SYRACUSE — They’ve known each other since they were teens. Now, as young adults, they own a new business in downtown Syracuse.

 

Arboxy Creative Group, a firm specializing in web and graphic design, branding, and e-commerce, is operating in a 2,300-square-foot space in the Galleries of Syracuse at 441 S. Salina St. in Syracuse.

 

Corin Zimmer, Matt Rusch, John Zell, and Robert Mayott founded the company as equal owners last Nov. 1.

 

The company principals spoke with CNYBJ on Feb. 18.

 

Arboxy says it can provide small businesses and entrepreneurs access to web-design services. “Something that can compete with large corporations, [and are] affordable to small businesses,” says Zell.

 

The firm also seeks to help its clients adapt to the changing trends in website design, noting that websites can become “outdated” in less than two years. 

 

“We stay up on that, and we try to make it accessible to our clients … on an affordable scale,” Zell adds. 

 

Zell handles web design and project management. Zimmer oversees sales and project management. Rusch serves as a graphic designer. Mayott handles business and program development.

 

They started the firm in the basement of the home that Zell and Zimmer share in Syracuse. The company moved into the Galleries space on Jan. 1, they say.

 

The firm now occupies a space that Auxygen, LLC, a Syracuse University startup, had previously occupied in the Galleries. 

 

Zell had previously worked for Auxygen, and when that firm moved out to pursue another business venture, Zell seized the opportunity to secure the space for Arboxy, he says. 

 

The four owners are Arboxy’s lone employees as of now, but the company hopes to add as many as five additional full-time employees during 2015, they say.

 

Arboxy hopes to put together another four-person “team” with a graphic designer, a web designer, a project manager, and a sales manager, says Zimmer. 

 

“Basically, what we do now and doubling it,” he says.

 

The four principals already owned a lot of their equipment, so launching the business didn’t require much money, they say.

 

Arboxy currently services about 15 clients, ranging from small proprietorships to larger, multi-employee firms, says Zell. The clients include Hay House, Inc., a publishing company headquartered in Carlsbad, California. 

 

Only a few of the firm’s clients have operations in Central New York.

 

Arboxy hopes to generate about $200,000 in revenue during 2015, the owners say.

 

When asked about the name Arboxy, the company owners said they believe they think “outside of the box,” so they tried to find a word that included the syllable “box.” The firm has a logo that also includes an image of a box, with the letter ‘b’ breaking out of it.

 

Keeping in touch

The four owners of Arboxy have known each other since they were teenagers.

 

Rusch and Zell liked to play paintball as high-school students. Rusch also met Zimmer through the same activity. They’d play paint ball at Headrush, Inc. on Walters Road in Van Buren, which is no longer in operation, says Zell.

 

Zimmer, Zell, and Mayott grew up in a neighborhood near Westhill High School. Rusch grew up in the Moyers Corners area of the town of Clay, he says. 

 

Zimmer, Zell, and Mayott all graduated from Westhill High School in 2009. Rusch graduated from Liverpool High School in 2007. 

 

After high school, Rusch pursued and eventually earned a bachelor’s degree in exercise science from the University of Central Florida in 2011. He wanted to work as a personal trainer.

 

At the same time, Zimmer, Zell, and Mayott remained in the area and worked in retail jobs.

 

Even though they started exploring life beyond high school, the foursome stayed in touch.

 

“We’ve always collaborated on different ideas,” says Zell, noting they’d ask Mayott for development ideas or Rusch for design help. 

 

Zell referred to himself and his colleagues as “freelancers” in graphic and web design beyond the work they were handling in their early jobs.

 

At the same time, Zell and Zimmer operate a separate, online clothing company for extreme-sports enthusiasts called All Things Adrenaline, which they started while students at Westhill in 2008.

 

Road trip and reuniting

Zimmer, Zell, and Mayott decided in June 2013 they wanted to explore the possibility of moving to California.

 

“Sold all of our stuff and packed everything that was left into cars [and] just drove across the country,” says Zimmer. 

 

The group had intentions of moving to the Golden State but it eventually just turned into a road trip that last just about a month-and-a-half with stops in Colorado, Las Vegas, Wyoming, and the Grand Canyon. 

 

“We didn’t enjoy the atmosphere that was there, and [came to the conclusion] that Syracuse was actually a very promising place to start a business,” says Zell. 

 

Like Zell and Zimmer, Rusch also operates an online clothing company called Lifted Apparel Co. It offers shirts and hats for people interested in physical fitness, but, as of now, he considers it more of a “hobby.” 

 

He started the company in 2012 with a business partner who lives in the South, says Rusch.

 

He’s also pursuing an associate degree in graphic design from Horry-Georgetown Technical College in Conway, South Carolina, which he’ll finish this spring.

 

Arboxy is Rusch’s first job in graphic design, he says.

 

Rusch decided to move back home last August as the group started discussing their business venture. They began to organize themselves for business in October, and launched on Nov. 1, says Zimmer. 

 

“We talked about it a lot, and … realized that we each had our own set of skills to focus on,” says Zimmer.

 

“The beautiful thing about our business is that it doesn’t necessarily matter where we’re located,” says Zimmer, noting it has clients nationwide. “It’s a beautiful thing to be able to be here and still work anywhere.”

SYRACUSE — Case #1. A father was a minority owner of a printing company. Six months after the business was launched, he died suddenly. There was no written plan explaining ownership rights. The business was eventually sold for a substantial sum. After a decade of litigation, the family received nothing. Case #2. A mother died unexpectedly. Her three sons, who were never trained to run the business, found themselves in charge of a $10 million corporation. Despite millions of dollars in orders and a solid reputation, the company floundered and filed for bankruptcy. The assets were eventually sold at auction.

 

The fact that neither of these hypothetical companies had planned for ownership transition shouldn’t come as a surprise. The Monitor Group of McLean, Virginia reports in a survey that 82 percent of business owners have no written plan describing what they’d like to see happen when they leave the business. As difficult as it may be to discuss issues such as death, valuation, and family relationships, it’s critical to plan for the event and to review the plan at least annually.

 

The right way to do it

One company that has preached the planning gospel on ownership transition is the accounting firm of Dannible & McKee, LLP, headquartered in downtown Syracuse. Anthony F. (Tony) Dannible, the recently deceased, former managing partner, taught ownership transition for more than three decades to a nationwide audience. This reporter sat down recently to interview members of the firm’s executive committee to review their ownership transition.

 

“The first step … [seems counterintuitive] because you start at the end of the process and work backwards,” says Thomas V. Fiscoe, managing partner of Dannible & McKee. “But you need to decide what you would like to see happen to the business when you leave. Create a description of the goal and create a timeline. Then decide what you want to do after leaving the business. Often, having a plan is what’s needed to get owners to act.”

 

Second, “… select and groom your successors early,” Fiscoe notes. “Too many owners underestimate the importance to employees, vendors, and especially customers of the company’s continuity. You need to assess future owners early in the process in order to groom them for ownership and work with them on areas where they have no experience or are not adequately trained. At Dannible & McKee, we have a formal process where the current partners, who are all owners, interview any prospects and work with those candidates to improve their eligibility for an equity stake.” 

 

Michael J. Reilly, the partner-in-charge of the accounting firm’s tax department and a member of the executive committee, stresses that “… this firm would never have grown from the original two employees to a firm of 80 if the partners hadn’t encouraged ownership positions to younger staff early in their careers.”

 

Reilly, who has co-authored a course on business valuation and ownership transition, adds a third point: “Too many owners have only a vague idea of the company’s value and often that’s inflated. There are a number of ways to value a company, but you need a professional to satisfy both potential investors and also the Internal Revenue Service [for estate and ownership-transition purposes]. It’s important that the evaluator be familiar with your business. For example, someone who focuses on companies with substantial assets may underestimate a professional-services firm with a solid client list and brand equity. It’s also critical that the investors approve the annual valuation to forestall any subsequent friction or even claims.”

 

“Which brings us to financing the deal,” Fiscoe states as point number four. “It’s not uncommon for candidates … [desirous of] a new or enhanced equity position to possess limited funds or assets available for investment. Our policy is to offer an extended payout period for up to six years, with the firm guaranteeing the transaction. There is no interest charged on the purchase of partnership units over time. The firm’s policy also requires partners to sell their total ownership interest by age 65 to avoid the concentration of ownership and the problems associated with redeeming large blocks of partnership units. Consequently, the partners are encouraged to sell small blocks of units over time.”

 

Reilly shares point number five. “The owner must understand the implications of income, capital-gains, and estate taxes on any transfer of ownership, both on the buyer and seller,” he exclaims. “Financing the deal is critical, but the impact of taxes can be substantial on the cost of acquisition and on net income. Structuring the ownership transfer can be as important as or more important than the price of the equity stake. For example, at a company organized as a partnership or as a limited-liability company (generally taxed as a partnership), investors can generally deduct the purchase price, which substantially reduces the cost to the buyer. In contrast, for companies organized as corporations, investors receive no deductions for the stock purchase until the stock is ultimately sold.”

 

The last step is the question of the transfer of power. “In some ways, the most difficult task for an owner is to give up control,” opines Reilly. “Most owners I know are ‘Type-A’, and many are used to making decisions quickly, often because they don’t share ownership. Giving up control can be a very, emotional issue for a seller. The point is that there are a number of ways to sell your interest without giving up control.”

 

When asked to identify the major problem in planning ownership transition, Fiscoe and Reilly respond as a duet: Owners don’t allow enough time. “The rule of thumb is that you should start when you are no older than 55,” avers Reilly. “I recommend that owners start even earlier, say 50 or before. It takes time to be sure your successor is a good fit with the company and well-trained to be an owner. You also need time to work with your team of advisers, which typically includes your CPA, insurance agent, financial planner, and attorney. They need to be very familiar with both the company and your personal situation to ensure a smooth transition. And the owner also needs time to think through the plan fully to be sure that it’s right for him.

 

“If we are dealing with an ownership of a family business,” Reilly continues, “the time required often increases, because there are deep, emotional issues to deal with. As an example, nearly all business owners want their children treated equally. It’s not uncommon for some of the siblings to be active in the business while others have no interest. Distributing shares to those who are not active in the business can destroy the enterprise, because non-active owners usually think the corporate value is worth more than the true market value. There are a number of ways to deal with this dilemma, which can be worked out in the planning process.”

 

Tony Dannible and Lance McKee, the founding partners of Dannible & McKee, “were a case study in how to handle ownership transition,” affirms Fiscoe. “They founded the firm in 1978 and at one point owned 70 percent of the firm. Lance decided that he would like to pursue his passion for wine, and sold his units over time before exiting to open a wine-importing business. Tony also sold off his ownership interest well in advance of his untimely death last year. Both encouraged and groomed others for a position as partner. Today, the ownership is well distributed so that no one controls a large block,”

 

The executive committee at Dannible & McKee includes Fiscoe, Reilly, and Kenneth C. Gardiner. Fiscoe joined Dannible & McKee in 1993, following a stint as an audit partner with an international accounting firm. He is a Le Moyne College graduate and assumed the managing-partner position in 2013. Reilly, also a Le Moyne College graduate, began his accounting career in 1979. In addition to his role as the firm’s partner-in-charge of the tax department, he also heads up its valuation and ownership-transition practice group. Gardiner, who is the partner-in-charge of assurance services and quality control, oversees audit and accounting services to the construction industry, manufacturers, and specializes in employee-benefit plans. He joined Dannible & McKee in 1981.

The Federal Reserve Bank of New York on Feb. 17 reported that its Empire State Manufacturing Survey general business-conditions index fell 2.2 points to 7.8 in the February survey.

 

Economists and analysts had been expecting a reading of about 9, according to Briefing.com and MarketWatch.

 

Despite the decline, the New York Fed said the figure suggests “that conditions for New York manufacturers improved modestly for a second consecutive month.” 

That’s because index readings above zero represent improving conditions. 

 

The survey found 29 percent of manufacturing respondents reported that conditions had improved, while 21 percent indicated that manufacturing activities had worsened.

 

The new-orders index fell 5 points to 1.2, indicating that orders were “essentially flat.” The shipments index climbed 5 points to 14.1, signaling that shipments “increased at a faster pace this month.” 

 

The unfilled-orders index remained negative at -6.7. 

 

The delivery-time index rose from negative territory for the first time in several months. At 1.1, the index suggested that delivery times had not shortened as in 

previous months, but rather were “little changed.” 

 

The inventories index, at -2.3, indicated that inventory levels were “slightly lower.”

 

The prices-paid index inched up 2 points to 14.6, signaling a “moderate” increase in input prices for a fifth consecutive month. 

 

The prices-received index fell 9 points to 3.4, indicating that the pace of selling price increases “slowed.” 

 

Labor-market indicators pointed to an increase in employment levels, but “little change” in hours worked. 

 

The index for number of employees dipped 4 points to 10.1, while the average workweek index came in at -1.1.

 

Indexes assessing the six-month outlook, though “generally positive,” conveyed “considerably less optimism” about future business activity than in recent months. 

 

The index for future general-business conditions plunged 23 points to 25.6, its lowest level in more than two years. 

 

The future new-orders and shipments indexes also posted “significant” declines. 

 

The future prices-paid index fell several points to 27.0, and the future prices-received index declined 10 points to 5.6, its lowest level in more than five years. 

 

The index for expected number of employees, though lower, remained positive at 24.7. 

 

The capital-expenditures index “surged” 18 points to 32.6, its highest level in more than three years, and the technology-spending index rose to 19.1.

 

The New York Fed distributes the Empire State Manufacturing Survey on the first day of each month to the same pool of about 200 manufacturing executives in 

New York. On average, about 100 executives return responses.      

 

SCHUYLER — Every organization should have a plan to deal with a hazard or disaster, one that focuses on both life safety and disruptions in the normal flow of operations.

 

And it doesn’t matter if the organization is a business, a nonprofit, or a government agency.

 

That’s according to Timothy Riecker, a partner in Emergency Preparedness Solutions, LLC (EPS), which is headquartered in Schuyler in Herkimer County. 

 

Riecker has served in public safety for more than 17 years, 14 of which have been in the field of emergency management, according to the EPS website.

 

Riecker lumps hazards into categories that include weather events and earthquakes; “non-intentional human incidents,” such as the failure of a dam or nuclear facility or a hazardous-material spill; and terrorist or events with a criminal intent, such as a shooting or a bombing.

 

He spoke with CNYBJ on Feb. 23. 

 

“Most of the things in your plan are going to apply to most hazards, most of the time,” says Riecker. 

 

Create a plan

Devising a business-continuity plan requires a planning team, which Riecker says is “the first and probably most important aspect of the process.”

 

The team should include representatives from the company’s management along with its finance and human-resources departments.

 

“They may even also, for some of this planning, invite in area emergency-services [personnel] to advise [the firm from] their perspective,” says Riecker.

 

The team should then identify potential hazards that affect areas of upstate New York — including the company’s specific location — such as fires, floods, severe 

thunderstorms, and winter storms.

 

Afterward, the team should conduct a “hazard-vulnerability analysis,” which identifies the frequency of such hazards affecting the region or the company’s specific area, and the potentially resulting impacts and severity of those impacts.

 

“Businesses also need to think comprehensively. They can’t just necessarily think within their four walls,” says Riecker. 

 

Companies need to consider their suppliers, distributors, and other vendors connected to business operations.

 

As an example, Riecker says a firm should have a plan if a supplier travels north from Pennsylvania on Interstate 81 and a storm prompts a highway closure.

 

The team should next identify “mission-essential functions.”

 

“In doing that, the company really needs to look at those things that essentially must continue to be done for [it] to remain a viable business,” says Riecker. 

 

They include legal and regulatory obligations, contractual obligations, and payroll.

 

After that, the team needs to conduct, what Riecker calls, a “business-impact analysis.”

 

“This is essentially taking into consideration the information [obtained] in the hazard-vulnerability analysis and looking at it through the lens of your mission-essential functions,” says Riecker.

 

The team then needs to examine ways to prevent or mitigate the hazards and how they could impact the business. 

 

The “number one” step is ensuring the company has the proper insurance policies in place, says Riecker.

 

“Talk to your agent, have them come in, and ask them the question. Ask them about flood insurance and make sure you’ve given a fair evaluation of your business assets so you have a good replacement value,” he adds. 

 

In addition, the team should make certain the firm has taken all steps to ensure employee health and safety, along with having a sump pump, a sprinkler system, and smoke and carbon-monoxide detectors for flood and fire prevention.

 

“If those were in place … just those things alone would prevent a lot of business losses,” says Riecker.

 

Once the team gathers all the necessary data, it can then devise the continuity plan that outlines strategies for handling the impacts of any hazards or disasters.

The plan, Riecker says, should be “implementation ready.”

 

“People can pull these [documents] out, take a look at them, and, in this moment of panic and information overload, they can see a very focused list … of what it is that they need to do,” says Riecker.

 

The final steps involve training the staff on the plan, exercising the plan, and reviewing the plan.

 

For many businesses, exercising the plan will involve sitting down and going through a scenario of introducing a hazard and talking it through, says Riecker.

 

“And seeing if the plan holds up to its intent,” he adds.

 

If the plan has some flaws, Riecker says, the company should revise the document until it is comfortable that the procedures can help in an emergency.

 

Companies should review their continuity plans “annually, unless [they] have some kind of a major change in the environment or in the business operation,” he adds.

 

Riecker also recommends two websites to help in the process, including www.preparemybusiness.org, a website that the U.S. Small Business Administration sponsors; and www.readyrating.org, an American Red Cross website on which a business can create a profile and find out its level of preparedness after answering a series of questions. 

 

The same business can log on periodically to update its score, he says. 

 

About EPS

Emergency Preparedness Solutions, LLC is a private consulting firm specializing in emergency and disaster planning, training, and exercises for private sector, government, and nonprofit clients, according to its website. 

 

EPS provides services through individualized experiences, focusing on the needs of each individual client to prepare them for the direct and “cascading impacts” of naturally occurring and human-caused disasters, the website says. 

 

The firm’s goal is to help its clients be better prepared for disasters, “resulting in preservation of life and property and minimizing financial impact.” 

EPS serves clients locally and nationally, both as a primary consultant and as a subcontractor.