Ushering In A New Year With the EFBC

In conjunction with our video message from President and Vice President of the EFBC, we wanted to also share some of our vision for the next year. With every new leadership team, an eagerness to serve brings a powerful driving force for our membership. It gives us a chance to re-evaluate our programs and offerings from a fresh perspective. EFBC Leadership is excited about programming and willing to put in the work to make this year one of our most successful yet. In order to see the fruits of our labor, coming out of a two year pandemic situation and into a new world, we need that driving force from our Executive Committee and Board of Directors to drive member engagement.

In discussing priorities for the upcoming year, EFBC staff and Board, decided to hone in and focus on a few key items. Our goals were to improve programming, increase member attendance, prioritizing our collaboration between DePaul university, and the roll out of our new membership levels. These priorities allow us to focus on what is important to us and at the top of that list is member engagement. The following info graph outlines these goals and gives a visual representation as a means to simplify our initiative for all members and community to digest.

We hope as members you feel inspired to spread the gospel of EFBC. And we hope to continue to serve this brilliant community! We value our members and are optimistic about the upcoming year. We cant wait to see you at our events!

Introducing Andy Sanghani And Dave Horvath, EFBC President and Vice President 2022-2023

EFBC is excited to formally introduce you to our newly elected President and Vice President. Andy Sanghani, President of Systematics Inc., joined the EFBC in 2016. Andy joined the board of directors last year when he served as Vice President. Dave Horvath, President/CEO of DTE LLC., joined EFBC in 2008. He served previously as a forum chair, and then the Board of Directors Governance Officer in 2021. With the EFBC’s new year in full swing, we are excited to introduce two members of our executive leadership team. They came together and filmed a message they hoped to extend to membership.

We are looking forward to working together and continue building up the EFBC. Through our individual successes we can come together to build a collective victory for the betterment of the organization.

Listen below as our new leadership welcomes us into the new (to us) year:

Gratitude

Reflecting, both in terms of serving on the board and the decade since I joined EFBC, I am met with deep feelings of gratitude. I can confidently say that this has been the period in my life where I have learned and grown the most as a person. I have served on the board for two years, first as vice-president and this past year as president. The experience gained forced me to adapt to the needs of and allowed me to be an advocate for change to meet the demands of our growing and evolving membership. I am eager to see what the upcoming board has in store for the coming months. We have great leadership in place for the upcoming year, and even with some members stepping into new leadership roles I am confident that they will do amazing things for the organization. Serving on the board, and on the EC, has been a powerful force in my life.

Special thanks to my wife, Annette, and mom, Val, who encouraged and supported me in the decision to join the board. They knew that this would challenge and push me in ways outside of my comfort zone, and the invaluable experience I would gain as a result, and for them I am forever grateful. I have gained so much from my membership, and I hope I was able to repay, even slightly, in service back. Thanks to my children, Mikayla, Hunter, Alexandra, and Greyson, for allowing me the time away from you all to serve EFBC, and forgiveness for missing some of your events. I will do my best to make that up. To Liz, Danielle, Cha Mi, the Board, the Executive Committee and Strategic Partners – Thank you for stepping up, for embracing change, and for making hard decisions for the future of EFBC. You all made the time fly by, in a good way through your constant support and unabated persistence. To Tau, Gina, Paula, AJ, Darrin, Scotty, Chris, and Arty – My people! You also helped cement my decision to serve on the board. Thank you for the encouragement, and a little pressure, in this endeavor. It was no easy feat, but your support and guidance were vital to my success.

The last two years were for me to push the proverbial envelope, both professionally and personally and to challenge myself in ways I never thought possible. I hope I did what was best for the organization, and I tried my hardest to work in the best interests of EFBC. My future self will thank me for the gained experiences from these years. A few final words are me encouraging you to step out of your comfort zone and to join a committee, or the board. This has been one heck of a wild ride, but I would wait in that line to do it all over again in a heartbeat.

As my final president’s message, I just want to humbly say thank you for entrusting me. I appreciate all of you.

Signing Off…
Neil O’Donnell
EFBC President 2021-2022

Now Hiring! From Anywhere!

Two of EFBC’s Strategic Partners share considerations when hiring employees who live out of state.

It seems like everywhere you look these days you see “Help Wanted” and “Now Hiring” signs. We know that many EFBC members are also trying to add talent to their teams, and for some, that has been a challenging process. With more and more companies adopting flexible work arrangements, expanding the talent pool and hiring employees outside of Chicagoland and even out of the state is becoming a more feasible option. But it’s not without complications. That’s why we went straight to the experts! EFBC’s Strategic Partners Karen Snodgrass at Cray, Kaiser Ltd and Rachel Bossard, at Burke, Warren, MacKay & Serritella give actionable guidance from a tax and legal perspective when contemplating hiring a team member from out of state.

Understanding Inflation & What To Do About It As An Investor

Inflation is headline news in the US and around the world. Consumers are experiencing price increases on new cars, used cars, housing, food, energy and more. The US Bureau of Labor Statistics reported that the Consumer Price Index (CPI) was up 8.5% in March and 8.3% in April, the highest increases since December 1981. Inflation reduces consumers’ buying power and often generates increases in interest rates, which impact stock and bond markets.THE HIGHEST INFLATION IN A GENERATION

To help you make the right decisions in your portfolio, as markets react and alarming headlines abound, gaining a firm understanding of inflation and its implications may prove useful. Here are answers to key questions to help, including: What is inflation? What causes it? How can it be managed? How do markets react to it?

What Is it? Defining Inflation

Inflation is defined as the rate of price increases of goods and services in the economy. In the US, we follow several measures of inflation:

CPI

which measures prices for a basket of goods and services over time

CORE CPI

which excludes food and energy, whose prices tend to be more volatile, from the CPI calculation

PRODUCER PRICE INDEX (PPI)

which reports changes in the prices of inputs for US producers (e.g., fuel, commodities)

What Causes Inflation?

A variety of factors can cause prices to rise, and we believe that the current inflationary environment is a result of many of those factors acting together:

• Supply chains remain disrupted, making it more difficult to ship and receive both raw materials and finished If demand stays stable but supply is constrained, prices tend to rise.
• Increases in demand when supply is relatively constant or constrained can cause prices to The global pandemic changed many shopping and living patterns, which in turn changed demand patterns for a wide range of goods from groceries to housing.
• The pandemic also put a strain on labor, as many people who left the workforce have chosen to stay out of it, even as the economy More jobs and fewer workers mean that employers need to pay higher wages, which are typically passed on in the form of higher prices.
• Geopolitical issues, especially the Russia/Ukraine conflict, have put a crimp in the global supply of oil, driving energy prices higher.
• Fiscal policy can drive inflation, as government spending and subsidies create more demand for goods, services and labor, making them more scarce and consequently more
• Monetary policy can drive Under some circumstances, when the Federal Reserve takes action to increase the supply of money by reducing interest rates or purchasing bonds, consumers and businesses have more money to spend, and they drive prices higher.

MORE JOB OPENINGS THAN UNEMPLOYED WORKERS

“Non-farm” refers to Nonfarm payrolls, the Bureau of Labor Statistic’s measure of the number of workers in the U.S. excluding farm workers and workers in a handful of other job classifications.

“Thous Persons” = thousands of persons “SA” = seasonally adjusted

What Can Be Done To Control Inflation?

Controlling inflation is one of the most important mandates for the Federal Reserve, the central bank of the United States. It has a variety of tools at its disposal, but the most critical ones are the federal funds rate (fed funds rate) and quantitative easing. Both of those tools relate to regulating interest rates.

The fed funds rate is the interest rate that commercial banks use to borrow or lend their reserves overnight. This rate can influence short-term interest rates for credit cards and a variety of different loans. When interest rates are low, borrowing money is inexpensive, and consumers and businesses tend to spend more, driving prices up. When rates go higher, borrowing is more expensive, which tends to slow spending and, in turn, can slow price increases.

Quantitative easing (QE) takes place when the Fed (or any central bank) purchases financial assets — typically bonds but sometimes including stocks — on a large scale. This practice, first employed during the Great Recession, increases the amount of money in circulation, stimulating economic growth, and keeps long-term interest rates low by creating demand for bonds. After employing QE, the central bank may move to quantitative tightening

(QT), when it sells the bonds that it has purchased. This increase in supply should cause an increase in long-term interest rates, which, in turn, slows economic activity and reduces inflation.

The Federal Reserve is employing both of those tools to manage the current inflationary environment in the US. In March, it announced that it would increase the fed funds rate by 25 basis points (abbreviated bps; each basis point is 1/100 of one percent), and in April they announced an additional 50 bps increase — the largest such increase since 2000. With inflation still running high, most economists believe that the Fed will increase the fed funds rate by another 50 bps in June, with additional increases to come depending whether data shows inflation has slowed. In general, the Fed tries to keep inflation in the 2% range — which is dramatically lower than the 8+% that we have seen during the first four months of 2022.

How Do the Markets Typically React to Inflation?

STOCKS: Rising prices can benefit earnings of

companies, which can pass on increasing costs to their customers and maintain their margins. At the same time, inflation and rising rates make borrowing and investing more expensive for businesses, which may hamper capacity and growth going forward.

According to a recent CNBC article, “When inflation exceeds 7%, the median return of U.S. stocks over the next year was 7.3%, compared to 10.3% when inflation was below 7%. And if we examine every yield curve inversion since August 1978, the median inflation-adjusted return of

U.S. stocks was only 4.7% over the next year, compared to 9% during every other period.”1

“Inflation and rising rates make borrowing and investing more expensive for businesses, which may hamper capacity and growth going forward.”

1 Maggiulli, Nick. “Op-ed: Will high inflation hurt stock returns in the long run? Not really,” CNBC, April 5, 2022, retrieved from https:// www. cnbc.com/2022/04/05/high-inflation-wont-really-hurt-stock-returns-in-the-long-run.html on May 13, 2022.

BONDS: Does that mean that investors should reduce exposure to equities in favor of Treasuries? Not necessarily.

Bond prices inversely correlate to interest rates, so as rates rise, bond prices go down. Since inflation usually generates higher interest rates, it is typically bad for bonds. We note, though, that while this short-term shock is bad for the market, the higher interest rates paid by bonds can make them more attractive to investors, especially to investors focused on income rather than capital appreciation.

The CNBC article also notes that “when inflation exceeds 7%, the median inflation-adjusted return on five-year US Treasuries was -2.6% over the next year, far below the 7.3% return on US stocks during the same time period. And, following every yield curve inversion since August 1978, the median inflation-adjusted return on five-year US Treasuries was 3.9%, compared to 4.7% for US stocks over the next year.”1

Investor Considerations

As discussed above, inflationary periods have historically put pressure on short-term equity returns and on short-term bond returns — and we know that inflation reduces the buying power of cash. So, what should investors do when facing an inflationary environment? Here are some time-tested suggestions:

• Consider your investment horizon: Conventional wisdom suggests that staying the course usually benefits investors — provided they have an investment horizon that can tolerate short-term Nobel laureates Eugene Fama and Kenneth French, in their famous paper describing their three-factor model, note that investors who can tolerate short-term volatility and who have an investment horizon of 15 years or more are often rewarded for their short-term losses.
• Have a Plan: Inflation and rising interest rates happen, and a good financial plan anticipates and protects against such Too often, investors without a plan may engage in the “panic trade” and sell indiscriminately when markets are down.
• Focus on Quality: Rocky market environments often create During turbulent times, we believe it is more important than ever to seek to invest in companies with strong market positions, experienced management teams, strong balance sheets and the ability to generate free cash flow.
• Most Importantly, talk to your advisor: First and foremost, turbulent markets can be confusing and We suggest investors have frank, open conversations with their financial advisors at all times, and especially during stressed markets when the advisor’s experience provides crucial perspective.

-PRIVATE VISTA, EFBC STRATEGIC PARTNER

Meet Patrick Cotter, COO of Cotter Consulting, Inc.

Get to know Patrick, a new member of the EFBC.

President’s Letter: Purpose

On May 19^th, several members, along with EFBC staff attended the Coleman Entrepreneurship’s Sixth Annual Purpose Pitch Competition. EFBC, you missed out! Everyone watched four startups pitch their greater purpose and how they plan to fulfill that purpose through their business objective. There was a theme around ESG (Environmental, Social, Governance) throughout the pitches. The passion these startups exhibited inspired me to consider my purpose especially around social. A part of our purpose as an organization is to maintain a relationship with a university and champion their students.

I live to care for and serve my family. I strive to be a loving father to my four children and instill in them the values that I believe in. I encourage them to listen and empathize with others, so the world is a more compassionate place. I want my kids to try new things and to get out of their comfort zones because that’s where growth happens. I aim to be a devoted husband to my wife, Anette, who inspires me every day to be strong and captivates me with her sparkle. I love my wife and I live to see her joy.

Our company values are to be capable and dependable. Corporations and municipalities rely on our quality service and professionalism to serve them. I also bring that to my team and employees. I want to create a company culture that excites my employees to come to work. I aspire to be a great leader and the first step is showing up for my team, my customers, my vendors, and mostly for my family. I even have the privilege of working with my mom every day so I get to merge my family and company values daily, as we do in family business.

I’m thankful to the Purpose Pitch teams for inspiring this reflection. To remind me that my purpose is to take care of the people that are important to me, pursue lifelong learning and continuous growth, and be kind to others and myself. And I’m excited to continue elevating our relationship with Bruce Leech, Director of the Coleman Entrepreneurship Center, and DePaul University. We are grateful to call them home. Lastly, I’ll leave you with this question – what’s your purpose?

Neil O’Donnell
VP of Business Development, Progressive Industries
EFBC President 2021-2022

25th Anniversary Celebration Highlights

As most of you know, EFBC was founded in 1994. Since inception, EFBC has been a resource for family businesses and entrepreneurs alike. Those seeking opportunities to connect with colleagues, grow their professional networks, and gain valuable leadership insights and skills have always found a home within our organization. As we take a step back to look at our phenomenal growth, being an organization of 138 members and the countless other individuals that were instrumental in our success, we cannot help but be humbled and inspired. Both by those who came before us in the  families we’ve had the honor of serving and the ones that will follow us when we leave.

As our 25th anniversary came and went, we were inspired document our history. From the beginning, the intention of EFBC was to construct an independent organization that serve the unique needs of this community and to grow with our members. Far and beyond, those initial goals have been met, and we felt that both our mission and community deserved to be celebrated, especially as we approached the quarter-century mark. The organization saw many changes over the years, especially given the total turnover of ownership and leadership with the EFBC, and we are just as strong, if not stronger, than we were >25 years ago.

In honor of our >25th Anniversary Celebration, we held a Gala Dinner that brought over 150 people to the stunning Renaissance Schaumburg Hotel. The gala was full with stories from our past and toasts to the future, and sprinkled with lots of laughing and dancing! One of the highlights of the night was an awesome band, which quickly became crowd favorite, who got the crowd out of their seats and on the dance floor. Our personal highlight of the night was the photo booth that easily had some of the best shots of the night, many of which are not appropriate to share publicly.

After enjoying a delicious 3-course dinner, EFBC’s Executive Director, Liz Fidanovski, took the time to acknowledge EFBC members and our brilliant community. Some of our members have been with EFBC for as long as we have been in business, back in the Family Business Council days! That sort of longevity reflects EFBC’s integrity and how we truly care about the communities we serve. We hope your loyalty will remain for the next >25 years…. and then some!

Cheers to >25 Years! ?
>25 years of educating and empowering the people of family and entrepreneurial businesses
>25 years of commitment to support and strengthen family-owned businesses
>25 years of learning together
>25 years of shared experiences
>25 years of serving over 200 business leaders from different companies in a wide array of industries

Do you have a transition plan? Let EFBC help!

In this Q&A EFBC’s Executive Director, Liz Fidanovski, shares what you need to know about TPA and why it is one of the most important EFBC member benefits that you should take advantage of.

Do you have a transition plan? Let EFBC help!

In this Q&A Liz Fidanovski shares what you need to know about TPA and why it is one of the most important EFBC member benefits that you should take advantage of.

What is TPA?

TPA stands for Transition Preparation Assessment. At some point, we all must transition. It could be in five years, 10 years, or even 20. TPA starts the dialog within your company around transition.

The first step of TPA is completing an online survey facilitated by JSA Advising. The survey only takes about 20 – 25 minutes to complete and we strongly encourage you to complete the assessment in one sitting. But if that is not possible you will receive a link to revisit and complete the survey if necessary.

The assessment survey will identify where you are in terms of transition and where you think the company is going. The rest of the leadership team completes the survey as well so we can see where they are in terms of transition and where they think the company is going.

A composite report is prepared that will identify where there are gaps and where you are in sync. From there we build a roadmap to help guide you through the transition process. TPA aligns the team and identifies things that need to be done to prepare for the transition and gives you the time to do it right.

Along with the survey and roadmap, TPA includes 10 hours of consultation from the Emeritus Group and EFBC Strategic Partners.

How many people can be involved in TPA?

Up to five company members can participate in the assessment survey. We encourage you to have multiple members of your business and family take the assessment to obtain a broader, more detailed transition roadmap.

How are the assessment survey results shared?

Once your assessment has been processed, someone from EFBC will arrange a time to meet individually with you to review a summary and interpretation of your TPA results. Then you meet as a cohesive group to review composite results and identify some initial next steps.

How long does the TPA process take?

Once you initiate TPA, you have two weeks to complete the assessments. Then it takes about two weeks for the reports to be compiled.

The entire TPA is typically a year-long process. Depending on where you are as a company, it may take a bit longer. Or if everyone is pretty much in sync it may be a shorter process.

When should you begin the TPA process?

It’s never too soon to think about transition! But we recommend that you start the assessment at least five years before you anticipate transitioning. Even if you may be 10 years out, take it. You may be thinking 10 years, but your partners are thinking 20. The assessment will uncover if you are or are not on the same timeline.

How much does TPA cost?

This amazing resource is free of charge for EFBC members. The cost for non-members is $3,000.

What is the Emeritus Group?

The Emeritus Group is a team of current EFBC members who have already embarked/completed the process of transitioning their business. Their experience is an invaluable resource as you make your transition plans.

Why is TPA such a valuable resource for EFBC members?

Approaching transition can be very overwhelming. TPA helps you narrow your focus. This is the first step in the process. Having key team members acknowledge where they are at and where they think the company is going helps to identify where there is alignment, or where there is not.

And it provides support from a neutral party. Emotions can run high when tackling weighty issues like transition, so it’s helpful to have an unbiased point of view outside of that emotional world.

There is also value in accountability. The Emeritus team checks in with you throughout the process and is there to help hold you accountable.

TPA allows you to take a stance on where you think the company and you are going. But nothing is set in stone. We help facilitate the tough emotional (and sometimes scary) conversations.

It also opens opportunities. For example, if it is determined that the transition is 10 years out there are more opportunities to choose from.

To find out more about EFBC’s TPA program Click Here!

Cyber Security and Emerging Tech Blog

Why Cybersecurity and Other Emerging Technologies Are Even More Vital to Your Business Health

This month we teamed up with a new-to-EFBC member, Matt Kaseeska, CEO of Net Works Consulting, to hear his thoughts on cyber security.

In 2022, it is redundant to say technology has changed every aspect of how we run our businesses. So, what’s next you ask? Guest contributor and new EFBC member Matt Kaseeska of Net Works Consulting Services shares his thoughts on why the health of your business is tied to your adoption of emerging technology and the importance of cybersecurity.

Deploying innovative technology solutions, such as artificial intelligence is crucial to retaining a competitive edge. Technology has always been necessary on a functional level — for tasks, communications, security, and so on. But these days, it can make or break your business. The ready adoption of emerging technology is simply a necessity for business growth and success.

The implementation of new digital technology can help accelerate progress toward business goals, such as financials, workforce diversity, and environmental targets. Companies that incorporate three or more emerging technologies reported growing net income 80% faster than non-adopters, according to Oracle.

To ensure you are in a position to take full advantage of emerging applications it is important to assess your current technology stack.

Top 5 Things a Tech Check Catches

From outdated solutions to cybersecurity that’s not up to the task, there are plenty of convincing reasons to discover where improvements could be made to your IT. A technology assessment will reveal:

1. Aging Solutions: If you haven’t updated in 6-12 months, you’re probably using at least one outmoded solution.
2. Decision-Making Lags: 75% of companies that use AI experienced an improvement in decision-making.
3. Old Equipment: New technology improves productivity, enhancing workflows.
4. Weak Security: Strong security is a must to avert cyberattacks, which average costing a company about $200,000.
5. Technological Deficits: A technology audit can identify areas that hold your team back.

Agility Matters

When it comes to your IT infrastructure, ask yourself if your technology enhances your ability to make data-driven decisions and if it provides value for your clients. Is it scalable? Do your employees have all of the tools they need to do their jobs successfully?

Agility is how prepared you are to adopt available technology innovations. To attain optimal agility, Forbes suggests you have a strategy with objectives, broad agreement on the technology path, IT processes in place and adaptable personnel who appreciate what new technology brings to the table.

While most executive managers believe agility to be important to their success, less than a third of executive managers believe their companies fit the profile, according to Project Management Institute.

Stay Ahead of the Cybersecurity Threat

The United States, Ukraine, the UK, and several other western nations have been the target of brazen Russian cyber operations in recent years. Hacking activity is anticipated to increase with the current unrest.

Cybersecurity is the protection of Internet-connected systems, including hardware, software, and data, from cyberattacks. Ensuring cybersecurity requires the coordination of efforts throughout the information system, which includes email, infrastructure, and network security as well disaster recovery/business continuity and operational security.

Russian hackers deploy many of the common types of cyberattacks used by domestic hackers. Cybersecurity threats you might have heard of before or perhaps encountered in the past include backdoors, phishing emails, ransomware, etc.

If you have yet to run a cybersecurity audit, now is a great time to do so.

About Matt:

Matt’s parent’s instilled in him the importance of hard work, honesty and delivering on what you promise. These principles have been carried over to his business. He created Net Works Consulting Resources based on transparency, simplicity and results. Over the past 25 years, Matt has led major companies forward with strategic IT leadership and transformed clients from a chaotic environment to a streamlined one that allowed for stability and growth.