Daniel G. Jacobs
Glenn Smith was relaxing in the back yard of friend's home one fall afternoon when he noticed a flock of Canada geese heading south for the winter.
The birds were flying in the familiar wedge formation. After a little research, Smith learned the reason behind their actions.
The bird in the lead serves as a wind foil for the others. When it tires, another bird takes its place and they are able to travel much further together than any single bird could alone.
Borrowing on this cue from nature, the president and CEO named his new Chagrin Falls-based e-commerce/Web consulting company Formation V Consulting.
"There are many leaders in this organization at any given time," Smith says, "but we have a direction and we fly together."
He spent more than a decade working in the consulting business before deciding to venture out on his own. One lesson he learned was to recognize the different sides of the Internet consulting business model -- applications and information technology. Very few existing companies attempted to handle both issues, Smith says, and the ones that did retained a primary focus.
Here's how he set out to differentiate himself from the flock.
Divide and conquer
Smith didn't want to fall into that trap, so the young entrepreneur took a different approach. He founded a second company, World Synergy.
"At the time I thought it was because the cultures were different," he says. "But it's a different way of thinking."
Each company has its own employees who deal with their own unique issues.
The e-strategy model, as Smith calls it, is a continuum from the idea down through the hardware that will ultimately implement it. Each of his companies focuses on specific areas. In essence, World Synergy works with companies to determine what they want to accomplish, how they will do it and how it will affect their business. Formation V deals with the infrastructure, the hardware and the programs.
Customers need both sides. The difficulty at many organizations trying to do both, he says, "is one side of the business doesn't understand the other side and vice versa."
Smith's approach circumvents that problem by creating two companies, each of which works within its specialty.
His e-strategy business model is composed of nine layers divided into two major divisions -- intellectual e-commerce, handled by World Synergy, and intellectual technology, tackled by Formation V. Both intellectual e-commerce and intellectual technology are trademarked terms.
World Synergy handles the first four layers: strategize, application, logistics and marketing. Formation V Consulting deals with the remaining five layers: communications, support, computing environment, security and high availability.
Smith is ready to deem his 2-year-old experiment a success. Clients are able to find solutions to both their IT and their applications needs in one company.
"The relationship that brings these two together is invaluable," he says. How to reach: Formation V/World Synergy, (440) 543-5565
Daniel G. Jacobs (email@example.com) is senior editor of SBN.
People are often confused by her car's license plate, ESCHEAT, through which they mistakenly believe she is announcing her infidelity. But the reference is to a much more mundane law, and relatively speaking, more recent than the biblical rules of adultery.
Escheat finds its roots in English Common Law, dating back to medieval times. When the head of a family died without heirs, the land reverted back to the king. Today, when property goes unclaimed, businesses are required to report it and transfer the funds to the state, which holds it in trust until the owner or the heirs claim it.
Owners claim only about 20 percent; the remainder is kept by the state. Escheat laws have been on the books since the 1950s, but were generally enforced only for banks and insurance companies.
However, they apply to all businesses, says Lane, who heads the escheat division in the Cleveland regional office of Ernst & Young LLP. Any enterprise -- from a sole proprietorship to an international conglomerate -- with an accounts payable department where checks are being cut has potential unclaimed funds.
"It's hard to believe, but people don't cash checks or they get lost," Lane says. "The more business you do, the more checks you cut. And, the more possible it is that over a period of time, you actually have checks that are not cashed. Those checks accumulate and that money's still sitting on the books."
Lane says it has become common practice for business owners to write to income unclaimed checks.
"Most companies don't know there's a law that says you can't take it as income," she says. "The businesses shouldn't feel foolish or stupid. What they've been doing is very common. It's illegal and they don't know it."
So what accounts are beholden to escheat laws? Many, says Lane. They include vendor checks, payroll checks, accounts receivable credit balances, pension benefits, unredeemed whole life policies, CDs, deposit accounts, safe deposit box contents, stocks, health benefits, jewelry left in a store and debit and credit differences for transportation companies.
State governments are aware of the huge windfall unclaimed funds generate and are now eagerly searching companies' books for the missing money.
"The states have embarked on a fairly aggressive audit program," Lane says. "What the states have done is to hire third party audit firms. For the most part, most of the states pay these bounty hunters a percentage fee based on what they find. They are extremely motivated to go out and really be aggressive and make an assessment.
"Under the unclaimed property laws, the burden is on the holder to disprove what the auditor says."
Most businesses are unaware of the unclaimed property laws and could have years of funds written off to income. If an auditor examines a company's books and finds money that should have been reported, interest and penalties can be tacked on. Fines of $100 a day may be assessed as far back as there are records. Lane recommends companies review their books for at least the last 10 years.
The news is not all bad, however.
Ohio has instituted an amnesty program, through which companies can voluntarily report their unclaimed property and avoid those extra fees. The amnesty program runs through the end of October 2000.
"The auditors are alive and well and working as we speak," Lane says. "If you get a notice of audit in the meantime, the states will not allow you to participate in the amnesty program. The auditors aren't waiting; they're out there.
"What the states are saying is, 'You've escaped the auditors piercing veil; if you've escaped that, you should come forward now before the auditor comes to you, because then it will be too late.'"
The good news
When it comes to unclaimed property, Ohio is really business friendly, Lane says.
"There's a lot of consumer protection underlying the unclaimed property laws," she says. "Where you run into an issue with businesses, it's when businesses owe other businesses unclaimed money. Business owners in Ohio have waged a very successful battle to exempt in Ohio business-to-business unclaimed property from reporting."
This, explains Lane, is a critical development. Members of the state chamber of commerce got together and argued that companies should know what money they're owed. The argument was that they understand it's consumer protection and they may walk away from a gift certificate, but when they are dealing with a business itself, it should be another story.
"Business owners are smart," Lane says. "They know where their money is. They were surprisingly successful in getting that legislation passed. What it basically means is that if you're an Ohio business and you've got property payable to another Ohio business, you don't have to pay it over to the state."
As far as Lane is concerned, the issue is very simple.
"The state should only get it if you can't find the owner," she says. "And that's if they've moved or died and you have no way to reach their heirs." How to reach: Ernst & Young LLP, (216) 861-5000
Daniel G. Jacobs (firstname.lastname@example.org) is senior editor of SBN.
But while some strategists might view calling a journalist an asshole a strategic error (and others might cheer the characterization), the faux pas was the result of a technological mistake -- he thought the microphone was not yet turned on.
Bush, or any other candidate for that matter, can't afford to make the same mistake with his Internet strategy.
The Internet has provided candidates with the ability to send targeted messages en masse. And new technologies continually offer more powerful tools to political hopefuls to reach greater audiences with more refined messages.
But along with that comes the opportunity to make bigger mistakes.
To help keep George W. from repeating his mistakes online, the campaign sought the services of Mike Connell, president of New Media Communications. Connell is a veteran of the political process, having worked for the elder Bush, Congressman Martin Hoke and Ohio Gov. Bob Taft.
"My ties to the Bushes go back to 1987 and 1988. I worked for the George Bush for President campaign, the father," Connell explains. "I started out working in Iowa. Then I got tapped by the deputy manager of the campaign, who asked me to go out to Washington (D.C.) to design the tracking system that the campaign used."
After the inauguration in early 1989, just three years out of the University of Iowa, Connell found himself in Washington, D.C., working for the president. After Bush's presidency ended in 1992, Connell worked for a newly elected representative from the West side of Cleveland.
"I was working for a freshman congressman named Martin Hoke," Connell recalls. "That was in early 1993 (in his Washington office). Near the end of 1993, I was married and I had two kids. He asked me if I'd be interested in moving to Cleveland, Ohio, and working out of the district office. (It was) a good opportunity and I'd been travelling back and forth between Cleveland and Washington already.
"I really liked the community. It was about the right size. It basically had everything I needed."
Following the congressional elections in 1994, Connell opened his own shop, New Media Communications, a Web consulting practice that specializes in the political arena. Connell serves as the Web strategist for the George W. Bush campaign, and handled a number of Internet-related projects during the Republican National Convention.
He also works with several Senate and House of Representatives candidates, including Sen. Spence Abraham (Mich.), Sen. Rick Santorum (Pa.) and Rep. Heather Wilson (N.M.)
SBN spoke with Bush's Web guru to learn more about the role of the Internet in modern politics.
Technology and media have long played a role in American politics. How has the introduction of the Internet paralleled that trend?
In its most basic sense, what has happened is going back to 1960. The media mix and campaign politics really proved to be the proving ground for television.
That's when it became introduced to campaign politics. What we're seeing here today is a very similar evolution where the media mix is evolving again. And the Internet is becoming mixed in with how we communicate with the masses.
Because the Internet is becoming so commonplace, and so many Americans rely on it as a channel for news and information, it's really a perfect tool.
What does the Internet offer the process that other media can't?
There are some advantages that the Internet has. I don't see television, radio or print going away, but I do see the Internet becoming a stronger component, more interactive than traditional media.
It also allows campaigns to better target their messages. It allows campaigns to talk to people directly, provide unfiltered messages. Quite frankly, it's some of your most effective communications. It's some of the most effective, best-spent money.
How does that compare to more traditional approaches?
Television for instance: Many larger campaigns (focus on) why you're the best candidate, what you're all about. It's a lot of information and not a lot time to do it in. It's a proven fact that if that campaign (puts a Web address) in that ad, people will log onto the site and they'll go out.
They're able to self-collect information. Do they want to know more about the candidate? Then they can go into the bio section. If they want to know the candidate's positions on the major issues of the day, or their pet issues, they can drill down into the agenda of the Web site.
Someone actively following the campaign can find out what the campaign is putting out in terms of new information that particular week.
Television is a passive medium. People simply sit back as the tube beams images and sounds at them. To find information on the Internet, people must actively seek it. How does that factor into a Web strategy?
People make choices every day. People choose to vote; people choose not to vote. Somebody who's already made up his mind may not have a reason to go to the Web site.
Maybe they want to get more involved in the campaign. Maybe they want to volunteer or make a financial contribution. Those sorts of activities can be supported via the Internet.
Maybe they just want to stay better informed on what's happening on the campaign trail. View the new information or sign up to get e-mail alerts when key things are going to be in their area.
What can we expect in the future?
What we're seeing is evolution taking place. Our first inclination was that we can do video delivery over the Internet. Let's take our campaign ads that we spent thousands of dollars to produce and digitize them and repurpose them.
It was a good idea, but the thought started to evolve. That's great the ads take advantage of new capabilities. E-mail has started to evolve. (We are working on) the delivery of more interactive messages -- e-commercials, radical mail. You're going to see a lot more sound and video. How to reach: New Media Communications, (216) 781-3172
Daniel G. Jacobs (email@example.com) is senior editor of SBN.
The first Great War had ended and Cleveland industrialists were stars of the American business community. The entire region was experiencing growth. And, like now, manufacturers experienced employee-related problems.
To address the issues of the day, 15 members of the Union Club of Cleveland, a private organization of the city's business community and one of the oldest social organizations in town, formed the American Plan Association of Cleveland. The organization was chartered to assist businesses with employee relation issues.
As Cleveland's economy -- and its industrial focus -- has shifted and morphed over the years, the agency, which became the Associated Industries of Cleveland in 1930 and later the Employers Resource Council, has maintained its focus for eight decades.
"I really credit the foresight the previous administration had," says Pat Perry, the ERC's executive director. "There was a greater recognition of the personnel function and that employees had a voice about what was going on in the workplace. I don't care if you have three employees or 3,000 employees, whether you're in manufacturing or cloning sheep, the bottom line is, you still have the same issues.
"We're not industry specific anymore, what we are is workplace specific, which is a big difference."
Learning from the past
In its early days, the ERC was very involved in political activities. According to an entry in the Encyclopedia of Cleveland History, the organization fought unionization and the Wagner Labor Relations Act and took a strong role in the Little Steel Strike of 1937.
It was even suggested that the association "hired strikebreakers, provided munitions and conducted espionage in an attempt to break the strike." The accusation was so strong the organization was the subject of an U.S. Senate investigation.
While the ERC has since distanced itself from those hardcore tactics, the focus remains the same.
"We are an employers' association that supports and promotes economic growth through the delivery of HR services and benefits to Northeast Ohio organizations," Perry says.
So instead of offering employers munitions, the ERC offers programs, training and counseling to business owners in 22 Northeast Ohio counties.
The five pillars
The ERC targets its 920 members through a five-pronged approach.
1. Training -- It offers a series of public events and programming dedicated to workplace practices. From regular breakfast meetings to on-site visits to an annual conference, the ERC conducts 60 to 80 events each year.
2. Research -- The ERC conducts a series of surveys covering a variety of topics from salaries to workplace policies and practices.
3. HR support -- "In a for-profit arena, it's called consulting," Perry says.
The ERC's experts help companies design handbooks, performance evaluations, compensation systems and even recruit HR professionals.
4. The Dream Team -- These organizations have agreed to offer their services to ERC members at a discount.
"We developed one of the broadest provider networks in the United States in terms of high-end providers of HR and workplace services and benefits," Perry says. "We call that group our Dream Team. That group, in effect, we negotiated some preferred arrangements with each of those providers that are exclusive to the ERC.
"They looked at us as an organization that basically covers nearly a half a million people. When you have that kind of market clout, you're able to go to some of these providers and (form) some very formidable partnerships."
5. Partnerships -- The ERC works with a variety of organizations, formally and informally, to extend its reach further into the community, Perry says.
Focus on your clientele
It's a strategy that some in the not-for-profit community might find a little unusual, but Perry has no intention of expanding the ERC's client base. With more than 900 member companies averaging nearly 300 employees each, the organization can touch hundreds of thousands of lives.
For now, that is enough.
"We've redirected our focus in terms of being much more concerned about retention," he says. "We've made a significant change in our operations here. We no longer prospect for new members. We will not aggressively pursue new members. We want to focus on our existing group.
"I would be happier to never add another company, but be in a position to serve our existing membership, than to add another company and to have any of our service be diluted."
That said, it pains Perry when a company chooses to withdraw its membership. The ERC boasts about 3 percent annual turnover, a far cry from the 8 to 10 percent just a few years ago.
"It absolutely puts a stake in my heart when we lose a member," he says. "I personally make a call. I talk to the owner if I can, (asking) 'What didn't we do?'"
Perry takes some comfort from the fact that only one-half of 1 percent are from what he calls bad turnover -- when a company leaves because the owners weren't getting value from the membership.
The rest of the turnover comes from circumstances beyond ERC's control -- merger, sale, acquisition, closing or moving.
Perry looks at a variety of factors to divine whether the organization is maintaining its focus. Perhaps one of the most telling is attendance at its regular programs. When he started with the ERC, 40 percent of its programs were cancelled because of a lack of participation, he says. That has changed, and every program, going back at least a dozen, has been sold out.
"I think the forefathers would be very proud of this group, that we're paying particular attention to what people are saying to us," he says. "What ERC is today is an absolute reflection of what our members have been asking for." How to reach: Employers Resource Council, (216) 696-3636
Daniel G. Jacobs (firstname.lastname@example.org) is senior editor of SBN.
Religion and politics.
They are the two taboos. Employers avoid the topics as much as possible. But with political messages so pervasive, just try to find a company where the names Bush and Gore haven't been mentioned in the past week.
"Around election time, those conversations always happen," says David Zanotti, president of the Ohio Roundtable. "We try an awful lot to keep politics out of the workplace, but you can't do it when you have a major election."
In an effort to keep the peace, the Ohio Roundtable has created a freestanding Web site, www.Decision2000.com, to which employers can refer their workers for information on the candidates and issues.
"I know employers sometimes wish they could tell their people who to go vote for," Zanotti says. "They know that in many instances, they see things the same, but they won't do that. Similarly, it's almost impossible to get employees information that isn't partisan in its nature.
"Decision 2000 becomes a place where people can go and refer other people that is safe and extremely informative."
There are more practical reasons, as well.
"Employers concerned about the EEOC are more gun-shy than ever because they don't want to get into trouble," Zanotti says. "They can say, 'Go check this site. I'm not going to tell you who to vote for, but I'll tell you where I get good information.'"
Information is king
"The majority of people will not focus on who they're voting for until 10 days prior," Zanotti says. "In many cases, 50 percent of the decisions get made in the last 24 to 48 hours. People go into a panic because they know they've got to go to the polls. They know what they're going to do on president; they know what they're going to do on big-name races.
"But they don't know who's running for state rep and they haven't got a clue about the state school board."
Using the Decision 2000 site, voters can tailor their search.
"The site allows people to build their own personal voter's guide," Zanotti says. "The site takes your ZIP code and assembles the pages necessary to cover your races, from the Statehouse to the White House."
Armed with that information, Zanotti says people can make good choices.
"The motivation behind this is the fundamental belief that in a representative republic, the more people who vote, the healthier the country will be," he says. "The biggest reason people don't vote is not because they don't care, it's because they care so much that they don't want to make a mistake. People are afraid to go there and face a very long ballot where they know so little.
"After awhile, they begin to feel, 'Gee, maybe somebody who knows more than me ought to make the decision.' That's why we call it Decision 2000. We want them to make the decision because it's their right and responsibility.
"In the electoral business, knowledge is everything." How to reach: Ohio Roundtable, (440) 349-3393; Decision 2000, www.decision2000.org
Daniel G. Jacobs (email@example.com) is senior editor of SBN.
Looking back, it probably wasn't that difficult to figure out where Stu Fishman would wind up.
He was the kid on the corner hawking cool, refreshing glasses of lemonade on sweaty summer afternoons. He was the guy who bought, sold and bartered comic books. While other kids enjoyed the thrilling adventures within those flimsy, ink-stained pages, Fishman saw dollar signs.
And, he was the enterprising student who earned spending money -- and quite a bit more -- by selling bugs.
"I used to sell insects for a living," Fishman recalls. "In junior high, all the girls had to make collections. I was the supplier. I made a lot of money. In fact, I made so much that my mother made me return some for gouging."
It may be difficult to determine whether mothers or legislators are harder on emerging entrepreneurs, but one thing is quite clear: Stu Fishman was destined to run a business. He practically bristles at the notion of joining a corporate culture, preferring instead the unpredictability of building his own operation from the ground up.
It didn't take long for the adult Fishman to venture into his first entrepreneurial enterprise.
"I was working for some guys in a ring company, Ringco, selling costume jewelry," he says. "I did real well, so I said, 'Gee, if I can do it for them, I should probably be able to do it for myself.'"
He started selling all types of costume jewelry except rings ("I didn't want to rip them [Ringco] off," he says) and sold it to drug stores, department stores and card shops. Clearly, he was in his element.
With each business he has founded, the 46-year-old Chagrin Falls resident has tucked away bits of wisdom and applied them to later ventures. The lessons came hard and fast. In his first 18 months in business, he sold $200,000 worth of jewelry. But, as he painfully learned, creating revenue streams was only part of the battle.
"I ended up tanking the company because I couldn't collect," he says. "I bought all these goods, sold all these goods and couldn't collect. Nobody would pay me."
At the same time, his personal life was dealt a blow. A gas line under his home ruptured and an explosion destroyed the house. With his business falling apart and his home blown apart, he recalls the situation with a bit of understatement.
"Totaled the house; totaled the business," he says. "Not an auspicious start."
Losing the jewelry business is the one blemish on Fishman's entrepreneurial record and it set his plans back a few years. He knocked around a bit before ending up at AT&T, where he spent five years before the itch returned.
Simply put, "I wasn't a good fit for corporate America."
Since the failure of the jewelry distribution business, Fishman has started three other businesses. Two have been unqualified successes. The jury is still out on the third, but early returns look promising.
In his most recent venture, OneWorld2U.com, Fishman and his partner, R.K. Khosla, sell furniture over the Internet. They combine the bricks-and-mortar world with the online one through the use of Temporary Internet Mobile Showrooms, traveling exhibitions of furniture that open at shopping malls around the country for a few weeks at a time. (See "Clicks and temporary bricks" SBN July 2000.)
But there's something else about Fishman that separates him from the pack. He doesn't fit any traditional entrepreneurial mold.
Some entrepreneurs suffer from a dearth of viable ideas or from undercapitalization. Others don't have the ability to turn concept into reality. They struggle. They beg. They pray. And, with a little luck, the business starts bringing in a profit and the owner eases comfortably into the new role of successful owner.
It's at that moment, however, when life is supposed to get a bit easier, that Fishman begins to squirm. For him, start-ups are a thrill ride, a jazz improvisation. And he is the artist, the one who sees the finished masterpiece where the rest of us see only a blank canvas.
"It's almost a love-hate relationship," he says, describing his view of start-ups. "You have a huge fear of failure. Your gut grinds at night. You wake at 2 o'clock in the morning and you can't fall back asleep. It just makes you absolutely wacky, but it's like riding a roller coaster.
"Coming down the slope is so damn thrilling and so energizing that you put up with the gut-wrenchingness for the chance at success."
"There's never a good time," Fishman says about starting a new venture. "There is never a time that you aren't scared to death."
That's because time, unlike money or good ideas, is the most precious of commodities. Explains Fishman, "You never have enough time to do everything that you want to do. You always have to prioritize your tasks because you're never going to get to your 'B' tasks. Forget about them."
Uncomfortable in the traditional office environment, Fishman left AT&T when a friend pulled him into a new consulting company, Software Support Group.
"I came on with those guys a couple of months after they started," he says. "I did the marketing side of the start-up."
Within a few years, he owned half the company. But, he just wasn't happy.
"I had gone through a period where I was a couple hundred pounds and was a two-and-a-half-pack-a-day smoker," Fishman recalls. "I wasn't enjoying what I was doing. I recognized that this was not how I wanted to spend the rest of my life, so I started running and gave up smoking."
Fishman also sold his stake in the consulting firm and decided to take a year off so his family could take vacations. It was on one such vacation that opportunity presented itself.
"We were supposed to take off a whole year, but we took off the whole summer. We had reservations at 11 national parks. We spent nine weeks on the road," he says.
In late July or early August 1994, Fishman and family stumbled across a small store filled with wind-up toys. It was loud and flashy, with dozens of toys and gadgets spinning, flying, crawling, chattering and clacking across the floor. As he watched, the old entrepreneurial desires returned with a vengeance.
So Fishman and his wife began discussing a new venture -- All Wound Up.
"We got back here in September," he says. "I said I'd like to do it. On Sept. 24, I was incorporated. We had the first store open by Nov. 1."
The mental make-up
Navigating a start-up through the often rough early waters takes a lot more than simply finding financial backers and putting a good idea into action.
"It's like testing yourself," Fishman says. "It's sort of like the ultimate test if you aren't six-foot-four and can't play basketball. For short, uncoordinated guys, it's the absolute best test."
It's a test he has passed with flying colors. Two years ago, shortly after he sold All Wound Up to Borders Books & Music, Fishman was named a Northeast Ohio Entrepreneur Of The Year by Ernst & Young LLP. Not surprisingly, his award came in the emerging entrepreneur category.
Kathryne W. Dindo, one of the EOY judges that year, says Fishman's skills were the right blend of mental make-up and perseverance.
"He understood what it took to get it to the next level," she says. "And that was unique. He was an entrepreneur that knew when the business had the opportunity, but he didn't have the resources. He's a true entrepreneur because even now, he begins to think about, 'What's my next step in life, my next business?'"
As part of his sales agreement with Borders, Fishman was supposed to continue overseeing the operations for two years. But he didn't last that long. Working for Borders, even if it was running All Wound Up, was still working for someone else. And for Fishman, that just wouldn't do.
"You're out there a little bit on a limb every time you do it," he says. "And I think what drives you is your fear of failure more than anything. The idea of losing is not a palatable thing."
Fishman recalls the jewelry business fiasco with a mixture of anger and disappointment. So why, then, does he risk it happening again?
"Because I do love the thrill. I love the chase," he says. "Some days, you're so excited with the results you can't believe it. Other days, you're so worried about something you might have done wrong. Did you order enough of this? Are you hitting the right price on that? Did you forget to order this? Will the goods come in on time to do the shows?
"Will you be able to get all the pictures done? There are so many things you have to consider. You worry because you want it to be a success and your name's on it."
Even with two successes under his belt, Fishman isn't one to rest on his laurels.
"That's yesterday's news," he says. "You're only as good as what you're doing right now."
No matter how much Fishman likes to play master of the house, he's not nave enough to think he can deliver a successful business on his own. One of the most impressive aspects of his operations is the collection of investors he has assembled.
The list reads like a who's who in Cleveland business circles. Among the investors are John Shields, Don Gustavson and Boake Sells, the former CEO of Revco Drug Stores and COO of Dayton Hudson (now Target).
Sells is known for his colloquial approach to giving advice. Fishman, by his own admission, has been the recipient of much of it.
"Sometimes, he'll come to you and say, 'Are you ignorant or are you stupid? Because if you're ignorant, I can teach you. If you're stupid, there's just no help for you.'"
There may have been moments where Fishman was ignorant, but he was never stupid.
"It makes a lot of sense," he says. "A guy like (Sells) will teach you how to do things and make you a lot better. He'll stretch you. But if you don't listen to his advice, he won't waste his time giving it to you. He's not going to put his money where he's not putting his experience and knowledge to work."
This is a classic problem for fledgling business owners. They think they know more than they do, and, they don't want to tap into the experience and knowledge of the people who have been through the wars before them. Fishman, says Sells, doesn't fall into that category.
"He's scrupulously honest," Sells says of his protege. "He's the kind of person who is always searching for new and better ways to do his business. He is very eager to tap the brains of other people. He doesn't have the 'not-invented-here' syndrome at all."
And, as good as the ideas are, it is Fishman for whom investors are putting their cold, hard cash on the line. One of his first investors in All Wound Up was a neighbor, David Weiss, president of Lucerne Asset Management.
"It wasn't the business," Weiss says. "Really, retail is not the best way to make money. But the thing about Stu is that he's probably more concerned about his investors' money than his own. That's what keeps him working hard.
"He works unbelievably long hours to make sure everything works."
Weiss points to Fishman's days at All Wound Up.
"At the time of the toy store, if you went by his house at 10 o'clock at night, he'd be taking phone calls from all the stores with their daily sales. Part of what makes Stu successful is not only the idea, it's really more the effort he puts in."
And, while Fishman certainly welcomed investors' money, for Weiss, buying in wasn't that easy.
"I used to live a couple doors down from him, so I knew him," Weiss says. "During the toy store phase, he was looking for money. He didn't want to take my money because I was a neighbor. I kind of pushed him to take money, so he did."
Weiss initially invested $100,000 and put another $50,000 in the next round.
"I think I grossed back a little under $600,000," he says. "I believe the first investment was in there about three years. The second 50 was in there for about two years."
Money is clearly important, but Fishman recognizes there is a larger picture at work.
"For R.K. and myself, it's like having the other half of our brain there," he says. "We know what they've taught us, but we don't know what they haven't taught us yet. We've got a whole new series of questions to learn. And it's really a treat."
It's not just the money people that help Fishman. Like most entrepreneurs, he is quick to credit his staff and partner for corporate success. He once described the staff at All Wound Up this way: "We have a great staff here. That makes it a lot easier. We've got a bunch of 12-cylinder engines. I try and hire everybody smarter than me."
That includes Khosla, who worked with Fishman on All Wound Up.
"We have a kick-butt core," Fishman says. "We're very fortunate that all of them were available to be picked back up by us. We have R.K., who I absolutely love to death, and myself. It's like having a brother you get to work with."
Fishman and Khosla brought back as many of the former All Wound Up workers as they could for the new venture.
"It's all the same old gang, which is sort of nice," Fishman says. "It's difficult to say how important it is when you know people that work well together and always do good work. You can go out and find other people who have those skills, but it's not family."
They feel the same way about him.
"What I like about Stu is he has energy to burn and he does what he says he's going to do," says Bill Skerl, who retired from All Wound Up but agreed to come back to help make OneWorld a viable enterprise. "When he first started with the business, I teased him. I said, 'There's no way in hell you're going to open up all those stores.' As I went along with him in the program, he met every objective.
"He really puts the time in and the effort. I respect him because he's good with all his people and he does a lot for everybody."
The two met while Fishman was at AT&T and sold Skerl, who worked in the operations department at Picker International, a new phone system. Over the years, they became friends. Eventually, Fishman convinced Skerl to join All Wound Up as a regional manager.
"I don't think a whole lot of people could do what he does," says Skerl, who thought he had retired last March. "I know I couldn't. I just don't have the energy level that you need. He works harder than anybody else. As hard as we work, we know that he's doing even more than that."
Success never comes easy. Entrepreneurs pay the price several ways -- failures, broken marriages, bankruptcies and other tragedies. Fishman has avoided the worst of the worst, only facing one failed business and little more.
Still, he's learned numerous valuable lessons along the way, such as to keep ideas in the pipeline and learn to recognize the wheat from the chaff.
Before Fishman and Khosla settled on OneWorld2U.com, they kept a list of more than 30 business ideas. And, when this project is complete, you can be sure the two will glance at the list again. Where it will take them, however, even Fishman doesn't know. But, he does recognize something his mentor, Boake Sells, told him.
"You have to honestly evaluate what you're doing," he says. "If you're doing something stupid, you can't blow smoke up your own ass. That's from Boake Sells -- never blow smoke up your own ass. It's the truth. If you're doing something that doesn't make sense, stop doing it."
Fishman says it's taken him a long time to recognize that.
"Sometimes, I'll see somebody's business plan and it's a dumb idea," he says. "People should be able to do that for themselves. You just have to take a good, hard look at what you're doing and determine what your strengths and weaknesses are. And make sure you've got a kick-butt team around you to make up for your weaknesses."
The second lesson he learned was to move quickly. When you finally make the decision to start a business, speed is of the essence.
"It doesn't make any sense to take it slowly," Fishman says. "It doesn't give you any advantages. You have to seize your opportunity when it's there because it's not going to be there tomorrow."
A third lesson is that business decisions must fit in with the core competencies of the strategic plan. The people who invested their time and money in Fishman recognized that he understands that.
"There are some ideas that are adjuncts to this business," he says. "We use something that John Shields taught us to test it. He says, 'Do the test. Is it tactical or strategic? If it's tactical and it's going to divert you at all from your strategic mission, don't do it -- even if it makes you money. Always stay on your strategic tact.'"
When Fishman founded All Wound Up, he stuck to that philosophy and it made all the difference.
"We had an idea at All Wound Up that we went to the board with," Fishman recalls. "That's really where we got this thinking from. John asked, 'Is it tactical or strategic?' We said, 'We'll make a lot of money.' He said, 'But is it tactical or strategic?'"
The idea, as it turns out, was tactical. The board rejected the idea and remained focused on its core competencies.
"I use that as my litmus test," Fishman says. "If it's opportunistic and tactical, it takes more resources than it's worth. Stick to the business plan, stick to the strategic issues. You've only got so much horsepower. You can't do everything. You can't spread yourself that thin."
A recent buying trip in Indonesia for OneWorld2U re-enforced that sentiment. In a 12-week period, Fishman spent only three weekends at home. That's a lot of time away from one's family. And, at this stage of his career, he realizes it's something he can no longer do.
"I do love it, start-ups, but this will probably be my very last one," Fishman says. "But I've said that before. And the only reason I say that now is because I'm 46 years old and it takes a lot out of you."
That doesn't mean he will eschew start-ups from this point forward. Instead, he's looking to his investors for inspiration.
"That's what I'd like to do next," he says. "I'd like to do what those guys do -- serve on boards and make people better. You don't necessarily have to be an angel investor to do that kind of work."
And, he recognizes that despite the constant entrepreneurial itch, you don't necessarily have to be able to paint a new business every few years to do that, either. How to reach: OneWorld2U (440) 247-7400 or www.OneWorld2U.com
Daniel G. Jacobs (firstname.lastname@example.org) is senior editor of SBN .
There are more ways than ever to get your name to clients and vendors.
But the same click of a mouse that sends messages across the Internet in the blink of an eye can just as quickly banish them to cyber oblivion. The same can be said for voice mail.
But the good, old-fashioned business card provides all the relevant information a person needs to know about your company. And it can do so much more.
Bob Popyk, author of "Here's My Card: How to Network Using Your Business Card to Actually Create More Business," offers tips and stories for business owners looking for ways to get more out of those thin paper rectangles. He has advice on everything from colors and type faces to when you might want to use odd materials or staples.
And, he explains when not to use business cards and even how to keep track of those you have distributed.
Here are a few of his suggestions:
Have your business cards made in a foldover style, double-sided with a perforation. The tear-off section could contain a discount, a freebie for coming in, a certificate or a rebate.
Coins glued with rubber cement to a business card get attention. They get noticed and they don't get thrown away.
Keep on clipping
To your targets' attention, send -- or bring -- something of interest to them from a newspaper or magazine. Attach your business card to the article with the back side out. This is where you write your personal note. Use a paper clip so they can easily remove your card. All your pertinent information is on the front. They will turn it over, even if it's just out of curiosity.
What's that name again?
When a name is hard to pronounce or read, phonetically spelling it out (in parentheses) could be a face-saver for your customer. Your ethnic name might be easy for you, but for the person who gets your card, it could be a bit of a problem. How to reach: "Here's My Card" is available at bookstores nationwide or through many online book outlets. For more information, contact Bentley-Hall Inc., (800) 724-9700 or at www.bentley-hall.com.
Daniel Jacobs (email@example.com)is senior editor of SBN.
So you've got a killer Internet start-up and you're ready to take the world by storm. There's only one problem: You don't have any money and the venture capitalists don't seem to be listening.
The problem may be with your presentation, not with your idea. But don't worry, there's hope on the Internet. American Express Small Business Exchange offers these tips on its Web site for Internet start-ups looking for venture capital funding.
1. Ask for the right amount of money.
Low-balling could put you out of the running. Venture capitalists know what a typical dot-com needs to get started and want to be sure you know as well. They'll bristle at firms whose funding needs fall below their threshold. How much to ask for depends on the investor, industry and stage of development.
2. Know the development stages.
Plan your fund-raising strategy through several rounds by presenting a realistic timeline for subsequent financing. The basic VC development stages are:
Seed financing -- Initial investment to get registered and started, hone the business plan and begin development of a sample Web site. Range: $100,000 to $500,000.
First stage/start-up financing -- Used to build a management team, ready site for launch and support the first few months of commercialization. Range: $3 million to $5 million.
Second stage financing -- Funds advertising and marketing once the site is up and running, building a customer base and sustaining fast growth. Range: $10 million-plus.
Third stage/bridge financing -- Used to reach an IPO. Range: $20 million.
3. Build your management team.
Talent is the number one thing VCs look at. Investors want previous start-up success and relevant expertise, as well as plans for how the team will evolve. Consider creating a board of advisers.
4. Financials don't really matter, but ...
Nobody can predict success, especially on the Web. That said, VCs will examine numbers to gauge how seriously you've considered the size of your opportunity and the costs of getting to market. Avoid grand growth claims -- build projections from the ground up, using customer segment data, offline spending habits and the success of similar online firms.
5. Demonstrate multiple revenue streams.
Having more than one revenue stream will provide a fallback position should your initial revenue source not develop as planned.
6. Show high-profile partners.
Strategic alliances that improve your talent pool, provide channels of distribution or increase your visibility demonstrate that respected firms are willing to work with you, reducing the amount of due diligence a VC has to undertake.
7. Sign some customers.
Show that clients support your product and company. No current customers? Establish prospect references -- ones that are willing to work with your business if certain criteria are met.
8. Snowball your funding opportunities.
Offers pending from other investors help sway fence sitters and give you greater leverage to get the best deal possible. Only use this tactic if genuine term sheets are in the works -- VCs will call around to confirm claims.
9. Be prepared to vest.
VCs want assurance that you and your team will be around for the long haul -- or at least until they're able to cash out. Expect vestment requests to key managers to stay with the business for a set time before shares take effect.
10. State the exit strategy clearly.
Investors used to plan their exits four or five years out. For Internet ventures, they look for more rapid paybacks, often as little as two years. Explain where your company will be at that time and provide a rationale for this vision. How to reach: American Express Small Business Exchange, www.americanexpress.com/smallbusiness
Daniel G. Jacobs (firstname.lastname@example.org) is senior editor of SBN.
It was three days before Christmas last year and about two minutes before opening.
Wadi Ina was in the back room of his Chardon-based New York Deli and Grille doing paperwork when one of the restaurant's servers walked into the office and said he was pretty sure there was smoke seeping into the restaurant.
"I peaked through the back door," Ina recalls. "I saw flames coming through the door of the store next door."
The fire department arrived within minutes, but it was too late to save the business next door, Bostwick Hardware, which was completely destroyed and today remains a vacant shell.
For Ina, however, the story was different. His firewall held up and the deli remained largely intact. There was plenty of damage -- firefighters ripped holes in the walls looking for ways to attack the flames, smoke and water marred the restaurant's remaining walls, floors and equipment -- but Ina's real battle was with his landlord.
"I was sitting in the parking lot saying, 'This is not happening,'" he recalls.
And, as he watched firefighters battle the blaze, Ina wondered about the future of his business and his business plan. The lease clearly indicated who was responsible for the repairs; what it didn't define was the time frame in which those repairs were to be completed.
The resulting daily struggle to get his operation grilling again not only hindered business, but also prevented the Lebanese immigrant from implementing his long-term plans, both for the future of his business and for his family.
Ina wanted to retire by age 55, but the young restaurateur was savvy enough to know he needed help to get there.
He met with Mark Arlen, a planner with the Cleveland Financial Group, and the pair spent months running the numbers. The final plan considered all aspects -- from employee retention strategies and buy-sell agreements to retirement income -- to finance Ina's leisure days.
"We had done the whole plan," Ina says.
Implementation had barely begun when the fire sparked, putting it all in jeopardy.
After the fire, Ina devoted his attention to getting the New York Deli & Grille opened. He likens it to "seven months of being pregnant because you're in labor every day."
Because of the interruption in his business, Ina didn't have the income to support his plans for an employee retirement program. Business interruption insurance helped, but not enough to move forward with other plans. Even when Arlen called to remind him to maintain his life and disability insurance policies, Ina wondered where the money was going to come from.
Ina and his partner survived the seven-month hiatus, reopening the restaurant in August.
For now, Ina's financial plan is on hold until the business and cash flow return to normal and he and his partner settle lingering concerns. The process, which should have been underway, now is likely to be pushed back one or two years. It's problems like this, Arlen says, that reinforce the notion at that preparation is key.
"People need to be more focused on planning ahead and thinking ahead before things happen," he says.
One minute Ina was worried about holiday party trays and juggling vacation schedules; the next, it was how to get the business running again.
"Yeah, you do have insurance, but it's a big, drawn-out process," Ina says. "It's not like they give you a blank check."
The New York Deli is not Ina's only venture. Without another restaurant, the Manhattan Deli in Willoughby Hills, Ina may not have been able to get his restaurant opened, even in seven months.
"If I didn't have another business, it would be very close to bankruptcy," he says.
Ina's partner in the Chardon restaurant wasn't so lucky. He and his wife, who also worked at the deli, were forced to find other jobs while repairs were made, even though the partners had business interruption insurance. Ina, himself, sought outside help.
"We had to go to the bank to borrow money to keep it going," he says.
The main problem was the lease, Ina says. While it did articulate who was responsible for the repairs to the infrastructure (the landlord), there were no stipulations on the time he had to complete them. Without knowing when they would be able do the detail work -- and burning through cash faster than expected -- Ina was limited during negotiations with his own insurance company. Knowing Ina was desperate, the insurance company held all the cards.
That changed when Ina received a bank loan. Once he no longer had to worry about day-to-day money issues, it put him in a better position to negotiate with his insurance company. And, he hired a private adjuster to work with the insurance company to get the claim settled faster. It's something he regrets not having done from the beginning, and will make sure to do if disaster hits again.
Like many business owners, Ina once believed, "It'll never happen to me." He now knows all too well the trouble of falling for that fallacy and follows another philosophy -- it's never to early to start planning, although it might be too late.
To other business owners who aren't yet true believers in preparedness, he offers this advice: "Get started as early as you can because you never know what tomorrow brings." How to reach: New York Deli & Grille, (440) 286-3388; Cleveland Financial Group, (216) 765-7420
Daniel G. Jacobs (email@example.com) is senior editor of SBN.
When the planning process began, Cleveland Financial Group's Mark Arlen asked Wadi Ina what his goals were for the future.
Ina replied, "a comfortable lifestyle."
Arlen asked, "What does that mean?" and kept asking as Ina further articulated his hopes. "Success" and "Peace of mind" followed.
The pair finally settled on "Make a better life for your family -- better than your parents made for you."
To get to that goal, Arlen led Ina through a four-part process -- objectives, assumptions, recommendations and implementation. It's something any business owner setting plans for the future should consider.
Simply put, what do you want to accomplish? Ina wanted to plan for the future of his family and his business. Arlen led him through a variety of issues, including:
- Emergency reserves
- Accumulation goals
- Mortgage analysis
- Education funding
- Retirement planning
- Investment planning
- Risk management, including disability and survivor income needs
- Estate planning
- Business planning
The assumptions were based on information Ina provided about his business. One of his goals was to provide five years worth of education for each of his two children. The assumption was that he would need $25,000 per year for five years in today's dollars, inflating at 5 percent.
Based on their ages, Ina was told to save $731 each month for his 8-year-old son, Jason, and $557 a month for his 4-year-old daughter, Nicole.
The final step of any long-term plan is to schedule the implementation of each of the accepted recommendations. It was that part of the process Ina had barely begun when the fire hit.
Now, because everything is being pushed back, the numbers will have to be adjusted, Ina says.
The word sends chills down your spine.
Several months ago, hackers attacked the servers at E-trade, the online company that allows individuals to buy and sell stocks from their personal computers. Apparently, no information was compromised and there was no damage other than a temporary suspension of service.
But the PR problem could have been huge. In an electronic age of instant communication, reports of blocked and delayed trades seemed to instantly circumnavigate the globe.
E-trade -- and companies like Yahoo, Amazon.com and eBay, which were also attacked -- spent time and money to reassure clients while the public relations department geared up for a massive spin session. It had to get the word out that the system was working properly and answer questions raised by news media around the country.
But first, it had to know what was being said about its operation. And for that, E-trade turned to VMS, a company that monitors and retrieves information about business from television and radio.
"We were able round up media coverage from across the country and e-mail video to them, give them hard copy videocassettes from all across the country, literally within hours," says Rodger Roeser, general manager for the Ohio office of VMS. "They were able to take a look at this and perform a content analysis to understand how they were being portrayed in the media, so when they did put together a satellite feed, they already knew what was being said. They understood how it was being portrayed.
"They could spin it accordingly and they could help the public understand that everything's going to be OK. And that's very, very important."
To do that, E-trade needed to see reports from the major networks, from MSNBC, CNBC and CNN and even see how the huge news radio stations were presenting the story. In emergency situations, VMS can provide access to the top 75 magazines and newspapers around the country.
"That we were able to provide a company in San Francisco with a videocassette from New York two hours after it aired, I think is just phenomenal," Roeser says.
Whether it's a problem that must be explained or simply a vehicle for better public relations, knowing what is said about your company and how it's being perceived is critical. For E-trade, the importance went right to the bottom line.
"It affects whether people are going to advertise on their Web site; it affects whether people are going to use them or put their trust and faith in them," Roeser says. "We're there to give our clients a boost and get coverage and provide CYA to them. We're their 'cover-your-ass.'"
The walls of VMS' offices are lined with VCRs and banks of videocassettes. The tapes contain hours of recorded programming from local stations. Each of the more than 65 VMS offices is responsible for its own airwaves and at least one of the national channels.
"Among the VMS collective, we have virtually every television and radio station, every cable, every syndicated broadcast in America," Roeser explains. "I am in charge of all of Ohio, so any client, any corporations, any entities inside Ohio, I would take care of. We record all of this data. It's sort of a collective matrix. The office in Ohio is responsible for capturing all this Ohio coverage and certain syndicated, cable and network programs."
Among his clients, Roeser counts local governments, professional sports teams and many public relations firms.
"The vast majority of PR firms, and hopefully PR executives, have been so well trained that they need to be getting proof of performance," he says. "They need to know what kind of coverage they're getting (for their clients) and where they're getting coverage."
A couch potato's dream come true
Recording the programs isn't the problem. A bank of televisions and VCRs handles that. But someone has to watch all those programs and listen for references to local entities -- businesses, area governments, sports teams.
Roeser hires college students, housewives -- anybody with a little bit of time on their hands -- to turn their attention to the tube. Viewers are trained on how to watch and record references to a company. So if Cleveland's Drew Carey talks about your company, you'll know.
There are no subscription fees or contracts. VMS' account representatives contact a company when it makes an on-air appearance.
"The client can then decide whether he needs to get a product," Roeser says.
Those products include transcripts, monitoring reports, broadcast schedules, audio and videocassettes and laser boards.
For Roeser, the significance of the service is clear.
"It's so intrinsically important to be able to provide the feedback that you receive from the public and the media to make your product better," he says. "We provide that feedback, so they can align their clients, align their companies, to make things in line with their image or to usurp their image and make it better so they can grow the company.
"If you don't know what's going on out there, you're really in a lot of trouble." How to reach: VMS, (216) 579-4103
Daniel G. Jacobs (firstname.lastname@example.org) is senior editor of SBN.