Dallas Business Symposium - 15 Insights We Learned

The Dallas Business Symposium last week was a treasure-trove of insights and examination of the current business climate we're in, with all its complexities and nuance. While there was a wealth of knowledge, expertise, and highly valuable pieces of information discussed, I wanted to share several of the insights we learned about from our 2 panels on tax policy and cybersecurity.

The first several insights are focused on cybersecurity, if you're looking for tax insights skip down to #11.

1. Misconceptions about Cybersecurity, ROI, and Strategic Priority:

• One significant misconception among business leaders is the belief that investing in cybersecurity has no clear ROI. Damian Davis, MBA founder of DIS Risk Solutions emphasizes that cybersecurity breaches are becoming increasingly costly, with average data breach costs reaching $4.5 million in 2022, and the aggregate breach cost is expected to exceed $1 trillion by 2025.

• Many leaders view cybersecurity and data privacy as purely IT issues rather than strategic business concerns. This perspective leads to reactive management instead of proactive, strategic thinking. Heath Carter , founder and CEO of TekConcierge , said that cybersecurity should be elevated to a board-level conversation as it is a core business risk that affects revenue, reputation, and operational continuity.
• This point aligned with the observation that businesses often underestimate the importance of cybersecurity investment, viewing it only in terms of cost rather than as a critical investment with a strong return (i.e., avoiding costly breaches and maintaining operational integrity).

2. The Rapid Evolution of Cybersecurity Threats:

• Cybersecurity threats are continuously evolving, with outdated controls like encryption and antivirus software being replaced by advanced systems such as multi-factor authentication (MFA) and endpoint detection. However, even these are becoming vulnerable to new attack methods.
• Business leaders must stay informed about these evolving threats and ensure they are using up-to-date security measures like zero-trust authentication to stay ahead of cybercriminals.

3. Importance of Retaining Cybersecurity Talent:

• Businesses often make the mistake of hiring cybersecurity professionals to meet temporary needs or to satisfy boards but then let them go to save costs. Damian suggests that consistent investment in and retention of cybersecurity talent is crucial, as skilled professionals are key to maintaining robust cybersecurity controls.
• Given the increasing frequency of cyberattacks and the talent shortage, organizations must prioritize retaining talent, as cybercriminals often have superior resources or incentives.

4. Challenges for Middle-Market Firms:

• Middle-market firms face unique cybersecurity challenges compared to larger enterprises. Larger firms can allocate more significant budgets to build extensive cybersecurity systems, while middle-market companies, even if growing, may only allocate a smaller percentage of their budget.
• The focus for middle-market firms should be on leadership’s commitment to valuing cybersecurity. This includes prioritizing risk management and investing in cybersecurity, even if the resources are limited. Leaders need to foster a culture where cybersecurity is seen as integral to long-term business growth.

5. Leadership Philosophy and Risk Management:

• The leadership philosophy around cybersecurity plays a significant role in how risks are managed. The panel suggested that companies that take cybersecurity seriously tend to have well-structured risk management approaches, including continuous patching, vulnerability scanning, and implementing strong security measures.
• Businesses that exhibit a robust cybersecurity philosophy are considered lower risk and more favorable to work with. Business leaders must ensure that cybersecurity is at the forefront of their operational strategies, not just an afterthought.
• Staying ahead of changes in technology and cybersecurity requires continuous learning and fostering a culture of security awareness within the organization.

6. Need for Regulatory Reform in Cybersecurity:

• The cybersecurity panel advocated for stronger cybersecurity regulations, similar to Europe’s GDPR, to protect data privacy and unify cybersecurity measures across the United States. This would create a consistent framework for companies to follow, reducing the current fragmentation in how businesses approach cybersecurity.
• There are also calls for more specialized regulations around cyber insurance underwriting. Currently, cyber insurance is treated under general property and casualty insurance, but given the growing complexity and significance of cyber threats, Damian suggests that cyber insurance should have its own set of standards and certifications.

7. Impact of AI on Cybersecurity:

• AI is becoming a significant force in both cybersecurity and cybercrime. Business leaders must stay informed about how AI is changing the landscape, both as a tool for protecting their businesses and as a potential threat vector.
• As AI continues to develop, leaders should explore how to integrate AI-driven solutions into their cybersecurity strategies while preparing for the new risks AI-generated attacks may pose.

8. Industry-Specific Challenges:

• Middle-market firms often lack the same level of cybersecurity infrastructure as larger companies, which puts them at a higher risk. These firms must find creative solutions to invest in cybersecurity measures that fit within their budget constraints.
• There are opportunities for middle-market firms to work with cyber insurance providers and cybersecurity professionals who understand their limitations and can offer tailored, cost-effective solutions.

9. Balancing Investment and Compliance:

• The panelists suggested that while middle-market companies may face resource constraints, they must still find ways to comply with regulatory standards and implement necessary cybersecurity measures. Business leaders should view these investments as part of a long-term strategy for growth and risk management, rather than as burdens.

10. Cloud Solutions and Managed Services:

• Heath notes that middle-market companies can leverage cloud solutions and managed services to bridge the gap in cybersecurity resources and expertise. These solutions provide scalability and cost-effectiveness, allowing companies to implement security best practices without straining their budgets.
• This aligns with the panel’s view that firms need to invest in up-to-date, scalable cybersecurity solutions, such as multi-factor authentication and zero-trust frameworks, to protect their data and operations effectively.

These next insights are focused on tax policies.

11. Misconceptions about State and Local Tax Obligations:

• One common misconception is that businesses only need to file taxes in states where they have a permanent presence or location. Brandon Newton of Whitley Penn highlights that having remote employees, traveling for work, selling through e-commerce platforms, or hiring contractors can create a tax filing requirement (also known as nexus) in multiple states.
• Another misconception is that businesses can simply overpay taxes in their home state to offset the tax liability in another state. This is not an effective strategy. Filing obligations and risks are state-specific, and businesses need to address tax requirements on a state-by-state basis.
• Business leaders need to be aware of their multi-state tax obligations, especially as workforce mobility increases with remote work and e-commerce. Misunderstanding tax nexus can expose companies to legal and financial risks.

12. Staying Informed on Regulatory Changes:

• The panel explored the importance of staying updated on regulatory changes, particularly in state and local tax laws, which vary significantly across states. This can be done by subscribing to industry periodicals, attending state-specific briefings, and setting alerts for relevant legislative and legal developments.
• Business leaders should know who the thought leaders are in their industry and find ways to access their insights, whether through podcasts, industry events, or legal updates.
• Leaders need to recruit strong tax professionals and prioritize continuous learning and actively monitor changes in tax regulations and policies to ensure compliance and take advantage of opportunities like deductions or credits.

13. Challenges for Middle-Market Firms:

• Middle-market firms face more administrative burdens when it comes to state and local taxes. Unlike larger companies, they often lack the resources to efficiently manage multi-state tax compliance, including sales tax, payroll tax, and industry-specific exemptions.
• Sales taxes, especially in a multi-state environment, pose significant challenges for smaller firms. Middle-market businesses may struggle with registering in multiple states and determining what is taxable in each jurisdiction.
• Smaller and mid-sized firms often miss opportunities to take advantage of specific tax credits and deductions because they lack the in-house expertise to identify and execute on them.
• Middle-market companies need to find ways to manage the complexity of tax compliance, whether through partnerships with tax experts or leveraging cloud-based tax solutions. Being proactive about identifying deductions and credits can lead to significant savings.

14. Tax Reform and Broader Impacts:

• The public often focuses on income tax rates, especially as there is net migration from high-income tax states to lower-tax states. However, the panelists noted that sales tax and other taxes, such as property and production taxes, also make up a significant portion of state tax bases. For example, in Texas, sales taxes represent 60% of the overall tax collections.
• When states reduce income tax rates, they often compensate by expanding the sales tax base. This shift is important for businesses to consider, as it could lead to new or increased tax liabilities in states that prioritize sales tax over income tax.
• Business leaders need to take a holistic view of tax reform and not just focus on personal or corporate income tax rates. Sales tax and other taxes play a significant role in the overall tax burden, and shifts in state policy can have broad implications for business costs and operations.

15. Tailored Tax Solutions for Middle-Market Firms:

• The panel discussed where a good CPA firm can help smaller and mid-sized businesses find value by identifying industry-specific deductions, credits, and tax-saving strategies that these businesses might not otherwise be aware of. This is crucial for middle-market firms that often lack the in-house resources to navigate complex state and local tax landscapes.
• Middle-market firms can benefit significantly from partnering with tax professionals who understand the nuances of state and local tax laws. These partnerships can uncover opportunities for savings and ensure compliance in an increasingly complex regulatory environment.

My firm James Sackey Marketing specializes in producing content like the Symposium that positions firms in front of their audience and provides a platform for professionals to connect, learn, engage, and do business together. If that sounds like something you'd be interested in learning more about, please connect with me on LinkedIn, check out my website here, and engage with me in text/WhatsApp at 469.422.0604 or email me at [email protected]

I regularly produce events that serve to educate and share marketing strategies and resources to scale middle-market firms using unconventional techniques. I've produced a library of over 150 answers to the top challenges business leaders are facing and you can access it for free here. You can also find several slide decks and 4 books published on Amazon that will help you market your business, regardless of size. Subscribe to my newsletter here (in the Featured section on my profile) on LinkedIn too so you can get updates on my upcoming events and other valuable resources.