What started as a chat between Bob Shearer and a caterer led to a match made in snack food heaven.
When Shearer, co-founder of Shearer’s Foods Inc. and founder and CEO of Shearer Solutions, heard that Keith Kropp, owner and president of Or Derv Foods, was setting new standards with innovative appetizers, he wanted to meet him.
“He was not looking for a partner, but we hit it off,” Shearer says. “And he said, ‘With your experience and what you have done at Shearer’s, I think we could really do a lot with the company.’
“I agreed and so one thing led to another, and then basically with my investment group we bought 40 percent of the company. We’re looking to expand and grow the company and are planning a new manufacturing facility.”
Shearer discussed his first investment with Smart Business after selling Shearer’s Foods last year.
Q. Besides its signature sauerkraut balls, Or Derv Foods produces a range of deep fried products such as calamari, banana pepper rings and even Oreos. With your 40 years in potato chips and other snack foods, how did this opportunity pique your interest?
A. I look for something that has a special niche, something in which we could be different, where we could diversify ourselves and be unique. With the group of talent that we have at the company, I feel good about the innovation that we can bring to the company.
Q. Who is in your investment group?
A. Bob Hanline, founder and CEO of The RS Hanline Co.; Al Melchiorre, CEO and president of Melcap Partners LLC; Steve Surmay, vice president at Shearer’s Foods Inc.; Joe Rogers, COO of Shearer Solutions; and John Bahas II, owner of Akron’s Waterloo Restaurant and Catering and Prime 93 Restaurant and Event Center — he tipped me off about Or Derv Foods, he’s also product development director at Or Derv Foods.
Q. You grew Shearer’s Foods from scratch in 1972 to more than $500 million of annual billings in 2012. You recently won the EY Entrepreneur Of The Year™ Northeast Ohio Award. What’s the key to this type of success?
A. My philosophy has always been to try to work with good people. And I really like Kropp. Then I think you always have to have a unique product in the category and be innovative. Those are the things that help successfully move a company forward.
Q. Can you describe the plant expansion that’s slated for 2014?
A. The new plant will be a sustainable plant. We will be doing LEED certification. Obviously we have a great interest in conserving our natural resources and working to make our foods very sustainable in their nature and manufacturing processes.
Q. What is it about the uniqueness, for example, of the products that enticed you?
A. We make wonderful falafels. Now I am really hooked on them. We are trying to do some products that cater to the vegan world and are organic and all-natural. We do an all-natural meatball that is just a great product. We do a meatless meatball for vegans that is just to die for. It’s great. We’re trying to develop a lot of unique products that set us apart from our competition. Outside of Shearer’s, this is my first adventure in food. I’ve done some minor things outside of the food industry, but this is where my real love is. I like the opportunity to be able to do that. ●
How to reach: Or Derv Foods, (330) 376-9411 or www.ordervfoods.com
Twelve years ago, EY decided to go global with its Entrepreneur Of The Year awards and establish the World Entrepreneur Of The Year program — and the results have been, shall we say, an international success. The conference, held annually in Monaco, features Entrepreneur Of The Year country winners competing for the World Entrepreneur Of The Year title.
Assembling business leaders from around the world in one place to be honored is a huge accomplishment — the wealth of experience, as well as the variety of successful leadership styles, is outstanding.
Here are some thoughts from the collection of the world’s most accomplished entrepreneurs — innovators, futurists, turnaround specialists and problem-solvers — about leadership styles. ●
“I built the company based on people, not on experience from before. They were willing to learn and try anything. We had a bunch of people who had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”
founder, president and CEO
Entrepreneur Of The Year 2012 United States
2013 Entrepreneur Of The World
“Early on, the business was centered on me, and I had to make all the decisions alone. Now I share those decisions with my 10 main directors. If there are differences in opinion, I make the last decision.
The other thing is that I have had to ensure that the people who are invited to work here are people with principles, values, integrity, responsibility and passion. If I don’t see a person with passion, they don’t hang around the company very long.”
Lorenzo Barrera Segovia
founder and CEO
Entrepreneur Of The Year 2012 Mexico
“I’m a very passionate person, which will never change. When you grow, you gain more experience and the kind of problems you face change. As you grow, you need to grow with your organization.”
Entrepreneur Of The Year 2012 Argentina
“In the startup days, you have to be very innovative, hire and retain talent, refine your business as you deploy in the marketplace, and you learn things from it. Today, with a solid track record of business success, I can focus on what’s next and think more strategic and long-term than you’re allowed to in the early days. My style has evolved as the business has matured.”
Chevron Energy Solutions
“Entrepreneurship and leadership is about always having ideas, knowing that it is possible even though everyone says it is too difficult. Maintain the positive and always have new ideas.”
Mario Hernandez, founder and president, Marroquinera
Entrepreneur Of The Year 2012 Colombia
“To keep the entrepreneurial spirit and entrepreneurship alive once you've got past the startup base, I think it is making sure people understand why they are there. There are always things you can do to improve your business. You should be rethinking and retooling it every chance you get. The key thing is to make sure everybody in the organization understands the story, where are you going — how are you going to get there? And the belief that you are doing the right thing —people want to know their purpose. Keep the energy going, keep a strong sense of purpose.”
Dr. Alan Ulsifer
CEO, president and chair
Entrepreneur Of The Year 2012 Canada
“The skill sets of an entrepreneur involve understanding how to create business. Why not work with kids who need it the most and actually teach them and help them to be entrepreneurs? That’s what is going to grow our economy and create stability where otherwise we’re going to have a lot of social unrest.”
President and CEO
Network for Teaching Entrepreneurship
“I like to be involved. I want to know everything that is going on. But I have to delegate to my team. That was the biggest adjustment for me, and it’s not an easy thing to do. It’s that delegating to others, trusting them and reinventing yourself. Now that we’ve grown, I put more responsibility on my team and rely on my team more than I once did.”
President and founder
SME Entertainment Group
“If someone makes a mistake, what do you do? You laugh with them. You don’t yell at them. You laugh. It just keeps things light and lively and people want to do their very best. You let them know they screwed up, but you also let them know it’s OK.”
National Heritage Academies
Leaders often talk about how the traits of accountability and transparency helped make them who they are, but to retired Navy Adm. Mike Mullen, who served as the chairman of the Joint Chiefs of Staff for four years under President George W. Bush and President Barack Obama, leadership is quite simply how you listen, learn and lead.
It’s not just a coincidence that communication is as important in the war zone as it is in an organization — and that’s where Mullen emphasizes listening to what his team members have on their minds.
Smart Business talked with Mullen about the challenges of being in command:
Q. What do you see as the most important trait that any leader must possess?
A. Integrity. Be true to yourself, and obviously true to your values. The value of integrity intrinsically has been a driver for me since I was a midshipman at the U.S. Naval Academy. It has served me exceptionally well.
Integrity encompasses being honest, truthful and consistent — both publicly and privately in leadership positions — and representing that in every situation. It is most evident in the toughest decisions you have to make.
Q. And how can you ensure integrity is present in leadership?
A. What I loved about command was the responsibility and authority that came with it. But more than anything else, the other piece was accountability — accountable leadership. That is not just having someone hold you accountable, but having enough strength yourself as a leader to hold yourself accountable.
I just found that even with those decisions that can be very unpopular, if you are true to that value of integrity, even if it may not seem to some to be the best decision, it [integrity] holds you in the best stead as a leader over the long term. And because of that, it becomes incredibly supportive of those very, very tough decisions.
Q. So what can help a leader make those tough decisions more effectively?
A. As a more senior leader, I learned to keep a diversity of views around me. The more senior I got, the more diverse the people, the recommendations and the discussions had to be in order for me to make the right decision.
I had people around me who were willing to say, ‘Hey, this is when you got it wrong,’ as opposed to the opposite, which is isolation, where nobody will tell the emperor [he] doesn’t have any clothes on.
Q. You’ve mentioned the importance of listening to others in order to help you become a better leader. How did you do that?
A. Everywhere I went, whether we had a town hall meeting or we could call an all-hands meeting, I would take questions from the audience. So, for example, when a young enlisted man would give me a question of which I didn’t know the answer, I said, “I don’t know the answer, but give me your email address. I will go research it and get back to you.”
I did that. I went back and looked at whatever their concern was. And some of those concerns generated significant changes in the military, or in the particular service they were in. For me, as chairman, that was a vital part of trying to understand what I was asking them to do, and then taking that feedback and trying to fix the problem that they raised — if it made sense to do it.
A good leader can make such a difference, and create something out of nothing, whereas a bad leader is unable to do that. The ingredient that makes a difference is leadership. ●
Retired Navy Adm. Mike Mullen served more than 43 years in the Navy, having served as the chairman of the Joint Chiefs of Staff from 2007 to 2011, and as chief of naval operations from 2005 to 2007. He will be the keynote speaker at the Dec. 5 American Red Cross Hero Awards. Learn more about the Hero Awards at www.clevelandheroes.com.
Consider this business scenario: You’ve landed a big account for your company by converting a highly prized prospect into a valuable client. The new client has hired you to handle a specific scope of work and is counting on your team’s ability to deliver work that goes above and beyond.
While nothing is more important than delivering great customer service to satisfy the client, you may not realize that you’re probably overlooking unrealized opportunities to forge a stronger relationship with your customer.
In today’s business landscape, most large companies offer an array of products and services. More often than not, however, your clients use you for a specific service or skill set. And unfortunately, in this scenario, most companies focus solely on the task at hand — delivering what they’ve been contracted to deliver — failing to take ample time to think about the bond they’re creating with the client and what could be next.
In more simple terms, it is one thing to provide service that keeps a customer; it is another to keep that customer and expand the relationship to become a trusted partner.
Provide value in a deliberate way
The good news is that this is an easy fix. Establish a content marketing program that allows you to distribute thought leadership to your clients.
A content marketing program will help you provide value that other service providers may not, and when clients see you as an informational resource and partner, it will be easier to expand the relationship.
Take this example into consideration: You are an insurance provider and your main product is life insurance, therefore most of the communication you have with your clients surrounds that topic.
With a comprehensive content marketing program in place, however, you can educate your clients on the recent trends in the insurance industry and how that affects the individual. At the same time, you can give them an overview of your company’s wellness program and let them know that if they joined, they could reduce their monthly premiums.
As you can see, you’re not just providing your client with the original service, you’re also providing them with both your thought leadership — aka value — and additional offerings.
Personal connections payoff
Aside from providing value to the client with the content you distribute, a strong content marketing program allows you to showcase your brand’s personality. Clients will be able to connect with your brand on a more personal level.
Providing continually updated content through the right channels to the right clients enhances your day-to-day communications. Clients start seeing you as thought leaders and partners instead of just service providers.
It will help you expand relationships and, as a result, generate new business through more products and services.
Show them more than just what they see on the surface — show them how active you are in the community, or how much fun you had during a recent company outing. If may sound trivial, but your clients do similar things, and seeing you connect with the community and/or employees will help forge a more personal connection. You never know; you and your client may support the same charity, organization or team.
Open communication also will help strengthen relationships to the point where you can capture a premium price and eliminate price-jumping clients. Clients will pay more for a valuable relationship than simply look to get the lowest price elsewhere. ●
David Fazekas is vice president of marketing services for SBN Interactive. Reach him at email@example.com or (440) 250-7056.
You would think someone like Douglas Merrill would be a heavy multitasker, with multiple devices in hand, fielding several conversations — both real and virtual — simultaneously.
But you would be wrong.
Merrill, who was the CIO at Google until 2008, doesn’t like to multitask. He says that when you do it, you aren’t using your brain’s full capacity and aren’t as effective. He recommends focusing on one thing at a time.
Billionaire Mark Cuban has his own time management strategy. Cuban, owner of the NBA’s Dallas Mavericks, says you should completely avoid meetings unless you are closing a deal. Otherwise, he says, they are a waste of time.
Both of these proven leaders have learned that how you manage your time is paramount to your effectiveness.
As a CEO, you are swamped every day with calls and emails from people wanting a piece of your time. Some are internal, some are charity requests, some are from friends or family members and others are from service providers.
To help wade through this sea of information, it’s important to have a system in place to help you free up time to think about your business and the things that matter most in life. These open times are what author Richard Swenson refers to as “margin.” They are the spaces between ourselves and our limits that are reserved for emergencies.
But for many business leaders, there are no spaces left.
The way out of this trap is to set clear goals and values for yourself and your organization. Once you do that, you will have a filter through which to evaluate everything. Everything will have an immediate yes or no answer, eliminating the “let me think about it” category completely.
The key is to establish what your goals are first and then prioritize what is important. With your priorities straight, you will find more time to put toward important things on your goals list, but don’t forget to leave time on your daily schedule. There is no way to foresee all emergencies, so by leaving yourself some margin, when something unexpected happens, you already have time built in to deal with it.
Once you have margin built into your life, you have to have the discipline to stick to it. There will always be the temptation to take every meeting or answer every email. But if you use your goals and priorities as a filter, those requests are easily either accepted or declined based on where they fall on your priority list.
If you want a life where you can experience more peace and joy and less anxiety, start looking at your priorities and establish some margin in your daily schedule. ●
Being a newshound isn’t just a hobby for Mike Thompson, it’s his way of keeping Montrose Auto Group at the forefront of successWritten by Dennis Seeds
Mike Thompson was going through the most difficult time in his career — he was spending a lot of time trying to keep Montrose Auto Group employees calm during the 2008-2009 recession.
“People were panicking around the country,” he says. “Nobody in our government leadership was really out there with confidence, reassuring the people that we were going to get through this thing — that we were going to survive.”
So Thompson did the next best thing. He took his years of experience with the business cycle and decided to be the take-charge guy who would inspire confidence among his employees.
“You have to believe that you can knock the walls down and get through it,” he says. “We were one of the fortunate ones who never had to lay anybody off, never had any need for anybody to take pay cuts. Sometimes we didn’t replace people when they left and we spread out the workload, but we kept on going.”
Pundits are quick to remind everyone of the cyclical nature of business, and while that may provide some consolation, someone who appears in control can strengthen its effect.
“I believe that for every down cycle, there is an up cycle,” Thompson says. “You’ve just got to be able to ride it out. And that was my message to our people. You’ve got to hang tough, because if you leave me and go somewhere else, you’ll be just as nervous.”
Thompson made it a point to communicate regularly with the managers who ran his operations.
“I explained to them how to talk to their people, and how to keep the people from panicking,” he says. “They had to keep them calm; financially, we were going to get through this thing. None of us had ever gone there before.”
While calm and reassuring words from management helped the situation, Thompson, president and CEO, didn’t stop there. His successful years in business — growing Montrose Auto Group into 12 auto dealerships, garnering more than $400 million in annual revenue — meant he had a few tricks up his sleeve. Here’s how he combines his principles of business with lessons learned to steer Montrose Auto Group through choppy waters.
Crunch your information
Business critics use many indicators to try to predict where the economy is going, and Thompson has found that a leading indicator such as sales of new automobiles carries a lot of weight.
“Usually, we are the precursor of six to eight months as to when a recession is going to start,” he says. “All of a sudden, even before people are aware, showroom traffic starts to do what I call turning — visitors go from excited, happy buyers to all of a sudden buyers who just have to buy cars. When that happens, you can always expect a slowdown coming sometime in the near term in the car business.”
Once Thompson saw a pattern there, he also looked for the reverse to support his belief.
“It is just the opposite when all of a sudden you start seeing people with smiling faces going out to buy new cars just because they want a new car and they can buy one,” he says. “That means we are looking at some good times coming up.”
While the nature and number of prospective buyers alone can give some important insight to economic trends, you would do well to support that indicator with research.
Thompson finds that rather than relying on reports from analysts, he does his investigating first-hand.
“I watch all the television programs that are important to business,” he says. “That’s the first thing I do in the morning. You try to stay ahead of the curve and you’ve got to go by your instincts. After so many years in business, your gut kind of tells you certain things are going to happen.”
Thompson finds that the often-overlooked signals are important.
“I read The Wall Street Journal; I look at little articles that a lot of people don’t even bother to waste time looking at,” he says. “You see how the ‘stars and the moon’ line up when you take all these little bits and pieces and pull them altogether.”
For instance, Thompson examines how many dealerships are for sale in the Automotive News. If there are only a small number listed — instead of several pages — things are good in the car business.
“You look at the Kiplinger report, you watch Fox Business news, you watch the international scene as to what is going on in Europe, Japan … I look at all that.
“Look at currencies, whether the dollar is getting weaker or getting stronger, whether the yen is weaker or stronger, what’s going on with the deutsche mark — those are little hints; what is going on in the bond market, what is going on with LIBOR — all those things give you clues.
“It’s just assimilating that information and tying it all together and saying, ‘Wow! Times are going to be good.’”
Saving for a rainy day is vital
Developing a sixth sense to predict the ups and downs of the business cycle gives you a powerful tool to employ. Of course, as economists are prone to say, leading and lagging indicators are not always accurate. So it is a good business practice to save for a rainy day.
Thompson learned as a young auto dealer with his first Chrysler store how tough it was to not only make money but to borrow money. Once he understood that, and depending upon how much the company made, he set aside an amount for a reserve fund.
“We put somewhere between 20 and 35 percent of whatever we earned that year into the rainy day fund,” Thompson says. “Then so much went to pay taxes, and then the rest, if I needed to leave it in the business, I did. If I could declare a dividend for myself, I did. Or we took that money, reinvested it and bought more stores.
“There were a couple of years when we didn’t put any away because we wanted to make sure we didn’t breach any covenants with the bank.”
Another advantage of having a cushion was apparent in the most recent recession, when as Thompson says, it was difficult to borrow a nickel, unless you really didn’t need any money.
“We were able to borrow money and invest in other stores because we had put away the cash cushion for a rainy day,” he says. “When they saw me investing in other companies, our people relaxed because I was one of the few in that first year and a half of the collapse who was out there buying stores.”
Along with the skills and experience of analyzing market conditions, it can take having a gut feeling for when change is imminent to ready your next move.
“I threw my money into the market when the Dow Jones dropped to 7300,” Thompson says. “I knew I didn’t have the bottom; it went down to 6600. But still, I said it is time. If it doesn’t turn around, the money is worthless anyway. So we got back into the stock market, and it worked out.”
Realize your reputation is king
It can take years to assemble a strong staff to run your operations well. If you have your pulse on the market, and realize that the cycle will run its course and bounce back, you need to be ready for that rebound. You will be ahead of the game if you are able to keep your experienced, senior staff rather than paring back and then hoping to obtain new talent when the market turns around.
“Even in the down cycle, never once did I think about letting senior level people go because it took me all these years to gather the people that I had who were really the strength of the Montrose Auto Group,” Thompson says. “I can give them all the tools, I can give them guidance, I give them money to run the businesses; without them, my businesses wouldn’t run the way they do now.”
In short, your company’s reputation, which you have carefully built over the years, could suffer a critical blow if you don’t ensure the continuation of your standing. Thompson knew how he had vowed in 1967 as a new salesman that if he were ever fortunate enough to buy his own dealership, he would never allow customers to be treated with less than the highest quality service. And he was going to keep that vow.
“You have nothing if you don’t have a quality reputation today,” he says. “That is why all the manufacturers today have to build quality cars. They had looked so bad, especially the domestics, in the late ’60s to early ’90s. They had no options to do otherwise; they had to start building better products. I give them a nine out of 10. They are just that good now.” ●
- Develop your information crunching methods.
- Saving for a rainy day is key.
- Realize your reputation is king.
The Thompson File
Name: Mike Thompson
Title: President and CEO
Company: Montrose Auto Group
Born: I was born in Cleveland. I’m a local boy.
Education: Besides the school of hard knocks, I went to Wickliffe High School, and I was the oldest of eight kids. I had to leave home in the middle of my senior year because there was no room for me at the house. My dad gave me my options: ‘Army, Air Force, Navy, Marines? We are bringing grandma here and there is no room for you.’ I went into the Army. I got my high school GED and took college accounting courses in the Army. I served in Vietnam in 1967 with the 9th Infantry Division.
What was your first job? As a boy, I mowed lawns, had paper routes, washed cars, waxed cars, shoveled snow by hand — anything to make a few pennies. I came home from Vietnam, and my dad told me there was an opening where he worked at Dowd Oldsmobile for a used car salesman. I went in and saw Healy Dowd who my dad had worked for 33 years at that point. And he said, ‘Mike, I’m going to do you a favor. I’m not going to hire you, because you will never make it in the car business.’ And I said, ‘Well, gee, thank you Healy.’ You know, that’s the biggest favor he did. Seven years later, I bought my first store, Trotter Ford in Euclid.
Who do you admire in business? In the car business, Alan Mulally, the president and CEO of Ford Motor Co., is the guy I admire most. And prior to him, it was Lee Iacocca. I liked both of those gentlemen … Iacocca was a tough guy. He pulled Chrysler out of trouble and turned it around. Mulally earned all my respect when he refused to take the handout from the government; he rolled up both sleeves and went to work just like Iacocca did and said we are going to fix this thing and he did.
What was the best business advice you ever received? This is a little bit of a joke. My dad said, ‘Son, you don’t want to go into business. Get a job and get a paycheck, you know you can count on it.’ That was the best business advice I ever got. My dad had an eighth grade education. On the other hand, the best advice I give to people, relative to business is, ‘Follow your money.’ A lot of people will take their money and invest it, and they expect other people to make it grow. Well, the way it’s really going to grow is if you keep watering it yourself. You worked hard to get that money, so, keep watering it. It pays off eventually.
How to reach: Montrose Auto Group, (330) 666-0711 or www.gomontrose.com
Deny, deny, deny; fall, tuck and roll; or put your head in the sand?
The quick answer to this headline is none of the above. A leader, by definition, must do exactly that — lead, which means being in front of a variety of audiences, including employees, investors and customers. Not everyone is going to be a gung-ho supporter. Sooner or later you’ll encounter a naysayer who either has a point to prove or is on a mission to make you and your company look bad.
Many of these verbal confrontations come out of nowhere and when least expected. As the representative of your organization, it is your responsibility to manage these situations and recognize that sometimes a “win” can simply minimize the damage.
When under siege, it’s human instinct to fight, flee or freeze. Typically these behavioral responses aren’t particularly productive in a war of words. Engaging in verbal fisticuffs could simply escalate the encounter, giving more credence to the matter than deserved.
If you flee by ignoring the negative assertions, you’ll immediately be presumed guilty as charged. It’s hard to make your side of the story known if you put your head in the sand.
By freezing, you’ll appear intellectually impotent. Worse yet, pooh-poohing a question will only fuel the aggressor’s determination to disrupt the proceedings. You could use a SWAT-type police and military technique to elude a confronter by falling, tucking and rolling to safety, but that usually only works on the silver screen.
Perhaps the best method to manage unwelcome adversaries is to be prepared prior to taking center stage. This applies to live audiences or a virtual gathering when you’re speaking to multiple participants, which is common practice for public company CEOs during quarterly analyst conference calls.
Most gatherings of this nature include a Q&A segment where the tables are turned on the speaker who must be prepared to respond to inquiries both positive and negative.
Before any such meeting, it is critical to contemplate and rehearse how you would respond to thorny or adverse statements or questions.
A good practice is to put the possible questions in writing and then craft your responses, hoping, of course, that they won’t be needed. This is no different from what the President of the United States or the head of any city council does prior to a press conference or presentation. The advantage of this exercise is that it tends to sharpen your thinking and causes you to explore issues from the other perspective.
In some cases you’ll find yourself in an awkward or difficult situation where there is no suitable yes or no answer, or when the subject of the interrogatory is so specific it is applicable to only a very few.
The one-off question is easiest to handle by stating that you or your representative will answer the question following the session rather than squander the remaining time on something that does not interest or affect the majority.
The more difficult question is one that will take further investigation and deliberation, in which case the best course of action is to say exactly that. Answer by asserting that rather than giving a less-than-thoughtful response to a question that deserves more research, you or your vicar will get back with the appropriate response in short order. This helps to protect you from shooting from the hip only to later regret something that can come back to haunt you.
Effective speakers and leaders have learned that the best way to counter antagonism is through diplomacy. It’s much more difficult for the antagonist to continue to fight with a polite, unwilling opponent.
Finally, when being challenged, never personalize your response against your questioner; always control your temper; and don’t linger on a negative. Keep the proceedings moving forward and at the conclusion keep your promise to follow up with an answer. This will build your credibility and allow you to do what you do best, lead. ●
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at firstname.lastname@example.org.
My 7-year-old son Cole recently gave me a Rainbow Loom bracelet, which is made of linked rubber bands. It is today’s school-age children’s craze, and Novi, Michigan-based Choon’s Design LLC is churning out the kits at a record pace.
With more than 1 million units sold in the last 24 months, Rainbow Loom is the brainchild of Choon Ng, a former Nissan crash safety engineer who invented it while working on a craft project for his daughters.
And Rainbow Loom, it turns out, isn’t its original name. When it was created, it was called Twistz Bandz.
Timing is everything, and Twistz Bandz may have sounded a bit too much like Silly Bandz — the last “wrist” craze that swept the nation. Between November 2008 and early 2011, every school-age child in sight was wearing layer upon layer of Silly Bandz on their wrists. It was as hot a product as anything since Beanie Babies.
Twistz Bandz’s arrival, it seems, happened just as Silly Bandz ran into what every hot new product eventually faces: competition. Look-a-likes with similar-sounding names began flooding the market. They were cheaper, and you could buy them more readily at more retail locations. The core brand quickly diluted. So Ng did what any smart businessperson would: He changed the dynamics of the situation.
Thus, Rainbow Loom was born.
Enter social media
Within a few months, the product — which allows its young owners to custom-create bracelets — was gaining attention. Much of this was due to a full-tilt social media blitz, including videos on YouTube and an engaging Facebook page, where users could share their designs.
More recently, Ng has become vigilant in protecting his patent and U.S. trademark — battling all wannabe competitors from launching similar-sounding products and flooding the market to dilute his own brand.
His success — or failure — is yet-to-be determined. But his efforts will prove fruitless if he’s not already looking ahead to the next product. This is the dirty little secret to any hot toy craze and the core dilemma every business leaders faces: How do you remain relevant as consumers’ wants, needs and desires ebb and flow — sometimes as swiftly as the wind changes direction.
Get beyond being a fad
Success in business relies upon building a sustainable operation that will outlast any cyclical “must have” product explosion.
There needs to be the creation of an idea continuum — an innovation factory, if you will. Innovative leaders must review, measure and adapt a company’s products, services and solutions to the changing whims of the marketplace. You need to talk to customers, vendors and prospects. And you need to regularly take the pulse of the market.
If you haven’t taken at least some of the gains from today’s success and invested it into research and development for tomorrow, you’re already losing ground. Today is today, and just like the disclaimers for financial investing warn — past performance does not indicate future results.
In the end, the only thing that matters is this: Is your next big thing built to last? Or, like every other craze that’s every hit the market, will your opportunities to remain relevant long into the future fade away after the competition creeps in and dilutes your market? ●
Dustin S. Klein is publisher and vice president of operations for Smart Business. Reach him at email@example.com or (440) 250-7026.
As a central control position for financial assets, family offices manage investments and trusts by preparing tax returns, handling bill pay and/or overseeing financial controls.
Floyd Trouten, a director of tax at SS&G, says families that use these private companies typically have an excess of $10 million in investable assets. However, no family office is alike because they are very customizable and offer a high level of service.
“A well-run family office minimizes taxes and maximizes cash flow to family members. It maximizes the amount of wealth that can pass from one generation to another. It provides a control point where assets are housed, managed and invested,” he says. “But the biggest thing is you can sleep well at night, knowing things are under control.”
Smart Business spoke with Trouten about how family offices work and why this might make sense for your family.
Why are family offices so different?
Each family has specific needs. Some may already have a third-party investment group that manages the money, so family members don’t care about investment advice if they are getting tax returns prepared. Other family offices include estate and tax consulting to maximize benefits to beneficiaries and minimize potential taxes.
With another type, the family may ask the financial advisers to be trustees. As the trustee of a family trust, the office may do bill pay and investment review. For example, if a granddaughter has an idea for an investment, it could be easier to have her bring it to the third party for review. The family office provides objective advice and lessens hurt feelings.
As another example, if a family member wants to buy into operating companies as a member of the board of directors, under the family office, the financial adviser might be asked: ‘Is this a good company to buy?’
In what areas do families with concentrated wealth typically fall short?
Some potential problems are having:
- No financial controls on what different family members can spend.
- Too much money not invested, and not earning anything.
- Investments so far spread out that you really don’t know what you have.
Another area to watch is bill pay. If a family member has the tendency to give to every charity that sends a request, the family office can provide guidance to the member regarding legitimate charities and charitable goals.
Many family assets may be flow-through entities — partnerships, trusts, LLCs or S corporations, which are taxed on an individual’s return. Family offices can help ensure there’s money for the appropriate tax payments as family members may have filing requirements in multiple states, as well as the U.S. and foreign countries.
What are some other ways families can utilize accountants through a family office?
If a patriarch or matriarch has sold a company for $100 million, for example, and wants to leave money for grandchildren and children, family office advisers can help ensure inheritances are fair and reasonable. It’s important to remember that fair doesn’t necessarily mean equal. Giving more to one child than another can create difficulties, but it may be for good reason, such as health, martial circumstances, etc. Combined legal and financial counsel can help you come to sound decisions.
In addition, you must take asset protection into account. If a beneficiary receives assets outright, he or she could have those threatened in a lawsuit, divorce or bankruptcy. A family office trust, administrated by a family member trustee and a third-party trust protector, safeguards assets from being awarded to another in a legal settlement.
Each family member’s individual needs can be so diverse that it may make sense to have separate trusts for each family member, which could be more easily administered from a central point. This scenario minimizes family disputes and provides individual privacy.
There are $46 trillion in assets housed in family offices today. If your family has complex tax return and financial scenarios, then it’s worth exploring whether you fit into this space. Find out more at the Family Office Association by visiting www.familyofficeassociation.com. ●
Insights Accounting & Consulting is brought to you by SS&G