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All Aboard the Adirondack Scenic Railroad
UTICA — This year, for my birthday, I rode the Adirondack Scenic Railroad. It was the first time I’ve had the opportunity to ride a train since I was kid, even though I’m surrounded by trains every day. The Business Journal News Network’s office is located in the former OnTrack station in Armory Square in […]
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UTICA — This year, for my birthday, I rode the Adirondack Scenic Railroad. It was the first time I’ve had the opportunity to ride a train since I was kid, even though I’m surrounded by trains every day. The Business Journal News Network’s office is located in the former OnTrack station in Armory Square in downtown Syracuse, and the same rail line runs behind my house in Jamesville.
On a fall morning in September, my friend, Jill, and I ventured out to Utica’s Union Station for the Fall Foliage Train excursion that goes from Utica to Thendara with a four-hour layover in Old Forge. A round-trip ticket for this excursion costs $37.50 per adult, but Jill and I scored a Groupon deal for $36 for two round-trip tickets.
When we arrived at the station at 9 a.m., volunteers were already herding the 400 passengers onto the train. As I’m settling into a window seat in car 3211, a volunteer named Mike walks through the car to collect tickets from the passengers. A lady across the aisle from us asks him when we’ll be off.
“All I can tell you is when it starts to roll, that’s when we’re going,” says Mike.
Shortly after that, we were rolling. Once we were moving, the volunteer car hosts encouraged the passengers to explore the train. This adventure was short-lived for me, because as soon as I stood up, motion sickness kicked in.
The ride was not a total loss though. While sipping a Ginger Ale that Jill graciously bought for me, I watched the scenery go by. With the “Mileposts and Points of Interest” guide that came with our tickets, I was able to spot the Erie Canal, Otter Lake, and more. Not to mention the endless number of deer I saw hanging out in people’s yards like they were waiting for their daily treats.
Two hours later, we arrived at the Thendara station, which is about a mile south of Old Forge. As we departed the train to catch the shuttle to Old Forge, the car hosts instructed us to return by 4 p.m. so that we could make the departure time of 4:45.
Ride the line
The Adirondack Scenic Railroad is part of the historic rail corridor that was constructed in 1892 and the first to go through the Adirondack region. While operated by the Adirondack Railway Preservation Society (ARPS), a 501(c)(3) nonprofit organization, New York State owns the 118-mile, Remsen-Lake Placid rail corridor, and the Departments of Environmental Conservation and Transportation jointly administer it.
ARPS performs maintenance work on the corridor and leases the track from April to December for train-ride excursions. From January to April, the NYS Snowmobile Association leases the corridor.
The rail corridor started to decline in the 1950s and 60s, but was briefly restored for the 1980 Winter Olympics in Lake Placid. After that, it laid dormant for more than a decade until a band of rail enthusiasts came together in 1992 and proposed operating a short rail line. Now 22 years later, 68 miles of the 118-mile track have been restored, and the Adirondack Scenic Railroad carries more than 70,000 passengers annually.
“We’re the largest tourist attraction in the county [of Oneida] after the casino,” says Bethan Mahar, executive director of ARPS.
Only about 5 percent to 8 percent of visitors come from within Oneida County. Last year, passengers traveled from 49 states and six countries to ride the Adirondack Scenic Railroad. Ridership has increased 35 percent in the past five years, says Mahar.
The railroad partners with local businesses and brings visitors to these otherwise remote areas along the corridor. The train is “very significant to the local businesses who see an influx of people spending money,” says Mahar.
ARPS starts running occasional trains in April, and then in July begins operating five days a week, Wednesday through Sunday. From August to December, the trips generally run at full capacity, carrying a max of 420 passengers, largely due to the themed excursions during those months, such as the Fall Foliage, Family Halloween Train, and the ever-popular Polar Express.
ARPS owns five locomotives and leases three locomotives. It also owns 23 passenger cars, two of which will be repaired during the upcoming slow season, the first quarter of next year. Each repaired car will add 120 seats.
All the trips are staffed by volunteers who assume the roles of car hosts, “trainmen,” conductors, engineers, and café and gift shop workers. Volunteers donate 15,000 to 20,000 hours of service each year, says Mahar, who steps into the role of “trainman” occasionally.
Mahar came on board three-and-a-half years ago as the Utica station manager. A year in, she became the executive director of ARPS. “It’s been a fun ride,” says Mahar.
Hailing from Sherrill, Mahar received a bachelor’s degree in anthropology from SUNY Geneseo, with a concentration in archeology and historic preservation. She also took a few master’s level courses from a Mexican university in Yucatan while working on a sustainable-tourism project.
ARPS operates from the second floor of the Bagg’s Square Café at 421 Broad St. in Utica, about two blocks from the train station. It has nine full-time employees, including mechanics and the Utica station manager. Since the Thendara, Lake Placid, and Saranac Lake stations don’t operate during the winter months, those managers are included in the 15 part-time employee count. Mahar says the railroad hires more part-time help during Polar Express season.
ARPS generates $1.3 million of its $2 million budget from ticket sales. The rest of the revenue comes from donations, memberships, and repair work the nonprofit does for others.
By the end of this year, Mahar says the nonprofit’s bank debt and payables will be paid, making it almost debt free. “We will still have one small loan from a board member, but in a nutshell, yes [we’ll be debt-free],” says Mahar.
Rails vs. Trails
The Adirondack Scenic Railroad operates between Utica and Big Moose, and from Saranac Lake to Lake Placid. The plan is to restore the rest of the rail so the railroad can offer trips from Utica to Lake Placid. But what to do with the remaining out-of-service rail between Big Moose and Saranac Lake sparks debate.
Some people believe that restoring the line will boost tourism; other groups believe the entire 118 miles of rail should be torn up and replaced with trails.
The rail corridor, which is on the National and State Historic Registers, was built before much of the Adirondacks had been declared “Forever Wild,” meaning it can’t be developed anymore. Mahar says that the train is the only thing that goes through some of those inaccessible areas now. The railroad also has a $5.5 million economic impact on the area and connects communities in and out of the travel corridor.
ARPS supports a rail-and-trail system, with trails running alongside the rail corridor. In the areas where that isn’t feasible, she says the plan would be to create other paths that would join with the corridor. “Our volunteers have already mapped out existing trails from Tupper Lake to Saranac Lake,” says Mahar.
In July, the state DEC and DOT announced that they would allow restoration of the rail corridor from Big Moose to Tupper Lake. Mahar says ARPS will be facilitating and overseeing the restoration work, although no formal dates or a financial commitment have been made, as of press time.
More public hearings will be scheduled to determine the best use of the line from Tupper Lake to Lake Placid.
In the meantime, Mahar says ARPS will continue to “fight the battle to preserve the corridor and keep it functioning.”
All aboard
At 4:30 p.m., we’re loaded onto the train in Thendara for the return trip. Lois, a car host, walks down the aisle of the car, hushes the group, and then asks, “Is everyone on this train going to Utica, New York?” Pause. “If you’re not, then you are now. Unless you let us know right now.” Silence. Looks like we we’re all going to Utica.
Contact Collins at ncollins@tmvbj.com
——————————————————————————————————
Adirondack Railway Preservation Society (ARPS)
421 Board St., Suite 7
Utica, NY 13501
Phone: (800) 819-2291
adirondackrr.com
Key Staff
Executive DirectorBethan Mahar
Executive Director’s pay from 2012 IRS Form 990$37,151
Board of directors (Officers)
President
Bill Branson, retired executive, RBS Wealth Management, A.G. Edwards & Sons
Vice President
Al Heywood, retired teacher, Heywood’s Greenhouses, Remsen Development Corp.
Treasurer
Michele Devendorf, retired executive, Sears-Roebuck
Secretary
David Link, Bluebar Oil, CSX, MA&N, Oswego Midland
Executive Committee Member
Wayne Tucker, retired executive, Kimberly Computers
Board of Directors
Bill Branson, retired executive, RBS Wealth Management, A.G. Edwards & Sons
Michele Devendorf, retired executive, Sears-Roebuck
Allen Dunham, North Country REDC, Adirondack North Country Association (ANCA)
Jim Ellis, retired high school principal, ANCA
Gene Falvo, Falvo Manufacturing, Oneida County Tourism, Mohawk Valley REDC
Al Gorney, private consulting
Al Heywood, retired teacher, Heywood’s Greenhouses, Remsen Development Corp.
Ed Kennedy, retired executive, IBM
Frank Kobliski, executive director CENTRO
David Link, Bluebar Oil, CSX, MA&N, Oswego Midland
Dan Mecklenburg, Trails and Rails Action Committee
Paul Miles, engineer, CSX
Garry Savage, retired, NYS&W RR
Sandra Strader, retired Tupper Lake mayor, the Wild Center
David Tomberlin, Well Dressed Foods, ANCA
Wayne Tucker, retired executive, Kimberly Computers
Paul Yonge, retired NYS employee
Mission
Preservation of the Adirondack railway. The organization’s purpose is promoting, participating in, and contributing to the rehabilitation, maintenance, and operation of the Adirondack Travel Corridor.
Programs & Services
Train-ride excursions, track rehabilitation and restoration, educational programs with school groups, group charters for assisted-living facilities and passengers with special needs, programs for disabled vets, track restoration and rehabilitation, vegetation management and a variety of special events ranging from holiday excursions (Easter Bunny Express, Family Halloween Trains, The Polar Express) to history trains, shopping trains, and wine and beer tasting trains.
Recent Organizational Highlights
2014 recipient of the Adirondack Architectural Heritage Awards for its rail-corridor restoration from Remsen to Lake Placid, and the Thendara Station.
Financial Data
Revenue Sources
Contributions & Grants: $1,250,207
Program Services: $1,012,885
Investment Income: 0
Other: $29,609
Total Revenue: $2,292,701
Expenditures
Salaries & Employee Benefits: $397,532
Other: $1,976,739
Total Expenses: $2,374,271
Deficit for the Year: -$81,570

From burgers to banking to buildings: Tom Clark, the intrepid entrepreneur
— Ray Kroc was a piano player, paper-cup salesman, and a multi-mixer salesman. In 1954, he received an unusually large order for eight multi-mixers from a restaurant in San Bernardino, Calif. run by the McDonald brothers. The business model was simple: offer a few items on the menu, such as 15-cent burgers, fries, and milkshakes,
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— Ray Kroc was a piano player, paper-cup salesman, and a multi-mixer salesman. In 1954, he received an unusually large order for eight multi-mixers from a restaurant in San Bernardino, Calif. run by the McDonald brothers. The business model was simple: offer a few items on the menu, such as 15-cent burgers, fries, and milkshakes, and focus on the quality. A year later, Kroc founded the McDonald’s Corp., which today is the world’s leading, global food-service retailer with more than 35,000 locations in more than 100 countries serving 70 million customers daily.
Burgers
Harold (Tom) Clark, Jr. bought into the idea back in 1978, when he called Kroc to purchase some franchises. A Utica–area resident, Clark founded Mac-Clark Restaurants, Inc. in the same year. Nearly 36 years later, he owns 17 franchises scattered across four counties surrounding Utica. “The restaurant business employs 963 people,” says the company president. “I enjoy it as much today as when I started the business, because I deal with young people who keep me young. For many [of my employees], this is their first job … Everybody goes through computer-based training, and 98 percent of my management come from the ranks. The idea that McDonald’s employees just flip hamburgers and get substandard wages is false. My average hourly pay-rate is $10 an hour, managers earn up to $50,000 plus benefits, and supervisors earn more than that.” Clark spends 90 percent of his time as a franchise operator. He says his annual revenue tops $40 million.
Banking
In 1990, the Utica native was unhappy with his investment returns. Rather than change investment advisors, Clark bought the Saranac Lake Federal Savings & Loan Association, an enterprise that had $29 million in assets. “I wanted to control my investments,” states the inveterate entrepreneur with a smile, “and recapitalized the bank as a stock corporation.” The new bank operated as a federal savings bank until 1995 when it was re-chartered as a national bank with a new name — Adirondack Bank, N.A. To position the bank for the future, he converted it to a state charter in 2003.
“When Gary Kavney joined the bank as president and CEO,” continues Clark, “assets had grown to $100 million. When Gary retired in 2013, we posted more than $500 million. By the end of the year, the number will reach $700 million. It’s been a good time for the bank to attract deposits with all of the confusion among consumers because of the flurry of bank-merger activity … From just a few branches in Saranac Lake and Lake Placid, the bank now has 19 offices and more than 200 employees.” Adirondack Financial Services Corp. with its four divisions — investment-advisory services, qualified-retirement plans, employee benefits, and financial planning — is an affiliate of the bank, and Adirondack Insurance Services, Inc. is a wholly owned subsidiary.
Adirondack Bank generated about $25 million in total income according to its 2013 year-end, consolidated financial statement. The bank holds 1.81 percent of the 16-county Central New York region’s deposits, according to CNYBJ Research and FDIC data as of June 30, 2014, the latest available.
Clark says he does not get involved in the day-to-day running of the bank.
Buildings
What started with burgers and banks now includes buildings. Clark set up Adron Building LLC, a real-estate company that includes the Adirondack Bank building as well as the adjoining property, which formerly housed Harza Engineering Company. The two properties contain 250,000 square feet of space on Genesee Street in downtown Utica. Adron Building LLC also holds apartments and other miscellaneous real estate.
While Clark at age 71 is still looking for more McDonald’s franchise opportunities, he has already begun addressing the question of corporate succession. His oldest son, H. T. Clark III, created an LLC and now owns and operates three of the 17 franchises. The middle son, Robert, is the executive vice president of retail banking as well as the director of marketing at Adirondack Bank and works closely with the bank’s current president and CEO, Rocco F, Arcuri, Sr. The youngest son, Christopher, is just two years out of college and working in New York City at a hedge fund.
Clark’s road to success has had its challenges. “Competition is brutal [in the franchise business],” declares the president of Mac-Clark from his office on the 15th floor of the Adirondack Bank building. “The original concept of a limited menu has changed with consumers’ tastes as they want more … [healthful] choices. It’s not just Big Macs anymore; now we offer yogurt, apple slices, and salads. To compete with Tim Hortons and Dunkin’ Donuts, McDonald’s offers breakfast with not only hotcakes and Egg McMuffins but also sausage burritos and fruit-and-maple oatmeal. At lunch and dinner, we face competition from Wendy’s, Burger King, and Subway, to mention a few, who frankly are giving everything away. The margins in this business are really tight.”
Over the years, Clark has shared his financial success with the community. He is a $5 million donor to his alma mater, Utica College, and has been generous to area children’s causes, such as the House of the Good Shepherd, Utica Rescue Mission, Upstate Cerebral Palsy, and Camp Ronald McDonald, a day-camp facility on a 100-acre tract.
“I saw the needs of the community in 1965 when I was only 22,” stresses Clark. “I was an executive on loan from my first employer, Marine Midland Bank, working with a nonprofit organization to help the less fortunate. I learned then how important it was to give back to the community.”
Clark is very optimistic about the future of the Mohawk Valley. “Business in the area is growing,” he opines. “We’re just beginning to see the impact of nanotechnology on the region, which I think will be huge. I’m also encouraged by how well our political leaders work together, regardless of party affiliation. There really is light at the end of the tunnel.”
Clark graduated from Utica College in 1965. Right out of school, he went to work for Marine Midland Bank. Over his nine-year tenure, the young executive progressed from training to commercial loans, credit cards, and finally industrial finance. Bankers Trust hired him in 1974 to be the area’s regional president and expand the operation into the Syracuse market. “By 1978, I decided to buy a business in the area,” affirms Clark. “While at the bank, I had financed a McDonald’s operator at the time that the first franchise opened in the area. I knew the financials of running the business, and I knew the franchise was for sale. The rest is history.” When not engrossed in the business, the septuagenarian heads for the family retreat at Big Moose Lake, which his grandfather bought in 1936. There is little time anymore for avocations with McDonald’s open 24/7 and seven grandchildren to attend to. Clark is married to New York State Supreme Court Justice Bernadette T. Clark.
Contact Poltenson at npoltenson@cnybj.com
Rome Memorial pursues other options for affiliation after suspending talks with Bassett
ROME — Rome Memorial Hospital (RMH) is pursuing new options for a potential affiliation partner after suspending its talks with Bassett Medical Center on Oct. 14. Bassett Medical Center is part of the Bassett Healthcare Network, which is based in Cooperstown. But as of Oct. 20, RMH hadn’t started new discussions with any other organization.
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ROME — Rome Memorial Hospital (RMH) is pursuing new options for a potential affiliation partner after suspending its talks with Bassett Medical Center on Oct. 14.
Bassett Medical Center is part of the Bassett Healthcare Network, which is based in Cooperstown.
But as of Oct. 20, RMH hadn’t started new discussions with any other organization.
“As of this time, Rome Memorial Hospital has not entered into discussions about affiliation with any other health-care organization,” Basil Ariglio, president and CEO of Rome Memorial, said in a statement to the Business Journal News Network (BJNN).
Ariglio provided his statement in response to a BJNN inquiry for additional information about the RMH-Bassett situation.
In its email inquiry, BJNN asked for an example of why RMH didn’t feel comfortable with an affiliation agreement, considering Ariglio had described the two facilities as “like-minded organizations” in many respects in a news release he distributed on Oct. 14.
“Confidentiality requirements in the non-binding Letter of Intent signed by Rome Memorial Hospital and Bassett Healthcare dictate that we cannot discuss the particular reasons for our decision not to move forward with the affiliation,” said Ariglio.
Dr. Vance Brown, president and CEO of Bassett Medical Center, reacted to the development in a statement that Bassett released Oct. 16.
“Bassett has been sincere in its efforts to pursue an affiliation that I believe would have potentially benefited both organizations as well as our patients. It is the kind of strategic alliance that has the potential to make the most of the changes occurring under health reform in order to meet the needs of the population we serve.
Toward that end, Bassett remains open to discussing opportunities in Oneida County,” said Brown.
Moving on
The board voted “unanimously” to approve the recommendation that Ariglio made in consultation with the hospital’s consultant and legal counsel, Dr. Chester Patrick, chairman of the RMH board, said.
The decision follows “several months of careful evaluation,” RMH said in the news release.
RMH’s board three years ago made the decision to explore opportunities to collaborate with other organizations to prepare for the “changing healthcare environment,” the release noted.
The board developed specific community objectives based upon feedback from a cross-section of members of the medical staff and community members and initiated discussions with several organizations.
RMH in November 2013 signed a nonbinding letter of intent to explore an affiliation relationship with Bassett.
“We share a commitment to clinical quality and recognize the imperative to deliver efficient and cost-effective care,” Ariglio said in the Oct. 14 news release. “However, as we moved through the process, it became apparent that the relationship with Bassett would not satisfy the objectives of the hospital or the people we serve.”
Ariglio also emphasized that the hospital’s effort to find an affiliation partner will continue.
“We will renew discussions with other organizations, who have continued to express interest in collaborating with us to strengthen the continuum of care for our community,” Ariglio said.
Even though RMH decided to move in a different direction, “the imperative to collaborate hasn’t changed,” he explained.
“We need to be prepared for new risk-based contracts that reward providers for keeping our patients healthy. The only way to improve our population’s health is through better care coordination, built upon a strong foundation of primary and preventative care. The process we went through over the last 11 months has been invaluable and will assist the hospital as we evaluate future affiliation opportunities,” Ariglio stated.
In its inquiry, BJNN also asked Ariglio to explain how the process with Bassett will help RMH moving forward.
“Working through an affiliation process with another health-care organization allows you to see how that organization can help your hospital and community in ways you may not have realized initially. Moving forward, we will look for those benefits we identified during our discussions with Bassett as we begin discussions with other potential affiliations,” he said.
He also noted that RMH has “no set timeline” to complete a potential affiliation agreement with another health-care organization.
Contact Reinhardt at ereinhardt@cnybj.com

The growing role of physician assistants in health care
With more than 100,000 physician assistants (PAs) currently practicing nationally, and more than 6,000 new PAs entering the workforce each year, this fast-growing medical field shows no signs of slowing down. “I think we’re going to continue to see growth,” says Mary Springston, director of the Department of Physician Assistant Studies at Le Moyne College
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With more than 100,000 physician assistants (PAs) currently practicing nationally, and more than 6,000 new PAs entering the workforce each year, this fast-growing medical field shows no signs of slowing down.
“I think we’re going to continue to see growth,” says Mary Springston, director of the Department of Physician Assistant Studies at Le Moyne College in Syracuse.
Le Moyne has seen increasing interest in its two-year PA program, which can accommodate 54 students per class. “This year, we had over 1,000 applicants for our program,” she says. “I think it’s because word regarding the profession is getting out there.”
According to the American Academy of Physician Assistants (AAPA), PAs practice medicine in all medical and surgical settings and specialties including primary care, emergency medicine, surgery, pediatrics, and more. The average PA will treat 3,500 patients a year.
The demand for PAs grew more than 300 percent over the past three years, according to a news release from the AAPA.
The aging population is one driver behind the increased need for PAs, Springston says.
Another factor is the Affordable Care Act, says Michael Whitehead, founding chair and program director of Clarkson University’s Department of PA Studies. More people with health insurance means more people are heading to the doctor’s office. For doctors, having one or more PAs on staff means the office can see more patients, Springston notes. “The need for primary care [practitioners] has exploded,” Whitehead adds.
A poll from Harris shows that many patients agree that PAs add value to the health-care system. Of those surveyed, 91 percent said PAs are part of the solution to addressing the shortage of providers and 92 percent agreed that having a PA at a practice makes it easier to get an appointment.
Becoming a PA provides an option for those who either cannot or don’t want to attend medical school, says Springston. Between medical school and residency, becoming a doctor is generally an eight-year process, she says. The PA program is an intensive two year master’s program, meaning people can get through the program and get out there to practice much sooner, she notes. For others, the appeal of more stable hours while still earning a good salary — the median annual salary is $90,000 according to the AAPA — is the deciding factor, Whitehead says.
Whatever the reason, the result is that interest in PA programs has been steadily increasing. Clarkson just graduated its first class of 16 PA students this past May, Whitehead notes. For the class of 20 enrolled students set to begin in January, Clarkson received more than 700 applicants.
According to the AAPA, there are more than 190 accredited PA programs across the country, with 78 percent of graduates receiving multiple job offers. About 52 percent of graduates receive three or more job offers.
Both Springston and Whitehead say that trend holds true at Le Moyne and Clarkson, where the majority of PA program students have jobs lined up, often before they graduate.
“It’s pretty much a guaranteed job,” Springston says.
According to the AAPA, PAs may take a patient’s medical history, conduct exams, diagnose and treat illnesses, order and interpret tests, develop treatment plans, counsel on preventive care, assist in surgery, write prescriptions, and make rounds in hospitals and nursing homes. Specific duties vary depending upon the setting, their level of experience, their specialty, and state laws.
In New York, PAs must hold a bachelor’s degree before completing a PA program and must pass a national certification test.
Contact The Business Journal at news@cnybj.com

Sunrise Family Farms: Tasting ‘organic’ growth
NORWICH — The first goat was domesticated in Mesopotamia 5,000 years ago. The warm climate formed a curd in stored milk, which one adventurous soul discovered was tasty. Thus began the making of yogurt. Fast forward 5,000 years. In 2000, America boasted 80 yogurt plants producing 2 billion pounds of the dairy product. A dozen
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NORWICH — The first goat was domesticated in Mesopotamia 5,000 years ago. The warm climate formed a curd in stored milk, which one adventurous soul discovered was tasty. Thus began the making of yogurt.
Fast forward 5,000 years. In 2000, America boasted 80 yogurt plants producing 2 billion pounds of the dairy product. A dozen years later, the number of plants spiked to 131 and Americans imbibed 4.5 billion pounds. In New York state, the amount of milk used to produce yogurt jumped from 158 million pounds in 2005 to about 1.2 billion pounds in 2011. Driving this explosive growth is America’s craving for Greek-style yogurt, which requires three times as much milk as conventional yogurt. By volume, Greek yogurt represented just 1 percent of total yogurt sales in 2007; today, Greek-yogurt sales account for more than half (52 percent) of all yogurt sales.
“Chobani created the Greek-yogurt industry in America,” says David Evans, president of Sunrise Family Farms, Inc., a co-packer (contract manufacturer) of quality, cultured dairy products, located in the town of Norwich (just east of the city of Norwich).
“Hamdi [Ulukaya, who founded Chobani in 2005,] educated the public to the taste of Greek yogurt, and our business rode along on his coattails. The big manufacturers like Chobani, Fage, Dannon, General Mills, and now Pepsi (which joined with The Theo Muller Group) are all fighting for market share as the demand for yogurt is expected to continue growing,” Evans explains. “Ignored in the yogurt wars is the rising demand for organic, all-natural, and gluten-free yogurt products. That’s where Sunrise steps in. We are a hometown creamery able to focus on the needs of entrepreneurs with new ideas and not just a processor of commodity products.”
Evans, a fourth-generation dairy farmer, decided in 1999 to expand the business, when he created the name Evans Farm House. In 2004, he added Sunrise as the marketing arm of the business, before renaming the company Sunrise Family Farms in 2010.
“The co-packaging operation has expanded dramatically,” notes Evans. “In 2010, this was a $3 million to $4 million business; today it’s a $12 million to $15 million business. We employ 50 people and expect to grow to 100 within a few years. There are three equal partners who own the company: Charlie Reinshagen, vice president and secretary; Sandy Grant, who is the treasurer and oversees the quality control; and myself. Sunrise has eight packaging lines producing mostly yogurt (80-85 percent), but also organic fluid milk and cream and even a dairy facial cream.”
Sunrise Family Farms currently has 12 active customers. “We have accounts across the country and also in Canada,” continues Evans. “We have a unique niche, because we are small enough to make batches of only 30 gallons and still large enough to make batches of a few thousand gallons. We work with a lot of entrepreneurs who have a dream but little knowledge of how to bring it to market. Sunrise can direct them to a company like International Food [Network, Inc.] in Ithaca to create the basic formula, and then we tweak the process to its conclusion. We also guide our customers to container and label manufacturers and advise them on transportation problems. That makes us both a co-packager and a consultant.”
The Norwich plant of Sunrise Family Farms, which comprises 11,000 square feet, is the original company site. To meet the rising demand, the private-label manufacturer has now opened a second location in Greene, about 20 miles away.
“We bought a 25,000-square-foot building [on 35 acres] that was built in 1995 but never used … because the owners went bankrupt,” says Evans. “Work is proceeding inside the building on the floors, to create rooms, and to build coolers. The investment to date in the building is $3.5 million, and the planned improvements, which should eventually add another 46,000 square feet, will total another $6 million to $8 million. The Greene site is serviced by the municipal electric company, which charges us 3.5 cents/kwh, a real benefit to a business that consumes a lot of energy. The way things are going, Greene may handle the regular production, and Norwich will focus on the specialty business.” The property is owned by an S-corporation called Chenango Valley Processors, Inc.
Customers
How does Sunrise find its customers? The answer is: “It doesn’t; the customers find us,” Evans asserts. “We don’t advertise, we don’t market our company, we don’t worry about competitors. Customers may read about us in publications or find us on the Internet. I probably get two to three calls a week from prospects. That lets us focus on the customers,” who Evans describes as 30 to 35 years old, on average, and thinking out-of-the-box.
A typical customer is Naturi, a micro business that wants to change the Greek-yogurt industry. Aditya Dhere and Anes Dracic originally presented their idea as a Capstone project at the Carnegie Mellon Tepper School of Business. While their peers focused on high-tech business concepts, the two entrepreneurs pursued the dream of producing the creamy recipe they grew up with, only modifying the taste and flavor using organic products and artisanal ingredients.
The company launched in February and added Jennifer Mrzlack, who brought experience from the food industry. Their biggest problem was sourcing, until they found Sunrise. To date, Naturi has raised money from family and friends, Carnegie Mellon University, and on Aug. 17 nearly $16,000 from 154 backers through Kickstarter. The Kickstarter investment funded the first production batch, which will be sold in organic and specialty-food stores as a high-protein, organic, and kosher-certified (through the Orthodox Union) yogurt.
The Sunrise management team
Sunrise Family Farms’ three partners act as its corporate management team. “Charlie and Sandy used to work at Elmhurst Dairy, where I sometimes bought equipment and containers,” notes Evans. “Charlie worked in operations and Sandy in quality control. We struck up a friendship. Charlie joined the business in 2008, and Sandy joined the following year. We work very well together.”
With consumer concern about food safety, the trio is currently pursuing SQF (Safe Quality Foods) certification. SQF is a process- and product-certification standard. It is a Hazard Analysis Critical Control Points-based food safety and quality-management system, intended to support industry or company-branded products and to offer benefits to suppliers and their customers. Products produced and manufactured under the SQF code certification retain a high degree of acceptance in global markets. “We expect to receive SQF certification by either the fourth quarter of this year or the first quarter of next year,” Evans avers.
Evans attributes some of the company’s co-packing success to vendors who offer professional advice. “The Greene expansion is funded by the Kinderhook Bank’s (Kinderhook Bank Corp.: [OTCQB: NUBK]) East Greenbush office,” notes Evans. “Our legal work is handled by Dave Sonn of Earlville, and Piaker & Lyons [P.C.] monitors the accounting from its Norwich office.”
Sunrise Family Farms is well positioned to enjoy not only the rapid growth of the yogurt industry in general, but also the growing consumer demand for more variety and for natural products. Its geographic location, proximity to millions of consumers, and unique market niche augurs well for continued success.
“Yogurt growth is probably in a 10- to 12-year cycle,” opines Evans, “with Greek yogurt remaining strong. But the market is changing with some consumers swinging back to conventional yogurt and others looking now at drinkable yogurt. While there will be new products [forthcoming], this is not a fad.”
Contact Poltenson at npoltenson@cnybj.com
SU researchers develop tool to track the performance of federal-court judges
SYRACUSE — Researchers at Syracuse University (SU) have developed a data tool that provides information on the performance of more than 900 federal district-court judges. The data tool, developed by SU’s Transactional Records Access Clearinghouse (TRAC) officially launched Oct. 14. TRAC announced the advancement in a news release distributed that same day. With the new
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SYRACUSE — Researchers at Syracuse University (SU) have developed a data tool that provides information on the performance of more than 900 federal district-court judges.
The data tool, developed by SU’s Transactional Records Access Clearinghouse (TRAC) officially launched Oct. 14.
TRAC announced the advancement in a news release distributed that same day.
With the new tool, the public can learn which judges handle the most civil-court cases, and how long it takes for judges to close those cases, says Gregory Munno, assistant research professor for TRAC.
“What’s the composition of those cases? How long, on average, does it take them to close each type of case? How many cases have they closed? How does that compare to other judges in the country?” he added.
Munno spoke with the Business Journal News Network on Oct. 17.
Users can analyze caseload and time-to-closure data by type of case, such as civil rights, product liability, and immigration.
The custom-built data application then automatically compares the findings for each judge to other judges in the same district and to the nation as whole.
That same day, TRAC released a report with findings mined from the new tool.
The report found caseloads have jumped 28 percent in the past two decades while the number of federal judges has increased only 4 percent.
It also found the time from when a civil matter is filed to when it is scheduled for trial has grown by 63 percent in the last 20 years.
In addition, the report found there’s surprising variation in the caseloads of individual judges and for districts as a whole, and not always in ways that one might expect. For example, the rural Eastern District of Texas, which centers on the small city of Tyler, is the busiest district court per full-time judge in the country.
Judge Information Center
SU is adding the new data on civil matters to TRAC’s existing Judge Information Center, which includes sentencing data for all federal criminal cases, along with tools to explore the practices of administrative immigration-court judges.
“Over and over again, history has shown us that a fair judiciary is essential for the maintenance of a functioning democracy,” David Burnham, an associate research professor at the Newhouse School of Syracuse University and TRAC’s co-director, said in the news release. “The Judge Information Center is dedicated to the belief that to assure this goal in the years ahead that the collection of independent, comprehensive, and accurate information about the working of the court system be expanded.”
Lawyers, law schools, judges, public-interest groups, and others have indicated “considerable interest” since the launch of the Judge Information Center’s criminal and immigration data service in 2012, according to the TRAC news release.
Even the U.S. Justice Department subscribes, the SU organization said.
The data behind the new tool comes from several sources, mixing publically available data from the Administrative Office of the U.S. Courts with data TRAC has mined from the electronic court-filing system known as PACER, as well as data that TRAC obtained from the Justice Department through a series of Freedom of Information Act requests and subsequent lawsuits.
PACER, a service of the Federal Judiciary, is short for Public Access to Court Electronic Records.
“The work it takes to compile, structure, and verify millions of records from disparate sources is considerable,” Susan Long, TRAC co-director and an associate professor at the SU’s Martin J. Whitman School of Management, said in the same news release. “We believe the results are worth it, with findings that provide researchers, journalists and lawyers unique insights into the least examined branch of government.”
Anyone with an Internet connection can access the data tool’s top-level statistics. Drill-down reports on each judge are available by subscription.
TRAC employs a sliding scale based on an organization’s nonprofit status and size to make its data tools accessible.
Burnham and Long founded TRAC 25 years ago. It is one of the “oldest independent organizations covering federal enforcement and federal judges,” according to the news release.
In addition to support from Syracuse University, foundations such as Carnegie, Ford, Knight, MacArthur, Rockefeller, and the CS Fund have also provided funding for TRAC, the school said.
Contact Reinhardt at ereinhardt@cnybj.com
USERRA law provides employment protection to military reserves
SYRACUSE — On Columbus Day, the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) celebrated its 20th anniversary, but the fight for employment rights for those who serve our country is far from over, according to one Syracuse law firm that specializes in USERRA cases. Mathew Tully, founding partner, formed Tully Rinckey PLLC,
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SYRACUSE — On Columbus Day, the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) celebrated its 20th anniversary, but the fight for employment rights for those who serve our country is far from over, according to one Syracuse law firm that specializes in USERRA cases.
Mathew Tully, founding partner, formed Tully Rinckey PLLC, to handle such cases after his own experiences with unfair employment practices while serving in the National Guard. It was after winning the case against his employer for improperly giving him poor performance reviews while he was on active duty with the Guard that Tully attended law school and set out to help others facing similar situations.
Tully Rinckey is an Albany–based law firm that also operates a Syracuse office at 507 Plum St.
USERRA establishes basic rights for service members to protect them from discrimination, to insure they are reinstated to the same pre-activation position, that they receive the same benefits as though there was no interruption in employment, and protects them from retaliation. USERRA protects reserve service members who did not receive dishonorable discharge or bad-conduct discharge and met satisfy pre- and post-employment employer notification requirements. The goal is to protect the civilian employment of non-full-time military service members.
“The vast majority of violations are unintentional violations of the law,” Tully says. However, there is no denying that unintentional or not, there has been a dramatic increase in USERRA violations since the Sept. 11, 2001, terrorist attacks. That’s because there was a surge in enlistment in the National Guard and other reserve components of the military.
Protection for members of the military dates back to World War II, Tully says. The intent was to protect those going off to fight the war from having to fight to regain their jobs when they returned, he says. “People should not be worried about their job if they go to war,” Tully says.
The problem currently is that there is a lack of awareness of USERRA and the rights it protects, he notes. In many cases, employers just don’t realize they are violating USERRA. One example is an employer that eliminates job applicants who indicate they are National Guard members from consideration for an open position, Tully says. The employer may think it is simply avoiding any headaches that may arise from having an employee deployed for active duty, but the law states that employees may not be discriminated against for military service.
While such unintentional violations happen often, Tully says he is also seeing more and more cases of willful violation. His firm recently represented a Jamestown police officer who successfully fought to have the way his vacation time was accrued so that it included his deployed years as part of his active employment. His employer had argued that those years did not count against the vacation-accrual schedule since he was not actively employed at that time.
“He was supposed to be treated as though he never left,” Tully says.
Tully estimates anywhere from 30 percent to 40 percent of USERRA cases are intentional violations.
With so many human-resources rules and regulations, he concedes it can be very difficult for both employers and employees to stay on top of it all. “It’s difficult for people to be aware of all the USERRA rights,” he says.
About 85 percent of his cases are settled with a demand letter to the employer, Tully says, but the real solution is to raise awareness of USERRA.
Employers can also reach out to the U.S. Department of Labor’s Veterans Employment and Training Services (VETS) program for information. “Their job is to go out there and provide education and support to employers,” Tully says.
Information and guidance is also available through the Defense Department’s Employer Support of the Guard and Reserve (or ESGR) office, which has a committee in each state.
In addition to Albany and Syracuse, Tully Rinckey also has locations in Buffalo; Rochester; Washington, D.C.; Arlington, Va.; and in September, opened an office in San Diego, Calif.
Tully Rinckey’s practice areas include family and matrimonial law, criminal defense, labor and employment law, personal injury, estate planning, Social Security law, bankruptcy, military law, and appellate law.
Contact the Business Journal at news@cnybj.com
Accountant discusses tax incentives for N.Y. manufacturers
SYRACUSE — New York manufacturers are benefitting from the state new tax-reform legislation and the Excelsior Jobs program, which the state enacted more than four years ago. The two topics were part of a presentation Joseph Hardick, a certified public accountant (CPA) and a partner at Dannible & McKee, LLP, delivered at the firm’s annual
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SYRACUSE — New York manufacturers are benefitting from the state new tax-reform legislation and the Excelsior Jobs program, which the state enacted more than four years ago.
The two topics were part of a presentation Joseph Hardick, a certified public accountant (CPA) and a partner at Dannible & McKee, LLP, delivered at the firm’s annual manufacturing conference held Oct. 21 at the Holiday Inn Syracuse-Liverpool at 441 Electronics Parkway in Salina.
Dannible & McKee, LLP is a Syracuse–based accounting firm.
Hardick’s colleague, Richard Maxwell, also a partner in the firm and a CPA, addressed the same topics in an interview with the Business Journal News Network on Oct. 20.
Corporate tax reform
Gov. Andrew Cuomo on March 31 signed a bill enacting “the most significant reform of New York State’s corporate-tax system since the 1940s,” which will mean changes that will apply to tax years beginning on or after Jan. 1, 2015.
That’s according to the website of New York State Department of Taxation and Finance and its page dedicated to corporate-tax reform.
Part of the tax-reform legislation addresses a manufacturer’s economic nexus, or its range of economic presence. That nexus for a New York firm could include a company’s physical presence, employees, or assets in New York, which make it subject to state taxation.
The new law creates a new economic-nexus standard linked to sales in New York. It’s a “bright line,” or clearly defined, economic standard for taxation for corporations deriving at least $1 million of receipts from activities in New York beginning Jan. 1.
“Out-of-state corporations that are conducting business in New York, [are] now subject to that bright-line test whereby if you have at least a $1 million in gross receipts from sales in New York state after [Jan. 1, 2015], then those out-of-state corporations will now be subject to tax,” says Maxwell.
Before the bright-line test, he says a firm either had to have property or payroll in the state. The bright-line test, which focuses on sales, makes it “a little more expansive and expands the tax base for out-of-state companies.”
The same legislation also includes a new zero tax rate on business income for qualified manufacturers, which became effective for tax years beginning on or after Jan. 1, 2014.
Maxwell cites a 2007 law on the same topic as having the original definition of a qualified manufacturer as one with more than 50 percent of its gross receipts coming from the sale of goods produced.
That was called the “receipts test,” he added.
A firm also qualified if it either had at least $1 million of qualified property in New York, or all of its property in the state. That was called the “property test,” he says.
The 2014 tax-reform law expands the definition of a qualified manufacturer to include a corporation or a combined group with at least 2,500 employees engaged in manufacturing in New York and having in-state property used in manufacturing with an adjusted basis for federal tax purposes of at least $100 million at year’s end.
“…then you’re also going to be subject to that zero percent tax rate,” says Maxwell.
The zero tax rate only applies to corporate taxes (C-corporation); therefore, all other forms of entity S-Corporations, LLCs, partnerships, and sole proprietors, which are taxed at the individual level, do not benefit from the zero tax rate.
The legislation also includes a real property tax credit for manufacturers, which became effective for tax years beginning on or after Jan. 1, 2014.
Qualified New York manufacturers can claim a credit equal to 20 percent of their real property taxes paid during the taxable year on property it owns and principally uses in New York.
“And that property has to also be principally used in manufacturing, so it just can’t simply be … an office building that’s not principally engaged in manufacturing,” says Maxwell.
Excelsior Jobs program
Former New York Gov. David Paterson on June 22, 2010, signed the bill creating the Excelsior Jobs program under the New York State Economic Development Law.
The state created the program to provide job creation and investment incentives to firms in certain industries, including manufacturers.
Eligible companies can apply for up to four, fully refundable tax credits.
The program is available to qualifying businesses for a 10-year period.
A manufacturer must meet certain job and investment thresholds to satisfy the program requirements.
The available tax credits are the Excelsior jobs tax credits, which allows a firm to claim a credit of 6.85 percent of wages, per new job.
“So, it’s by position effectively,” says Maxwell.
The 6.85 percent credit is designed to assist with offsetting a portion of the associated payroll costs for hiring new employees.
Firms can also claim the Excelsior investment tax credit, which is equal to 2 percent of qualified investments.
The credit is “very similar to the old investment tax credits that New York state has had for years,” says Maxwell.
A qualified investment generally means an investment of tangible property, which includes equipment and machinery, office furniture, computer and related office equipment, and a building and related structural components.
Firms can also claim Excelsior research and development credit, a claim of 50 percent of federal R&D. The credit is limited to 3 percent of total research expenditures in New York.
The Excelsior real-property tax credit is available to businesses located in certain distressed areas, which have been labeled as an investment zone; or to businesses in targeted industries that meet higher employment and investment thresholds that the state would consider a “regionally significant project,” according to the program outline on the website for Empire State Development.
A firm can claim a credit of 50 percent of eligible real property taxes in the first year. The credit is then phased out over the next remaining nine years at 5 percent per year.
For example, the allowable real property credit in year-2 would be 45 percent, and the credit for year-3 would be 40 percent.
Contact Reinhardt at ereinhardt@cnybj.com
5 Strategies for Small-Business Owners to Lower Taxes before the End of the Year
Although you may not be thinking about tax-season preparation just yet, fall is the perfect opportunity to get ahead and organized. Small-business owners and entrepreneurs typically rush to pull together reports at the end of the year, which can become stressful and hectic. All business owners — including doctors and dentists managing their own practices,
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Although you may not be thinking about tax-season preparation just yet, fall is the perfect opportunity to get ahead and organized. Small-business owners and entrepreneurs typically rush to pull together reports at the end of the year, which can become stressful and hectic. All business owners — including doctors and dentists managing their own practices, and real-estate agents running their own agencies — can improve their tax position with the right prep work. These are simple, yet effective, strategies that owners and entrepreneurs can take to reduce taxes before the end of the year.
Start with the 12×12 system
For 12 consecutive days, one day at a time, go over each month of the year to review bank accounts, gather receipts, and find canceled checks — if you don’t currently have financial statements — and go through checking accounts to find tax-deductible items. Then, place each month’s records in an organized folder for either your tax preparer or accountant. This approach presents 12 opportunities to analyze your tax situation and make adjustments prior to the end of the year, and gives you an idea of your tax liability.
Find easy steps to reduce liability
Now that you have a benchmark number, face it and find ways to reduce it. Put your fixed expenses on paper and seek out opportunities to have a better tax position. Determine the items that can become tax benefits and those that can be written off — but don’t write-off items just for the sake of it. Do so for the beneficial reasons to get money back in your pocket, and then determine where to invest it, such as contributing to a retirement account.
Give the gift of marketing
The holidays are approaching, which means gift-giving is under way. As you may or may not know, gifting clients has a write-off limit of $25 per person, and many business owners often exceed the limit. However, if business owners include marketing materials and business information with their gift, the items are considered a marketing ploy rather than a gift and do not have a write-off limit. These items can therefore be written off for the entire expense.
Track all charitable donations
Many business owners do not take advantage of the ability to set up their own charitable organization. At the end of the year, if you determine that your taxes are very high, you can donate to your own organization and receive a tax deduction. This not only creates the opportunity to lower your tax bill, but it also positions the company favorably, as people like to conduct business with companies that are serving the community.
Open separate companies
Business owners can open a separate company for sellable content or products and have two entities. This provides a multitude of benefits, but from a tax perspective, you have the option to invoice one entity, based on services rendered, ultimately lowering your tax bill.
As a business owner and entrepreneur, looking to do what is best for your business, taking the time and effort to prepare your taxes will help you capitalize on opportunities than can lower your tax bill. Even though it is not tax season yet, a lack of planning can put your tax position at a disadvantage. Taking these strategies into consideration and being proactive about your taxes is the key to finding ways to lower your tax bill before the end of the year and fuel success for the year to come.
Karla Dennis is an expert tax and business strategist. She is founder and CEO of a tax and accounting firm called Cohesive, based in Southern California, and is licensed to represent taxpayers in all 50 states. She is also an accomplished speaker and the author of two tax strategy books, called “Against the Odds” and “Tax Storm.”
Five Signs that your Business is Doomed
We have seen many companies go into bankruptcy over the years, and there are some common issues with most of them. These are issues that may not necessarily show up on the accounting balance sheet, but in my experience they are sure signs that trouble is ahead. If some of the signs on this list
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We have seen many companies go into bankruptcy over the years, and there are some common issues with most of them. These are issues that may not necessarily show up on the accounting balance sheet, but in my experience they are sure signs that trouble is ahead. If some of the signs on this list apply to your company, then some major course corrections may be in order. If all of the signs apply, then your business is probably doomed.
1. The owner’s son or daughter is going to take over, no matter what, and he or she is unqualified. In many family-owned businesses, the company falls apart in a few generations because owners conflate a management-succession plan with an estate plan. Giving Junior ownership of the family business after the founder is gone is fine, but management should only consider giving Junior the job of running the company if he or she would reasonably have been hired by an objective HR manager from among a pool of qualified candidates. Unlike good looks, managerial competence is not an inherited trait.
2. The company does basically one thing, and the way it does that one thing has not changed in 25 years. Think for a moment about how different your life is now from life in 1989, and then reflect on how differently your company delivers to customers today than how it did in 1989. If your business delivers to customers in the exact same way as it did in 1989, then trouble is likely ahead.
Established companies that have been doing the same thing for a long time can easily get lulled into a sense of complacency, and not make needed, expensive upgrades to stay competitive until it is too late. The world is changing rapidly, and there are very few areas that have not been affected. Example 1: Kodak just kept making film instead of fighting like mad to get into digital cameras. Then it went bankrupt. Example 2: In the 1990s, Smith-Corona made a smart move by moving its typewriter factory from high-cost New York state to low-cost Mexico. The problem? The company was still making typewriters. Then it went bankrupt.
Admittedly, some businesses really will never have to change. Amish farmers probably won’t go out of business because they don’t have Twitter feeds. Most companies are forced to change in fundamental ways, however, or they end up on the auction block
3. The only way the company has enough money left for operations is for ownership/management to work for free. While it may be inspirational to the employees, it is a bad sign that the ownership of the business is working for free. In a lot of situations, companies’ management/owners will forego or greatly reduce their salaries and distributions in an effort to keep the business afloat. Doing this for a few weeks may just be a sign that the company is going through a temporary rough patch. Doing this for months, however, is a sign that the company operations don’t bring in enough revenue anymore. Doing this for years (and yes, that does happen) is a sign that the business is doomed.
In economic terms, the purpose of a business is to make money for its owners. If it does not make money for its owners, then what is the point of running the company?
4. The company does not make a profit from its operations. Businesses are supposed to do things and produce things, and then they are supposed to make money from these products and services. This may seem obvious, but a lot of companies, both large and small, are afflicted by the deadly disease of not actually doing much of anything at all, and thereby not making any money from what they do.
Startup companies sometimes hide this by getting more cash from hapless investors and crowdfunding (e.g., Pets.com), and established firms hide this by selling assets and accumulating uncollectable receivables (e.g. Enron). Eventually, the day of reckoning arrives when no one puts more money in the Kickstarter campaign, or there are no more old assets for the business to sell. A company cannot escape the fact that it must actually do things and make things that make money.
5. Management is clueless and lacks clear plans for the future. This ties in with signs 1-4. If the management refuses to acknowledge critical problems like those above, then the problems won’t be fixed and the company is doomed.
Beautiful formal business plans themselves never, ever save a company. Indeed, for some companies a very simple business plan is the best thing. The real issue is whether management can answer the following question: What are the specific problems that will come up in the next five years, and what are you planning to do to fix or prevent them? If management can’t identify and fix problems then the company is going to have a tough time, regardless of the formal business plan.
Neil J. Smith is an attorney with Mackenzie Hughes LLP in Syracuse. He is a member of the business department focusing on bankruptcy law. Smith represents businesses in bankruptcy proceedings, and he assists businesses with debt reorganization and workouts. This viewpoint article is drawn and edited from a posting on the Mackenzie Hughes Plain Talk blog. Contact Smith at nsmith@mackenziehughes.com
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