Thursday, 28 June 2001 20:00

Web wise

Mac Productions was not born from a lengthy business plan or a boardroom brimming with high-tech Web wizards. John Stubbs created the Internet solutions provider and Web-design company in 1999 after working on a project for Case Western Reserve University.

Although he may have stumbled into the enterprise, Stubbs put some high-powered thinking, rather than high-interest loans, into the small business that promises to deliver high-end growth.

The native Clevelander was busy running his computer repair company, Digital Systems Inc., and serving its primary customers, the Medical and Dental Schools of Case Western Reserve University. After maintaining a few of the schools' Web sites, Stubbs was drawn into Web design by the lure of a generous salary. Confidently, he offered his services.

''Business just snowballed from there,'' he says.

Ten employees and two years later, Mac Productions is working with small start-ups such as BroadBased Systems Inc. and Robin's Next Jazz Club in downtown Cleveland. Larger accounts include the United Auto Worker's union.

Although growth has not been rapid, it has been steady. Fortunately, the company is not heavily in debt and was able to withstand a fluctuating marketplace that saw the demise of many tech businesses. Aside from a frugal budget, Stubbs believes he has done a few things right to help his company grow.

Keep your costs down
''We utilize the Internet to its fullest potential, whereby we can keep our operating costs as low as possible in comparison to our competition,'' says Stubbs.

Mac Productions uses a cost-free, Web-based program for its customer relationship management. Any employee from its virtual office can manage all processes related to the customer, from presale activity to billing.

''It allows everyone to take part in the customer experience,'' says Stubbs.

Work virtually
Using Web-based recruiting sites and job fairs, Stubbs hired his virtual employees from across the United States, from Washington to Massachusetts. Administrative functions such as payroll, check acceptance and human resource functions are done online. Even postage is purchased via the Web.

Team up
Strategic alliances were formed with the same providers that keep costs low for Mac Productions, including Stamps.com, OfficeMax.com, TeleCheck, CheckFree.com, PayMyBills.com, Card Ready International and Register.com.

When customers need these services, Mac Production employees do the set-up work, which brings in a commission from partner companies.

Know your customer
Stubbs says he understands his target market.

Many small offices, mid-sized businesses and home offices have hands-on business owners who are hesitant to work through the Web and need face-to-face interaction. Stubbs has lived on both sides of the fence, as small business owner and as an employee of a larger company.

''Especially when you're dealing with first-time users,'' he says. ''they definitely don't want to let go to a person 1,000 miles away on the other end of the telephone.''

Maximize your reach
By going virtual, Mac has salespeople and developers in targeted areas without the constraints of a centralized office.

''They (the customers) are more likely to be at ease with someone when they can shake their hand and say, 'Hey, you want a cup of coffee?''' says Stubbs.

Mac Productions is accessible in more than 4,600 cities, and Stubbs is hoping to hire several hundred additional V-reps in the near future. That provides high hopes as Mac Productions continues to expand.

The difference, Stubbs says, is that Mac can be local or national and still have that face-to-face experience with the customer.

''In the long run, it will make the difference.''

How to reach: Mac Productions, (877) 877-4878

Mac Productions website

Published in Cleveland
Thursday, 26 July 2001 20:00

A green thumb for business

Last year, Lake County's nursery businesses accounted for $90 million in sales. With such a large concentration of nurseries in such a small area, the industry frequently pits fishing buddies and old school chums against each other in the competition for sales.

So how did Jim Zampini distinguish his family-owned company and grow it to be one of the largest nurseries in the area, averaging 250 employees during the peak season? According to his daughter, Maria Zampini Pettorini, he did it with good business sense and an expertise in cultivation.

Pettorini and her brother, Joe Zampini, followed their father into the business that his father founded in 1946. Zampini and Sons Nursery started on a quarter acre of land in Painesville and has evolved into three divisions spread across 1,000 acres -- Lake County Nursery Inc., New Plants Inc. and Champion Garden Towne.

Each year, the businesses together generate $8 million in revenue and 1 million plants.

Five years ago, Pettorini found herself rebuilding the company after her father's long illness stagnated its growth. Once back on his feet, Zampini asked his daughter to work on a succession plan, her first project since graduating from Pennsylvania State University.

''We really could have lost the business if something would have happened (to him),'' Pettorini says.

After the reorganization, Joe Zampini was assigned to manage the government, Canadian and house accounts. Pettorini became president of the nursery division and vice president of the retail store. Even with a degree in horticulture, she admits she didn't inherit her father's green thumb.

What she can propagate, however, is a business. Working alongside her father, she created a new management team at both the retail and wholesale divisions, then worked on process changes to increase the company's overall efficiency.

Re-evaluate and update
There was an immediate impact after Pettorini evaluated and redesigned the general and administrative procedures. A close look at the books revealed opportunities to save on phone contracts and health benefits. After a year of rooting around, the result was a 42 percent savings in administrative costs.

Traditionally, the nursery industry employs relaxed business practices that result in significant cash flow problems.

''Nursery customers were averaging 98 days for payment,'' Pettorini says.

Understanding that cash is king, she approached her customer base and set out to change the pattern. Today, payment standards are under 40 days, and only a few customers became casualties of the move.

Innovation
The green industry typically lags behind others in technology, says Pettorini, but the nursery created a Web site and was one of the first in the area to offer online services to customers and employees.

Champion also stays on the cutting edge of the cultivation side of the nursery business as a result of Zampini's flair for plant development. He holds more than 75 trademarks and patents on plant varieties; hybrids are licensed throughout Europe and Canada, and sales from one Oklahoma garden center last year generated more than $25,000 in profit.

The continuous improvements paved the way last year for the highest fall sales quarter in Champion's history, a whopping 33 percent above the company's previous record.

In this male-dominated industry, Pettorini's business savvy has helped her bridge the gender gap, and earlier this year, she became the first woman president of the Ohio Nursery and Landscape Association. Ironically, being a woman has worked to her advantage on the retail side of the business.

''I can buy for the store because I am our target demographics,'' says Pettorini. ''I am a working mother that doesn't have a lot of time.''

How to reach: Champion Garden Towne, (440) 259-5571

Lake County Nursery website

Published in Cleveland
Thursday, 26 July 2001 20:00

Providing the link

A local Internet provider is taking the human services industry into the next generation of technology.

MCG Information Exchange Corp., a secure, Web-based provider management system in Beachwood, offers ProviderGateway software, a link between caseworkers and human services agencies.

The beneficiaries are people in need of a job, daycare or medical treatment. Caseworkers can conduct more client interviews without sacrificing much-needed report and accountability data. By not waiting until the end of the day to fill out forms and contact health care providers, those critical services can come through faster.

The Welfare Reform Act of 1996 tightened the reporting requirements on federal funds going into state agencies, says Howard Kurop, director of marketing and affiliate development at MCG.

"If you expect more monies or whatever kind of adjustments in the following years, you've got to be able to show the accountability," he says.

Typically, face-to-face contact between caseworker and client generates mounds of paperwork in the health care arena. ProviderGateway loosens the redtape noose around the caseworker's neck. Agencies can focus on being out in the community helping people, while keeping up with administration-laden tasks such as registering clients, tracking provider contracts, doing process referrals and generating reports to meet state and federal compliance guidelines.

ProviderGateway takes the time out of data reporting because throughout the day, information is exchanged between those in need and agencies that can help. The Web site is a security-controlled, private virtual network accessed via personal digital assistants or laptop computers. Internet management of client information breaks down the barriers between client appointments and client files.

According to Kurop, the biggest advantage of the system is its ability to configure to meet the demand of many types of agencies and nonprofit providers.

"It was developed with an understanding of the issues counties and their provider network and configured based on their needs," he says.

Another advantage is the speed in implementation.

"With Web-based applications, we can implement in as little as 90 days," Kurop explains.

MCG has developed Internet-based connectivity engines for the public sector since 1985. Its programs can be found locally in Geauga, Portage, Cuyahoga, Summit and Lucas counties. Research and development occurs in its Lakewood, Calif., facility.

How to reach: ProviderGateway, (216) 202-2800

ProviderGateway

Published in Cleveland
Thursday, 26 July 2001 20:00

Slingshots or clubs?

When pricing your products and services, does your business look to larger competitors for guidance and direction?

More important, like David in his battle against Goliath, are you choosing a slingshot or a club? Too often, small- to mid-sized businesses choose a club instead of a slingshot.

A machine shop and an advertising agency feel pressure to match the hourly rates of their largest adversaries. Invariably, this is a mistake because the smaller firms' costs of production and service differ from those of larger competitors. When customers and prospects choose smaller companies over larger firms, it is almost always for nonprice factors.

There are countless examples of missed profit opportunities, lost margin dollars and unnecessary pricing concessions. Invariably, owners of smaller companies leave money on the table for three reasons:

  • They don't focus on their best and highest use. (See last month's column for more on this.)
  • They have too little confidence in the value they provide. Smaller firms don't always respect their own products and services enough to ask customers to pay for them.
  • They don't understand their own marketplace. Too often, companies price their goods and services without sufficiently understanding their customers, prospects and competitors.

To ensure your business prices its products correctly, here are five rules:

  1. Never base prices on costs. Too often, business owners link their prices to their costs. What something costs a small business is rarely related to what the market will pay. Lawyers learned this long ago. They pay less costly staff to complete routine work but still bill the client at the firm's standard rates.
  2. Price products and services based on the value to the customer. Customers buy holes, not shovels. Restaurants do not price their meals by adding up the cost of food and service. Instead, they create an experience customers will pay more for.
  3. Price your product to fully cover the cost of selling and servicing the customer. Too often, smaller business owners forget to include all the hours involved in developing proposals, creating trial orders or samples during the sale and after-the-sale-service. Your product's price must reflect the total value of selling and service.
  4. Only compete on price when the customer and the opportunity are right. If an opportunity offers your business a chance to pick up new skills, publicity or economies, you can price more aggressively. But there are times when customers are not worth the price they cost, particularly those that require (and don't value) additional services.
  5. Price your products and services differently to prospects, reordering customers and multibuyers. When attracting new customers, create trial size or simple, low-risk products and services designed to attract a skeptical buyer. Price these aggressively to close new business fast. Price reorderable products and services for maximum profitability, as these are the backbone of your company's earnings. Customers will pay more for your innovation and value than prospects, but your new offers won't be as profitable as your reorders.

Just as David's slingshot ultimately felled Goliath, your pricing weapons can have the same impact in your marketplace. The key is to stop trying to use pricing clubs and start learning how to use your slingshots.

Andy Birol is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970.

PACER Associates website

Published in Cleveland

Jim Shelley comes face to face with the reality of unemployment every day. As director of the Men's Resource Center at Lakeland Community College, Shelley works with men who find themselves part of a growing statistic -- maturing professionals looking for a job rather than looking forward to retirement.

Being pushed out of the working circle close to the end of one's career can be the result of downsizing, redesigns, retirement buyouts or economics. Whatever the reason, an estimated 23 million near-retirement workers between the ages of 56 and 64 are involuntarily out of the work force.

In a tight labor market, that's led to a dichotomy of sorts: while many employers are offering early retirement, others are plucking those affected for their own work forces.

The Department of Aging has recognized the trend and is a primary supporter of the Senior Employment Center, with offices in nine Northeast Ohio counties. The nonprofit agency is part of the Senior Workers Action Program headquartered in Akron.

At the Lake County office, employment consultant Holly Traub helps people take their skill sets and transfer them to meet the demands of today's employers. She says she's found that participants often feel hurt and betrayed by the moves of employers, but stresses they shouldn't take those feelings into an interview.

"The most important first step is to ease yourself over the negative issues," she says.

To help do that, she suggests taking a "skills inventory" to get comfortable in understanding what you have to offer.

"Your job security is your current skills," she says, adding that self-directed tutorials available at the center not only improve tech skills but also help rebuild confidence.

The growing trend has received attention and energy from the Washington D.C.-based think tank the National Academy of Social Insurance. Studies are underway to determine what economic factors are the driving root causes, as well as to investigate the social and financial implications on the economy.

All of this has employers wondering which side of the fence they're on -- recruiters or downsizers.

And, although unemployment remains low, Shelley says there's one aspect of the situation that can't be measured -- the degree of job insecurity that people are feeling. How to reach: Men's Resource Center at Lakeland Community College, (440) 975-4747; Senior Employment Center, (440) 350-2557

Deborah Garofalo (dgarofalo@sbnnet.com) is an associate editor at SBN Magazine.

Published in Cleveland
Thursday, 13 September 2001 13:20

Finder's fees and securities laws

Over the past year, I have received numerous telephone calls from clients and participated in discussions with colleagues on whether a third party may collect a finder's fee for introducing potential investors to corporations seeking venture and/or other forms of capital financing.

These situations typically involve third parties who seek an ownership interest in the corporation, shares of the corporation's stock or cash fees for bringing investors and their money to a corporation.

Some may attempt to rationalize what such providers or finders do by using an improper analogy: If people pay fees to accountants and lawyers for their valuable professional services, what's wrong with giving up a piece of equity in a corporation or paying a cash fee to a third party who provides such a valuable professional service as bringing equity investors to the corporation?

The answer is simple. When corporations or individuals hire accountants or attorneys, these professionals are licensed and regulated by governing bodies that set educational, training and ethical standards. Individuals who act as promoters and/or finders and who seek finder's fees should be held to similar standards.

Generally speaking, federal and Ohio securities laws effectively prohibit finders or promoters from engaging or professing to engage, directly or indirectly, in the purchase or sale of securities with the expectation of receiving a commission, fee or other compensation unless they are licensed.

If a promoter or finder who is not properly licensed introduces a corporation to individuals willing to make an investment, and the corporation provides that with a fee, then that individual may be subject to civil liability and/or criminal prosecution under the law. Civil damages may include fees paid for advice, any loss due to such advice, court costs and any income derived as a result of such advice.

In Ohio, an afflicted individual may bring an action for civil liability for such a violation within four years after the investment advice is rendered or two years after discovery of facts which constituted such violation, whichever is shorter.

If the promoter or finder is subject to criminal prosecution, such individual may be subject to felony charges and/or criminal fines that vary depending upon the value of the funds or securities involved.

In addition, any sale made in violation of Ohio securities laws is voidable in its entirety by the purchaser (the new equity investor). Also, the corporation, as seller of its shares of stock, and any participants involved in the sale of stock are jointly liable for the full amount paid by the investor to the corporation, along with any court costs the investor has incurred.

There are individuals who are properly licensed as securities brokers or dealers who can provide the same services as a finder or promoter. By using properly licensed individuals or entities, a corporation looking for capital can eliminate its liability.

Joel S. Heiser (jheiser@arterhadden.com) is an attorney at Arter & Hadden LLP and is a member of the firm's E-Group, a multidisciplinary group of attorneys who focus their practice on entrepreneurs, Internet, e-commerce and emerging growth companies. He can be reached at (216) 696-5665.

Arter & Hadden E-Group

Published in Cleveland
Thursday, 13 September 2001 09:12

Beyond coffee mugs

John Citraro doesn't want to take all the credit for bringing the NCAA Women's Final Four championship to Cleveland in 2007, but he can rest on the fact that his promotional idea had the tournament's selection committee members thinking about Cleveland as they drifted off to sleep.

Citraro's company, Cannon Advertising Specialties, designed pillowcases with a city of Cleveland logo and artwork for all the pillows in the all the hotel rooms of the Final Four selection committee members. Hotel staff and cab drivers also wore buttons designed by Cannon welcoming the committee to the city.

"It's a small thing, but it might have been that extra touch that none of the other cities thought of," Citraro says. "So if we helped out there, then we did our jobs."

Advertising specialty items such as coffee mugs, T-shirts, baseball caps and pens have been around for decades. The tradition started with a savvy printer who printed calendars with other companies' logos on them. The idea was that not only would the company get a yearlong advertisement, but the printer would get a regular customer, as well.

Today, there are more than 711,000 promotional items that can be emblazoned with a company logo or promotional event design, says Ross Salupo, Cannon CEO.

If that sounds like a lot, you'll believe it when you step into Cannon's museum-like showroom, a converted Catholic elementary school on East 40th Street in Cleveland. The brick schoolhouse, built in 1906, features eight rooms, including a main classroom for crystal, watches and high-end items. A cloakroom holds clothes and other apparel, which make up about 30 percent of Cannon's business.

There's also a study hall for pens, paper goods and office products, and a lunchroom, which features aprons, lunch boxes, oven mitts and other kitchen gadgets.

"This is the only medium that keeps giving without charging," Salupo says. "Let's say a client packages a refrigerator magnet with a card talking about their services. The consumer uses the magnet to hold up picture of their grandchildren. Now every time that person goes to the refrigerator, it's free, it's no charge. This is the only medium that offers the residual benefit, additional impressions at no charge."

Salupo is often faced with clients who are a little overwhelmed by their choices. In a panic, they often pick the most basic promotional item -- a coffee mug or pen -- which works effectively if those items meet the need. But really, how many mugs or pens have you already handed out?

Here are three basic questions to ask when deciding what kind of promotional item to use to advertise your company.

What's your objective?

The specialty advertising item may be used to introduce a product, to introduce a new phone number, to encourage people to test drive a car or to motivate staff. It could be a way to reward a client base or of saying thank you to a business partner. What are you trying to accomplish?

Once you have an objective it can help focus your search among the dizzying array of items.

Who's your market?

A windshield ice scraper might be a great idea for your clients in Northeast Ohio, but what do you send to those in Florida? As with any advertising, the target audience is important when considering a promotional gift.

The target could be as broadly defined as women ages 18 to 35, or it could be as narrow as workers who have been with your company 25 years or more.

What's your budget?

The question that can best focus your search is, how much do you want to spend? Salupo has $12,000 Ebel watches and $2,000 Waterford crystal vases, but he also sells stickers that cost less than a penny each.

"You have your mainstays mugs, pens, but there are so many other items that might better fit into their marketing objectives," Salupo says. "I think you'll find that anything -- anything -- can be customized."

How to reach: Cannon Advertising Specialties, (216) 431-1905

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

www.cannonadvertising.com

Published in Cleveland
Thursday, 13 September 2001 08:49

A picture's worth a thousand words

In 1998, the acquisition of Voice-Tel Enterprises booted Nadia Clifford out of the director's chair and into the unemployment line.

With no strong desire to jump back into the corporate lifestyle, she began researching new technology for business opportunities.

"At that time, dot-coms were a dime a dozen, but I did feel there was some great potential in Internet-based technology," Clifford says.

Turns out she was right.

Clifford's research led her to iPIX Picture Corp., a Tennessee-based panoramic imaging company. The panoramic technology allows researchers to see a 360-degree view of everything from a city street to the interior of a restaurant.

She decided the best potential for iPIX was in the university and hospitality industries. The idea was that incoming freshmen want to see the college they're considering without an expensive trip to the campus. In the same vein, travelers appreciate seeing accommodations before making reservations.

With iPIX technology, the customer can create a bird's eye view effect that can be used on the Web or produced for CD-ROM and print brochures.

"You get three different versions in terms of an internal sales tool," explains Clifford.

But navigating the bureaucratic infrastructure of higher education proved difficult.

"Departments are very autonomous and to have a consensus of opinion from a university is sometimes very challenging," Clifford says.

Eventually, Oberlin College and Western Reserve Academy added panoramic imagery to their Web sites, but focusing on the slow-to-react educational world could have meant the end of the 2-year-old company.

Stepping back and looking at the market from a different angle, Clifford tried envisioning where the technology could be used. Her conclusion: She needed to open up her marketing efforts to cities and marketing firms.

For Ron White, executive director of the Beachwood Chamber of Commerce, attracting new businesses is important. With 4 million square feet of office space and approximately 2 million square feet of retail, White believes iPIX offers a great way to present his city to the outside business community.

"My goal is to get their (relocators) attention ... entice and not give away the show," White says.

Beachwood's Web site offers maps and text, but White believes the upcoming addition of virtual tours will attract people looking to relocate businesses, promote commercial real estate and showcase the residential community.

Clifford ran with the idea, and soon, the Greater Cleveland Media Development Corp. will integrate virtual tours into its Web site.

"It makes sense to use that type of technology ... to entice producers to come into Cleveland," says Clifford.

Recently, she was joined by her husband, Jim, who studied photography at the Cleveland Institute of Art, and Bridalview.com was born.

The offshoot targets the computer savvy bride-to-be, typically a master researcher of information on everything from banquet halls to travel and formal attire. Wedding-related vendors advertise services, and banquet halls give a full room view of a hall decorated for the occasion.

Clifford says the iPIX technology does not sell itself. The biggest challenge doesn't come from competition but from finding a way to help clients understand the value of the technology.

"It's a learning curve for everyone, but fortunately, our clients' clients are computer savvy, so they have to work very hard to keep up with their demands," says Clifford. How to reach: Clifford Digital Studios Inc., (330) 656-0025 or www.cdsin3d@aol.com; Beachwood Chamber of Commerce, (216) 831-0003, www.beachwood.org or ron@beachwood.org; Liggett-Stashower Inc., www.liggett.com

Deborah Garofalo (dgarofalo@sbnnet.com) is associate editor of SBN Magazine

Published in Cleveland
Thursday, 13 September 2001 08:08

Hidden time bombs

You've finally incorporated a 401(k) plan into your business. Now, the individual investment choices are in the hands of your employees.

Your job as plan trustee is essentially over, right?

Not so, says Robert Arnoff, owner of Broadview Heights-based employee benefits firm Arnoff & Associates Inc. In reality, much of the burden for qualified benefit plans falls upon the trustees, often in ways many aren't even aware of.

"A lot of employers don't know about the inherent risks concerning qualified plans such as 401(k)s," Arnoff says.

One risk is a fiduciary breach, which occurs when a trustee of the qualified plan commits an action that is not in compliance with ERISA regulations. Trustees are typically either the business owner or a senior-level decision-maker within a company, and they can be noncompliant without knowing it.

There are many types of breaches. These can include situations in which a trustee is not working solely in the interest of plan participants. One example is if the trustee is friendly with a broker and limits the type of funds employees can put their 401(k) money into for self-interest reasons. Another situation may arise when a trustee pilfers funds from the plan. No matter the type of breach, each carries stiff penalties.

"The main repercussion of a fiduciary breach is that the trustees can potentially be responsible for paying a huge settlement," Arnoff says.

In accordance with section 409 of the ERISA law, a fiduciary who breaches any of his or her duties for overseeing a qualified plan must restore to the plan any losses that occur because of the breach.

So what can you do to keep fiduciary breaches from occurring? Beyond keeping your hands out of the till, Arnoff offers three suggestions.

Assess the plan

First, determine the total assets in your 401(k) plan. Once you have amassed more than $1 million, your exposure is greater. ERISA guidelines fall under something called the "prudent man principle," meaning trustees are held to standards based on what a prudent person would do.

"The prudent trustee should have a fiduciary audit done after a plan has reached $1 million is assets, at least every three to four years, and perhaps even more frequently based on the type of plan that is in place," says Arnoff.

Undergo a fiduciary audit

A fiduciary audit will determine not only how your plan stacks up but whether it's in compliance with federal law. It is also a risk reduction measure for the trustees.

Arnoff suggests a first audit three years after introducing a plan into your business. After an audit, it is wise to have any and all substantial changes reviewed by an ERISA attorney.

Define your risks

"Defining who is at risk from a fiduciary standpoint is an important consideration," Arnoff says. "The business owner may not have the ultimate exposure if he or she is not a trustee of the company's plan."

There are additional measurements of exposure that are spelled out in a fact-finding session during a fiduciary audit.

The bottom line, Arnoff says, is that unless you run the plan through careful inspection, you could be flirting with disaster. It's better to know today whether your 401(k) plan is in compliance than to find out in a few years when it could cost you thousands, if not hundreds of thousands of dollars in penalties.

How to reach: Arnoff and Associates Inc., (440) 717-1775

Dustin Klein (dsklein@sbnnet.com) is editor of SBN Magazine.

Published in Cleveland
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