Dave Lindsey: How ‘focus = growth’ for rapid business expansion involves the ‘main thing’

Dave Lindsey, founder, Defender Direct

Dave Lindsey, founder, Defender Direct

You will never get it all done!

My first job out of grad school was managing one product line, no people and a “to do” list that was a mile long.

I remember breaking down to my dad one night, who at that time was a bank executive who managed multiple divisions, hundreds of people and a lot more responsibility than I could ever comprehend. I was beyond frustrated working 70+ hour work weeks yet I couldn’t manage to get everything done, and my to-do list kept growing!

That’s when Dad gave me some of the best advice that I have ever received. He said, “David, they don’t pay you to get it all done. They pay you to get the most important things done.” Wow! That simple phrase changed my life.

Let me clarify by saying that some jobs, entry level specifically, do warrant the employee to get everything done; all phones need to be answered, hamburgers cooked, etc. prior to leaving for the day.

But as we begin to move up the ranks of responsibility we don’t want to take this mentality with us. When we are managing people, places or things, the options of what we spend our time on grows exponentially. We can conduct training, print a new catalogue, go to a meeting … the list goes on and on.

 

Learn to focus

So many options and requests on our time and soon, we find that we can never get it all done. This is why it is imperative that as we grow in our positions, we learn to focus on the right things.

The power of prioritization is undeniable in terms of your future success and in order to be exponentially successful, you must learn how to differentiate time management from prioritization.

Peter Drucker says it best: “There is nothing so useless as doing efficiently that which should not be done at all.” Don’t waste your energy just crossing things off your “to do” list. Instead, spend some time prioritizing. Then pour your energy into the projects and tasks that you have deemed to be the most important things to complete today.

In the early days of Defender, I was a young entrepreneur obsessed with thoughts about how I could grow our business. As Defender grew, our team members were presented with new opportunities everywhere we turned.

While sometimes it was hard to turn away from an opportunity to sell what was presented as the “next big thing,” early on I took a step back to really evaluate our business. Every time we said yes to a new idea or product, it meant more training, more options, more complexity.

 

Stay in focus

Success does create more and new opportunities, but that means we must stay focused say no more often! Otherwise, our team and focus will fragment and slow us down.

I hear so many stressed out business leaders say, “But it’s all important!” However, by definition, if everything is important, then nothing is important.

If you want to be the leader of a high performance, fast-growth business, then your No. 1 job is to figure out what is most important and to “keep the main thing as the main thing.”

Still, today I divide my to-do list into A,B,C and D priorities and every morning I write my top three A priorities on a Post-It note, which I carry with me throughout the day as a reminder to keep me focused.

If each day I can get my top three most important things done amongst the chaos of life, I figure I’ll have a pretty successful life.

Remember, there will always be more things to do than there is time to do them. You’ll never get it all done and your “to do” list will never be empty. Let this philosophy release you from the stress of trying to get it all done and put that new energy into getting the right things done today.

How Belk’s Dave Penrod is leading 6,000 employees through non-stop change as the nation’s largest privately-owned retailer undergoes a renaissance at age 125

Dave Penrod and his management team at Belk had an order as tall as a homemade lemonade: change the company mantra from “If it ain’t broke, don’t fix it” to “Modern. Southern. Style.”

“Our customers viewed us as old fashioned and one-dimensional, so we decided that it was time to modernize our approach to the business while retaining our traditional Southern values,” says Penrod, who oversees 100 stores in the heart of the South — Georgia, Florida, Alabama and South Carolina as chairman of Belk’s Southern Division.

Belk has had just three CEOs since its founding in 1888 — that is until 2010, when the heretofore low-key department store chain launched a makeover with the goal of reaching annual revenues of $6 billion within five years.

Historically, Belk has catered to shoppers who patronize its 301 brick and mortar stores located in small- to mid-size cities throughout the Southern U.S. But recently, it’s been ceding sales to savvy city slickers like Macy’s and Nordstrom, who use the Internet and mobile apps to infiltrate rural markets. Admittedly, the company has fallen behind in the e-commerce and social media arena, and many of its stores could use a facelift.

The company wants to leverage its strength, which is appealing to the tastes, culture and buying habits of Southern shoppers, while improving in lagging areas.

To that end, management adopted a new logo and the new tagline. The company is investing $270 million in store improvements, $210 million in information technology, $53 million in e-commerce and $4.5 million for a new e-commerce fulfillment center in Jonesville, S.C.

Penrod is charged with implementing the company’s strategic plan in his division, and as every executive knows, change is difficult — especially for tenured employees. In fact, a survey of 3,199 global executives by consulting giant McKinsey found that only one change transformation in three succeeds. Here is Penrod’s approach to instilling change and yet keeping Southern values at Belk.

Create line-of-sight

Penrod is creating line-of-sight between the company’s objectives and his employees’ daily activities as part of his plan to achieve long-term structural and cultural transformation. Now, workers can see how going the extra mile to satisfy a customer can propel Belk’s sales and profits.

“The way we communicate our brand to consumers is by being friendly and hospitable because that reflects traditional Southern values,” he says. “We need to go out of our way to smile and greet shoppers the minute they enter the store so they experience our Southern hospitality.”

And since employees often need a compelling story to change their behaviors, Penrod is using a structured communications program to breathe life into Belk’s new brand and encourage his team’s evolution.

Employees in Penrod’s division review results from the day before and set daily goals during a 10-minute morning huddle with their manager. The short sessions reinforce change and build mindshare toward the company’s strategy.

“You can’t broadcast a list of goals and think that everyone gets it,” Penrod says. “You need frequent reminders to create a shared vision and buy-in for your strategy.”

He’s also increasing his team’s chances of success by building their skills and capabilities.

After only 75 percent of customers said they were satisfied with their shopping experience in a recent survey, Belk launched a new customer service training program for its 23,000 associates. But Penrod took training and development to the next level in his division, by launching a formal succession planning regimen and development program for high-potential employees.

The program boosts morale and productivity by giving employees a career path and improves retention by providing new hires with the necessary skills to execute Belk’s strategic plan. Plus, promoting from within helps preserve the company’s unique Southern culture.

Finally, Penrod’s fostering accountability and continuous improvement through the introduction of monthly performance reviews. Employees receive feedback and share ideas during one-on-one sessions with their area manager. Although the sessions take a fair amount of time, Penrod says they’re jumpstarting productivity and fostering innovation.

Since every employee looks at organizational change from the stand point of how he or she will be personally affected and self-preservation can take precedent, Penrod is allaying their concerns by offering them knowledge and opportunities.

“Failing to invest in your people is shortsighted because they drive customer satisfaction,” he says. “We came out of the recession with a renewed commitment to development and innovation and now, it’s paying off.”

Support your local community

Belk plans to continue it’s commitment of giving 2.5 percent of annual pretax income back to the communities it serves and for good reason. The $19 million in donated last year not only exhibits Southern values it distinguishes Belk from impersonal e-tailers.

Plus, employees can spread the company’s “Southern State of Mind” philosophy while rubbing elbows with members of the community as they paint classrooms, build bookcases, beautify school grounds and install educational murals as part of the company’s 125th birthday celebration.

“We call ourselves community partners but what does that mean?” Penrod says. “It’s the way we support local education and healthcare, but it’s also the way we treat our customers and our associates.”

For example, Belk had just acquired the Proffitt’s and McRae’s chain from Saks Fifth Avenue in 2005 when Hurricane Katrina hit Biloxi, Miss. Penrod says the company could have taken the insurance money and closed the store, but instead, they raised $1 million for local employees and continued to pay them until they got back on their feet.

CEO Tim Belk called the company’s decision to stay in Biloxi a defining moment as other companies abandoned the devastated region.

“Unlike other companies, we don’t measure the return from our donations, we do it because we believe that supporting the communities we serve is the right thing to do,” Penrod says. “Community support exemplifies our Southern culture and values, it’s an intangible asset that can’ be measured.”

Cater to customers

Belk store sizes are tailored toward the needs of the local markets they serve. Stores range in size from 40,000 to 300,000 square feet of space, with an average size of approximately 92,000 square feet.

While management is introducing new lines of private label fashions by designer Cynthia Rowley and Carolina Panthers quarterback, Cam Newton, the merchandise selection in each store addresses the preferences of local customers.

Customized merchandizing is one reason why Belk is surpassing the competition in a key measurement for brick and mortar retailers. The 11 retailers tracked by Thomson Reuters posted just 1.1 percent growth at stores open more than a year in March. In contrast, Belk has had 12 consecutive quarters of comparable store sales growth and its comparable sales growth rate for fiscal 2013 was 6.3 percent.

“We use demographics like income, age and population size to adjust the assortment of merchandise in each store,” Penrod says. “But we refine that data based on our knowledge of the local community and by listening to our customers. Our growth in same store sales reflects our connection to the community”

For instance, the stores in South Florida offer a slightly different selection of merchandise when the snow birds arrive from Northern states. And some stores extend Southern hospitality to local shoppers by hosting evening parties that include refreshments, a fashion show and music by a local disc jockey.

Like many companies, Belk uses formal pulse surveys to gauge overall customer satisfaction. But customers can weigh-in at any time by completing an online survey or “Tell Us What You Think” card, and their feedback serves as a call to action for executives like Penrod.

“We adhere to something called the sunset rule,” he says. “When a customer expresses a concern, it’s referred to an executive and must be resolved by the end of that business day.”

But Belk’s management team doesn’t stop there; they use customer feedback to review underlying business practices and initiate adjustments to faulty policies and procedures.

For instance, the company is committed to giving shoppers the seamless omnichannel experience they crave, that reaches across stores, belk.com, mobile devices and social media.

It wasn’t until 2008 that Belk’s online offerings expanded beyond home goods and wedding registries to include clothing and other merchandise. Furthermore, the company estimates that only about 25 percent of online sales come from outside Belk’s sixteen-state footprint and customers can’t order a product online and pick it up in a local store — at least not yet.

The initial phase of improvements includes a new systems platform and functionality enhancements to make shopping online at belk.com easier and it’s developing a mobile app so customers can shop on-the-go from their favorite device.

Employees are charged with promoting the company’s improved website since multichannel shoppers spent 15 percent to 30 percent more than those who visit brick and mortar stores according to surveys by IDC’s Global Retail Insights research unit.

Although the firm didn’t embrace the social media craze until 2010 it now has a blog, a solid presence on Twitter and 789,988 “likes” on Facebook.

While net sales for the 53-week period ended Feb. 2, 2013 increased 7 percent to $3.96 billion, the company is banking on the growth of Internet sales and it’s Southern charm to reach $6 billion by 2015.

“When I visit our stores with members of the Belk family and talk to customers and associates, I get a true sense of what Southern means,” says Penrod. “As a guy who’s originally from Michigan, I’ve learned a whole lot about Southern style and hospitality.”

The Penrod File

Name: Dave Penrod

Title: Chairman, Southern Division

Company: Belk

 

Birthplace: Detroit

Education: Bachelor’s degree in business management, Oakland University in Rochester, Mich.

What was your very first job? I was a caddy at a local golf course, where I learned a lot about human nature. Golf is a game where honesty, integrity and sportsmanship are paramount because it’s not monitored by referees, so it’s easy to cheat. I observed that some people are inherently honest and some people aren’t. What I learned as a caddy prepared me for life as well as my career.

Who do you admire most and why? I admire politicians like Hillary Clinton and John McCain because they’re truly business people who have to build consensus and balance disparate points of view to get anything done. It’s not easy to do that and I admire anyone who can overcome tremendous obstacles, relentlessly pursue a resolution and foster a spirit of collaboration.

What is your definition of business success? Sales and profits are important but you can’t achieve them by yourself. Your success as a manager hinges on the growth and development of your people. When they flourish and grow, the financial metrics take care of themselves.

What are the keys to leading organizational change? You’ll get some connectivity at a high level, but to truly inspire change, you need to take your message down to the individual level. Give your employees the opportunity to shape the direction of the organization by sharing feedback, especially from customers. Some folks won’t agree with your plan but most of them will engage if you employ a regimented communications strategy that is supported by performance management, training and career development.

What’s the word? Language Services Associates succeeds by taking all challenges to help people communicate

Laura K.T. Schriver, founder, chairman and CEO, Language Services Associates

Laura K.T. Schriver, founder, chairman and CEO, Language Services Associates

When her husband’s commercial real estate development business began to suffer in the late 1980s, Laura K.T. Schriver was concerned for the well-being of her family.

“I had three kids about to go to college, a house and a very nice living,” Schriver says.  “I had to think, me, my Savior and I, what was I going to do? I don’t have a college education, so I couldn’t fall back on my credentials. It was either I was going to open a catering business or I was going to do something with language.”

While she was trying to decide how to employ one or both of her loves, Schriver, a native of Buenos Aires who is fluent in Spanish, was called by a district attorney’s office to interpret for a case. She then received a call from Immigration and Nationalization Services asking if she could recommend a Mandarin interpreter. Immediately she recognized an opportunity and jumped on it. Schriver installed a phone line and set up her kitchen counter as an office and began to recruit and deploy interpreters for clients requesting them.

More than 20 years later, Schriver is leading a business with more than 150 employees and roughly 5,000 independently contracted global linguists. Whether it’s interpreting the spoken word or translating the written word, the company offers services for more than 200 languages.

“The entire company is open to ideas and we listen to them all,” says Schriver, Language Services Associates’ founder, chairman and CEO. “With our IT department, we dream it, and they create it. That’s the best part of knowing that you have these people who are true creators.”

Don’t limit yourself

Technology is at the core of everything that LSA does, and Schriver says her employees are trained that very little, if anything, is impossible.

“We don’t limit our client to the product that we have as is,” Schriver says. “We create a product that will completely take care of the client’s needs. If we don’t have it, we make it. Most of our software is proprietary, with the exception of the standard document, word processing and design products.”

In addition to face-to-face interpretation and text translation, LSA also offers telephonic interpretation services. With Interpretalk, LSA’s clients can access a live telephonic interpreter in less than 30 seconds.

The company continues to enhance its video remote, text translation, American Sign Language and language assessment services.

LSA also continues to find a market in the prison industry by addressing cultural language differences that may arise.

“Hispanics in particular carry two last names,” Schriver says. “So you have Jorge Fernandez-Lopez. They would go out and say, ‘Mr. Lopez?’ And none of them answer because the first last name is the legal last name. It’s Mr. Fernandez. Lopez would be his mother’s maiden name. And people in the United States don’t generally know that.”

Ready to serve

Schriver’s challenge is to stay ahead of the curve and be ready when languages that have not required her services in the past become more prominent. It’s not always easy to match up an independent contractor with the right language and need.

“We not only clear the credentials of all prospective linguists before adding them to our network, but we also put them through LSA’s rigorous verification and qualification process to demonstrate competency in spoken language conversion,” she says. “This allows us to see who the people are that we want to partner with, and who can represent our company in an interpretation situation the best. You really have to search high and low.”

How to reach: Language Services Associates, (800) 305-9673 or www.lsaweb.com

Brennan Mulcahy is confident slow and steady will win the race for solar power supremacy

Brennan Mulcahy, co-founder, chairman and CEO, American Solar Direct

Brennan Mulcahy, co-founder, chairman and CEO, American Solar Direct

Brennan Mulcahy likes to keep it both simple and smart when he thinks about his growth strategy at American Solar Direct.

“It’s about providing high-quality, photovoltaic rooftop solar systems for residential customers in California,” says Mulcahy, the company’s co-founder, chairman and CEO.

“That’s it. So we’re focused clearly on that. There is a lot of opportunity for our business in other states and other jurisdictions, but we’re very focused on getting that part of our business right. I’ve seen too many companies try to be everything to everybody.”

The measured approach that Mulcahy takes toward growth at his 170-employee company is an effort to get it right the first time and prevent unnecessary mistakes.

He wants to get the right people in place, build a strong culture of empowerment and have an operational process that everyone understands. That way, when the business does take off, there will be far less uncertainty about what needs to happen.

“You’ve got to grow in a prudent manner,” Mulcahy says. “Companies that try to do too much, too fast risk destabilizing the business. So it’s finding a balance between high growth and controlled growth. We strive for high growth, but we also want to achieve controlled growth so that we’re managing the business and our resources responsibly.”

Develop your team

As you seek to prepare your company for a higher volume of business, you need to take a good, hard look at the team you’ve got in place and see how it matches up with your vision and company goals.

“You need to take a formulated approach so you understand not only where your weaknesses are in the organization, but also your opportunities,” Mulcahy says. “Identify those high-performers who are likely going to advance in their career.”

Mulcahy holds a weekly executive committee meeting where his department heads talk about the strengths and weaknesses of the organization from many points of view, including personnel.

“We look at how we’re performing across the organization on a regular basis,” Mulcahy says. “You have to identify, as you’re growing, the key positions you are going to want to fill six months, 12 months, even two years down the road. You can’t just go out and hire everybody you want on day one. So we work together to create that prioritization based on what we need in order to hit the goals and objectives of the organization.”

You need to keep your team engaged in this discussion so that everybody is moving forward with the same information and the same goals in mind.

“You work together to set those goals and everybody on your executive team has bought in to them,” Mulcahy says. “You want to create an environment that allows them to contribute and feel that they really can contribute meaningfully.”

One of Mulcahy’s priorities with regard to personnel decisions is to see if a need can be filled internally. Just as you want your leadership team to feel part of the high-level decisions, you want your employees to feel connected to the growth plan at their level.

“I’m a big believer in growing organically and offering opportunity for advancement in the organization to the extent that you can,” Mulcahy says.

Keep the makeup of your company’s work force in mind on a regular basis and think about how the players could be moved as your company grows.

“Identify who your superstars are, those folks who are going to advance in their career in the short term,” Mulcahy says. “Understand each department and who you have coming up in that department. The way I look at it is very formulated. I look at each department and who the critical senior positions are and then I look at who in the organization is below that could fill it at some point. Who may need additional training or support to continue to advance? Where do you have gaps in the organization?”

When you have a clear understanding of what you’ve got, you’ll be able to make smarter decisions when you have to reach outside your own walls to make new hires.

Be a good listener

As you build your talent level or do a better job of maximizing the talent you already have, you have to make sure you keep your ears open to the ideas your people bring to the table.

“You have to listen to people,” Mulcahy says. “That is something that is hard for a lot of leaders who have their idea and just do it. If you bring high-performing people onto your team, you have to listen to their ideas. You may not always agree with them, but you have to listen and weigh and consider their perspective. Engage as a team and allow people to feel comfortable challenging and debating ideas.”

This kind of engagement makes people feel like they are part of the plan to make the business grow. It also gives them comfort that there is a plan and that the work they are doing is building toward bigger goals.

“If you respect peoples’ perspective and you respect their point of view, you make them feel valued,” Mulcahy says. “Then as a team, you come together and draw conclusions. At the end of the day, once you’ve had the discussion and the debate, it’s important that everybody gets on the same page to execute a decision. But again, you have to allow for that opportunity to be heard.”

It starts with you. If you openly demonstrate that you value the perspective of the people on your leadership team, they will be more likely to do the same with their direct reports. The result is a group of people that don’t just view your business as the place where they come to work and collect a paycheck.

“I want to have a culture at American Solar Direct where people feel like they helped build it, not just that they work there,” Mulcahy says.

This willingness to listen and consider other opinions is another opportunity for you to show that you want the company to be successful, but you want it to be done the right way.

“It’s a culture you have to embed in the organization,” Mulcahy says. “It’s not a process, not a policy you put up where you say we’re going to listen to our employees. It’s something you actually do and you start by doing it.”

Build customer relationships

Relationships are a key component of any organization, whether it’s between fellow employees, employees and management or a company and its customers.

“For our business, it’s not a one-stop sale,” Mulcahy says. “You can’t walk in, drop off the product and take a check. When we enter into a relationship with a customer, it’s a 20-year relationship because we lease them the solar equipment for 20 years.”

Customers make monthly payments for the equipment that allows solar energy to power their homes. In return, they expect responsive service if anything goes wrong.

“So when they visit for the first time and give them that presentation, it’s not just a quick in and out, see ya later,” Mulcahy says. “We have to come back and inspect the roof. We’re going to send installation teams in and put that system up on the roof. We’re going to have a long-term relationship so the salesperson has to do a good job in order to be successful.”

Whether you’re in the solar business or a different industry, you need to promote the philosophy that happy customers lead to confident salespeople.

“Salespeople who have a happy customer, they feel good about what they have done,” Mulcahy says. “That gives them a lot of confidence and helps them get more business because they feel proud of the job that they are doing. The second thing that happens is if you do a good job for a customer, you get referral business.”

Referrals have been especially strong in the past couple months and Mulcahy says that bodes well for the future.

“It makes their job easier,” Mulcahy says. “Anybody in sales loves a referral because you don’t have to go out and work as hard to get that customer. It indicates to them that we’re doing a good job with our frontline customers.”

Mulcahy wants American Solar to be viewed as a company that is reliable and committed to great customer service.

“It’s easier to get staff excited about doing a good job than it is going and doing a low-cost job or a mediocre job,” Mulcahy says. “We’re not setting out to be a high-volume, low-quality, low-cost provider. We’re setting out to be a high-quality, superior customer service product with a personal touch. We think that is something that makes everybody excited to be part of the team.”

American Solar Direct is expected to hit $60 million in sales this year and Mulcahy is confident that his team is in a strong position to satisfy the demand.

“We can educate the customer, provide the personal touch and make them feel comfortable with what they are getting,” Mulcahy says.

How to reach: American Solar Direct, (855) 765-2755 or www.americansolardirect.com

 

The Mulcahy File

Brennan Mulcahy

co-founder, chairman and CEO

American Solar Direct

What’s the best business lesson you’ve learned?

Communicate openly and honestly.

Why is that an important lesson?

It just saves so much time and energy. So often people spend hours or days beating around the bush and not getting down to the most important issue. I think you’ve got to really drill down to the nitty-gritty of what is important. Just be open and honest.

There is never anything to be gained by beating around the bush because you just confuse other people around you. Be very clear in what you think about something and what you want to do and just really get to the point in a respectful way if you don’t agree with somebody.

What traits are essential for leadership?

No. 1 has got to be the ability to listen. That’s critical. You often hear communicate, communicate, communicate. I agree with that. But I think the first pillar of communication is listening. People often get that backwards. They think communicating means you have to be doing all the talking. To be a good leader, you have to listen to people.

You need to be able to make decisions as well. I’ve often seen people who aren’t good at making decisions; they often spin their wheels around in circles. At a certain point, you have to make a choice and forge ahead. That doesn’t mean you always make the right decision. But you do have to make a choice sometimes and hopefully get it right more often than not.

Who has been a big influence on your life?

My brother, Tim Mulcahy. He got me started in sales when I was very young, and we started many companies together.

Takeaways:

Know what your team can do.

Engage others in decisions.

Get to know customers.

Lisette Poletes steps lightly, then finds her groove to take Global LT to new heights

When Lisette Poletes joined up with her mother, Hortensia Albertini, to help lead Global LT in 2009, she did so with an air of curiosity.

“Probably for the first eight or nine months I was here, I took an approach where I really just watched what was going on,” Poletes says. “I had to build my own ideas of what I thought was working and not working coming from a different background.”

The numbers show it was time well spent. Global LT, a language training and translation provider, closed 2009 with just more than $9 million in revenue. When 2012 wrapped up, that figure had risen to more than $20 million.

“We’ve had one of the worst economies ever, and we’ve managed to not only survive but thrive,” says Poletes, the 101-employee company’s owner and CEO. “I’m very proud of what the team I work with has done. It’s to their credit.”

Earn employee trust

Poletes joined Global LT with extensive sales and marketing experience from her education at Michigan State University and her prior work experience with Pfizer. But she had not been a part of Global LT, so she had to earn employee trust.

“I wasn’t coming in to take it apart, to sell it, to bring a venture capital firm in,” Poletes says. “I was in it for the long haul.”

Words are one thing, but Poletes backed it up with action.

She invested in new accounting systems and customer relations databases and elevated employees who had worked hard into management positions. She also instituted a profit-sharing program for employees.

“We basically put a plan in place where I don’t take a dividend out of the company if they don’t all get paid,” Poletes says. “It’s fostering that environment where we all feel like we’re in this together.”

Make use of good ideas

Poletes does not need to be the lead voice on every new idea at Global LT.

“We’ve done a lot of different things based on someone saying, ‘This process doesn’t work,’ or, ‘This works in my department,’” Poletes says. “My response is, ‘Let’s make it a best practice and see if we can make it work across all departments.’”

A great example is the suggestion that was made to bring together the people who recruit teachers and translators around the world for the company’s language training department under one leader.

“It was something that had been tossed around in the past, but she came up with a great proposal and a great plan, and we said, ‘Let’s try it,’” Poletes says. “That’s probably been in place the last two or three months and seems to be working well. It may be that we move all our talent to do the entire recruiting under one giant umbrella instead of just for language.”

Keep pushing ahead

As Poletes looks to the future, she sees endless growth opportunities for Global LT’s language services in emerging markets such as China and Brazil. She also sees opportunity in the government sector.

“We just obtained our GSA certification, which allows us to go after government contracts,” Poletes says. “That will be a brand-new focus that has a ton of potential growth.”

And you can be sure that her employees will be part of the pursuit of those new opportunities.

“If it doesn’t work, you can always go back to the way it was,” Poletes says. “But you can’t move forward unless we try these new ideas and who better to come up with them than the people who do the work every day?”

How to reach: Global LT, (888) 645-5881 or www.global-lt.com

Craig Dupper – Four mistakes business owners make when preparing their company for sale

Craig Dupper, managing partner, Solis Capital Partners

Craig Dupper, managing partner, Solis Capital Partners

The old term “putting lipstick on a pig” refers to prettying up a mediocre asset right before you want to sell it. Prior to marketing, the seller makes changes that cause things to look better than they really are under the surface. There is little difference between a cheap paint job on a used car to hide rust or new carpet in a house to cover cracks in the foundation and short-term cosmetic changes at a company justified as “preparing for sale.”

Here are four key mistakes business owners often make when trying to prepare their companies for sale:

■  Shallow bench: Sellers often hold off hiring personnel in key management positions such as senior vice president of sales, controller and manager of procurement. They do this to minimize administrative costs in hopes of increasing sale value. Most buyers will evaluate the leadership team and make purchase price adjustments to account for those vacant positions.

The leadership team (both the C-suite and upper management) is a critical value-driver for buyers of businesses. As such, business owners should always maintain the strongest, most complete team whether the business is for sale or intends to remain independent.

■  As-is, where-is: Often, sellers neglect making necessary investments in machinery, facilities or IT systems to preserve cash and/or pad the bottom line. Any sophisticated purchaser of your business will take into account the need to remedy inappropriately deferred capital expenditures and a buyer’s perception of these deferred costs could be greater than those if the business had been maintained all along.

Well-run, growing businesses require ongoing investment. Machinery wears out, IT systems require updating and facilities need refurbishment. While every capital expenditure should be highly scrutinized based on cost and overall contribution to efficiency, deferring critical investment in hopes of increasing sale value is a mistake.

■  Pump-up the balance sheet: Another mistake sellers make is in the area of working capital. Balance sheet cash can be increased by more aggressively collecting receivables and extending payables in ways that are inconsistent with historical practices.

To detect this, buyers of businesses often include a “working capital adjustment” in their purchase consideration. If the company has been pulling cash out by collecting accounts receivable and/or extending payables, there will likely be a negative working capital adjustment.

Strong businesses have consistent working capital and cash-conversion cycles, and temporarily changing best practices can irreversibly impact vendor and customer relationships. Maintaining consistency will preserve these relationships and be rewarded in the purchase multiple offered by a discerning buyer.

■  Run on a shoestring: Some sellers try to operate their businesses with the bare minimum of liquidity in order to increase perceived working capital. This is more difficult to identify, since there is a fine line between capital efficiency and too little operating cushion.

Buyers will again employ a working capital test and closely evaluate the historical monthly fluctuations in receivables and payables. If there are certain months where larger fluctuations necessitate an operating cushion, this will be factored into the purchase value.

Once lost, liquidity can be difficult to regain. It is better to always operate the business leanly but with enough liquidity to provide cushion for seasonal working capital variances and to support ongoing growth.

While the decision to sell your business requires a new perspective, it doesn’t necessitate changes in fundamental operating principles. Making short-term cosmetic changes in an attempt to “prepare the company for sale” will ultimately be visible to the buyer, can create lasting customer and vendor challenges, and won’t be rewarded in increased sale value.

Focus on fundamental operating principles and maximize the value of your business — no lipstick required.

Craig Dupper is managing partner at Solis Capital Partners (www.soliscapital.com), a private equity firm in Newport Beach, Calif., focused exclusively on lower-middle-market companies.

How investing in your accountant can deliver big returns

Accountants can do much more than prepare your taxes. Stephen W. Christian, managing director at Kreischer Miller, offers some ways to work with your accountant to increase profits and grow your business.

Q: Can your accountant add value and help you increase your profitability?

A. Do you consider your accounting fees to be overhead or an investment? One stereotype of an accountant — bean counter, scorekeeper, tax preparer — deserves its connection with minimal value overhead. But the right accountant takes the historical numbers and information available and helps you navigate a path to increased profitability and a return on your investment.

Accounting firms add value in many ways, but one that C-suite executives are reaping the most benefit from revolves around determining and accessing the right information with which to make timely, informed decisions. Think of all the information embedded in a company’s systems — production statistics, time and productivity information, supplier and customer data, margin analyses, etc. Your accounting firm can assist you in harnessing it.

First, determine the information that would put you in the best position to make decisions and monitor activities. What are the key performance indicators? Your accountant can assist you in determining the appropriate indicators. You can then develop the type of dashboard report you would like to review.

Your accounting and technology teams can assist in automatically populating the dashboard reports. You will be able to review critical information on a daily, weekly or monthly basis from any smartphone, tablet or computer. Stop wasting time with the incredible amount of useless information available to all of us. Work with your accountant to focus on utilizing only the relevant data, putting you on a path toward timely, better decisions that lead to improved profitability.

Stephen W. Christian is a managing director at Kreischer Miller. Reach him at (215) 441-4600 or [email protected]

The inflection point: when supply meets demand

Michael Feuer

Michael Feuer

The more there is available of something, the less it costs. Conversely, when there’s a limited quantity of that same something, the more it’s coveted and the more expensive it is. This is a rudimentary concept, but few companies know how to effectively manage the process to ensure they balance supply with demand in order to maintain or improve the profitability of a product or service. Of course, before you can maximize profitability, you must have something customers want, sometimes even before they know they need it.

Think about precious metals, fine diamonds and even stocks. The beauty and a portion of the intrinsic value of these things are effectively in the eyes of the beholder. In reality, much of their value or price is determined by the ease or difficulty of obtaining them.

As for equities, as soon as everyone who can own a given stock has bought it, then, in many cases, the only direction that stock can take is down because there are simply more sellers than buyers. On the flip side, when few people own a stock but everybody decides they want it, for whatever the reason, that stock may take a precipitous upward trajectory.

A case in point is Apple. At one time, when its per-share price was more than $400, $500 and even $600, everyone thought the sky was the limit and the majority of institutional funds and many home gamers, aka small individual investors, jumped on the bandwagon. The stock reached $705 a share in the fall of 2012, and just when all of the market prognosticators were screaming, “Buy, buy, buy,” there were too few buyers left (because everyone already owned it) and the stock fell out of bed. In many respects, Apple was still the same great company with world-class products, but there were simply more sellers than buyers and — poof — the share price evaporated, sending this once high-flying growth stock to the woodshed for a real thrashing.

The question for your business is how can you manage the availability of your goods or services to maximize profit margins? The oversimplified answer is once you have something of value, make sure that you create the appropriate amount of tension, be it requiring a waiting list to obtain the product or service or underproducing the item to create a backlog. However, this is a delicate balancing act, because if it’s too hard to get, then customers will quickly find an alternative, and your product will become yesterday’s news.

Some very high-end fashion houses, such as Chanel, have it down to a science. It can be very difficult to walk into a marquis retailer today and obtain one of its satchels without being made to jump through waiting-game hoops, just for the privilege of giving the store your money in exchange for the fancy schmancy bag. That stimulates demand and keeps the price up because customers tend to want something they can’t seem to get.

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. Reach him with comments [email protected]

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OMG! Forget landlines and faxes — it’s a booming world of wireless devices and connections for Marcelo Claure and Brightstar

Marcelo Claure, CEO, president, chairman and founder, Brightstar

Marcelo Claure, CEO, president, chairman and founder, Brightstar

Interviewed by Dustin S. Klein | [email protected]

When Marcelo Claure got into the mobile phone business in 1997 as it was just getting started, there were 1 million mobile phones sold a year. Today, there are 1.7 billion sold every year.

The founder, president, chairman and CEO of Brightstar Corp. lives and breathes the fact that massive growth and change are part of the territory. Smaller, more powerful and robust smartphones and wireless technologies are being developed constantly.

“Change is part of our culture and our game,” he says. “We need to adapt to change. Being a distribution company at our core, we’re constantly changing suppliers, not just to change but because they become less and less relevant.”

What started as an effort to be the leading distributor of mobile phones in Miami soon became the leading distributor in Latin America.

“Then we said, ‘What about in the U.S., too?’’ he says. “Then we said, ‘What about the world?’ Today, we are the world’s largest distribution company.”

And it couldn’t have happened without a concerted effort to find executives who could operate in a dynamic, changing environment — very different from the traditional executive.

“They’re very unique and hard to find; at the beginning, we made a lot of mistakes,” Claure says, describing how the talent was having a difficult time keeping up with the technology.

But under Claure’s leadership, Brightstar has attained unprecedented growth, expanding to 51 countries in only 15 years. With $6.8 billion in revenue and 5,500 employees worldwide, the company is in a great position today, realizing growth in all areas. Here is an inside look on how to deal with frequent change, explosive growth and the necessary talent to rein it in.

Take an ‘on-your-toes’ approach

Claure says a large part of how you deal with change is your approach. If you can establish a team that is always on its toes, that’s one of the first steps to what in simplest terms is a two-part culture.

“Change forces you to have a culture of innovation and a culture of ‘What’s next?’” he says. “If you look at what our company is today and what it was 10 years ago, it’s a completely different company.

“We are a lot more service-oriented now; from being a trader of mobile phones to today, we’re a leading supply chain company in our industry. We’re one of the leading insurance companies in the arena. We’re the world’s largest buy-back and trading company. Pretty much one thing is always thinking of what’s next.”

Many companies who stay on the cutting edge of technology look for individuals who are often the type to be called “early adopters.” These employees stay up on all the latest developments and are eager to try the latest product, even before all the bugs are out of it. However, an executive with impressive credentials doesn’t always equal an early adopter.

“We thought that by bringing big executives from big firms they would automatically yield success,” Claure says. “We couldn’t have been proven more wrong. The type of execs that fit our profile are the innovators and people who are used to building stuff, who operate in a changing environment, are very different than your traditional executive who is pretty good at grabbing something and keeping it constant or making it grow at suboptimal levels.”

It’s a somewhat painful process of trial and error. You are looking for a good fit when the tolerances are very narrow.

“We’ve learned and figured out the profiles of what makes somebody flexible at Brightstar,” Claure says. “Definitely it’s enough flexibility and adaptability to change and willingness to try new ideas, to bring new ideas to the table and to do different things in the course of their career. That’s what makes an executive at Brightstar shine.

“We’ve gone through a lot of hits and misses, but I think we’re getting better at recruiting the right talent.”

Be flexible to evolve

Once you think you have the right talent in place, you will be in a position to stress that, as the technology evolves, the company has to evolve with it.

“You have to build the culture and company that is ready to be flexible and be able to change pretty fast,” Claure says.

“If you look at the players we’ve dealt with since our founding, we’ve seen the rise of Motorola and Nokia. Nokia is struggling. If you look at where we’re working today, the focus now is on, ‘How can we offer a high-end smartphone like an iPhone or Galaxy for lower-income people so they can pay us a dollar a day?’

“If you go back 15 years ago, would we ever think that was possible? Absolutely not. So we’re used to change, we’re used to mobility. If you just see my industry, Apple was nonexistent there 15 years ago; today, it takes 75 percent of the industry profit.”

What began as a distributor is transforming into a service company for Claure.

“We’ve built our services around the phone and leveraging the structure we have around the world,” he says. “It’s pretty unique. Today, we run supply chains for some of the world’s leading operators.”

An entrepreneur is always looking for ways to expand his or her business, and Claure set his focus on ancillary products and services in that vein.

“We now buy more than 25 million used phones from consumers, we recycle them and we sell them in American markets,” he says. “Then we focused on the consumers who are accidentally losing their mobile phones; we launched an insurance company.”

Insuring the devices filled an expanding need in the market. Devices are misplaced, lost, dropped or stolen every day because, in part, of their convenient size.

“We wanted to be in the insurance business so we bought a small insurance company,” Claure says. “We fix our systems so they can scale, we fix the management team and then put that insurance business into our 51 different countries so that it immediately explodes our growth. Our insurance company has grown 450 percent in the 1½ years since we bought it. Next year, it will grow 1,000 percent.

“Then we figured out that retailers needed help in managing the growing wireless complexities so now we manage wireless categories at the world’s leading and biggest retailers in the world.”

Learn to use your advantages

Once you have been evolving your business in tune with how the industry is evolving, you often get a very good sense of where trends are going so that you can make some solid predictions, which can lead to expansion.

Claure says in addition to those skills, an advantage can be had in just being a bigger company.

“Being big now means ideas come to your company — a lot of people come with them,” Claure says. “That’s a lot easier now. Now your job is to pick the right idea, pick the right product and solution and make the right decision. It was a lot harder seven to eight years ago when you had to invent everything. We’re very good at identifying and saying we want to play in a specific business.

“We’re constantly being approached by smaller entrepreneurial companies. We buy them or partner with them or figure out other ways and then put them into the Brightstar platform. It gives them pretty amazing growth. It’s a lot more fun now when you can choose than it was before.”

As competitors try to encroach upon your space, use your experience and foresight to decide what new partnerships to explore.

“More than mobility, we’re going to experience in the next few years the connected world,” Claure says. “Everybody has a mobile phone today. There isn’t much more to mobile phones but not everybody is totally connected.

“Today, each person probably has a couple of devices — like tablets and your phones. If you look at the future and what’s expected by 2020, we’re going to have 50 billion connections, which means every human being is going to have a connection. So what does that mean?”

He sees opportunities to wirelessly connect smartphones, computers, digital cameras, cars, refrigerators, washers and dryers — whatever. It all will be connected.

“We’re moving toward a completely connected world, which means new supply chains need to be formed to operate that connected world,” Claure says. “There are new ecosystems, new businesses and new players.”

It all boils down to who has the capability to execute, he says.

“The keys are how do you execute? How can you scale? How can your systems and people scale?

“We sit in a position where we have sufficient business for the next couple of years. The potential with this business, if you execute an opportunity, then nobody tells you how good you do, that’s expected.

“But when you screw up or do something wrong, news travels fast, and that’s a problem.  We need to make sure we continue to do what we do. Never take our customers for granted. Make sure we execute. A lot of activities we execute are because customers are outsourcing to us so their expectation is that we’re going to do a lot better with price than they used to do themselves.” ●

How to contact: Brightstar Corp.,  www.brightstarcorp.com or (305) 421-6000

The Claure File

Marcelo Claure
Founder, chairman, president and CEO
Brightstar Corp.

Born: Bolivia.

Education: Claure holds a bachelor’s degree in economics and finance from Bentley College in Massachusetts. He also received an honorary doctorate degree of commercial science from Bentley College and an honorary doctorate degree from the Universidad Tecnica Privada de Santa Cruz.

Claure on how to deliver exceptional service: Talent, talent, talent. I spend 40 percent of my time interviewing new talent. I have replaced 80 percent of my management team in the last two years and the reason for that is the people who got us to a certain point aren’t the same people who are going to get us further.

Out of that 80 percent, half are still with Brightstar but they’re not the leader, the same COO, CFO, CTO. A company’s most important asset is its talent base. For every company and every industry, if you have great people running your company, great things will happen. If you have mediocre people in your company, bad things will happen. You might be good for a certain period of time in your company; it doesn’t mean you’re going to be good forever. Talent management is a very important process.

Secondly, you have to do the painful exercise of investing in having the right systems and processes. It’s painful because it’s expensive but also because it’s disruptive. Every time you have to implement a new ERP or a new warehouse management system, your initial reaction is delay. Delay — but then you pay for the consequences later on.

We’re learning. For example, I won’t tell you the customer but in a very large country we grew faster than our systems. There was a point where we couldn’t shift devices. They were like, ‘Oh my God.’ Those are problems you can’t fix at once. Those are problems that you have. … As we build our new products and services, we have to be dedicated to investing to make sure we can scale our systems, people or processes.

 

 

 

Few layers and plenty of freedom give the managers at McKinley Inc. the spunk to grow

Albert M. Berriz, CEO, McKinley Inc.

Albert M. Berriz, CEO, McKinley Inc.

Twenty years ago, McKinley Inc. was a company with 450 employees. Ten years ago, the company, which specializes in real estate investment and management, had a single operating platform for all of its businesses.

That was then, this is now.

Today, Ann Arbor-based McKinley has more than 1,400 employees and six different divisions contributing to its $273 million annual revenue figure.

It’s a long way of saying that growth has been a fact of life for CEO Albert M. Berriz. That’s a good problem to have, but it still comes with a series of challenges that must be met and overcome if Berriz is to have a financially and culturally healthy company on his hands for years to come.

“There are a couple of basic disciplines that we are very methodical about,” Berriz says. “One is we maintain a very flat organization. I believe that the distance from where I am sitting to where our customers are sitting is really no more than two heartbeats. I have six divisional CEOs who report to me, and they are flat with the people in the field, who are our customers.

“The second thing is, the six individuals who run each of the businesses have a lot of autonomy. They really get a lot of freedom to run their businesses as their own.”

For Berriz, managing growth is about managing the distance between people. Though he oversees a company with assets in 25 states, he wants as few levels and geographical barriers as possible to exist between management and field employees, between management and customers and between peer-level employees in the field.

But to maintain that type of connectivity, Berriz has needed to constantly work on strengthening his company’s cultural values and refining his communication strategy.

“Anything we do is really not top-down; it’s really integrated throughout the organization and is customer-driven,” Berriz says. “Everything we do needs to be driven by our responsiveness to our customers.”

Promote your core values

Though Berriz gives his division heads a high level of autonomy regarding how they manage, he still requires them to hire, make decisions and lead based on McKinley’s core values and core purpose, which is posted on the company’s website: “To enrich the quality of life in our communities.”

Berriz wants his executives to lead with their own leadership styles, but he has learned that a company will not be able to grow and adapt effectively without every employee’s compass arrow pointing in a common direction. That fact only becomes more critical as your company continues to expand and add people.

“While I’ve basically given them liberty to run their businesses, and I’m not a micromanager, we do still have a commonality regarding what the core values are and what the core purpose is,” Berriz says. “Even though each member of my team might be hiring differently, their standards are the same and the core values that they’re hiring for are the same.

“That is how you continually promote your core values throughout the organization. Even though we’ve grown to 1,400 people, when we do employee surveys, it’s not uncommon for 90 percent of our employees to have a full understanding of what our core values and core purpose are.”

When McKinley’s management talks about those values to the company’s employees, they use individual examples whenever possible. Berriz says if you can put a face on the behavior you want emulated, it has a much better chance of taking root and becoming something that your company embraces as it grows.

“It has to be something that is done throughout the organization, as opposed to top-down,” Berriz says. “If you look at our core values and the things that signify our core values, we helped to reinforce them by talking about individual people in the organization. We didn’t just write it on the wall. We actually took examples of great people in the organization and used those examples to help fashion our values.

“Say we have an employee named Jeff, and we want to have Jeff as our positive example. We ask what makes Jeff a great person in the organization. That is how we got our core values. We didn’t do it backwards, just by coming up with things and writing them on the wall. You take a look at your seasoned people in the field, people who are successful and embody certain positive characteristics, and say ‘That is how we want our people to be.’”

Hire with a purpose

If your culture is both formed and driven by your people, you need to hire managers and employees who embody the traits and principles you want to emphasize. Technical skills can be taught, but values, ethics, adaptability and a willingness to put the customer first are, in most cases, a product of personality before training.

Identifying and hiring the best possible management team members is a crucial first step. If they are on board with your cultural principles, they’ll hire like-minded people as part of their teams, and those people can, in turn, attract more of the same — a factor that can work to your advantage in a big way if you are eyeing a period of aggressive growth.

“Great people attract great people, and that’s huge, because you can’t have an organization like ours with mediocre people,” Berriz says. “And once you have great people, they expect to retain the great people they’ve hired.

“I think one of the biggest reasons people leave or stay with an organization is their boss. The six CEOs I have serving under me all have very high standards, so they serve as the litmus test. They are going to be the ones who expel mediocre people and attract great people.”

Berriz says you should never forget that any given person’s impression of the company, its mission, its values, its growth plans, and his or her relevance to accomplishing it all is predicated largely on the boss-employee relationship. It’s why each person at every level of your organization needs to strive to embody and lead by your company’s values.

“Associates can know the name of a company, they may understand what a company does, they may know their job,” Berriz says. “But at the end of the day, the real relationship is with their boss.

“If it’s a sour one, their view of the company and what the company does will be sour. If it’s a good relationship, their view of the company is a good one. That’s why people stay with or leave a company because of their boss. It’s rarely because of other issues.”

Berriz takes that philosophy a step further, trying to promote a positive relationship between upper management and all McKinley’s employees in the field. He sets the tone himself by setting up multiple channels for communication and dialogue focused on the company’s present and future growth plans.

“There is a difference between autonomy and not having a common culture,” he says. “One of my most important responsibilities is attracting and retaining great people, and I need to do that culturally — not just with my six CEOs, but I have to do it right down through the organization.”

Berriz describes himself as an “old-fashioned guy” when it comes to communication. He prefers in-person interaction whenever possible, but given the number of people McKinley employs and the size of the company’s geographical footprint, it’s impossible to maintain a consistent level of personal contact with every associate in every corner of the company.

Berriz has needed to find other ways to engage his people. One of the primary ways he’s attempted to bridge the gap is by embracing social media as a communication tool.

“For instance, if you go to my Facebook page now, you will see news about what is happening in the company,” Berriz says. “I’m making four or five posts today to Facebook, and my Facebook page is tied to our company website, as is Twitter. So if you are a team member and you want to stay in touch, you can go to my Facebook page. If I didn’t put that effort out there, if I didn’t utilize those social media platforms, I don’t think my communication would be as effective.”

Berriz has recognized that a large percentage of his workforce is composed of those who came of age in the era of the Internet. Younger employees have lived their entire professional lives in an environment that includes high connectivity through electronic media.

If you are going to connect the company’s purpose to younger workers and maintain a dialogue with them, you need to consider the value of Facebook, Twitter, blogs and other electronic media platforms in your communication strategy.

“A big portion of our population at McKinley is in the 18-to-35-year-old category,” he says. “That means social media and how we are communicating in real time can be very powerful in terms of developing and maintaining a common culture. I travel around, but there is no way that I can touch every person in the company through traveling. You have to make other efforts, otherwise you’ll be out of touch.”

How to reach: McKinley Inc., (734) 769-8520 or www.mckinley.com

The Berriz file

Albert M. Berriz, CEO, McKinley Inc.

History: I was born in Havana, Cuba. My family moved to the U.S. in 1959, when I was three years old, as a result of the revolution in Cuba. I grew up in Miami, where I graduated from the University of Miami with a degree in architecture and engineering. I later received an MBA from Northwestern University.

What divisions do your CEOs oversee?

We have five real estate divisions — two commercial and three residential — and one division that covers acquisitions, finance, partnerships and new ventures. Five of them are based out of the Ann Arbor office, but they are never here. They are always out in the field. We have one individual covering the Carolinas, Texas, Nevada and Arizona; we have one individual who does Florida, Michigan, Indiana, Illinois; and another one who has a third overlaid geographically.

For me, nowadays, it doesn’t really matter where they live. I have one CEO who works down in Florida and actually keeps an apartment down there, which is great because that person stays closer to our people and closer to our customers.

What are the keys to staying in touch with your direct reports?

It is all personal. I am on the phone with a few of them every day, or talking in person once every couple of weeks. I am very connected with those people. I am not a micromanager, it is not my style, but we have an understanding and expectation of what the results need to be and what the culture needs to be. But after that, it is really up them to lead in their own style.

What are those conversations like?

It is very high-level. We have a very transparent organization, so you are either on or you’re off. We have dashboards here that are always available in real time, so I am always aware of good or bad developments. So the results part is easy, and the culture part is easy too, because I have a good sense of what is happening in the organization.

We have a well-run organization, so I am mostly focused on the future, where we are headed in 12 months, in five years and 10 years, as opposed to the problems of today. If there is an occasional problem today, I will deal with it, but to be candid, the problems are infrequent, so they are seldom an issue.

Takeaways

Define your company’s purpose.

Hire people to fit that purpose.

Utilize multiple avenues of communication.