Your taxes: Taking start-ups to the next level

By LEON HARRIS, MARK FITZSIMMONS
May 2, 2019 22:12
3 minute read.
Approximately 170,000 Americans live in Israel.

Approximately 170,000 Americans live in Israel. In total, more than one million U.S. citizens and green card holders – who both live overseas and own more than 10% of a foreign corporation – faced the prospect of paying the tax.. (photo credit: REUTERS)

 
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Lean Six Sigma has been around for decades and has become the preeminent organizational improvement technique. Virtually every Fortune 500 organization uses it to improve the way they do their work – from designing new products and services to improving existing ones. Start-ups should do the same.

What is Lean Six Sigma?: Lean Six Sigma is a process and set of tools used to invent, design and continuously improve the products and services that customers depend on, regardless of the industry, the size of the business, or whether they’re in the private, public or not-for profit sector. It’s about using information to set your employees up for success and consistently meet the needs of your customers.

By using Lean Six Sigma, an organization drives out unnecessary costs, improves employee engagement, and generates greater customer loyalty.

Sadly, too many organizations, regardless of what they do or even how big they are, spend significant time and money doing something wrong the first time – then spend resources fixing the original error plus any side-effects. This is incredibly frustrating.

The Lean Six Sigma methodology incorporates strategies that have been developed to solve specific problems within an organization. By following a project management approach, it enables project leaders and subject matter experts to draw from a collection of improvement strategies to solve the most critical problems faced by the organization. Moreover, it provides employees with critical problem-solving skills they can use for the rest of their career.

Not only are employees more capable, but morale improves significantly as employees become more successful and experience less stress. They know how to solve the problems keeping them up at night.

How Lean Six Sigma works: Briefly, the methodology most commonly follows an approach called “DMAIC,” an acronym for the typical phases of an improvement initiative or project.

• Define. In the Define phase, we transform each opportunity identified into a clearly defined Lean Six Sigma project. During this phase the project team is chosen. The customer and customer requirements, the process to be improved and the project goals are defined.

• Measure. Measure the existing system. Establish valid and reliable metrics to help monitor progress toward the goal(s) defined in the previous step. Begin by determining the current baseline and understanding the process as it is today. Use exploratory and descriptive data analysis to help you understand the data.

• Analyze. Analyze the system to verify cause and effect relationships. Identify ways to eliminate the gap between the current performance of the system or processes and the desired goal. Apply statistical tools to guide the analysis.


• Improve. Improve the system. Be creative in finding new ways to do things safer, better, cheaper or faster. Use project management and other planning and management tools to implement the new approach. Use statistical methods to validate the improvement and to ensure defects have been addressed and eliminated from the process.

• Control. Implement the process solutions identified earlier. It is also time to establish controls and accountabilities for the proper operation of the process going forward.

The outcome: Sustainable improvement is how employees interact with their stakeholders. It requires disciplined, local action coupled with a company-wide commitment to changing how employees are recruited, rewarded, recognized, managed and positioned in roles. In an ever-increasingly global market, any organization wanting to succeed must find ways for their people to respond faster and better to new challenges and changing environments.

Organizations that leverage Lean Six Sigma to understand their world through insights gathered from both structured and unstructured data will make better decisions about the way they engage with their stakeholders will be the ones who succeed.

Comment: Lean Six Sigma can promote any start-up that wants to be taken seriously, or to make it to an exit, from Jerusalem to California. This will help in any due diligence. 

On the tax side, use Lean Six Sigma and check that start-up losses are utilized, R&D grants are requested if needed, tax filings are up to date, tax is withheld as required from sale consideration, and so forth. We have seen major multinational acquirers walk away from deals if they see a mess.

As always, consult experienced advisers in each country at an early stage in specific cases.

Mark Fitzsimmons is president of 360 degrees Management Consultants and an expert in Lean Six Sigma. Leon Harris is a certified public accountant and tax specialist at Harris Horoviz Consulting & Tax Ltd.
Mark@360degreesconsultants.org and Leon@h2cat.com.

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