Morgan Lewis Jr.

Tuesday, 22 January 2002 05:47

The space between

Andy J. Birol isn't a SBN Magazine columnist just because he's lucky. He knows about growing businesses, retaining customers, and he knows selling. After all, he sold us on writing a monthly column -- and we're tough customers.

Birol has logged some impressive success stories over his 24 years in business and five years as a consultant from companies as small as Diamond Tool and Die in Euclid to as large as IBM. He's coached and advised manufacturers, attorneys, marketing companies, software developers and computer network installers. He likes to describe what he does for clients in cinematic terms.

"I'm like Robert Duvall in 'The Godfather,'" he says. "Marlon Brando, who was like the business owner, didn't do anything without consulting the consiglieri, the Duvall character. That's me."

Birol's main expertise is his PACER process, which stands for Process for Acquiring Customers and Enhancing Retention. He was so fond of the phrase that he owns the copyright and called his firm PACER Associates until last November when he changed it to Birol Growth Consulting.

"My business grew beyond the PACER process," he says. "My corporate identity needed to reflect that."

Birol's firm name change is the same kind of back-to-basics shift that he sees as so necessary for many companies struggling during the recession. Technology, he says, has gotten in the way of that transition.

"Too many companies who prefer to stay detached from their marketplaces found technology to be an excellent crutch to help them do that," Birol says. "It's allowed them to put distance between them and the customer."

Raze the walls

Companies are too dependent on Web sites and marketing materials to help sales reps educate the potential customer, Birol says. Repeat customers are built through face-to-face meetings where you and your representatives try to understand the prospects' needs.

"I am continually stunned by the level of mediocrity in how most companies choose to run their sales and marketing and customer service," he says. "Companies have gotten fairly good at managing their costs, what they have neglected is to effectively manage their efforts to grow."

Be special

Birol servicemarked the phrase, "Best and Highest Use," which you have no doubt seen in his column. It's another way of saying "do what you're good at and what you like doing." Likewise, focus on your target market, make it smaller, and grab more of it.

"If you could sell all the left-handed chiropractors in Geauga County, you'd probably be better of than trying to target every professional services provider in the Northeast Ohio," Birol says. "If anybody can use your service then you can't be special to anybody."

Pay attention

Make that follow-up phone call. Tell your sales reps to send Thank You notes, and it wouldn't hurt for you to write a couple. If your customer thinks you're not paying attention and their business isn't valued, watch out.

"It's back to basics," Birol says. "Eliminate the sloppiness."

Birol Growth Consulting

Wednesday, 02 January 2002 04:56

Real assets

Employees and benefits are the top expenses for most companies. Not far down that list is real estate, whether its rent or debt service. When times are tight, few employers look past trimming staff as a way to decrease expenses.

But shutting the doors and selling a branch office isn't the always the answer. There may be ways to better use that space, or save on the costs to run it rather than just closing the office.

"Few business owners look at their real estate and analyze it," says Ted Barr, co-founder of Allegro Realty Advisors in Cleveland and former senior manager in the Real Estate Solutions Group of Deloitte & Touche LLP. "They're running their business and making do and it creates their own inefficiencies. Those inefficiencies are probably costing them about 20 percent of their occupancy costs.'"

Barr and Allegro co-founder Joseph Greulich, also a fomer D&T real estate consultant, say they've helped clients save anywhere from a few hundred dollars to more than $20 million a year. Barr says they've made changes as small as where a manufacturing firm ordered cleaning supplies to helping outsource distribution and warehousing services for a large retailer.

"We don't do anything a business owner couldn't do for themselves," Barr says. "But many just don't have the time or don't have the resources to hire one of the major consulting firms."

Here are some the questions Barr and Greulich's ask clients when reviewing their facilities:

  • Look over your occupancy costs. What are you paying for rent or debt service? How long has it been since you negotiated with the landlord or bank?
  • How is your office organized? Has your staff changed in size and the office layout not changed along with it?
  • Analyze energy costs. Would it make more sense for your company to buy energy in bulk or from another provider?
  • Are you growing? How about in five years or 10 years? Do you think you'll need more or less space?
  • Should you rent or own? Often there are better tax benefits if you rent.
  • Has your customer base moved?
  • Do you carry a lot of inventory? A different locationcould save on inventory tax. Do your trucks have good highway access to and from your facilities?
  • What kind of transportation do your employees use? Perhaps a move closer to a bus or rail line would entice employees to stay.
  • Is there land on your property that you never use and don't plan to use? That could be marketable land which could provide you with a steady revenue stream.

Deloitte & Touche Real Estate Services

Wednesday, 02 January 2002 04:44

Site insight

Finding a location to build a new plant or distribution facility is one of those rare good problems because it usually means your company is growing.

It's kind of like the problem of having more orders than you can fill or earning more money than you know what to do with.

But a good problem can quickly turn bad if you make a rash or bottom line decision on the location. Just because the land is cheap and in the right neighborhood doesn't mean you should snap it up, warns George Stevens, a certified industrial properties advisor for Grubb & Ellis Co. in Cleveland.

"It can be deceiving," Stevens says. "All things being equal, you can look at the cost of the land. But that should really be last thing you look at."

Here are some factors to consider before you buy some land for your first or latest expansion.

Know the terrain

Make sure the infrastructure is there. Find out where the gas, water and sewer lines are and how close are they to your prospective site. Sites that are called "fully improved" have all those utilities on the land ready to install.

The cheap acreage could turn into a false economy if property needs to be graded or rests on protected wetlands. Not only would those intrusions add cost, but they would also tack on an extra eight to 12 months onto the construction time.

Size it up

The warehouse or plant you're building now can accommodate the current workflow. What about in five or 10 years? It will probably be cheaper to buy the extra land now for a future expansion at the site rather than wait until you need it to find it's already been purchased or 20 percent more than it was five years ago.

"A good rule of thumb is you should be able to double your plant size on the site," Stevens says.

Watch your neighborhood

If your expansion is due to an increase overseas business, there are many industrial parks in the area that have foreign trade zone designation. While the land might be more expensive in a foreign trade zone, the tax benefits in the long run will balance out those costs. For example, the Cleveland Business Park downtown is a foreign trade zone park run by the Cleveland Port Authority. There are also parks in Strongsville and Glenwillow that have the designation.

What's around you? Locating close to restaurants, day care facilities and grocery stores will attract employees to fill job openings at the new facility. Think about the image of your company during your search. If you're high-tech, you'll probably want to locate next to other similar companies.

Grubb & Ellis Co.

Monday, 03 December 2001 09:00

Lights, camera, action!

Ron Goldfarb jokes that his company won $500,000 and donated it to the Ohio Library Council. But indirectly, The Glazen Creative Group is indeed responsible for a certain celebrity contribution.

Goldfarb, executive producer at the firm, put together a TV public service announcement for the council promoting Ohio's libraries. The spot featured Cleveland native, comedian and sitcom star Drew Carey, who extols the virtues of the state's libraries amid cascading images of books, rapid-fire editing and computer effects courtesy of Glazen's video artists. It's a pretty slick production for a traditional institution.

After the filming, Carey was so impressed with the commercial and the council that he agreed to waive his fee and later picked the council as his charity of choice on a celebrity edition of "Who Wants to be a Millionaire?" Carey won $500,000 on the show for the Ohio Library Council -- more than any other celebrity won for his or her charity.

It was the idea of Glazen owner Alan Glazen and Goldfarb to get Carey involved in the TV spot.

It's not just the Ohio Library Council that has called on Glazen and its crew of video artists to help raise money and awareness for community organizations. Others include the Adoption Network, the Cleveland Museum of Art, the Center for Prevention of Domestic Violence, Recovery Resources and Westhaven, a teen crisis shelter. In fact, half of Glazen's clients are nonprofit or other community organizations, which often have limited budgets for marketing.

In some cases, Goldfarb and Glazen agree to produce the videos at no charge, but never skimp on quality just because they're not getting paid.

"We always try to do something," Goldfarb says. "We can't always do what we want to do for everyone who asks us. Our focus is to do the most help for the people that have the least."

Cleveland's Providence House is one organization Goldfarb felt was in need of his firm's services. Providence House shelters abused, neglected or abandoned infants, often from homes where their parents have been arrested. For the last 10 years, Glazen has created fund-raising videos for Providence House to show at its annual luncheon.

"Personally, I have a sensitivity toward things that involve kids," says Goldfarb, a father of two. "Not only are they our most vulnerable citizens, but they're the future of our society."

For the last five years, the firm's 12 employees have donated at least $100,000 in services, says owner Alan Glazen. The videos his team created have helped those organizations raise tens of millions of dollars. Thanks to its dedication to these groups, it has earned a 2001 Pillar Award for Community Service.

"If we could make a living doing only nonprofit work, we'd all like to do that," Goldfarb says. "It gives our people a chance to work on something that they know is making a difference in people's lives." How to reach: Glazen Creative Group, (216) 241-7200

Morgan Lewis Jr. (mlewis@sbnnet.com) is senior reporter at SBN Magazine.

Monday, 03 December 2001 08:59

Grassroots game

The Cleveland Crunch's "Soccer In The City" program resulted from an impromptu meeting in, of all places, the Cleveland City Hall men's room between Crunch General Manager Paul Garofolo and Cleveland Mayor Michael White.

The Crunch had just received an award from the city for its 1998-1999 championship season. After the celebration, White stopped Garofolo on the way out of the men's room to tell him he wanted the city's youth to be more involved in soccer.

White, a former high school football player, told Garofolo he liked the fact that you don't need to be "7-feet-tall and weigh 300 pounds" to be good at soccer.

"I told him, 'Mayor, everywhere in the world, except for America, soccer is an urban sport,'" Garofolo recalls. "He said, 'Well, I want to be on the cutting edge of communities in the country that are developing the urban soccer market.'"

With help from the city's recreational centers and the Cleveland Municipal Schools, Garofolo and the Crunch kicked off the "Soccer In The City" program, the cornerstone of the Crunch's community service programs. Crunch players ran instructional soccer clinics that reached 1,200 children in the city's 19 recreational centers.

At the end of the season, the city of Cleveland Indoor-Soccer Championship game was moved from Euclid to the Crunch's field at the Cleveland State University Convocation Center and played before a Crunch game. Recreational center players were outfitted with special uniforms and their names were announced over the center's public address system.

"To be a part of the community, it truly has to be a two-way street," Garofolo says. "We receive their support, they come to our games, they buy our merchandise. We need to give back to the community as much as the community gives to us."

For Cleveland Municipal School Day, 10,000 students are invited to a Crunch game specially scheduled in the morning for them. The field trip is tied to a program called "Kick In and Win," in which players visited 22 middle schools to promote fitness, education and academic achievement.

"In a sport like ours, grassroots marketing is critical because we don't have million-dollar plus advertising budgets like the major league sports franchises, but we've got something they don't have," Garofolo says. "These are a way to go out one-on-one, develop the fan base, create hero worship by having the kids identify with players that don't park underground at Gund Arena or inside a fence at Jacobs Field. For a 7- or 8-year-old kid, Hector Marinaro is a big a star to them because they can actually relate to them."

The Crunch is involved in other efforts that have garnered the organization recognition with a 2001 Pillar Award for Community Service.

The Crunch's "Score Big with Reading" program with the Cuyahoga County Public Libraries had players in all the libraries reading to young children and posing for promotional posters that read "Got Books?" Players teamed up for the Parma City Schools "Contract to Read" program which involved 14,000 kids in the Parma School District.

The Crunch's involvement in these efforts and others have garnered the organization recognition with a 2001 Pillar Award for Community Service.

"Our players are really wonderful guys," Garofolo says. "For players who are not natives of Cleveland, this is a great way for them to interact with the community, make friends and create opportunities for post-career play.

"They've been very cooperative in all our efforts and we share this award with them." How to reach: The Cleveland Crunch, (216) 896-1140

Morgan Lewis Jr. (mlewis@sbnnet.com) is senior reporter at SBN Magazine.

Wednesday, 28 November 2001 12:07

Politically correct

J. Donald Mottley served four terms as a representative for a Dayton-area district in the Statehouse.

He fought legislation that added to the tax burden of business owners and worked to lower income taxes as chairman of the state's Ways & Means Committee. He's back in the private sector now with his former law firm, Taft, Stettinus & Hollister, which in January merged with Cleveland's Kelley, McCann & Livingstone.

Mottley is the managing director of the firm's new venture, Focused Capital Solutions, essentially a lobbying and government relations branch of the firm. Government relations is an increasingly popular offering for law firms with clients who need to stay aware of federal and state legislation that will affect their business but who don't have the time or resources to lobby lawmakers themselves.

"Government decisions affect business all the time," Mottley says. "Everything from tax policies to health insurance issues to regulatory issues, like environmental issues. But often if your company is smaller or highly specialized, there won't be a trade association to represent your interests."

That said, it might not be as difficult as you think to exact some influence with your state or federal lawmaker.

"I can tell you from my own experience as a legislator that it's a lot more effective to hear from an individual business person," Mottley says. "An organization can tell you about the concern, but to hear from the constituent in your district, it has a lot more impact."

Here are Mottley's tips for letting your voice be heard in the Statehouse and all the way up to Capitol Hill.

Join up

There are thousands of trade organizations bending the ears of politicians. There's a reason for that: They work. Aside from the financial contributions these groups make, lawmakers know these organizations represent a lot of people who have a lot of what politicians want -- votes.

These associations also send out newsletters and literature about bills that are in the works that could affect your business, which is a lot better than reading about it the newspaper after the bill has been passed or rejected when you can't do anything about it.

Don't drop by

You think your day's busy? Lawmakers have more meetings and talk to more people in a day than you could imagine, so don't just phone or drop by your local representative's office hoping to catch him or her in a spare moment.

Make an appointment well in advance, and keep it brief.

Be prepared

When you get the appointment, make the most of your time by discussing a specific bill or problem you're having with which the legislator could help, Mottley says.

"Don't just say, 'I want less taxes,'" he says. "Say, 'Vote against this bill because it affects my business or my industry in such a way.' That's much more helpful than saying you're opposed to more regulation or taxes." How to reach: Taft, Stettinus & Hollister LLP, (216) 241-2838

Morgan Lewis Jr. (mlewis@sbnnet.com) is senior reporter at SBN Magazine.

Resource list

Here's a list of how to reach the people getting paid by your tax dollars.

If you have offices in another part of the state or country, government Web sites can help you track down what state and federal districts those offices are located in. Also check out a popular federal trade organization, the NFIB, and a local one, the Ohio Chamber of Commerce.

To search a database of 5,000 trade organizations, go to the Concept Marketing Group Web site at www.marketingsource.com/associations

Ohio House of Representatives
77 South High St.
Columbus, OH 43215
(614) 466-3357
www.house.state.oh.us

Ohio Senate
77 South High St.
Columbus, OH 43215
(614) 466-4900.
www.senate.state.oh.us

U.S. House of Representatives
Washington, D.C. 20515
(202) 224-3121
www.house.gov

U.S. Senate
Washington, D.C. 20510
(202) 224-3121
www.senate.gov

National Federation of Independent Business
600 Maryland Ave. S.W.
Suite 700
Washington, D.C. 20024
Phone: (202) 554-9000
Fax: (202) 554-0496
www.nfib.org

Ohio Chamber of Commerce
230 East Town St.
P.O. Box 15159
Columbus, OH 43215-0159
Phone: (614) 228-4201 or (800) 622-1893
Fax: (614) 228-6403
www.ohiochamber.com

Wednesday, 28 November 2001 11:52

SBN connects

SBN Magazine has always reported on smart ideas to help grow your company, but our influence seems to be moving off the page and into the real world of business.

LogiSync Corp., based in Westlake, recently became the first company to join Lorain County Community College's GLIDE program, a regional innovation center and resource hub designed to help new and existing businesses grow. And where did LogiSync President Edward Yenni find out about the GLIDE program? SBN Magazine's "dot-Comference" at LCCC last May.

"It was a tremendous conference," Yenni says. "I heard (LCCC President) Dr. (Roy) Church talk about the existence of GLIDE. I went there for an entirely different purpose that day, but when I thought about what he said, I thought, 'That's what we need.'"

Westlake-based LogiSync manufactures and sells embedded computer systems for commercial and industrial devices. Its systems help operate advanced hospital beds, create more efficient diesel engines, monitor smoke stack emissions and regulate power for telecommunication devices.

Through GLIDE, LogiSync will use the Regional Growth Capital Fund, created by -- but independent of -- GLIDE, which is expected to build to $25 million through private, corporate and venture capital firm investments. LogiSync will also draw on LCCC graduates to help fill its anticipated high-tech job openings and use GLIDE's advisory staff for business strategy consulting.

GLIDE Managing Director Don Knechtges is the former chief development officer of Geon Co., which later merged with M.A. Hanna Corp. to form PolyOne.

"Any organization is only as good as its people," Yenni says. "As soon as I met Don and (GLIDE director) Peter (Ditchman), I knew that this was a group that had some energy and had some great ideas, and that's exactly what we need."

Yenni says his company, which he founded in 1993, could spin off into smaller companies to serve its nine vertical markets as its grows. It now has more than $1 million in annual sales and 10 employees. Ditchman says the growth goal for LogiSync is $100 million in annual sales, but did not offer a specific timetable.

LogiSync will also move its headquarters to Lorain County as part its agreement with GLIDE. How to reach: LogiSync, (440) 871-0004; GLIDE, (440) 366-4310

Morgan Lewis Jr. (mlewis@sbnnet.com) is senior reporter at SBN Magazine.

Wednesday, 28 November 2001 11:25

Survivor

Sandwiched on gray metal shelves in a quiet corner of the e2grow Inc. offices are stacks of big brown cardboard boxes.

In those boxes are relics. Folded neatly in clear plastic are hundreds of T-shirts in every size from small to XXL. These T-shirts are leftovers from an eerily recent, but now disregarded time.

They sport the logo of one of e2grow's latest acquisitions, Locality.com, a small business directory Web site formerly located in posh Mountain View, Calif.

e2grow's president and CEO Dennis Barba Jr. rifles through the boxes looking for a large to present to an office guest.

"I think we've got that size," says Barba, dressed about as far as he could be from a T-shirt in a blue pinstriped suit sans jacket, striped French collar broadcloth shirt and red tie. "We've got every size. They had so many of these printed up."

The ignoble legacy of the dot-coms is plastered on these T-shirts. In hindsight, many of these companies were all marketing gimmicks and promotions. No sales, no revenue, no profits, but "Hey, look at our great logo!"

But standing in the e2grow offices 3,000 miles away from Silicon Valley, it's clear that the model that killed so many online companies is just what e2grow isn't. e2grow is a traditional company with old-fashioned, proven principles, a company that could have the motto "profits or nothing."

Here's how Barba puts it.

"It's just a matter of mathematics," he says. "Once you get X number of paying customers, you have a profit and you just have to watch your overhead."

Barba's back-to-basics philosophy is working. He is not only surviving, but thriving in economic conditions that have destroyed the lame dot-coms and have established, traditional companies cutting and restructuring.

There's no magic in Barba's success. He keeps expenses low. His modest offices are on the top floor of the Park View Federal Building in Bedford Heights. He invests in smart technology, not Aeron chairs and Herman Miller workstations.

Correspondence is digital to save paper. He uses his cell phone to keep phone bills down. He staffs lean.

"You heard about these companies hiring 100 people in 90 days, it was just unbelievable," Barba says. "Especially in a start-up company, it's like you're building a family. The early employees are key, and if you hire 100 people in 90 days, you're not going to be making just a couple mistakes, you're going to be making many mistakes.

"You can't afford to make mistakes when you're bringing people on early."

Set firm roots

e2grow's roots date back to Barba's time at the Columbia University Graduate School of Business, where he earned his MBA. This was 1998 and 1999, during the fever pitch of the dot-com craze.

Stories of 30-year-old tech billionaires echoed in the halls, so it's understandable that Barba and his classmates were drawn to new technology-focused careers.

"I was told I should start a company or come up with some kind of a vision and try to get people to follow it," Barba says the Columbia faculty told him. "They thought I would be a good leader."

Barba's potential was not lost on his classmates, either.

"Out of a class of 45 senior executives from some major companies, Dennis really stood out," says James Blackwell, a Columbia classmate and international vice president at ChevronTexaco. "His drive, focus and aggressiveness is key. Everybody in the class could see Dennis is one of those people who was going to make things happen. That was a pretty high-power group to stand out amongst."

Back home in Cleveland, Barba spent the summer planning what kind of company to start.

"I wanted it to be A, Internet-based, and B, built on solid business fundamentals that could actually make a profit and be a viable business and be a valuable service to the people that use it," Barba says.

Then, after Thanksgiving dinner in 1999, Barba was playing pool at a friend's house when the idea for e2grow hit him. He put down his cue, told his friends he had an idea and left. By 5 o'clock the next morning, he had a 12-page PowerPoint presentation describing the basic structure of e2grow.

Capture the market

Barba knew many small business owners lack Web presence. He saw the Web as a way not only to even the playing field with their large corporate competition drawing customers to the malls, but to generate sales from outside their local areas.

For consumers, e2grow (now branded as Locality.com) puts them in touch with local merchants and service providers with a community-based directory. For the business owners, they sign up to have e2grow's Web designers build them an e-commerce site, set them up with e-mail and place the business in not only the local directory but in top Web search engines such as Google and AOL.com.

Barba watched other Internet companies tap the small business market with varied success. But he was an investment banker for 14 years with companies including Bears, Stearns and Co., and Cowen & Co. before he founded e2grow, and his financial savvy was going to be his edge in the game.

"A lot of the companies would raise $30 million, $100 million, $200 million and really generate no significant revenue," Barba says. "It was increasingly shocking to see how little emphasis was focused on cash flow and how it was all about raising money and trying to exit as soon as possible."

The other fatal flaw Barba saw with some companies was that they apparently expected the software to sell itself through heavy media advertising, e-mail marketing, direct mail and cold calls. But that kind of faceless marketing doesn't work in the small business market.

"These people don't want to converse with you via e-mail," Barba says. "They don't want to be on hold for 15 minutes. They don't want to leave a message and hopefully have somebody call them back in three days. They needed attention by people, it needs to be fairly immediate, and that's expensive.

"So we've spent a lot of time and effort to try and make that a cost-effective way to scale."

With the basic business model in hand, Barba assembled a board of advisers to help him manage costs and grow the company. He culled executives from top companies including Parker Hannifin, AT&T Solutions, Kinetico and Steris, and advisers with academic backgrounds at schools including Columbia Graduate School of Business and Case Western Reserve University.

His management team included his father, Dennis Barba Sr., as president; John Anderson from Lincoln Electric as vice president of business development; and John Strathern, a former securities broker, as managing director.

"What first struck me was Dennis' personality and the team he had put together," says Warren Goldenberg, e2grow's legal counsel and a partner at Hahn, Loeser & Parks LLP. "These are people with significant business backgrounds, really people of substance."

Barba hired Deloitte Consulting to manage the project's financial modeling and Beacon International Marketing in Akron to help with market research. To design the e2grow software, Barba hired Cleveland-based software developer IdeaStar.

Jim Fisher, IdeaStar's president, is on e2grow's board of advisers.

"We've really had no problems with IdeaStar since we've done this, which I think is rare," Barba says. "We continue to have a good relationship with them and part of that was their willingness to work with Deloitte as a team. It was fairly bug-free after it was put out."

Barba and his advisers voted to risk $70,000 in seed money. If they couldn't get the company growing before the money was gone, they would fold it.

But thanks to keeping his costs low and making strategic acquisitions for pennies on the dollar, Barba and his advisers didn't need to chip in any more cash.

Acquisitions

Barba started small by building community portal sites in eastside communities such as Chesterland, Solon and Bainbridge to draw consumers to news and information and to local merchants. For his first few business customers, he built their sites for free.

But he had seen too many customer freebies kill many dot-coms, so he still charged the monthly subscription fee for e-mail, e-commerce and search engine optimization services.

"I kept very close tabs on what it cost us to acquire a customer, and we included the cost of labor to build these Web sites in that cost of customer acquisition," Barba says. "Our goal is to have a customer that's profitable to us from the first day. So the check they give us to build their Web site, it's our goal to have that check to be more than what it costs to acquire that customer and build that Web site."

Unfortunately, sales alone weren't enough to sustain e2grow in the early days, and fund-raising was a necessary evil for the start-up. It wasn't easy. From January to June 2001, Barba says it was "damn near impossible." But that all changed once he snapped up a bleeding online business directory called Locality.com.

Locality.com had a strong presence in the San Francisco Bay area, Portland, Seattle, Nashville and Cleveland. In its heyday, it raised $8 million in venture capital and generated revenue. But in its final months, sales dried up and the cost of doing business in Silicon Valley was too great.

Locality.com was losing $600,000 a month, and its investors needed to sell.

"We were able to demonstrate to the venture capital firm that was controlling the company that we had good management, we had good financial management, and that we were determined, hardworking and tenacious," Barba says.

He won't reveal the numbers, but in one month, Locality.com was earning a profit for e2grow. The key was cost savings. Barba kept none of Locality.com's employees, and rent in Cleveland was 5 percent of what the company had been paying in Silicon Valley.

Internet service cost only 10 percent of what the start-up was paying for the same features out West.

"They were running the business model that was en vogue for a while," Goldenberg says. "Dennis has never operated on that model. He's running it and always had run it more like a traditional business where you build it one step at a time."

The acquisition of Locality.com's assets piqued investors' interest. The transaction showed the VC firms on the West Coast and elsewhere that this Cleveland-based Internet start-up was a survivor. Investors who ignored Barba months ago wanted to schedule meetings.

By the end of summer, he was turning away potential investors after landing investors in 14 states.

"We never thought six months ago that we'd ever tell somebody 'No' that wanted to give us money," Barba says. "But right now, we have an operating plan and enough money to make it profitable by the first quarter of next year (2002)."

Get to the point

The boost in funding allowed Barba to acquire ConnectSpace.com, an Internet marketplace that allows owners of small- and mid-sized businesses to network and to buy and sell goods and services with each other.

The site was formerly owned by the Cleveland-based Ohio Innovation Fund, an early stage seed capital fund.

"It was good timing," says Jeff Hanson, partner of the Ohio Innovation Fund. "They have cash and they have a good plan for going forward and they're getting very good valuations on acquisitions. Their strategy of turning acquisitions into cash-flow positives the month after the transaction is a good one."

Connectspace.com was e2grow's fifth acquisition in the last 12 months, which seems unusual for man as tightfisted as Barba. But he avoids what could be costly situations by using his skills as a fast and tough negotiator.

"Dennis is very focused and extremely intense," Goldenberg says. "He's no-nonsense. Once he sees what he wants, he goes after it."

Hanson, who's faced Barba on the other side of the negotiating table, calls his style "tenacious."

"Dennis moves fast, makes decisions quickly and is very aggressive," Hanson says. "He doesn't take 'No' for answer. It's actually very refreshing to work with him."

Barba says he picked up his negotiating style from experience and business school, but mostly from his father, who worked for General Motors for 34 years as regional director of surplus properties for the eastern United States and Europe.

"It's just a matter of finding out as quickly as possible where everybody stands," Barba says. "Then you try to find the simplest and most creative way to get to that solution."

Despite the steely exterior and what some might characterize as ruthless negotiating tactics, Barba is said to send flowers and gifts to business colleagues after working on a project or negotiation.

Profitability awaits

With its wider nationwide brand recognition, Barba decided to roll up all of e2grow's features under the Locality.com name and imaging. To spread the word, he plans to unveil a fiscally conservative radio and television marketing campaign in Cleveland with a major cable television provider and with the dominant radio in Portland, the company's second largest market.

Profitability will just be a matter of expanding Locality.com's customer base, which should be easier with 130 independent sales reps in new markets including Chicago, Dallas, Albuquerque, Kansas City and Denham Springs, La. The addition of Gary Adkins, a regional sales director based in Nashville, brings e2grow/Locality.com's total full-time staff to 22 people.

"There's really nothing magical about it," says Goldenberg. "It's a management play. He just manages and executes very well. Just by doing it day in and day out." How to reach: e2grow Inc./Locality.com, (440) 735-9060

Locality.com

Monday, 29 October 2001 08:57

Rules of the game

Here are his top rules:

1. Focus and discipline are critical. Lots of people want to buy something that is almost, but not quite, the same as what you're selling. Don't stray from your mission, Weaver says.
''That temptation can be difficult to pass up when you have no sales, but distracting your business from its main purpose is dangerous, even when your lights might go out next week.''

2. Always take a paycheck. You get lazy not taking a paycheck; it lets you be inefficient.
''There may be some masochistic satisfaction from sacrifice, but you need to set out to build a business that can pay you a good income,'' Weaver says. ''When I almost sold the company, they told me what they would pay me to run it. I realized that that was what I should be getting out of the business and I started earning and paying myself that.''

3. Marketing and image are everything. Better marketing can overcome a superior product any day, Weaver says. Selling junk, however, will kill your business in the long run.
''It's not the product, it's the underlying philosophy, the reason for being in business,'' he says. ''Find a need and fill it. That's how this came about. I saw a need.''

4. The walk outdoes the talk. There must be a good reason for prospects to buy from you and employees to work for you. You have to believe it and live it. It's much more important than a written statement, Weaver says.
''Everyone else saw towing as an opportunity to get rich rather than trying to make each tower and towing better,'' Weaver says. ''They're thinking give and get vs. give and receive. If you give because you want to get, it doesn't work.''

5. Pay employees first. This rule is for when times are tight because it violates rule No. 2, Weaver says.
''After we built our new house, we went eight weeks without a paycheck.''

6. You can't teach attitude. Despite great skill and talent, some employees just clash with your staff and hurt the business, Weaver says. An employee who genuinely cares about the company and the customers is better than an employee who is highly qualified, but can't work with others.
''Our own business was crippled by prima donnas,'' he says. ''Suddenly, you think your business can't survive without someone you just don't like. Turns out, you can survive very well.''

Wednesday, 24 October 2001 08:59

Sports Inc.

Andy Schmetzer has a few spare moments. It's early afternoon, and he's just gotten done running a soccer camp on the other side of town and returned to the Cleveland Crunch's headquarters in Warrensville Heights.

He carries two enormous florescent orange jugs that used to hold water. His skin is tanned from weeks out in the summer sun. He wears shorts and a red T-shirt with a big Dairy Queen logo on the front.

"Are we playing softball tonight?" he asks Crunch media relations director Michael Cracas as he sets the jugs down. "I think the field should be dry by then."

A violent summer thunderstorm has just soaked Cleveland's east side.

"What time are we starting?"

Time is one thing Schmetzer doesn't have much of, but he's working on that. He's a captain and midfielder on the Cleveland Crunch, owns a coffee shop at Akron Children's Hospital, runs summer soccer camps and manages the Force Fitness Indoor Soccer Center, where the Crunch practices. And don't forget the demands of a family with two children, which he also has.

Schmetzer is busy, but you can't tell from talking with him. He's not a hurried type, armed with a cell phone, PDA and daily planner. He's not checking his watch every two minutes. He speaks in calm, almost drowsy tones. He speaks like a man at ease, not one rushing to his next appointment.

"I've had some great, great young employees, especially at the coffee place," he says looking off, a smile emerging on his face. "I have kind of a reputation, especially with them. Sometimes I get flighty, they say. At times I'm running in so many different directions, but I try to organize myself pretty well. It's difficult to do because of what I do with the team."

Meanwhile, 260 miles northeast in Rochester, N.Y., Schmetzer's teammate Bill Sedgewick is also busy, with the one task he loves: playing soccer. In the summers, Sedgewick plays for the Rochester Raging Rhinos outdoors before returning to Cleveland when the weather favors the indoor game.

But Sedgewick has his mind on business, too. He's co-owner of two restaurants in Edmonton, Ontario, called Badass Jack's Gourmet Subs & Wraps, a popular Canadian franchise. He recently opened the second location after the success of his downtown eatery.

Sedgewick's partner manages the sandwich shops while he's playing soccer, which is pretty much all the time.

"The reality of it -- guys don't look at the reality of it -- you can injured at any time," Sedgewick says. "Just in the back of your head, you know if I'm injured or if I'm not able to play anymore, I have something to fall back on -- something that's growing, something that I don't have to start from the ground up."

The teammates say they talk shop during the season. Sedgewick, 30, turns for advice to 34-year-old Schmetzer, who has run as many as five coffee shops in Northeast Ohio since 1992.

The men are in different places in their business careers. Schmetzer is focusing on the indoor soccer center, getting away from the coffee shop. Sedgewick is working on expansion plans for Badass Jack's.

"That really interested me, the coffee shops," says Sedgewick, who joined the Crunch last year. "We've discussed certain parts of the business, labor costs, food costs. Even the indoor center he's trying to purchase. I wish I were more hands-on. I was playing indoor at Edmonton so I would be there in the winter for years to come. But it didn't work out that way."

The teammates share the business bond with few of the other players. Most are content just to play soccer year-round, perhaps a little envious of the entrepreneurial Schmetzer and Sedgewick.

"I always like to learn, see what other people are doing," Schmetzer says. "We talked about what it's like running the business and doing things after and how much time he takes in it. For that, we had a lot in common. The guys always gave me a hard time about how dumb I was working all the time.

"They were always like, 'We're not asking Andy if he wants to go golfing.' I was totally out of the golf circuit."

Schmetzer's business savvy seems to be genetic. His parents, German immigrants, came to America with nothing. His father was lured overseas by a job at a sheet metal plant outside Seattle, where the Schmetzers settled to raise a family.

When Schmetzer was 7, his father took all he had saved and opened a soccer-only sporting goods store called Sporthaus Schmetzer. There are two stores in the Seattle area and an indoor soccer center called the Everett Soccer Arena. Schmetzer's brother now runs the family businesses.

"I guess I just learned from them," Schmetzer says. "I like to try new things. I don't mind taking risks and I don't mind working hard to go after things. In that respect, I kind of get it from my parents, watching them. They're retired now and they made a good go of it."

His father was his coach from age 4. The youth club soccer leagues are fiercely competitive in Seattle. It's where you improve your game and get noticed by professional scouts. Playing for your school is just for fun, although Schmetzer did that as well. The Cleveland Force drafted him out of high school in 1985, where he played until the team folded in 1988.

Reluctantly, he went back to play in Tacoma, Wash., but Cleveland left its impression.

"I really liked Cleveland from the day I got here," Schmetzer says. "I got out of my (Tacoma) contract as soon as it came up. The coach in Cleveland at that time was Kai Haaskivi. I knew him from the Force and we were very close, and I tried like crazy to get out here and it worked. That was in 1990. A couple years after that, I opened the coffee shops."

Think back to Cleveland in 1990. There was that Arabica on Coventry in Cleveland Heights, and the names Starbucks and Caribou weren't yet part of the everyday vernacular. Eleven years ago, a cup of coffee was 79 cents at the most.

Things have changed.

Enter the World Wide Web. Enter grunge and everything Seattle. Enter the Java Connection. Schmetzer opened the first one, only a kiosk, in Saks Fifth Avenue in Beachwood Mall in 1992.

"I had one location, one small location, everything was going fine, Schmetzer says. "Then all of a sudden you find another good location and another, and that's when things started to get, oh my gosh, I don't have time for it."

He opened in Akron Children's Hospital and Lutheran Hospital in Cleveland, where he had a full-size shop. During the season, it was surprising Schmetzer had any energy left for soccer. He worked at one of the coffee shops from 7 a.m. until practice at 9 a.m. When practice was over at noon, he'd go back to the shop and keep working until at least 9 p.m., usually later.

"It was bananas," Schmetzer says. "But I get antsy when I'm not doing stuff. My first four or five years, I did what all athletes do, what they probably should do. You went to practice, you came home afterwards, you watched TV, you ate, you took naps and then you got ready for next day's practice. I did that for a number of years, and then finally I said, 'I better get something going. I don't want to be retiring from soccer and have nothing to fall back on. I don't want to start from scratch.'"

Last year, when the opportunity came to manage the Force Fitness Indoor Center, it was a natural fit and Schmetzer jumped at the chance. With another time demand and mounting competition from Starbucks and Caribou popping up on every street corner, he decided to shed the coffee shops. So when Lutheran Hospital started work on its $2.3 million renovation, Schmetzer didn't object when Java Connection wasn't part of the new design.

"It really got to me mentally," Schmetzer says. "Timewise, it was nonstop. It really started to wear on me, and quite honestly, looking back, one reason I'm trying to get rid of the coffee shop, the indoor center is not as much work. I stopped enjoying ... I didn't get as much out of playing for a while, just because I was tiring myself out.

"I just didn't feel like I was giving my body enough of the rest it needed. By that time, you're so deeply entrenched in the business, you're thinking, 'What can I do? I can't just leave it. I can't just not show up.' It was tiring. There's no question about it."

It's doubtful that Sedgewick will follow his teammate's path. Since he's not involved in the day-to-day operations, his sandwich shops are little more than an investment for now.

There will be time for them when soccer's over. But that's not to say Sedgewick, who has a bachelor's degree in business finance, hasn't learned anything.

"You have to have incredible honesty when you work with a partner," he says. "It takes someone special, first of all, because I'm here playing soccer and she's there running the business full time. Also the time you put in, you would never imagine. You think, 'I'll open a business,' and they don't think about the paperwork aspect of it. The awkward hours you have to put in when the little things come up, people not showing up.

"Flexibility, for sure is one of the things I've grasped most about it."

Sedgewick played indoor soccer for the Edmonton Drillers until 1999, when he decided to take a season off to work at the sandwich shop full-time. Months later, he missed soccer and wanted to get back in the game. The Driller's owner, thinking Sedgewick wasn't returning, traded him to Wichita, Kansas.

Sedgewick was devastated. He wanted to keep playing indoors, but moving to Wichita was not an option. Luckily, Cleveland picked up his contract and Sedgewick joined the team for the 2000-2001 season.

"It's one of the best-run franchises in the league," Sedgewick says. "Stability was important. They have a great tradition with winning. And it's close to Rochester; it's only a four-hour drive."

The Crunch's season kicks off this month, and Schmetzer's and Sedgewick's attention will be focused solely on soccer bringing a championship to Cleveland in April. They'll make time for business when they can.

Schmetzer is contemplating purchasing the Force Fitness Indoor Center from Bart Wolstein, former owner of the Crunch. He's proven he can manage the center -- it was booked all summer by amateur and youth soccer leagues, a feat which hasn't been accomplished in several years.

"It's gone more toward youth practices and really went away from the adult leagues that were going there in the evenings," Schmetzer says. "I'm trying to bring that back. I'm trying to book it every night with the adult leagues and kids playing on weekends. And I want to fix the place the up, and I want to clean it up and get it to its past glory.

"It's going to be a slow process, but I think it can be done."

And Sedgewick and his business partner are designing plans to bring Badass Jack's across the border.

"We even looked at opening in the airport terminals," he says. "The name's catchy. It would probably be different in the States just because there's already companies with that name. It would probably be B.A. Jack's or something."

Whatever its name, Sedgewick and his teammate Schmetzer have a stable future to look forward to when they hang up the cleats, or indoor shoes, in this case. In the unpredictable world of professional sports, you can't ask for much more.

How to reach: Cleveland Crunch, (216) 896-1140