Chicago (1685)

Wednesday, 25 June 2008 20:00

People power

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Five years ago, Dave Lindsey told his company’s national convention that “Businesses don’t grow, people do.”

Lindsey, president and founder of DEFENDER Direct, personifies this statement and has worked tirelessly to provide a culture that embodies personal growth as one of four key passions (the others are systems as solutions, developing leaders and expanding influence) that drive the company’s success since its inception 10 years ago.

That commitment to personal growth has served Lindsey and his team well as he has led them through challenges ranging from varied economic conditions, managing fast-paced growth, changing market strategies and attracting talented people to the team. When faced with obstacles, Lindsey has exhibited an uncanny ability to focus on the right priorities and draw his team’s attention there, doing the most important things first and letting the details fall in place behind the strategic needs of the business.

DEFENDER Direct is now the largest dealer in the nation for ADT security systems and Dish Network satellite systems. Lindsey has been an integral part of building these dealer programs and advising his ADT and Dish Network partners on ways they can improve their market position and dealer programs.

His entrepreneurial thinking has added value to both of these partners, and he has been instrumental in helping other dealers improve their businesses. When most other business owners would shun competition, Lindsey embraces an abundance mentality and freely coaches his peers. The end result is a stronger brand and improved business conditions for all.

HOW TO REACH: DEFENDER Direct Inc, www.defenderdirect.com

Wednesday, 25 June 2008 20:00

Celebrating entrepreneurship

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Congratulations to all of the nominees, finalists and winners in the Ernst & Young Entrepreneur Of The Year Midwest area 2008 awards! Ernst & Young created this award to honor the accomplishments of the great men and women who make our economy vibrant.

Growing companies are vitally important to us. They create jobs, support their communities, and provide products and services that help drive the economy. It is hard to imagine where we would be today without the entrepreneurs who create growth companies. They are the visionaries and the risk-takers who believe in their dreams and refuse to be denied. Rather than follow in the footsteps of others, entrepreneurs choose instead to lead, to take the road less traveled.

For the past 22 years, we have proudly recognized outstanding business leaders from the Midwest area program. This year’s Illinois, Indiana and West Michigan participants have succeeded through turbulent economic times and personal sacrifice. They have risen to tackle adversity and change the world as we know it. They’re driven by accomplishment. They have defined sustainability. They’re not afraid to take risks and can see beyond them.

Ernst & Young’s Strategic Growth Markets practice is the leader in serving the Russell 3000 high-growth private companies, those with significant investments from venture capital or private equity firms, and companies planning to go public. We are committed to serving the entrepreneurial companies throughout their life cycle. That’s why we started the Ernst & Young Entrepreneur Of The Year awards. Since the first awards were presented in 1986, more than 12,000 outstanding businessmen and businesswomen have been honored with this distinction.

Join us in congratulating the leaders of today — those innovators that have achieved their American dream. We, along with our sponsors and patrons, continue to be inspired and encouraged by the entrepreneurial business achievements of our nominees. The following pages highlight those individuals who pursued this coveted distinction. Ernst & Young is proud to recognize and honor the accomplishments of the people who make this country great.

Congratulations from Ernst & Young on your continued success!

RANDALL L. TAVIERNE is Ernst & Young Entrepreneur Of The Year program director, Midwest Area Strategic Growth Markets leader and a partner at Ernst & Young LLP.

Wednesday, 25 June 2008 20:00

Promoting success

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Nicole Loftus was working as an executive in the promotional products industry when she realized the inefficiencies in the way the industry conducted business.

The standard business model was to view the customer through a territorial lens, discouraging any contact between the corporate and end customer and the manufacturers and importers closest to the products.

She knew that she could create a better business model and formed Zorch in 2002 to realize her vision. By emphasizing the branding and merchandising capabilities that Zorch could bring to its corporate customers and de-emphasizing the middle-man role that distributors have traditionally played, the company can be a better partner to its corporate customers. Zorch can deliver a more efficient, responsive order process as it facilitates communication between vendor and customers, it can bring higher levels of sophistication to the merchandising and design decisions and serve as a corporate “brand guardian” as well as deliver lower costs.

Loftus bootstrapped the company with loans from her parents and put up her house as collateral to guarantee bank loans to the business.

As her business model was most applicable to large customers with significant promotional product spending budgets, she faced scrutiny from large Fortune 500 purchasing departments. Nevertheless, through force of will and a compelling customer promotion, she was able to land a major insurance company as her first customer. Now, she has several of the largest companies in the nation as her clients, most of whom source their promotional products exclusively through Zorch.

HOW TO REACH: Zorch International Inc., www.zorch.com

Wednesday, 25 June 2008 20:00

The fine print

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In 1983, Edwin S. “Stan” Hooker III and a partner purchased Midland Paper, Packaging + Supplies from the jaws of bankruptcy. His vision was to create the premier independent wholesale distribution company for fine printing papers in the Midwest. Hooker has never wavered from his original vision.

Those early years presented a number of challenges, including apprehensive suppliers, minimal working capital, bankers looking for personal guarantees and a crowded market of competitors, many of whom had substantial resources.

Year after year, all of the profits were invested back into the business so Hooker could continue to build the business while gaining credibility and trust with suppliers, customers and banks.

MPC prides itself on having a flat management structure, which enables the company to be responsive to its employees and make key or strategic business decisions in a relatively short period of time. In addition, the company’s four stockholders are actively involved in the day-to-day business operations and practice an open-door management style. The culture has allowed the company to double its employee base during the last five years while maintaining a very low turnover rate among its middle- and upper-management team. It also allowed MPC to acquire several companies with a minimal impact on the underlying business.

Today, the company has grown to become one of the largest independent paper and packaging distribution companies in the country.

HOW TO REACH: Midland Paper, Packaging + Supplies, www.midlandpaper.com

Wednesday, 25 June 2008 20:00

Pushing the envelope

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True entrepreneurs are never satisfied. They are always pushing the envelope and preparing for future possibilities. Jim Fabris has continuously harnessed that entrepreneurial drive to convert his vision into business realities.

Fabris joined Hurco Cos. Inc. 20 years after its founding, but he quickly understood the value of the company’s mission of providing unique software and equipment to the machining industry.

Combined with his conviction, tenacity and vision, he risked his career more than once to convince the board to make tough choices that were counter to company norms and even industry norms at the time. For example, while competitors continued to focus on the North American market in the 1990s, Fabris understood the value of globalization and the importance of building a strong global supply chain.

Fabris revisited the company’s mission to convince the board that painful choices in the short term were necessary for future growth. Much of the pain was due to his recommendation to abandon legacy products upon which the company was founded, which meant layoffs of employees associated with those products.

“I had to convince them that shrinking would actually make us stronger,” Fabris says.

Focused on the company’s core competencies, Fabris instigates continual innovation of technology that supports the company’s mission. Under his leadership, the company that pioneered interactive graphical computer controls systems continues to push the evolution of technology to new levels, which has led to unprecedented growth and profitability.

HOW TO REACH: Hurco Cos. Inc., www.hurco.com

Wednesday, 25 June 2008 20:00

Dream to reality

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In 1988, Bejan Douraghy made his way to Chicago with $1,000 in his pocket and an idea for a business. A prior job experience had taught him that you had to treat creative talent with the same level of respect as you treat your customers, because as a creative staffing agency, people are his products and his service.

Five years later, his company, Artisan, had tripled in size. A year after that, he appeared on the cover of Inc. magazine about how bootstrappers change their business practices to foster growth and move beyond the start-up phase.

Almost 14 years later, his words still hold true, and he emphasizes a commitment to his team and to the growth of Artisan, a creative haven for top talent, such as artists and designers, that balances the demands of businesses needing creative services while advocating for the talent filling those needs.

He has built one of the best-known brands in the United States’ creative staffing services industry, serving nearly 2,000 companies and providing challenging work to 8,000 artists. The company continues to gain recognition with promotional events that recognize the best artists and designers in the global creative community.

Douraghy knows that putting together the right people for his client needs is equally as important as putting together the right internal team for Artisan’s culture and sustained success. When employees ask for professional development opportunities, he examines the request, considers an appropriate budget and encourages them to pursue creative endeavors.

HOW TO REACH: Artisan, www.artisantalent.com

Wednesday, 25 June 2008 20:00

People first

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“You have no idea how much I appreciate being heard.”

Robert Habeeb read this line from a note he received from an employee in Ohio, and it touched him. As president and chief operating officer of the $165 million hotel management company First Hospitality Group Inc., he could easily spend all of his time in fancy boardrooms in important meetings, but instead, he relishes being out among his 3,000 employees, all of whom he says have stories worth listening to.

He recognizes that when leaders take the time to learn where people are from, ask about their families and find out what their aspirations are, it creates loyalty and trust. And relationships that are built on these casual interactions create stock no leader can buy.

Smart Business spoke with Habeeb about how focusing on employees strengthens your company.

Talk to people. The closer you stay to the front lines, the better informed you’ll be as to what’s really go on in your business. If you get out on the front line where the interaction between the company and the customer takes place and you listen to those folks, you’ll get a great picture of what’s happening in your business.

If you stay in the office and go from meeting to meeting, dealing with executives and expect you’re going to get the full picture of what’s happening in your company, you’re probably mistaken.

If you don’t discipline yourself to put a big black line on the calendar and say, ‘I’m not in the office on this day or during these hours,’ and get out, it’ll never happen because your time will always be hijacked by some other priority.

You get to chat with people and learn a lot about your product and customer. The more that you’re close to your product and the people on the front line, the more that the keeping it real comes naturally rather than it’s a mission.

Find a way to help your employees.We started an employee Web site. When we first rolled it out, we had an all-staff meeting and talked about the site.

At the end of the meeting, the first question was, ‘I don’t have a computer — do you know where I could get one?’ A lot of the people that work for us at entry level didn’t have the resources to buy a computer, so we came back and found a company that would co-op with us on helping people buy their first computer.

Anything we can do to help them navigate, people cheer for. It creates loyalty. We want people to be cheerful and friendly, and it certainly contributes to them going to work and making it easy to be cheerful and friendly.

It’s probably the difference in where you have your heart in what you do versus just going through the functions.

Think big. We’d rather get out of bed every day and try something different and have it flop and then pick ourselves up and try something else, as opposed to being an organization where ideas end up on the bulletin board, and the bulletin board committee gathers them and puts them in the log book, and that’s where they die.

We do a car giveaway every year. There came a time when we realized that management by whip and chair was extinct, and to retain people and inspire them to do good things, you have to develop a system that rewards.

Every time you have perfect attendance for a quarter, you get into the lottery. At the end of the year, we draw from the names of all the people who have perfect attendance, and that person has their choice of, this year, a Cadillac Escalade for a year, a Harley Davidson motorcycle to keep, or we paid your living expenses for the year.

That spurned from a lunch conversation we had one day. What’s the cost, and what’s the potential if it improves people’s performance just 10 percent?

Incentive programs should always drive you to some result. The reward should be exciting, and you should have a celebration of the accomplishment. The bigger deal you make of any incentive, the more effective it will be.

Call-offs reduced by 75 percent over the first four quarters where we had it introduced. It’s a long shot that you’re going to win the car, but it’s creating a positive when you get up in the morning and you’re not really sick but you’re making that decision of whether to call off sick or not. It really does change people’s behavior for the better.

Prioritize people. It’s all about where your head is at. What happened at Enron is that management stopped going to work every day thinking about their customers and employees and starting going to work thinking about ‘me’ — it’s all about ‘me’ — this is what ‘me’ has to do.

Many leaders can accomplish great things while being full of themselves — self-confidence and a little bit of arrogance are positive traits — but when you break that connection and you’re not genuine anymore, then you’re in the soup.

There’s a barrier that goes up when someone is seen as unapproachable as opposed to someone who walks around chatting with everyone they see. It keeps it real. It keeps you in tune with what’s happening in your company and what’s happening with your customers.

HOW TO REACH: First Hospitality Group Inc., (847) 299-9040 or www.fhginc.com

Wednesday, 25 June 2008 20:00

More than just a bank

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People don’t have the time they used to, so everyone is seeking a one-stop-shop answer for their needs. That goes for companies, too. Why simply hold accounts at a bank when you could also get advice on succession planning or taxes or treasury management services?

While many banks may present themselves as total “financial advisers,” it ultimately comes down to experience and connections, says Mitchell Belon, regional president of MB Financial Bank in Chicago.

Smart Business spoke with Belon about what makes a bank a good financial adviser.

What attributes should a company look for when selecting a bank as its financial adviser?

It should look for a bank that focuses on commercial banking as its core business. A good commercial bank will have professionals that have experience with various types of companies. In addition, veteran business bankers may have experienced changing economic cycles and have seen how they affect companies and their management.

A banker should also serve as a company’s trusted financial adviser. He or she should have a working relationship with both the company’s attorney and accountant. Bankers can set themselves apart from the competition by spending time thinking about the company and where the owners want it to go. A banker should recommend proper debt facilities and structures, depending on the company’s sales cycle, cash flow and asset life span.

A good relationship manager wants to build a comprehensive relationship with the company and its owner, and businesses need to view their financial services in their entirety. If a company is solely focused on the lowest-cost alternative, it will suffer in the long run. It will bounce from bank to bank and never really establish a solid relationship of mutual trust, confidence and respect.

When you consider all of the time and effort it takes to make a change, you’ll see that the costs often outweigh the sometimes very small improvement that may be picked up in an interest rate.

What is a treasury management plan?

A comprehensive treasury management plan will address each facet of the cash cycle. This would encompass cash disbursements, the collections of cash, fraud prevention and the movement of funds within the bank between accounts and/or loans. A bank’s goal should be to set up a system that runs itself, allowing the company to do what it does to produce profits.

Cash disbursements can take the form of checks, ACH transactions and wire transfers. The number of ACH or electronic payments is growing rapidly because it’s safer, cheaper, faster and easier than mailing checks. Today, this can all be easily controlled and managed by the business. Paying vendors in this manner is becoming common, and operating an in-house payroll that offers direct deposit to employees has become quite simple. Forge-proof checks can be purchased, and reconcilement services that monitor incoming checks issued by a company on a daily basis all but eliminate the chance for check fraud.

Cash collections are what keep the company’s engine running. The goal is to make it convenient and safe for customers to pay — as quickly as possible. A company can outsource the grunt work of opening payments and preparing deposits to the bank through the use of a ‘lockbox’ service. Also, a company can allow customers to pay smaller invoices by credit card over the phone or Internet with merchant credit card processing. A company can also collect payments electronically from customers through the use of ACH services. If a company has multiple locations in different cities, funds can be ‘concentrated’ or moved in easily from other company bank accounts to a central operating account.

Within the bank, many companies take advantage of online account access, which makes a wide variety of monitoring and information reporting available at your fingertips. Any loan or interest payment can be set up for automatic payment on the due date. Excess cash can be ‘swept’ automatically into an investment account at the end of each business day. Funds can also be swept between the main checking account and a line of credit.

What is succession planning?

Succession planning allows for a smooth transition of an owner out of the business when he or she is ready. This may be to the next generation in a family, to a purchase from an outside company or through an employee buyout. At MB Financial Bank, we have a team in our Wealth Management group that works in conjunction with the company’s attorney and accountant. They devise an integrated approach that considers the financial, legal and accounting aspects of the move.

MITCHELL BELON is regional president of MB Financial Bank in Chicago. Reach him at (630) 797-9047 or mbelon@mbfinancial.com.

Monday, 26 May 2008 20:00

Welcome aboard

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You’ve added some top talent to the organization and they’ve jumped right into the job. Are you integrating them into your company so that they feel like important team members? Orientation programs, ongoing training and feedback can be valuable tools for both the employee and the company.

“Integration is a key part of making new employees more effective,” says Rob Wilson, president of the Employco Group. “They join the company and don’t know anyone. A good orientation program will help them feel more at ease.”

Smart Business spoke to Wilson about what a company can do to make every new employee feel like a key member of the team.

How important are orientation programs?

Orientation programs are extremely important. A good program is not only informative, it’s also an ice-breaker that welcomes a new employee and integrates him or her into an already established environment that might otherwise be intimidating or overwhelming.

We hire many payroll employees, and they all have experience. They know how to perform the payroll functions, but we need to train them so that they adapt to our system, methodology and corporate culture. It’s imperative that they understand how we do things so they can best respond to our clients. A good orientation program is a great way to achieve that.

What is the purpose of an orientation program?

Orientation programs should educate the employee on the company history, its mission statement, corporate conduct and possibly the individual’s roles and responsibilities. I say ‘possibly’ only because if you have two or three new hires, it makes sense to discuss job descriptions in the orientation. But if you have a large group, say 20 or so, you probably want to keep it more general. Beyond putting a new hire at ease on the first day, an orientation program is a good way for new employees to meet their fellow staff members.

How detailed does an orientation program need to be?

This depends on the size and nature of the company and its business. Many companies do a basic review of employee benefits and the rules and regulations of the work-place. This can be accomplished by following an outline of an employee handbook. Larger companies or those who may be governed by multiple laws might desire a more extensive program to fully cover all aspects of the business.

Should a training program be a part of the orientation or something entirely separate?

It is a little bit of both. The training program is an extension of orientation. Training really focuses on the specific job function and will vary in length and scope, based on the position.

For example, a clerical position may require a ‘softer’ approach that consists of on-the-job interaction with a colleague. On the other hand, a more technical position might require training from a certified training instructor.

Does the function of the company influence how much training is required?

The industry in which the firm operates will dictate the type of training and requirements necessary. A sales organization will train more on customer service, overcoming objections and how to ‘close the deal.’ A chemical company will have to comply with OSHA training requirements, safety and hazardous material training, etc. Financial institutions will train on market conditions, laws, regulations and compliance.

How much training should continue, and is there a set amount of time?

It really needs to be an ongoing process. There will always be new developments, regardless of how experienced the person is in his or her job. Some positions by law require continuing education and recertifications. Other ways to expand or extend your company’s orientation program are through quarterly or semiannual company outings, which also help to build company morale.

How much feedback should be given to employees who have gone through training?

As much as necessary for both the success of the employee and the company. The lines of communication should always be open. If there is a problem, it should be addressed early on before it escalates. Feedback does not always have to wait until the formal annual review to be given. Equally, when an employee is doing something well, encouragement will foster a more positive and productive employee if given on an ongoing basis.

In summary, once you finally find those new employees that you believe can do the job right and benefit your company, you need to orient them on the company that you’ve built. Educate them to get up and running in the shortest amount of time, provide ongoing training to continually grow talent and always keep communicating with both encouraging and critical feedback to positively impact all parties involved.

ROB WILSON is president of Employco Group. Reach him at (630) 286-7345 or robwilson@employco.com.

Monday, 26 May 2008 20:00

Key performance indicators

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If you don’t know how your business is doing at all times, you’re headed for trouble. An early warning system? Clearly defined key performance indicators (KPIs).

“A key performance indicator is a metric that allows you to evaluate whether you are meeting a certain goal,” says James P. Martin, CMA, CIA, CFE, CFD, CFFA, a senior manager with Cendrowski Corporate Advisors LLC. “Identifying what the KPIs should be for a particular organization is part of the overall risk assessment process, which identifies any number of factors that can stand in the way of success.”

Smart Business spoke with Martin about how to effectively use KPIs to monitor whether your business is on track.

How important are metrics?

Very. If a KPI is not measurable, it will not be useful. For example, ‘word-of-mouth’ is not a useful metric. And, make sure you measure things that are relevant. Here’s an example: By using metrics, an organization named pets.com — which sold bulk pet food and the like on the Internet — determined that many shoppers were abandoning their carts at the time of checkout. Why? Because most of the products were too expensive to ship as opposed to simply buying them in the store. Pets.com went out of business because their solution was to provide free shipping. They used a metric that revealed a problem with their business model, but incorrectly interpreted it.

So how can a company best define relevant key performance indicators?

Performance indicators differ from business to business. Having clearly defined goals to start with will help the company determine what it needs to monitor. To assist in the process, use the SMART acronym; ask whether the KPI is Specific, Measurable, Achievable, Relevant and Time-bound. A KPI should be all of these.

How can this information then be used to improve efficiency?

Key performance indicators are used in many industries to monitor and improve efficiency, and thus improve the bottom line. The fast-food industry has the use of KPIs down to a science. It monitors everything — how long it takes you to receive your food, how long it takes to cook 100 burgers — the list goes on. The industry knows what needs to be accomplished to achieve its goals, and identifies a measure to make sure it happens.

Another example is a call center. Management will monitor how many people it takes to answer how many calls per day to determine ways it can improve efficiency.

And how often should a company monitor its KPIs?

It depends on many factors unique to each organization. If you’re a company in turnaround mode with low cash levels in the bank, you might be monitoring certain KPIs daily, such as A/R and average sales per day. If you’re a manufacturing company tracking production on a piece of equipment you’ve financed, maybe you are analyzing the metrics on a monthly or quarterly basis.

How would something like a ‘balanced scorecard’ play into the equation?

That means that you have to look at overall objectives holistically. If you only measure factors related to profit (e.g., how many widgets can we produce by how many workers in one hour) you might overlook quality, marketing — all the other elements that must work in harmony in order to achieve success. Your KPIs should be setup so that you are monitoring all areas of the business that tie into achieving your overall goals.

What about companies that don’t have KPIs in place; how can they get started?

They do have KPIs in place; they just may not realize it. For example, they intuitively monitor payroll — they know how many hours they pay versus periodic revenue. The first step to formalizing the process is to determine what you need to monitor and measure. Look at the current performance, benchmarks and target levels. Think about all the processes you undertake; analyze objectives and risk conditions/pitfalls to avoid.

Can accounting software make the monitoring job easier?

The monitoring of KPIs is nothing new — we’ve been doing this manually for centuries. The prevalence of computers and today’s accounting software just provides readily available information. Today’s software enables companies of all sizes to create risk models, define data criteria, set early warning triggers and alerts, etc.

How often should KPIs be revisited?

At least once a year, as part of the annual meeting to set objectives for the upcoming year. Throughout the year, new KPIs may need to be added and old ones, removed. To be useful, the KPIs that are already in place must continue to make sense.

JAMES P. MARTIN, CMA, CIA, CFE, CFD, CFFA, is a senior manager with Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or cs@cendsel.com or go to the company’s Web site at www.frauddeterrence.com.