Supply Chain

There is significant evidence that supply chains have “normalized.” Delivery times are fast and overall demand is low. Many companies are now looking at “longer-term” supply chain planning and changes. Some of these changes include multi-sourcing and digitizing supply chain operations. Geopolitical events and resulting tariffs/sanctions could quickly change the supply chain landscape, however, so it is more important than ever to be nimble with respect to strategic and tactical planning.

When preparing (hopefully in advance!) to sell your business, it helps to understand what buyers will looking for and asking about.  While revenue and financials are well-known areas of due diligence, for companies in the product space the efficiency and riskiness of operations and supply chain are also fair game. Buyers are concerned about a target company’s ability to complete products to satisfy customers and drive revenue. This depends on a robust supply chain and manufacturing strategy. They will consider questions such as: what do you build and buy?; why?; where?; and, what risks are associated with that (geopolitical, tariff, logistical)? While many people know that potential buyers will ask questions about customer concentration, some do not realize that savvy buyers will also ask about supplier concentration in order to better understand the risks of dependency on a few (or one!) suppliers for critical materials needed to generate revenue. In cases where there are limited suppliers available, buyers will want to know how that risk is mitigated. They may be interested in whether you have too few suppliers (creating risk) or too many (leading to high managerial overhead and low influence with each supplier). Supplier relationships and total cost of ownership – payment terms, inventory programs, whether you have been paying your suppliers on time, etc. are all areas that buyers may look into. Buyers are also interested in inventory levels of both finished goods, work-in-progress, and raw materials. This can be a major drain on cash flow.  Obsolete inventory (which has been in stock for a long time and has no likely future use) also raises concerns.  Inventory accuracy may be a concern – if they think they are buying $2M in inventory but there really only is $1.5M from a physical count, that will lead to some discussions. It is wise to expect a possible inventory count and prepare in advance with your own counts to assess and improve accuracy. It is best to think like a buyer and prepare early to set up supply chains and operations that will impress potential acquirers and not raise red flags.  By deliberately thinking through manufacturing and supply chain strategies and addressing potential risks, companies can best situate themselves for successful exits. Please feel free to reach out to Lustig Global Consulting (

Increasing revenue when preparing for a future sale (or pretty much anytime!) is great but an equivalent savings in operational costs, such as supply chain and manufacturing, can provide an even greater increase in company sales price since valuations are often based on multiples of EBITDA. A $1M increase in sales may improve EBITDA by several hundred thousand dollars while a $1M decrease in supply chain and manufacturing costs usually improves EBITDA by almost that full amount. There are a number of ways to tackle optimizing these costs.  A first step is to look at the current manufacturing and supply chain strategies and how they align with the company’s overall strategy.  Are these areas part of the core competencies that are essential to maintain in-house? Are there other possible operational strategies that are worth considering? With that guidance, companies can then look at their options.  Are they buying the right things from the right suppliers (and the right number of suppliers) at the right time (think inventory levels) at the right prices and on the right terms? Do they have the right mix of what they fabricate, assemble, test, package, and distribute themselves vs. through suppliers? Are the in-house process optimized for best cost, inventory, and quality? Assessing these areas provides great potential for increasing the company’s values.  For more information please go to

Expense Reduction Analysts (ERA) are looking at numerous ways to help companies save money and improve processes in an inflationary environment. One of ERA’s most successful verticals in assisting companies with their freight costs. Need: Business leaders are looking at unique ways to combat inflation and reduce freight costs. Solution: ERA’s freight specialists put forward 10 unique ideas to combat rising freight costs as a catalyst to initiate a conversation with decision-makers and promote our expertise. Value: Decision makers who utilize ERA’s group of experts will save more than with their internal teams alone. Please take a look a the attached PDF. Reach out if you have any questions or if I can be of help.

Managing Today’s Reality of Excess Inventory:   The Domino Effect of Having Out-Dated Software Systems.   Not having real time information on the fast-moving products. Not having accurate information of the inventory level in multiple locations. No method of tracking Vendor Reliability of ON-TIME deliveries.   What are the Results of Excess Inventory? Late shipments will result in production disruption. Order cancellations will result in excess inventory. Reduction of Profit from reduced sales price to move excess inventory. Cash on hand reduced as funds are tied up in unsold inventory.   How to Manage the above issues! Replace the outdated software with real time software needed to: Better manage everything related to sales and inventory   The Benefits Resulting from Real Time Software! Understanding inventory turns to maximize inventory at item levels. Knowing Vendor Reliability to achieve better product availability! Understanding the inventory availability when managing multiple locations.   For additional information visit our website 

A major theme of this edition of ProfitSense was accounting, as host Bill McDermott welcomed two CPAs, Bradley Carroll, CFO of Progressive Lighting, and Gary Clayton, CFO of Superior Business Management. Bradley discussed his move from a CPA firm to in-house practitioner, the significant problems associated with logistics and sourcing products internationally, and more. Topics Gary addressed included enhancing the value of the business, major challenges business owners face today, and why misclassifying employees is so high-risk for such small savings. ProfitSense with Bill McDermott is produced and broadcast by the 

With the supply chain and labor shortages caused by the pandemic, the blockage of the Suez Canal (remember that?), and the ongoing war between Russia and Ukraine, prices have gone through the roof. And while the Fed may claim some of it is transitory, many of us know exactly what it is: Inflation! But what exactly is inflation, what does it mean for a business, and what can a business owner do about it? In this article, we’ll define inflation and discuss some strategies for dealing with its ramifications. What is inflation? Inflation is an increase in prices not tied to an increase in quality. Inflation is when food prices go up for no reason at all; if package quantity went up to the same degree as food prices, then the price increases would not be an example of inflation But when we get away from simple things like food, it gets a bit murkier. If a car price goes up because the car is rare, is that inflation? How about putting out better but more expensive models…is that inflation? If cars are hard to come by because of a chip shortage, is that inflation? How about when the price of a commodity goes up because the price of fuel went up? Is that truly inflation? Or is it what the Fed would describe as transitory – something that will reverse itself when the price of oil comes back down? (Incidentally, the question of when the price of oil will come down is up for debate.) Our firm recently held a webinar with an energy analyst who opined that energy prices might stay high for some time (fact check and include link)) But, beyond defining inflation, the real question is – what does this mean for my business? How do I react and keep my business, reputation, and pricing power? Tips for Dealing with Inflation I recently had a conversation with a food service provider. He was facing a dilemma; commodity prices like flower, oil, and onions were up 80-150%. Labor was up significantly too. How can he keep selling food at a price people can handle while continuing to make a profit? Here is some of what I shared (and other things I did not share that may be interesting to a broader audience). Not all products are created equal. The cost for components of one product went up modestly while the cost of ingredients of the other went up much more significantly. Understand your margin by product and you can know where you need to raise and where you can absorb slightly tighter margins. Create efficiencies. If labor costs are up, what can you do to reduce the amount of labor inputs? Maybe hire robots for a piece of the process. Maybe buy certain items ready made from a larger vendor who can get economies of scale. If certain onions are up more than mushrooms, start offering mushroom salad as a standard and charge an extra fee for onion salad. Be thoughtful about inventory. Having extra inventory will cost you more money and you ultimately have to chare the customer more to cover your carrying costs. On the other hand, with prices increasing weekly, you may save significant money by buying things today rather than next month. Loss leaders are an option. Certain products might be unprofitable when viewed individually; however, if they enable you to sell other more profitable products, you might profit on a customer interaction even if you do not profit on each individual component. Consider buying in bulk. If you get a slight discount today and lock in your prices for the next few months, you are probably ahead of the game. Unless of course prices start rapidly falling, in which case you have price stability but are behind the 8-ball. Keep a long-term view while making sure you stay liquid and solvent. If you believe that commodity prices will come down (I do, but unfortunately, I do not know when), realize that there could be an opportunity to build or solidify those long-term relationships today and make the profit tomorrow. Keep an eye on the competition but know your numbers. Know where your business’s “line in the sand” is located. If you go past there, you will end up regretting it. Don’t let your competition entice you to chase unprofitable volume. You may not “make it up in volume…” Compete on things other than price. Provide a better dining experience, off hours delivery, customization, or something else your customers value that doesn’t cost you too much to provide. You will raise prices, but they’ll keep coming back for other reasons. Don’t just focus on margins. If you used to produce product for $5 and sell it for $10 but now it costs you $10 to produce, you can sell it for $15 and while you’ll have a much tighter percent margin (33% vs 50%), you’ll still be making the same number of dollars in profit ($5). Your competition may continue to mark it up 100% (so if the cost is $10, they’ll charge $20). Consider a loyalty program. If you do have to raise prices, consider instituting a loyalty program to “give something back.” While “points” are often left unused, you still build loyalty and if customers do come back for the freebies, you are giving my favorite type of discount – the one you only give when they come back. Monitor closely. If you do choose to operate on tighter margins, be very careful of waste and spillage. With tighter margins, every lost “unit” eats up a bigger piece of your profits. It’s been an interesting decade so far, these 2020s. When we are all grandparents, the kids are not going to believe this, but until then, keep paying attention to what is going on and make sure you are thoughtful about the scenarios in which you find yourself. Be intentional about your business (and life too!) and make sure to have good facts so you can make the right strategic decisions to help you weather this storm. — Gershon Morgulis is the founder and managing partner of Imperial Advisory CFOs. Imperial’s 8-CFO team provides owners and other executives of growing businesses with part-time CFOs and other consulting services which enables businesses to make better and more confident business decisions.

Take Control of Insurance Pricing Premiums continue to increase for certain commercial insurance lines, while coverage terms have become more restrictive. Companies that take a passive approach — simply responding to quotes from underwriters — frequently receive coverage that’s both inadequate and overpriced. Watch this video to learn how organizations can leverage data to proactively drive the insurance placement process, reducing their cost of risk typically by 10% to 25%.

From appliances to sofas, Americans aren’t used to empty shelves or waiting weeks for their purchases. But the pandemic continues to disrupt the supply chain, shuttering factories, creating logjams at ports, and exacerbating a truck driver shortage. This event will bring together regional leaders – L.L. Bean CEO Stephen Smith, Massachusetts Port Authority CEO Lisa Wieland, and Boston Public Schools food services executive Laura Benavidez – in a discussion led by Globe business columnist Shirley Leung on how they’re dealing with supply chain woes, the impact on our fragile economic recovery, and whether this is a new normal.

We are hearing and reading a mix of information from economists and suppliers in a wide range of industries. Some state that they expect supply constraints to loosen by the end of the year and prices to plateau. Others tell us that even though some of the commodity indices show price relief, it will still take 6-9 months for those lower prices to work their way down to industrial consumers. The most optimistic outlook is that things will soften a bit by the end of the year, while the pessimists indicate that we may not have relief until late Spring / early Summer of 2022.

Every business owner envisions a growing business, running smoothly without drama and having massive amounts of cash flow and profits. The problem is that with growth comes increasing complexity. Oftentimes, you need to add people and improve processes. Deciding not to add people and processes can create choke points in our business that cause it to become increasingly inefficient or ineffective. It breaks my heart to see businesses not living up to their potential. There’s a fix for those choke points, but sometimes we see them or sometimes we don’t. Or if we do see them, we may not know the right fix.


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I once had the thrill of interviewing Jerry West on management. He was “The Logo” for the NBA, although back then they didn’t advertise him as such. Only the Laker followers knew for sure. In 1989 the “Showtime” Lakers were coming off back-to-back championships.  Pat Riley was a year away from his first of three Coach of the Year awards. 

Can you Offer Too Many SKUs to Your Customers? The short answer is YES! A SKU, or Stock Keeping Unit, defines each different product version that you sell and keep inventory of.  There may be different SKUs of the same overall item based on size, color, capacity (think computer or cellphone memory), features, and many other parameters.  For build to forecast businesses, that number of variations can quickly explode and become difficult to manage. Your customers are busy and want ordering simplified. Of course, they may need (or want) more than one variation of a product. That is reasonable and a common aspect of business – one size does not fit all! But there is a point where too offering too many SKUs is not value added either for your customer or your business.  In his April 30, 2013 article “Successful Retailers Learn That Fewer Choices Trigger More Sales” in Forbes, Carmine Gallo discusses his experience and a study about “choice overload” by other authors. He writes about a retailer that “has discovered that giving a customer more than three choices at one time actually overwhelms customers and makes them frustrated…when the customer is faced with too many choices at once, it leaves the customer confused and less likely to buy from any of the choices!” Choice overload is well-documented in consumer studies but can apply in B2B as well. While customer satisfaction is important, another key concern is the often-hidden costs associated with a business offering and managing a large number of SKUs for a given product type. These costs include holding inventory, S&OP (Sales and Operations Planning) team time, small production runs, and scrapping inventory. Holding inventory takes up space, which may come with a cost or utilize racks that could be used for other products. Scheduled inventory counts take up employee time and may result in blackout periods when the warehouse is not shipping product.  The more SKUs there are, including extra SKUS, the greater the potential impact. The Sales team’s forecasting and the Operations team’s purchasing reviews that are part of the S&OP process can occupy more of their valuable time if they need to consider these times. If small orders or forecasts require a new production run, this could be costly and create excess inventory. Whether from this new production or past builds, eventually it will make sense to write off and scrap old inventory, another cost impact to the company. How do you know which SKUs to focus on if you wish to look at reducing your total number of SKUs? Start by examining SKUs that have: Low historic sales over a period of time Small variations between SKUs that customers do not value Older technology or model when newer option SKUs are available This requires a true partnership between Sales and Operations. It starts with educating both teams on the costs involved – neither group may be aware of the money and time impact to the company. Periodic (such as quarterly) reviews of SKUs that meet the above descriptions should become a fixed part of the calendar. A review of the data and other available for sale options should result in the identification of SKUs which may not be needed. At that point, it is helpful to have a customer friendly EOL (End of Life) Notice process by which you inform customers of last time buy requirements for this SKU and alternates available. It is usually best to provide some time for the last time buy in the interest of customer satisfaction, although that may not always be necessary. At a company that designed and sold electronics, a robust SKU rationalization process was implemented to help address these issues. A representative from the Operations team analyzed SKUs that met a version of the above criteria and suggested candidates for the EOL process. Next, a member of the Sales team reviewed them and, where appropriate, issued product change or EOL notices to customers, providing them time for last time buy orders when needed. These steps helped reduce the work involved in maintaining these SKUs while not leading to any customer complaints. A final note – sometimes it makes sense to continue offering low selling SKUs – to support customers buying other items (hopefully in larger quantities). It may be worthwhile to encourage them to keep coming back to you for all of their product needs and this may be a way to accomplish that. But it helps to understand that this is truly the case and not assume that this customer would not be equally happy with another, more popular, SKU.   Steven Lustig is founder and CEO of Lustig Global Consulting and an experienced Supply Chain Executive.  He is a recognized thought leader in supply chain and risk mitigation, and serves on the Boards of Directors for Loh Medical and Atlanta Technology Angels.

When it comes to careers, business owners are a minority of the population. In conversations this week, I mentioned the statistics several times, and each owner I was discussing it with was surprised that they had so few peers. According to the Small Business Administration (SBA), there are over 33,000,000 businesses in the US. Let’s discount those with zero employees. Many are shell companies or real estate holding entities. Also, those with fewer than 5 employees, true “Mom and Pop” businesses, are hard to distinguish from a job. The North American Industry Classification System (NAICS) Association, lists businesses with 5 to 99 employees at about 3,300,000, and 123,000 have 100 to 500 employees (the SBA’s largest “small business” classification.) Overall, that means about 1% of the country are private employers. Owners are a small minority, a very small minority, of the population. Even if we only count working adults (161,000,000) business owners represent only a little more than 2% of that population. So What? Where am I going with this, and how does it relate to our recent discussions of purpose in business exit planning? It’s an important issue to consider when discussing an owner’s identity after transition. Whether or not individual owners know the statistics of their “rare species” status in society, they instinctively understand that they are different. They are identified with their owner status in every aspect of their business and personal life. At a social event, when asked “What do you do?” they will often respond “I own a business.” It’s an immediate differentiator from describing a job. “I am a carpenter.” or “I work in systems engineering,” describes a function. “I am a business owner” describes a life role. When asked for further information, the owner frequently replies in the Imperial first person plural. “We build multi-family housing,” is never mistaken for a personal role in the company. No one takes that answer to mean that the speaker swings a hammer all day. Owners are a Minority We process much of our information subconsciously. If a man enters a business gathering, for example, and the others in the room are 75% female, he will know instinctively, without consciously counting, that this business meeting or organization is different from others he attends. Similarly, business owners accept their minority status without thinking about it. They expect that the vast majority of the people they meet socially, who attend their church, or who have kids that play sports with theirs, work for someone else. There are places where owners congregate, but otherwise, they don’t expect to meet many other owners in the normal course of daily activity. This can be an issue after they exit the business. You see, telling people “I’m retired” has no distinction. Roughly 98% of the other people who say that never built an organization. They didn’t take the same risks. Others didn’t deal with the same broad variety of issues and challenges. Most didn’t have to personally live with the impact of every daily decision they made, or watch others suffer the consequences of their bad calls. That is why so many former owners suffer from a lack of identity after they leave. Subconsciously, they expect to stand out from the other 98%. “I’m retired” carries no such distinction.       This article was originally published by John F. Dini, CBEC, CExP, CEPA on

In a recent research study by The Value Builder System™, they analyzed data from 20,000 business owners who completed a Value Builder assessment of their business and discovered that owners who have businesses dependent on them, known as Hub & Spoke owners are facing a 35% discount on the value of their businesses and part of the problem may be the degree of customization they offer. For the purposes of the study, a Hub & Spoke owner is someone who answered the question “Which of the following best describes your personal relationship with your company’s customers?” with the response, “I know each of my customers by first name and they expect that I personally get involved when they buy from my company.”  One reason customers want the owner to personally attend to their project is the degree of customization Hub & Spoke owners offer.  In fact, the study shows that Hub & Spoke owners are more than twice as likely to say they offer a complete custom solution for each customer.  Since the owner is usually the person with the most subject matter expertise inside their company, it’s not surprising customers want the owner’s full attention on their job. The secret to making a business less reliant on its owner is to stop offering a custom solution for every customer.   How Ned MacPherson Built More Value By Doing Less   Ned MacPherson is a digital marketing guru, so it’s not surprising that when he first started offering his time, it was in demand.   In the early days as a consultant, he offered all sorts of growth hacking services. But when demand outstripped his supply of time, Ned had a decision to make. He could either turn away prospective clients or build a team of consultants underneath him.  As a growth guy, the idea of treading water didn’t appeal to Ned, so he opted to build a team. However, to ensure his team could execute without him, Ned decided to focus on one service offering: post-click analysis. Rather than help optimize a website for the entire customer journey, Ned’s company would become one of the world’s leading firms on optimizing a customer’s journey after they opted in to a website.   Most digital marketing consultants offer a wide range of services, but Ned knew it would be impossible to remove himself if they offered help in too many areas. By specializing in post-click analysis, Ned and his team were able to streamline their offering. Demand for Ned’s time started to diminish as his employees became some of the world’s leading experts in a narrow slice of the analytics market.   Within seven years of starting Endrock Growth & Analytics, Ned had 70 employees, more than $2 million a year in EBITDA, and multiple acquisition offers.   

The sale of a business marks a major life event. It’s emotional, stressful, and exciting all at the same time. And unfortunately, it’s often a lot of work. Most business owners will only experience the process of selling a business once in their life. This is both good and bad news. On the bright side, you only need to get through it once. But many business owners aren’t ready for the process and risk leaving money on the table as a result. With many sellers relying on the sale to fund their retirement and lifelong financial goals, getting it right from the start is critical. Here are tips from sell-side business advisors on what to do (and not do) when selling a business. What to do (and not do) when selling a business Start thinking about selling your business early — really early One of the top mistakes sellers make when selling their business is not starting the process early enough. There are many reasons starting last minute can really hurt your bottom line. It’s not uncommon for business owners to assume they’ll never retire at some point during their life. But as often happens, life changes. Perhaps health concerns for you or a spouse make continuing to run your business difficult. Or maybe you eventually lose the excitement when getting up every day and want a change of pace. Sudden sales or immediate retirements Unfortunately, when business owners want to sell with a tight timeline (or fire sale), they may have fewer options to exit. It’s not uncommon for some buyers to want the owner and/or members of the management team to stay on for a period to help with the transition. If there’s an earn-out, it’ll usually require the seller to stick with the company for different milestones (time, financial, or otherwise) to earn the full purchase price. Earn-outs aren’t ideal for sellers, but if you’re unwilling or unable to consider deals with any continuation component, it could impact the sale price, timeline to find a buyer, or both. Make your business more sellable later by getting advice now Business brokers often recommend getting a valuation done years before expecting to sell the company. Sarah Grossman, Principal of BayState Business Brokers in Needham, MA, says this helps sellers “shape their timeline and any financial planning that needs to be completed prior to a sale.” Understanding the fair market value of the company is critical to setting expectations for the seller, but understanding the drivers of the valuation can help increase the sale price over time. Grossman says, “a [business] broker can advise them on things they can do in their business over the next few years to make it more saleable when it does go on the market.” How to maximize your cash at closing Aaron Naisbitt, Managing Director at Dunn Rush & Co, an investment bank focused on sell-side M&A in Boston, MA, emphasizes the importance of going to market and knowing what your business is worth. He says, “the biggest mistake many businesses owners make is not running a competitive process when the business is capable of attracting interest from a broad number of buyers. This mistake most often occurs when the owner has already made the second biggest mistake – not taking the time to educate themselves and prepare adequately for the process.” Not every business will be able to run a competitive process. But those that can, and don’t, “Will leave money and terms on the table if they do not do so” he adds. Getting professional help is key here as trying to negotiate a sale directly with a buyer might be short-sighted. Grossman says it’s not uncommon for sellers to be approached directly by competitors. She cautions sellers considering working with buyers directly as “They could be leaving significant money on the table without a clear understanding of the valuation of their company. Sellers also need to work with a broker and their advisors to understand a typical deal structure so that they can maximize their cash at closing.” The importance of understanding the terms of the deal cannot be overstated. This is where money is made or lost. Naisbitt cautions that sometimes terms can sound really good, but aren’t always common sense. He adds that without an advisor, sellers “Don’t know where to argue.” During negotiations, you have to consider “What is it that’s important to you and what are you willing to give up” he says. Exit planning is not time to DIY — assemble your team of advisors When selling a company, gathering your team of advisors early on is key to getting a successful outcome. Again, odds are you haven’t sold a business before and probably won’t again. We don’t know what we don’t know…and you only have one shot to get this right. Your team of business and personal advisors will be instrumental in getting the deal over the finish line. Your business advisory team may consist of: a business broker or M&A advisor, accounting and tax advisors, and transaction/M&A attorney. On the personal side, your sudden wealth advisor who focuses on helping individuals experiencing a transformative liquidity event. Be sure to involve your wealth advisor in discussions around deal terms too. For example, when considering deal structure, it’s important to ensure alignment with your objectives or financial needs. What are your income needs after the sale or do you have plans for a big purchase? Your advisor can help determine how much cash you need at closing and whether to consider the pros and cons of arrangements like an installment sale. And at closing, a financial advisor can help you determine Section 1202, realizing the gain over time with an installment sale, asset versus stock purchase, or state tax implications such as the charitable goals, legacy objectives for heirs, or estate tax planning strategies. Brokers explain what sellers are most unprepared for during the process Selling a business is a lot of work. In addition to running the company in the usual course of business, sellers also need to comply with a host of due diligence requests from the buyer’s team and the lender financing the transaction. The magnitude of this process is by far the most 

In March 2022, Florida enacted the politically charged Individual Freedom Act, informally known as the STOP WOKE (Wrongs to Our Kids and Employees) Act. Less than two years later, the U.S. Court of Appeals of the Eleventh Circuit blocked the enforcement of the Act on the grounds it violates employers’ right to free speech. This decision directly impacts employers in the Eleventh Circuit and will have a ripple effect on employers nationally.   How did the Individual Freedom Act (Stop WOKE Act) affect employers? The Act attempted to prevent employers from mandating training or meetings for employees which “promote” a “certain set of beliefs” the state “found offensive” and discriminatory. There are eight prohibited beliefs each relating to race, color, sex, and national origin. According to the Act, employers must not teach the following: Members of one race, color, sex, or national origin are morally superior to members of another race, color, sex, or national origin. An individual, by virtue of his or her race, color, sex, or national origin, is inherently racist, sexist, or oppressive, whether consciously or unconsciously. An individual’s moral character or status as either privileged or oppressed is determined by his or her race, color, sex, or national origin. Members of one race, color, sex, or national origin cannot and should not attempt to treat others without respect due to race, color, sex, or national origin. An individual, based on his or her race, color, sex, or national origin, bears responsibility for, or should be discriminated against or receive adverse treatment because of, actions committed in the past by other members of the same race, color, sex, or national origin. An individual, based on his or her race, color, sex, or national origin, should be discriminated against or receive adverse treatment to achieve diversity, equity, or inclusion. An individual, by virtue of his or her race, color, sex, or national origin, bears personal responsibility for and must feel guilt, anguish, or other forms of psychological distress because of actions, in which the individual played no part, and were committed in the past by other members of the same race, color, sex, or national origin. Such virtues as merit, excellence, hard work, fairness, neutrality, objectivity, and racial colorblindness are racist or sexist, or were created by members of a particular race, color, sex, or national origin to oppress members of another race, color, sex, or national origin. Employers still had the ability to mandate employees attend sessions that either refute these concepts or present them in an “objective manner without endorsement.” This dictates how an employer deals with its employees and is particularly limiting in how employers address discrimination training. Employers who failed to adhere to the law were liable for “serious financial penalties—back pay, compensatory damages, and up to $100,000 in punitive damages, plus attorney’s fees—on top of injunctive relief.”   The Ruling – Inc. v. Governor [2024] In March 2024, the U.S. Court of Appeals of the Eleventh Circuit served an injunction preventing enforcement of the Act. Despite the state insisting the Act banned conduct rather than speech, the court ruled the Act unlawfully violated the First Amendment’s right of free speech by barring speech based on its content and penalizing certain viewpoints. While certain categories of speech such as “obscenity, fighting words, incitement, and the like” are traditionally unprotected, the court pointed out that “new categories of unprotected speech may not be added to the list by a legislature that concludes certain speech is too harmful to be tolerated.” Florida is keen to appeal against the decision.   What does this mean for employers? Regardless of one’s opinions on the matter, this can be viewed positively from an employer’s standpoint. Employers in the private sector can control speech in the workplace, and this ruling confirms their autonomy will continue. Whether or not the rest of the country will follow suit remains to be seen. This case, in tandem with the US Supreme Court’s ruling to ban race based affirmative action, signals today’s intense political climate is likely to continue to impact how employer diversity, equity and inclusion (DEI) initiatives are approached. Employers should continue to review their DEI initiatives, ensuring they are in line with the latest precedents. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at or 203.454.0560      


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