leading sections of the small intestine, where much of the breakdown and absorption of food takes place. Without full absorption, the body can’t add pounds easily.

People who have had a gastric bypass can suffer a range of nutritional deficiencies (especially of calcium, iron and vitamin B2), leading to conditions such as osteoporosis and anemia. While these effects can be tamed at a doctor’s behest with nutritional supplements, other effects must simply be tolerated. One of the most common is “dumping syndrome,” in which the stomach contents that move too swiftly through the small intestine cause nausea, sweating, weakness and diarrhea. “If I eat just one bite too much, I get this nauseated, clammy, icky feeling,” Williams says. Gastroplasty alone can cause vomiting when even tiny amounts of food stretch the stapled stomach.

The body adapts to such effects and patients become slightly more tolerant of food over time. In fact, about 10 percent of patients can eventually “outeat” the procedure with high-calorie food, losing less than half their excess weight, which is how surgeons define failure, according to Jones. (Because it’s possible to boost caloric intake, especially after a year or two, women who’ve had surgery can have healthy pregnancies.) But whether surgery ultimately produces successful results, “these procedures permanently change the way you eat,” says Edward Livingston, M.D., director of the bariatric-surgery program at the University of California, Los Angeles, School of Medicine.

If you are a candidate and determined to pursue surgery, the issue becomes finding a doctor who has the skill, experience and hospital resources to do the operation well and, just as important, follow through with post-op care. “Personally, I’d stay away from for-profit organizations that advertise their services,” Livingston says. “If they’re selling operations like a car dealer, they may not always have your best interests in mind.” Big hospitals that get other doctors’ most difficult referrals are most likely to have high-quality, specialized staff and equipment, he says. Ask a prospective surgeon to put you in touch with former patients who’ve had complications. “If he’s not willing to do that, he has something to hide,” Livingston says. Likewise, ask him what his complication and mortality rates are for bariatric cases, and put them in context. For example, does he tend to accept patients who are heavier or sicker than do other doctors you’re considering? If so, he may be an excellent surgeon, but you ca n expect his complication and death rates to be higher. Also inquire about special equipment and hospital staff available to meet the needs of obese patients, especially respiration experts in the recovery and intensive care units. Look up your doctor on the ASBS Web site (asbs.org). If he’s listed as a regular member, he’s broadly certified by the American Board of Surgery (there’s no special certification for bariatric surgeons). If he’s an “affiliate” member, he’s not yet board-certified.

Talk to your doctor in detail about life after the operation. He should make clear that surgery won’t let you eat however much you want. In fact, because your eating will be severely restricted, you’ll pay more attention to your food intake than ever before. “For the best long-term results, I still recommend eating a lowfat diet of fruits and vegetables, and exercising moderately three to four times a week,” Jones says. In Williams’ experience, however, dedication to results becomes easier when you’re thin. “My confidence level has increased 200 percent,” she says. “My work life, sex life and social life have all seen tremendous improvements, and I’m glad every day that I had the surgery. The small sacrifices, like eating smaller portions and limiting the types of foods that I eat are well worth it. I look and feel good, and I want to stay that way.”

Richard Laliberte is a writer living in eastern Pennsylvania.

“As a thin guy, I could be objective about a subject [weight-loss surgery] that can provoke strong feelings in doctors and patients,” says Richard Laliberte, author of “Desperate Measures” on page 94. Keeping fit for Laliberte means having fun - specifically, cycling the country roads near his home in Eastern Pennsylvania. “The roads are so hilly they have become a training mecca for cyclists from all over the world,” says Laliberte, who also contributes to Maxim and Parents.

No-one in Swaffham slept that night. Police and immigration officials moved from house to house, flushing out the ‘illegal’ ones. Some were taken from their beds, some detained at work, others let go because there weren’t enough vans. By dawn the choppers had landed, the immigration officials had left and the police had done their job. A story dissolved, never to be told, never to be printed, never to be aired. How lives change overnight!

‘The inflow is mainly from the Eastern European countries and they use “waiting area” countries like Ukraine and Russia for easy access to the West,’ says Professor Marko Bojcun, Director of the Ukraine Centre at London Metropolitan University, who has spent the last couple of years researching the east-west migration path from the former Soviet Union to Western Europe.

These are the people ‘Fortress Europe’ loves to hate, the ones the United States labels as ‘aliens’, Middle Britain sees as asylum seekers taking ‘our jobs and benefits’, and the developed world christens ‘illegal immigrants’.

My life as an illegal worker started last summer when I rang Peter, a notorious gang master in Swaffham, Norfolk, eastern England. He has command over more than 200 illegal Eastern Europeans. All I needed to do to cross the threshold into this uncharted nether world was to go there.

Peter hides out in a pub most of the time, where he occasionally also does his business. I get an intimidating reception from the people inside the pub, but quite the opposite from Peter himself. Valencia, who is Polish, guides me to my pre-arranged accommodation: 53 Station Street, a ratinfested edifice and an eyesore for the locals. Scores of dirty working boots and raincoats litter the hallway. Four or five beds to a room, bare concrete floors, the stench of urine and greasy kitchen sinks, oily cooker and corroded utensils, rusty gas pipes and soiled floors.

Many workers already occupy the place I will be calling home for the next three months. I get a bemused look from them–a single coloured skin in a stronghold of East Europeans and Russians.

Next morning in the wee hours I find myself beside a road waiting for a van to take me to the workplace. National Insurance and work permits are not an issue. Peter hasn’t even asked me for my surname. Standing on the street this cold foggy morning I feel like an illegal Mexican waiting to be hired for a day’s labour in San Diego. A van screeches to a halt. The driver pops out his head and asks me if I am Pranav. An eerie silence fills the van when I hop in. A Nepali is a surprise. No-one speaks a word to me.

The Manor Farm Ducklings Company employs a huge number of illegal workers. Today another greenhorn (me) has arrived. Flora, an administrative assistant, guides me to a room where I will slave for the next 13 hours, lifting 15-kilogram packages of Marks and Spencer ducks, stacking them in a truck. She introduces me to Marian, a Polish man who started earlier in the day. Language stands as a wall between us.

Barely two hours into the job my vision blurs, my arms ache and my legs won’t hold me up any longer. I lose consciousness and collapse inside the truck. A minute or two later I find myself held by Marian. He has dragged me further into the truck to avoid the CCTV cameras that glare at us from every corner of the factory. He gives me the thumbs up and goes back to work–at twice the speed, to compensate for the time he has lost with me. We haven’t exchanged a word yet, but I have discovered a humane bond and my idea of ‘illegal East Europeans’ is transformed. In the darkness of the cold truck, against the agonizing body ache, I weep silently–a Nepali let loose in the lowlands of England.

After 14 days of 14-hours-a-day slavery at Manor Farm Ducklings, and the total loss of my self-confidence, I get paid–a little yellow envelope containing my recompense for gutting a duck every three seconds. They have subtracted $56 a week for National Insurance contributions, $56 for a bed like a trench and $6 for the white-van ride to and from work. And then there is Peter’s $48 ’security deduction’. My wage is $136. It’s a rip-off.

Peter, one of the gang tycoons of Norfolk, is not a nice guy. If driving across rhubarb fields in a Range Rover while abusing workers at the top of his voice is all it takes for this ex-Londoner to do his job, so be it. After all, he says, when his workers do the midnight runner ‘it doesn’t mean a damn thing’–new recruits will fill the gap within hours.

No-one is allowed to break his rigid rules. He segregates us on the basis of race alone. A handful of English welfare fraudsters work for him. They travel in a different van, work comfortable seven-hour shifts and get holiday and sick pay. Sycophantic Carl, Peter’s right-hand man, makes sure the rules are properly implemented.

The day starts as early as five in the morning. It takes an hour-long van ride to reach the fields. The long summer days of June are a windfall for gang masters like Peter and Carl: a battalion of illegal workers, a gang of mean supervisors and vast fields of rhubarb to be harvested. You slave for 16 hours a day bent double, five minutes for lunch if you are lucky, abuse and threats of deportation in between.

I leave East Anglia the minute I have achieved what I set out to do, never to look back again at the modern-day equivalent of medieval slavery. For thousands of others it’s not that easy. With their economies back home in the doldrums there is no respite for them. Vultures like Peter and wage-slave factories like The Produce Connection and Manor Farm Ducklings stretch from the Scottish Highlands to the Midland plains and the Eastern lowlands, feasting on the vulnerability of the immigrants, the ones Fortress Europe loves to hate.

Police and immigration authorities turn a blind eye to the disorder they help to create. Every few months they launch a PR stunt, raid a factory, arrest a few immigrants, take them through Swaffham market square with sirens blaring. The locals cool down, politicians stop grousing for a while. The gang masters start their scavenging all over again.

How do they get away with it? Well, illegal workers fill the chronic shortage of labour in agriculture and manufacturing. The state provides them with nothing. They work for a pittance. They pay taxes like everyone else. They contribute to the economy. They help to make this part of England one of the richest in the country. Dead to the world in a cluster of caravans in the shadows of an open shed, waiting on street corners at dawn to be taken away in vans; humble, hard-working people cheated by fate and foxy folks. Lives lost in the lowlands.

I received a call from a business systems analyst one afternoon. He said: “We’re in negotiations with a prospective new technology vendor. But the process is going too easily. The vendor is conceding every single negotiating point. Could you review the financial information on the company?” I retrieved the company’s statements from the Internet. The company was losing money, it was insolvent, and its accountants had just issued a “going concern” qualification. I called the systems analyst and conveyed these facts. “Is that bad?” he asked. I again tried stating the information in financial terms. I ended up telling him: “If we pulled up to the company’s headquarters tomorrow, I wouldn’t be surprised to see the lights out and the doors locked.”

Several years ago, vendor due diligence primarily involved conducting background checks, nailing down operational requirements, and negotiating contract language. While evaluating an armored-car company or check-printing vendor once seemed arduous, today’s technology risk managers face such nettlesome questions as these:

* If the bank’s primary telecommunications company declares bankruptcy today, will the phones ring tomorrow?

* If the Web-hosting vendor cuts back on customer support personnel, will the bank’s Web site be down for hours rather than minutes?

* How would the bank know if its transactions-processing vendor were sold to management of questionable character?

Even if a vendor is in poor shape, there may still be compelling business reasons to stay put rather than seek alternative solutions. Shifting front Crafty Crocodile Software to Big Boa Constrictor Systems can take a bite out of your budget as you leave your old vendor and squeeze your resources while installing a new one. Like the man who journeyed the world searching for romance only to return home and fall in love with the girl next door, sometimes the best course of action may be to sit and do nothing.

Indeed, many robust and cutting-edge solutions come from vendors who lack a long track record or have weak financial statements. As one vendor recently lamented:

“I am sorry to hear that your bank has decided not to take advantage of our revolutionary new product. I think that it is a grave mistake to eliminate a vendor from consideration based on a due-diligence process that appears to be unduly focused on number crunching as opposed to seeking opportunity for your bank to gain a competitive advantage.”

Although a less formidable technology vendor may require a smaller contract with a closer maturity date, a stronger vendor may merit a larger, longer-term contract. Moreover, some vendors have capitalized on their financial and operational strength: “Sign a three-year deal rather than an annually renewable contract and save $500,000!”

Evaluating a vendor’s risk profile is troublesome because not all of the risks are financial. National banks are old hands at providing the Office of the Comptroller of the Currency with many indications of direct credit risk to borrowers (risk ratings, repayment histories, independent credit reviews, etc.), but they may be less experienced when it comes to evaluating third parties. In addition to credit risk, the OCC asks banks to consider strategic, reputation, compliance, transaction, and other risks, (1)

While encouraging national banks to use technology in a safe and sound manner, the OCC has stepped up its third-party risk assessment. Recently caught short, one national bank had to devote extensive manpower and financial resources to vendor review. As fate would have it, the solution involved the help of a new database from a technology vendor.

Ironically, while financial institutions are increasingly relying on technology, they also are migrating to progressively more outsourced solutions. As a result, banks are delegating control of the very functions that are becoming more important to their success! Just because the henhouse now has a digital gate doesn’t make the farmer any less responsible when the fox swipes the automatic opener.
eveloping an Effective Vendor Evaluation Solution

What’s needed is a consistent means of identifying, prioritizing, and administering technology vendor risk. Vendors representing higher risk should be tracked more closely. And the solution should be dynamic. An effective vendor risk management system will:

* Rely on teamwork from various functional areas of the bank.

* Determine materiality of the vendor risk.

* Guide evaluation of a vendor’s track record.

* Incorporate financial analysis of the proposed vendor.

* Obtain proper legal review of vendor contracts.

* Integrate existing vendors into the system.

* Establish guidelines for tracking vendors over time.

The Teamwork Solution

Technology solutions are now so pervasive that they require input from throughout the institution. Traditionally, evaluation of new bank products and services included input from audit, compliance, security, privacy, and marketing. Clearly, the best approach to evaluating vendor risk has always been multidisciplinary. But in addition to these traditional areas, technology vendor risk analysis also depends heavily on technology, business systems, operations, finance, and legal review.

* Conduct an analysis of the vendor’s business franchise. How long has the company been in business? Who are the vendor’s main competitors? What is the company’s market share?

* Check the vendor’s business reputation, complaints, and litigation. Does a reference and background check with the vendor’s existing customers indicate any problems?

* Review qualifications, backgrounds, and the reputation of the vendor’s management.

* Establish the vendor’s internal controls, audit, business resumption, continuity, recovery, and contingency plans. Review the vendor’s insurance coverage.

* Review the vendor’s experience in implementing and supporting the proposed product or service. Are there other similar-sized financial institutions as customers?

* Look at the significance of the bank’s contract to the vendor. Does the proposed contract represent a large par of the vendor’s revenues or income?

* Determine whether the vendor has any key subcontractors or enabling counterparties. If the proposed contract is large or material, conduct a check on these additional entities as well.

* Look at the service and support commitment. Does the vendor dedicate a sufficient level of resources to meet the ongoing needs of the bank?

* Evaluate research and development expenditures. Is the vendor’s current research-and development budget large enough to keep the bank’s technology current?

While answering many of the preceding questions is most important before entering a vendor relationship, the bank should revisit this checklist annually for more material contracts. Outsourced technology arrangements should clearly receive the highest level of regular scrutiny. However, as mentioned above, these vendors are generally very strong and the regular review can be conducted in a relatively short time.

Financial Evaluation

What would you think about a vendor who said the following?

By declaring bankruptcy, the company is in the process of reorganizing its finances. The news media will speculate to no end about whether or not we will survive. Regardless of what the financial press and our competitors say, the company has a proud past and we believe that it has a bright future. The company’s new management is in the process of addressing key constituencies, including our employees, supplier’s and customers….

One of the biggest risks in technology vendor relationships is financial stability. Several years ago, it seemed that a telecommunications carrier declared bankruptcy every day. Sometimes, in particularly volatile areas of technology, it seems tough to identify even one vendor with financial staying power.

* Review recent pronouncements front the company’s management. Has the company had any recent earnings warnings? Does it seem that the company has provided any surprises related to its accounting procedures? One of the biggest areas of adverse surprises was revenue recognition. Are sales being converted to cash or are receivable balances rising?

* If publicly traded bond ratings are available, obtain them from Moody’s, Standard & Poor’s, and Fitch. Generally, a senior unsecured debt rating is preferable for a vendor analysis, since the vendor contract usually has no preferential terms or security. Pull a D&B or other commercial credit report on the proposed vendor.

* Update research on the industry.

* Analyze the vendor’s most recent financial statements. What are the vendor’s income statement and cash flow trends? How consistent has the company’s operating performance been in the past?

* Review the company’s balance sheet. Some technology vendors build fortress-style balance sheets to offset the volatility inherent in their industries. Does it appear that the company has enough financial staying power for the length of the contract?

* Evaluate the vendor’s forward commitments. Often, technology vendors have a healthy slug of deferred revenues or maintenance liabilities. Does the company appear to have the operating consistency and liquidity to meet its upcoming commitments?

A company in financial distress is not one to be avoided altogether. However, in attempting to right the ship, the management of a beleaguered vendor often takes steps that have adverse consequences for the bank. If the vendor significantly cuts its staff, the bank faces the risk of a more prolonged disruption in service than is desirable. The bank also faces the possibility that resolving even routine customer service matters will take longer and require more manpower. Often a company in trouble will greatly reduce capital expenditures, resulting in the risk that a competitor could develop better technology.

A company reorganizing in bankruptcy may ironically have better service quality than before: If service quality slips, the company becomes a candidate for liquidation. Nevertheless, a vendor in bankruptcy poses significantly increased risks: Even a company that successfully reorganizes may shed assets or reorient its service delivery.

For these reasons, in cases of financial distress, it is often appropriate to consider substitute vendors. At the very least, once a vendor in financial distress is identified, it is imperative that the bank develops a financial tracking system and an operational contingency plan.

Legal Review

The importance of proper legal review cannot be emphasized enough. Generally, the bank will have an established review system for all contracts, based on various criteria, including dollar size. The last pace of change in technology may warrant legal review if the term of the contract exceeds a relatively short length of time. In addition, certain criteria that raise materiality also increase legal risk.