Morgan Lewis Jr.

Thursday, 18 July 2002 13:17

Father of the infomercial

The letters swirl into focus: "Home Miracles 1950." A grainy black-and-white image brightens on the screen.

It's a man, probably in his 60s, standing in a glowing white kitchen behind a counter bursting with blenders, food and utensils. The man is silent for a moment, perhaps unsure whether the cameras are, indeed, rolling. Then, like a crack of thunder, he begins the booming sales pitch.

"Folks, here we have one the most wonderful machines ever invented ... The Vita-Mix."

The infomercial is born. Its father is Cleveland's W.G. Barnard.

Love 'em or hate 'em, anyone with a television knows an infomercial when they see one. The 30-minute commercials constitute a large percentage of programming on cable television after midnight. The Direct Marketing Association puts Barnard's 30-minute spot for WEWS-TV in Cleveland in 1950 as one of the first, if not the first, infomercials.

Today, there are hundreds of infomercials (what the industry calls Direct Response Commercials). But it wasn't actually Barnard, or "Papa," as he is known at Vita-Mix, who started the phenomena, although he was the star. It was his son, Bill, who recognized the potential of this popular invention called television.

"My dad's looking at this huge box with a tiny screen and thought, 'There could be hundreds of thousands of people watching this. Why don't we do the same thing?'" says Vita-Mix Corp. President John Barnard. "In those days, you only had three channels, and they didn't have a lot of programming, so my grandfather's program was more exciting than the normal programming. A lot of people watched it over and over again because it was just more entertaining."

The Barnard men were self-taught salesmen and since 1921 had traveled around the country to fairs and trade shows demonstrating and selling Vita-Mix machines. The television spot, in their minds, was just another demonstration, only this time, the pitch wasn't to a group of 30 people gathered around a booth at the county fair. It was a pitch to thousands -- in their homes. Advertisers didn't recognize the impact until years later.

"At that time, he gave out his home phone number on the show and he basically sat on the edge of the bed all night long answering the phone," Barnard says. "That was back with those antiquated phone systems. The operator in Akron would call up and say, 'I've got 30 calls waiting for you.'"

Barnard and his marketing staff just released another infomercial for the Vita-Mix 5000, the latest household model. Although the technical quality of the infomercials has improved, the new 15-minute spot still has the skeleton of Barnard's pioneering commercial from television's Golden Age. Filmed in Cleveland, the latest ad uses actors Mike Kraft and Connie Dieken, who effortlessly create drinks and dishes, all with soft jazz playing in the background.

The message, however, is the same as it was in 1950: Health.

"Barnard was delivering a fiber and vital chemical message a good half-century prior to it coming back full circle," says Benjamin Berns, director of direct marketing for Vita-Mix. "He was way ahead of his time."

Market knowledge

John Barnard grew up with the company and learned the art of selling from the family patriarchs. An engineer by trade, he left Vita-Mix in 1962 to start companies of his own. He returned in 1981 and later became president of the company when his brother, Grover, retired in 1999.

Grover Barnard, with help from his mother, Ruth, expanded the business using new marketing techniques, such as focused catalog distribution. The elder Barnard men, Bill and W.G., preferred to grow the business the old-fashioned way -- through direct demonstration. That tried-and-true sales staple hasn't been phased out of the company by any stretch of the imagination. Vita-Mix's 40-member independent sales force still attends more than 500 shows a year all over the world, preparing drinks and dishes with the machines.

"As far as the business aspects, (Ruth and Grover) were the ones that ultimately got into the direct mail and technical issues," Barnard says. "Quite frankly, my father and my grandfather weren't too interested in that. They were salesmen -- very good salesmen. Very honest, very straightforward, but still salesmen."

The Barnards started to improve the performance and durability of their machines in the late 1960s and early 1970s. With the improvements, the price increased, making it a tougher sell to the average customer. So the Barnard family learned more about the market and the consumers who would be interested in the high-end blending and mixing products.

They understood that careless mass mailings would drain their marketing budget faster than they could whip up a fruit smoothie. Precise market knowledge and persistent communication were key.

"When you're marketing something that costs $450 and there's zero prior awareness, a 24-page catalog featuring one product and a stellar sales message that will close you on the 24th page is required," says Berns, who was recruited from KeyCorp's marketing department. "A whole lot of education and understanding is required prior to the purchase decision being made."

New directions

Perhaps you've eaten the McDonald's McFlurry dessert or sipped a margarita at Chi Chi's or a Mochaccino at Starbucks. Chances are they were blended with one of Vita-Mix's commercial line mixing machines. That line didn't exist until 1992, and now represents 40 percent of the company's business.

Some of Vita-Mix's earlier household models were used in restaurants and other food services industries, but they never lasted much longer than their competitors' models. It wasn't until commercial customers asked then-president Grover Barnard to design a blender durable enough to handle the constant use of the food service industry that his engineers designed the company's first commercial mixing machines.

"We looked at the other ones that were out there and they were garbage; they didn't hold up," Barnard says. "We thought we could make a better one, and we did. We quickly put together a machine that was like a workhorse."

With increased durability and quality comes a bigger price tag, which some in the industry thought would be the downfall of Vita-Mix's Drink Machine. Not so, Barnard says.

"It turns out some of these establishments actually paid for their machines (in revenue) in a just few days," Barnard says. "There is so much profit in the frozen drink business. So, it turned out it was a no-brainer. We showed them this is how long it takes to pay for itself instead of having to replace it."

Web wise

If it weren't for the eight-foot-long sign, you might miss Vita-Mix's headquarters tucked away on a wooded residential street in Olmsted Falls.

"You can't tell it's this big" is the reaction of most visitors after a tour. It's not so much a building but a series of hallways, which lead to offices, a warehouse and an assembly floor, then up some stairs to the executive offices. There are 25,000 square feet of building space spread over 10.5 acres and Barnard plans to add another 10,000 square feet for more offices.

The growth center of the company -- the computer room -- is housed in a small, inconspicuous enclave in one of the offices. Vita-Mix's Web site, launched in October 1999, and e-commerce platform, launched in April 2000, is the third most profitable segment in the company. At a time when retailers are burning through capital to keep struggling Web sites alive, Vita-Mix's is thriving because of the Barnard history of market knowledge.

Berns keeps the fire burning with twice a month e-prospecting campaigns, using e-mail to direct interested consumers to its Web site. Current customers click back to the site with e-continuity campaigns, which tell Vita-Mix owners of specials, new recipes, new Web site functions and clearance sales.

The user bulletin board, which offers customer recipes and food preparation tips, continues to draw Vita-Mix owners to the site and gives the company another chance to contact the customer after the purchase. Multiple contacts are key to increase brand recognition and referrals.

"It's not a commodity impulse purchase," Berns says. "Those who do acquire it become their own aficionados, developing their lifestyle around this most recent purchase, telling all of their friends and all of their family. The word-of-mouth for this particular machine ... we can't measure it, it's so big."

Quinetix, a Rochester, N.Y.-based direct marketing firm helped design Vita-Mix's Internet strategy into the profit center it is now.

"For a small, privately owned company, the mix of direct marketing techniques that they do is on the level with a lot of the Fortune 500 companies that we've had experience with," says Tricia Howe, a principal owner at Quinetix. "They've spent a lot of time analyzing their customer base and really getting to know who their customers are, and therefore who their target audience is, for prospect initiatives."

Thanks to that market knowledge, Vita-Mix machines are in more than 1 million homes and distributed to more than 45 countries. So the next time you're flipping through the cable channels and cursing W.G. Barnard for creating the infomercial, remember, it's not his fault it worked so well. How to reach: Vita-Mix, (440) 838-4080; Quinetix, (716) 546-1860

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

Thursday, 18 July 2002 13:12

A young man's game

With a blonde ponytail hanging down his back, Jim Kilmer says that just because the average age at his company is 26.2 years old doesn't mean inexperience follows youth.

In fact, their fresh faces are a comfort to their clients in Cleveland, a city that, on the average, is grayer than most major American cities.

"You're always hearing about teen-agers and high-schoolers designing Web sites and programming things," says Kilmer, manager of systems development and spokesman for the OPAL Group in Independence. "It's actually conditioned a lot of traditional corporate management into thinking that youth is the way to go with that. Even though we're not fresh out of high school, it has helped our cause, because when we walk in and start talking about these things, they kind of take it in stride and say, 'They must know what they're talking about.'"

There is no question that these young men know what they're talking about. Their customers include Apple Computer, Wolfgang Puck Soups, Williams Petroleum, the National Institutes of Health and Case Western Reserve University.

"The fact is, we're young," Kilmer says. "It hooks them. They expect us to be good and exciting, and I'm pleased to say we haven't disappointed anyone. Credibility is the hardest thing to build, but once you've got your name out there, have a few high-profile clients and have people willing to sing your praises, it happens."

Here's how Kilmer and his OPAL Group team built credibility in their first year of business.

Land corporate backing

The OPAL Group provides an array of computer network, software and hardware services to companies with annual sales of $5 million to $50 million. The company's average project runs from $10,000 to $100,000.

For now, OPAL Group is still a subsidiary of a management and venture consulting firm in Pittsburgh by the same name, but Kilmer and his colleagues have the option of buying out the parent company and going off on their own.

The five men worked independently for the OPAL Group in Pittsburgh before customer demand led to last year's creation of a technical services arm of the company.

"Rather than just walk in and become employees of the OPAL group, we decided we were going to band together and form our own company," Kilmer says. "We put the team together, put a modest business plan together and pitched it to the OPAL Group. We said, 'You give us funding and we'll do whatever you need for about a year in repayment for that, and in the meantime, we'll go about building our own business."

Establish community ties

Four out of the five members of the company are graduates of Case Western Reserve University and Kilmer sits on an advisory committee for the Great Lakes Science Center.

Other partners held positions with MetroHealth Medical Center and Key Bank before becoming part of the OPAL Group. The men have many ties with local companies and higher education, which has not only helped build their client base but spread the word about the company, which has only been marketing aggressively for a few months.

"We're bringing in business about as fast as we can handle it," says Kevin Jacobs, the firm's enterprise systems architect. "All of us come from fairly well-established backgrounds. We didn't just graduate from college. We have a lot of contacts from our previous employment.

"We have a very rich pool in which we've established ourselves as experts in our previous lives."

How to reach: The OPAL Group, (216) 986-0710

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

Friday, 28 June 2002 06:52

Bread winners

The bread makes the sandwich, says Izzy Schachner.

It's too bad that he and fellow deli owner David Pearl couldn't slip a loaf of their famous rye in with their proposal to earn food service rights in the new Cleveland Stokes Federal Courthouse. It might have made the process easier.

But government contracts are never easy to land, and these lifelong friends and business partners had to become experts in the bureaucratic process in a matter of days. After all, what do a couple deli owners know about government contracts?

"It was a grueling process," Pearl says. "One of the hardest things we've ever done."

The duo beat out large food service conglomerates like Sodexho and AVI Food Systems Inc. to land the lucrative contract. Their restaurant, The Courthouse Café, will have access to more than 450 employees in the courthouse and at least that many attorneys, clerks and law enforcement officials who visit the courthouse daily.

Not bad for two entrepreneurs whose sole purpose was to start a business so they wouldn't have to work desk jobs.

Pearl's father, Alex, was one of the founder's of east side institution Corky & Lenny's. David grew up in the well-known restaurant, where he worked for several years. He's proud of his father's achievements, but doesn't want to succeed standing on his father's shoulders.

"Corky & Lenny's is a very strong name," he says. "In the beginning, it helped me establish my creditability and get in the door, but David's Deli has been around for seven years now. It used to be David from Corky & Lenny's, now it's David from David's Deli."

While Pearl grew up in food service, Schachner learned the trade working 60- to 70-hour weeks managing Tony Roma's chain restaurants around Cleveland.

"I started out as a fry cook," he says. "After three years, I knew every valve, every fuse, every quirk of the place. When it became that much of a routine, I knew I was ready to leave."

Meanwhile, in 1995, Pearl opened David's Deli on the first floor of the towering mirrored-glass Eaton Center on Superior Avenue. Vying for the lunchtime crowd downtown is never easy.

Not only are there dozens of lunch spots within walking distance of every office building, the Eaton Center has a cafeteria which is subsidized by the building's tenants. Despite those challenges, David's Deli flourished.

"It's true, people could get meatloaf and mashed potatoes for $2.95 in the cafeteria," Pearl says. "But people want a change. Something lighter, more healthy or just different."

"People don't mind paying more for higher quality food," Schachner adds.

Soon after Schachner left Tony Roma's in March 1998, the duo opened Izzy's Lunchbox in the McDonald Investments building. The restaurant's name is painfully accurate. What started out as a 3,000-square-foot restaurant shrunk to 500 square feet when a larger tenant in the building needed more space.

Regardless, Schachner manages to serve hundreds of diners every day in this confined space by directing the traffic flow around a large pillar in the middle of the restaurant. It's a surprisingly smooth process.

"When I panic, I tend to get creative," Schachner says. "Those 500 square feet were not all useable. We had to get down on our hands and knees and use chalk to outline all the space we would have and lay it all out."

Both delis were thriving when Schachner heard the food service contract for the new Cleveland Stokes Federal Courthouse was up for bid. Neither Pearl nor Schachner knew anything about how to land a government contract, but they believed they could convince the U.S. General Services Administration, which was in charge of awarding food service rights, that they had the experience for the job.

For a couple of men who had never written a business plan, the amount of information the GSA requested was staggering. It wanted a complete business plan, including financials for both restaurants, projections for the proposed restaurant, a letter of guarantee from a bank promising loans, referrals from previous property managers and an entire cycle of menu items including prices.

And they had less than two weeks to put it all together. With the clock ticking, they hired SS&G Financial Services to help with the proposal and the financials.

"We were really under the gun," says Adam Berebitsky, director of hospitality services for SS&G. "But David and Izzy were totally committed to this. They weren't looking at this as just another proposal. These guys are growing entrepreneurs and they showed the judges that they were serious operators."

There were eight sections to the contract approval process. If they scored less than 5 out of a possible 10 points on any part of the process, they would be eliminated.

A surprise visit to one of the restaurants was part of the assessment, and the panel of judges dropped by Izzy's just before 3 p.m., minutes before it closes.

Luckily, Izzy's brews coffee all day and served a fresh pot to the judges when they arrived. Schachner shudders to think what would've happened if he'd shut off the coffeemaker before the visit.

"They were tough," Pearl says. "You have to follow all of their directions very closely. You have to understand everything they're asking you because if everything's not exactly the way they want it, forget it."

The work wasn't done when they won the contract. Pearl and Schachner received the contract documents on Christmas Eve and were instructed to have them signed and postmarked no later than Jan. 4, leaving only the week between Christmas and New Year's to read the contracts, make changes and mail them to the GSA -- a week notorious both in the public and private sector for vacations and low productivity.

"It was almost funny," Schachner says. "But you know what? We did it. We got it back to them in time."

The Courthouse Café will be 4,300 square feet, the largest restaurant for the duo when it opens in August. The menu, which weighed heavy into the panel's decision to award the contract, will include whimsically-named items like "overruled" omelets, "sustained" salads, "plaintiff's" personal pizza and "defendant's" desserts.

"We tried to include those little extra touches," Pearl says. "(The GSA is) very specific in what they want because they want to compare apples to apples. But if you go the extra effort, like we did with our menu, it can make a difference between you and the next guy."

Likewise, the duo's financial reports included more data than the bare requirements. Berebitsky says since SS&G helps write thousands of business plans for restaurants all over the country, he approached the proposal the same way he would if he were seeking investment funding from a bank or private firm.

"With our financial projections, we weren't just throwing numbers at them," Berebitsky says. "We didn't just show 'Here's what our revenue is going to be,' but 'Here's what we think our check averages are going to be, here's how many people we think are going to eat breakfast, here's how many people are going to eat an A.M. snack, lunch, P.M. snacks.' Behind our numbers, we had a methodology." How to reach: David's Deli, (216) 696-2266; Izzy's Lunchbox, (216) 621-7700

Friday, 28 June 2002 06:46

Business of America

Every business was affected by the events on Sept. 11. Business as usual did not resume the next day, or the day after that. Perhaps it never will.

Business leaders re-evaluated their company's missions. It wasn't just words now. Employees reconsidered their companies, and what was really important about their jobs. Profits, growth and market share suddenly seemed trivial. Family, friends and people were the top priority.

But the strength of this country is that its businesses, and the people who run them, will always move forward. To progress. To innovate. That spirit has built the United States into the most economically robust country in the world. It is the entrepreneurial spirit.

It is that spirit that Ernst & Young honors with its Entrepreneur Of The Year Award. Quite possibly, this year the award means more than ever.

"What always seems to amaze us every year is you always wonder, 'Where will the new entrepreneurs come from?'" says C. Lee Thomas, partner-in-charge of entrepreneurial services for Northeast Ohio for Ernst & Young LLP. "Particularly with the economy this year and with 9-11 all factored in, we continue to see some strong entrepreneurs and some great winners."

Even with the subsequent recession, Northeast Ohio showed its resilience. About 70 companies were nominated for this year's award, almost identical to the region's number last year.

"Nationally, our nominations have been down," Thomas says. "But in Northeast Ohio, we've held up well with a consistent amount of nominations. That's a real positive trend here."

It would be impossible to honor these entrepreneurs and their achievements while ignoring the events of this past year. Everything has changed.

Instead, let us honor these entrepreneurs, not only for their business skills but for their pursuit of the dream that is the bedrock of the United States of America. How to reach: Ernst & Young, (216) 861-5000

Friday, 31 May 2002 12:10

Bringing it all back home

In late summer 1999, attorney Craig Boise moved to Cleveland from New York City. He and his wife, April, had served on nonprofit boards in New York and in Boise's hometown of Kansas City, so it seemed natural for the young couple to do the same in their new city.

But where to begin?

Boise, a senior associate at Thompson Hine LLP, talked with a partner at the firm about a Cleveland organization called Business Volunteers Unlimited that places business executives on nonprofit boards. He was intrigued.

"My wife is from the area, but we didn't know about all the organizations," says the soft-spoken Boise. "Cleveland just has so many nonprofits; we wanted to get a feel of which one would be best for us."

Boise called BVU President Alice Korngold about getting involved. After several interviews and a seminar, he was presented with about 10 organizations suited to his interests.

A classically-trained pianist, Boise studied piano performance at the University of Missouri-Kansas City Conservatory of Music but altered his career plans midway to become a police officer. His time on the police force nurtured an interest in law, and he later enrolled in law school, although he never left behind his love of music and the performing arts.

One organization Boise discovered through BVU was the Karamu House, the oldest African-American cultural arts organization in the country. Poet Langston Hughes was a member, as was stage and screen actor Robert Guillaume. Boise joined the board and was appointed treasurer.

"It would've taken a longer time to find an organization like Karamu House if it weren't for the BVU," Boise says. "The other thing is, you know that these organizations you're presented with are looking for board members. It eliminates a lot of the guess work."

Business Volunteers Unlimited is best known for connecting Cleveland-area business executives to nonprofit and charitable boards and for helping companies design volunteer programs.

BVU's services are unique. No group like it exists anywhere else in the country. Korngold and her staff are currently helping to develop a similar organization in Baltimore, and BVU recently received a grant from the Charles Stewart Mott Foundation to spread the program around the country.

"Now, other cities and foundations are even more interested," Korngold says. "So we'll see where this leads to. But it's a good step forward."

BVU was established in January 1993 by a group of Cleveland's largest companies: Eaton Corp.; Jones, Day, Reavis & Pogue; BP; TRW Corp.; and KeyBank. These companies devote millions of dollars to charities, but their leaders thought there must be ways to help other than throwing money at nonprofits.

"They wanted to channel talented people to help these nonprofits, but they needed a vehicle to do that," Korngold says.

The founding group's other goal was to increase the number of companies involved in charitable activities. Korngold, who had founded and run other nonprofits, was approached by these companies to form a new kind of organization that would match executives and companies with nonprofits.

"We looked around the country for other models we could learn from, and lo and behold, there were none," Korngold says. "So we realized, we'll have to invent this."

Korngold and her staff interviewed more than 200 nonprofit directors, corporate leaders, board members and fund-raisers to get their input about BVU's mission. Using that information, she created a model, rolled it out and has since refined it.

"The model works quite magnificently," Korngold says. "We're able to draw talented business people, who bring valuable business skills to the table, and deploy them to the nonprofit sector at a time when nonprofits more than ever need access to these business skills."

Today, there are more than 120 business members. Membership plans range from $1,500 to $15,000. BVU helps companies develop volunteer activities, and train and place executives on nonprofit boards based on their areas of interest. To date, it has placed 685 executives on 215 boards.

BVU works with more than 650 nonprofit organizations, matching business experts with nonprofits to help with management, finance, marketing, real estate and public relations on the boards, or just to act as advisers.

But why do companies and nonprofits need BVU to find each other?

"Companies are in the business of doing what they do for a living," Korngold says. "But companies are interested in helping in the community, especially at the local level. What they're saying to us is we want to be involved, we have people who want to be involved, but we don't know the nonprofit sector and we don't have the time and resources to do that research."

Korngold's staff also helps highlight organizations and volunteer projects that may not get the recognition that larger charitable groups like the Red Cross and the United Way do.

"I didn't want to get involved in a huge organization," says Scott Durham, vice chairman and COO of HKM Direct Market Communications Inc.

He's been on the board of Providence House, a shelter for infants, since December.

"We own our own business, and we're used to being more hands-on," he says. "I thought if I got on a board with 75 people, I wouldn't feel like I was contributing."

Jacqueline Acho, a partner at consulting firm McKinsey & Co. and a former chemical scientist, joined the board of the National Inventors Hall of Fame after learning about it through BVU.

"BVU knows all of the organizations, and they know a lot about them," says Acho. "They know what stage of development they're at, they know what kind of executive director they have, and they know the quality and activity level of the board. It would've been silly for me to try to find all of that out by myself when they've got it."

No one denies the ancillary business benefits of charitable activity, although few companies get involved for those reasons. Charitable work boosts morale among employees, provides good exposure for the companies involved and connects business leaders who might not otherwise meet. Durham says networking, however, is never a top priority in the organizations in which he is involved.

"You can't go on one of those boards and be pushy, or you would look like a jerk," Durham says. "But if you get on a board and be yourself and you do a good job and prove yourself, people will start to know who you are and what you're capable of, and professionally, they would consider you for opportunities."

Executives say another business benefit of serving on boards is that they are presented with problems different from the kind they usually face in their industry, which can help them solve a problem in their own company. Likewise, the nonprofits gain professional expertise from those recommended by BVU.

"When you run your own business, you're aware of a lot different things," Durham says. "I'm used to fixing a roof when it breaks. I'm used to knowing that you have to have safety programs and maintenance programs. So I contribute that expertise, not just one specific area."

Boise says his legal expertise has been an asset on the Karamu House board.

"I can help resolve certain issues, such as employment matters or compliance with ADA requirements," he says. "But more than anything, I'm not afraid to pick up a phone and ask for money. Fund-raising is a tough thing to do, but a very necessary part of the job."

Like Boise, Brad Norrick, senior vice president at Marsh Inc., was turned on to BVU by a colleague after he moved to Cleveland from Indianapolis. Through the organization, he found Young Audiences of Greater Cleveland, which brings professional artists, including storytellers, poets, musicians, dancers and actors, to Cleveland classrooms.

"It's a big deal, especially in Cleveland, where arts education has really been curtailed over the last decade," Norrick says. "This organization was perfect for me because I wanted to be involved with something having to do with kids and the theatre arts."

Norrick joined the Young Audiences board of trustees in 1999, then became chair of the development committee, where he coordinated fund-raising efforts. He was then promoted to chairman of the board.

"We had one of our most successful years last year," Norrick says. "This is an organization that is doing some wonderful work, and I'm really proud to be part of it." How to reach: Business Volunteers Unlimited, (216) 736-7711.

Wednesday, 24 April 2002 06:22

Mark time

Frank Brady, president of North American Precast Inc. in Stow, has been using the basic principles of benchmarking throughout the seven year history of his pre-cast concrete company. For him, it was just common sense.

"It's simple," Brady says. "It's easier to track and compare graphically rather than going back through and going through a lot of sheets and a lot of computer backup information."

Benchmarking uses charts, graphs and other visual elements to compare your company's performance during a time period to a previous year, quarter, month, cycle or any time period. You can compare output, financial results or anything that contributes to running your company. The idea is not new, but it is now much easier to gauge your internal performance against industry averages to see where your company stands in the market.

"Benchmarking is becoming a lot more popular because people have better access to information," says Dale Ruther, partner at accounting firm Bober, Markey, Fedorovich & Co. in Akron. "The Internet has helped, and trade associations are offering more of this type of information to their members."

Ruther has helped expand North American Precast's benchmarking program to help compare to the rest of the pre-cast concrete industry using data collected from the Pre-cast Concrete Institute in Chicago, a trade association.

"Now I let Dale do all the work for me," Brady says. "That way he has all the information that concerns the accounting firm."

Here are some benefits of benchmarking.

Cost savings
The major plus to benchmarking is it lets you quickly see your operational costs over time. Even fractional changes to your labor, material or overhead expenses can have a large financial impact at year's end.

"People see their material costs were only 1 percent higher than the year before and they think it's not a big deal," Ruther explains. "If you spend $20 million on materials, that 1 percent translates into $200,000. That all falls to the bottom line."

Targeted information
Benchmarking allows you to track more than just sales records with your competitors. Highly specific information like salary scales, gross profit, return on assets, labor cost per square foot and other labor productivity statistics, material costs, sales per plant, sales at job site level is usually available. That data will give you a much clearer picture about where you stand in the market.

Better employee management
Benchmarking can help establish productivity and financial goals. Using industry average labor costs, a company can manage labor differently, change schedules, limit overtime or revise processes to ensure that materials are delivered to the worksite more efficiently.

How to reach: Bober, Markey, Fedorovich & Co., (330) 762-9785; North American Precast, (330) 655-9336.

Thursday, 28 March 2002 09:04

Postal personality

Imagine our delight when a small pizza box arrived with our daily stack of mail. Instinctively, we grabbed the box only to find not a pizza parlor logo on top but a picture of a PC On Call computer repair truck with the words, "PC On Call Delivers! Expert Computer Repair and Service - On Site!"

Sure, we were disappointed there was no pizza, but it got our attention. Inside the box, the lid becomes a computer monitor and the interior is decorated with a photo of a computer keyboard and a pizza.

Inside, on square sheets of paper, there's an introduction letter, PC On Call background information, description of services and employee contact information. It's the same basic information mailed to us every day but delivered in a creative way. It conveys the message that PC On Call "delivers" computer repair.

We at SBN Magazine get heaps of direct mail every day from companies, PR agencies and authors eager for copy in our publication. Too often, the mail is a generic press release enclosed in a glossy folder with a CEO mug shot and/or company logo. These packages are usually routed to the circular file (trash can) or stuck in a pile that might as well be labeled "Throw away in three months."

But every so often we get an innovative direct mail promotional package, and it's not always from a Ford Motor Co. or a Microsoft, which can afford to dump millions into marketing materials. This time it was from PC On Call.

Kevin Boothe, PC On Call's director of marketing, developed the pizza delivery concept with Dan Pinger Public Relations in Cincinnati.

"We were looking for some unique way to break through the clutter," Boothe says. "We wanted it to be creative and relevant to our business. There's nothing worse than to get a tchotchke of some sort and then ask, 'What did they send me this for? It has nothing to do with what they do.'"

The mailing was part of a media awareness campaign PC On Call launched at the beginning of the year.

There's still one question: How did they know we like pizza so much?

How to reach: PC On Call Inc., (888) PC-ONCALL or www.pconcall.com; Dan Pinger Public Relations, (513) 564-0700

Send a message

Creative direct mail will get you noticed, but it must deliver a clear message about your company or it's headed for dumpster. Stacy Stufft, senior account executive at Dan Pinger Public Relations in Cincinnati, offers these suggestions for designing your creative direct mail package.

Define your goal. "Sending something for the sake of sending it out or the sake of being creative isn't going to be effective unless it ultimately calls someone to act," Stufft says. "In our case, it was a softer sell, just reminding the media to turn to PC On Call in terms of a source."

Make your company unique. For PC On Call, its distinction was delivery. That's what it does best. That's what differentiates it in the market.

Be targeted. Figure out who you want to reach and how you're going to reach them. PC On Call's mailing was targeted to members of the print media. "You don't want to send out expensive mailings to prospects that won't be interested," Stufft says.

PC On Call

Tuesday, 26 February 2002 12:22

Tool time

Jack Schron Jr. is the third generation to run metal tooling manufacturer Jergens Inc., and the industrial landscape had changed drastically from 1942, when Schron's grandfather and father founded the firm.

In that time, manufacturers large and small have shut down. Plants and jobs have consolidated or moved out of Cleveland and then out of the United States.

This trend has resulted in a dwindling number of industrial apprenticeship and other educational programs, despite technological advances in manufacturing processes.

"Training is something that has fallen on hard times," Schron says. "We felt if somebody doesn't start training and educating the next generation of manufacturing, we're not going to be a manufacturing country."

So Schron combined the Old World concept of apprenticeship programs with Internet technology to create Tooling University Ltd., an online education system that provides manufacturing classes and lessons on a variety of subjects.

The program was launched in spring 2001 and today offers 35 classes; another 30 are waiting to be added. Schron's goal is to have 120 to 150 classes running. Students can take classes from a home PC or at their workstation during a long manufacturing run. Most courses take less than an hour.

Students can also take classes on a handheld computer with Internet access and upload tests and quizzes into their home computer. Instruction is delivered through text as well as full-motion video and graphics. And Jergens has partnered with several industry magazines to provide other educational content for its Tooling University.

Schron says one of Tooling University's largest benefits is that instruction is available 24 hours a day.

"People don't have to go traveling half way across the country to get training," Schron says. "There's no disruption to your work force or work schedules."

Schron's ability to solve a lingering problem in his industry using technology earned him and Tooling University a 2002 eVolution in Manufacturing award.

The program started with the idea to train people just to use Jergens' products. But during Schron's research, colleagues encouraged him to include courses for the whole industrial sector on basic manufacturing issues such as how to use certain drills, how to sharpen cutting equipment, how to tell the differences in materials and how to read blueprints.

The response was better than expected -- between 300 to 600 visitors log on each day.

"The need to have manufacturing and industrial skills is as strong today as it was before," Schron says.

An international electrical company with a Cleveland facility enrolled a group of its workers and set up a separate classroom in its plant for Tooling University instruction. The company is slated to buy a 1000-seat license for its workers. Cuyahoga Community College and The Society of Manufacturing Engineers also buy licenses.

While noble in its intentions, Schron didn't want Tooling University to drain Jergens' budget. The site charges a subscription fee for classes starting at $399 for a year, which includes hundreds of hours of instruction.

"We wanted it to be a business model that worked," Schron says.

He says the Internet classes only cost about 25 to 30 percent of what in-person class instruction costs, and "there's a very high retention rate because the student comes in and they move at their own pace." How to reach: Jergens Inc./Tooling University Ltd., (216) 486-2100 or www.toolingu.com

Wednesday, 30 January 2002 10:21

Proof of claim

As the economy continues its downward spiral, it is increasingly common for businesses to receive notice that a customer (the debtor) has filed a bankruptcy case.

When the debtor files a bankruptcy petition, it creates a bankruptcy estate comprised of substantially all of its assets. The actions a creditor must take to protect its claims vary depending on its relationship to the debtor.

One such action is filing a proof of claim (POC), a written statement that sets forth the creditor's claim, and must conform substantially to Official Form 10. This is not difficult, but must be done properly to avoid technical pitfalls, which could permit the debtor or trustee to defeat the creditor's claim.

Shortly after a bankruptcy case is filed, creditors receive the Bankruptcy Notice. The POC must then be filed with the clerk of the bankruptcy court in which the bankruptcy case is pending.

The creditor or its authorized agent should execute the POC with supporting documents attached. If a security interest is claimed in the debtor's property, copies of the security agreement and recorded mortgages or financing statements should also be attached to the POC. The claim described in the POC is deemed allowed for the purpose of the creditor participating in distributions from the bankruptcy estate, unless a party in interest, such as the bankruptcy trustee, objects.

A POC executed and filed in accordance with the Bankruptcy Rules constitutes prima facie evidence of the validity and amount of the claim. If a party in interest objects to the POC, the creditor generally has 30 days to respond. If it does not, the objection is usually granted. If the creditor opposes the objection, the bankruptcy court conducts an evidentiary hearing on the creditor's claim and the objection.

There is some risk because a party filing a POC is generally submitting itself to the jurisdiction of the bankruptcy court, which may not be desirable in all circumstances. It may also result in a waiver of the right to a jury trial. Accordingly, before filing, creditors should consult with legal counsel and evaluate whether these factors create unacceptable risks.

Timely filing is essential for a creditor to share in distributions from the estate. Businesses should consult with their legal advisers to take steps to increase their likelihood of receiving payment. Raymond J. Pikna is of counsel with Vorys, Sater, Seymour and Pease LLP in Cincinnati and specializes in bankruptcy law. He can be reached at (513) 723-4000.

Wednesday, 30 January 2002 09:55

Turner on a dime

If there's one mantra that has stood out for Turner Construction Co. over the past century, it can be summed up in a simple equation: Diversity = Survival.

From a $9,800 concrete company in 1902 to a $6 billion multinational publicly traded corporation, Turner's leaders have always had a gift for finding new markets and new methods for earning a buck.

"Historically, Turner has always adapted to changing conditions," says Karen Sweeney, Turner Construction vice president and general manager of its Cleveland office. "That's because we've never been reliant on one market segment."

Today, Turner builds offices and facilities for more than 10 industries, among them health care, commercial/retail, education/science, apartments/hotel and public/justice, including Cleveland's new Justice Center downtown.

Turner values diversity in its people, too. In a traditionally male-dominated industry, Sweeney was the first woman to be named vice president and general manager of a Turner regional office. Other women followed in top executive positions.

Under Sweeney's watch, Turner's Cleveland office has grown from 70 employees to more than 90.

Early days: Concrete

The company wasn't always diverse. Back in 1902, Turner Construction founder Henry Chandlee Turner's focus was reinforced concrete, which he discovered was less expensive and faster to use than traditional construction methods.

With a virtual monopoly on concrete construction, Turner started to aggressively advertise "Turner for Concrete" in New York City. His business boomed.

But by 1907, competition entered the market and the number of concrete construction jobs started to dwindle. Company President W.W. Turner realized he needed to diversify to stay afloat and launched Turner's general contracting service.

Pre-war: Diversification

After World War I, W.W. Turner pushed the general contracting focus and dropped the "Turner for Concrete" slogan. During this time, Turner was one of the first of his era to recognize the importance of good employees. He honored them by offering them company stock and held staff recognition events.

"Turner knew that our employees are our strength and our asset," Sweeney says. "We have to make sure they're motivated and enthused."

Post war: Office boom

The Great Depression affected Turner Construction as it did the rest of the country. The company went from $44 million in revenue in 1929 to $2 million by 1933. To maintain its financial integrity, Turner President Joseph Archer Turner changed directions, used new building materials and accepting work building storage containers and other smaller revenue-generating projects.

By 1937, revenue had risen to $12 million.

Thanks to several large military contracts during World War II, Turner was positioned to take advantage of the office high-rise building boom that followed. The war also established the government as Turner's biggest repeat customer.

Today: Core strengths

By the late 1960s, Turner had surpassed $1 billion in revenue and went public. But in 1975, office building construction was slowing. Once again, the company adapted, with Turner president Walter Shaw steering it in a new direction, building hospitals and health care facilities. Eventually, health care projects made up one-third of Turner's business.

But diversification got out of hand in the 1980s. Turner was involved in development projects, managing power generation plants, financial services and health care, as well as its traditional construction work.

"We needed to focus on our core strength," Sweeney says, "which was taking on complex and unusual challenges, but always building buildings."

The 1990s saw Ellis "Bud" Gravette Jr. point Turner back to profitability. He also managed the merger with the German construction company Hochtief AG, in which Turner remained an autonomous subsidiary.

"Today our focus is diversification within our core business," Sweeney says. "That way we will always be able to adapt to a changing market." How to reach: Turner Construction, (216) 521-1180 or www.tcco.com. Hear Karen Sweeney speak on Tuesday, Feb. 19, at the SBN Live Luncheon Series at the Watermark. For more information contact, SBN at (216) 228-6397.

Sidebar

Turner Timeline

Turner Construction has a history of stability surviving in a rapidly evolving economic climate over the last 100 years -- in 1902, less than 10 percent of American families had electricity in their homes.

Here are some key dates in the first Turner's century.

May 6, 1902: Turner Construction Co. founded by Henry Chandlee Turner.

1904: Turner builds Robert Gair Building, an eight-story concrete factory and the largest of its kind in the United States.

1907: First Cleveland project, Murphy Varnish Co., completed.

1908: Opens first branch office in Buffalo, N.Y.

1911: First "Turner City" complete: a fictional city made up entirely of buildings created by Turner Construction Co.

1922: Concrete era ends; push to diversify to general contract work.

1929: Volume peaks at $43 million, sinks to $2.25 million during Depression.

1939-1943: Builds Pacific Naval air bases; establishes U.S. military as biggest repeat customer.

1946: Office construction boom.

1951: Headquarters for U.S. Steel Co. built.

1962: Cleveland office opens

1969: Turner Construction Co. goes public; achieves $1 billion in volume.

1975: Office construction dwindles; Turner focuses on health care facilities.

1987: Turner slashes unprofitable nonconstruction divisions; construction division remains profitable.

1998: First woman vice president elected, Karen Sweeney, general manager of Cleveland office.

1999: Merges with construction giant Hochtief AG of Essen, Germany.

2002: Celebrates 100th anniversary.