An automated database is a body of facts, data or other information assembled into an organized format suitable for use in a computer. The database may be considered protectable as a form of compilation, which is defined as a work formed by the collection and assembling of pre-existing materials or data that are selected, coordinated or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.
Issues routinely raised are whether the pre-existing works are sufficiently collected, assembled, coordinated or arranged to create an original work of authorship. Despite such questions and related risks, copyright registration remains the only registration system available in the United States for databases.
The deposit requirement and application filing procedure vary depending on certain characteristics of the database and on the frequency of the updates, if any. For an initial registration for a new database, a "Single Basic Registration" may be appropriate. Such registration requires a completed Form TX, the filing fee of $30 and the appropriate deposit.
Licensing starts with addressing issues found in other types of intellectual property licenses. A departure occurs in limiting access, copying, data use in derivative works, considerations for escrow and end-user concerns.
Payment provisions may be stated in terms of flat fees for an entire distributed database or in terms of monthly or periodic access fees or usage-based fees. Payment provisions may be tied to other variables, including total or concurrent users, bandwidth metering, per-query or per-result pricing, and other variables. Restrictions or alternative pricing may also be provided for access to data or delivery by alternative media, for example, one price for online access, another for a database compilation delivered on CD-ROM by mail.
Typical license provisions may also appear, including right of use, distribution, treatment of derivative works or commingled data and allotment of copies for testing, backup and disaster recovery purposes.
Termination provisions should also appear, addressing topics such as breach of confidentiality, unauthorized use of data or the software delivering the data, copying, distribution, reverse engineering or material breach of payment terms. The issue of access to historical data or previously downloaded data should be addressed.
Intellectual property issues should also be considered. The licensor, or its third party provider, generally should retain all rights to the data and data delivery software. Data should be characterized as a trade secret where appropriate.
Requirements for proprietary notices to follow the database, data and/or related reports should also be stated. Warranty, warranty disclaimer, limitations on liability and indemnification provisions are also typical. These provisions are often heavily negotiated, but in many cases, equity calls for the licensor to bear some responsibility for the product being licensed. Where the data is being collected from outside sources, disclaimers for accuracy, timeliness and/or noninfringement may be suitable. Software and/or data escrow should also be addressed.
Related provisions or accompanying agreements may provide further terms for maintenance, support, upgrades, revisions, consultant fees and so forth. Support terms may include tech support response times, conditions or restrictions for what types of errors fall under support, and support contact information.
Database protection and licensing continues to play an important role in the Information Age. Automated database registrations provide a mechanism for capturing data developed over periods of time, and clients can benefit from developing procedures to regularly register such information.
Database licenses should be carefully crafted to include provisions that recognize unique aspects of the database licensing.
Vladimir Khodosh is an associate in the Chicago office of Barnes & Thornburg LLP and is a member of the Intellectual Property and Business, Tax & Real Estate departments. His practice focuses primarily in technology and Internet law, and in the negotiation and drafting of patent, trademark and copyright licenses. Reach him at (312) 338-5917 or firstname.lastname@example.org.
Education: High school graduate and the school of hard knocks
First job: I always wanted to be an architect. My very first job was doing drafting for the Village Roselle, which is where I lived. That got me started in the business.
Career: I started at a company called Pletka and Associates. I was there one year and they went bankrupt. I like to think I had nothing to do with it.
Boro then began working at Four Columns Ltd., the predecessor to FCL Builders.
I've worn every hat except accounting.
Boards: The Better Boys Foundation
What is the greatest business lesson you've learned?
Say what you do and do what you say.
What is the greatest business challenge you've ever faced, and how did you overcome it?
It was creating structure with the growth opportunities that came about. We grow with the growth of our clients.
Whom do you admire most in business and why?
Two of my best mentors and best friends would have to be Bobby Stovall and Mike Mullen (CEO of CenterPoint). Certainly, they have molded me and this company into what we are today. I'm still best friends with both of them. Both of them have done a terrific job with the people around them.
The question refers to the Customer Identification Program (CIP) section of the USA Patriot Act of 2001. The act, the full name of which is Uniting and Strengthening America by Providing Appropriate Tools Required to Intersect and Obstruct Terrorism, requires banks to be sure they know the companies with which they do business.
CIP requires banks to ask businesses for certain documents to verify their identity. For example, corporations may be asked for copies of their certificates of good standing, limited partnerships for copies of their partnership agreements and not-for-profit organizations for copies of their organization agreements.
Banks have always required their customers to provide adequate identification. The CIP regulation that banks must establish a reasonable belief that they know the true identities of their commercial customers is not significantly different from past operations. If the business entity cannot be adequately identified, banks have traditionally taken additional steps to confirm the identities of individuals with authority and control over the account.
What has changed as a result of the Patriot Act is that most banks now are routinely collecting identification information up front for the individual account signers, as well as for the business itself for every new account that is opened. Principals must provide their names, addresses, dates of birth and Social Security numbers, along with their business's taxpayer identification numbers.
In addition, banks must screen potential new business customers against a list of about 5,000 businesses and individuals with which U.S. enterprises may not do business, according to the Treasury Department's Office of Foreign Asset Control. The list ranges from drug traffickers and oppressive governments to shipping vessels, Al Qaeda and Cuba.
As a result of the Patriot Act, banks may be more likely to do account profile screenings that give them an idea of what type of business they should expect from new accounts. Bankers may want to know whether a certain account is likely to generate a lot of cash transactions, for instance, or whether funds will routinely be wired to foreign countries -- and if so, where.
Such questions will help banks satisfy increased regulatory scrutiny of their monitoring for suspicious activity. Many of the activities that prompt suspicious activity reports are longstanding provisions of legislation such as the Bank Secrecy Act, which requires banks to report transactions or activities that don't fit the profiles of the businesses involved.
Firms that attempt to circumvent the Bank Secrecy Act requirement of reporting currency transactions involving $10,000 or more, for instance, by using repeated transactions of just under $10,000 are among those that would generate suspicious activity reports. So are businesses that show ongoing cash transactions that might not be consistent with their profiles. The extra questions for new accounts help banks determine what would be considered normal.
The Patriot Act should not concern legitimate business owners. Fear of identity theft makes some people reluctant to provide their Social Security numbers in writing, but the CIP regulation requires banks to obtain a Social Security number when opening an account for a new customer who is a U.S. citizen. Also, without Social Security numbers on file for interest-bearing deposit accounts, banks must employ backup withholding, automatically remitting a portion of the interest paid on the account directly to the IRS.
In short, the Patriot Act simply requires banks to do what they have always done -- collect information on the customers they serve, keep that information secure and report any suspicious activity that may occur. The only difference is that the requirements for information, like many aspects of security after Sept. 11, have been greatly increased in response to the times.
Susan Lepore is vice president of compliance and community reinvestment activities for MB Financial Bank. Reach her at (847) 653-1770 or www.mbfinancial.com.
Goldstein joined LaSalle Bank in 1998 as a group senior vice president in the finance division before being named executive vice president in 2001. In 2002, he was named CFO, and in 2004, was promoted to senior executive vice president.
Prior to joining LaSalle Bank, he was with Morgan Stanley Dean Witter for 10 years, where he held positions in treasury, investor relations and financial operations. Prior to Morgan Stanley, Goldstein worked in mergers and acquisitions for Manufacturers Hanover. He also worked at Pfizer Inc.
Goldstein replaces retiring ABN AMRO Mortgage Group chairman Scott K. Heitmann. Goldstein continues to report to Norman R. Bobins, president and CEO of LaSalle Bank Corp., and remains a member of the LaSalle Bank Corp. Executive Committee.
ABN AMRO Mortgage Group Inc. is one of the largest loan originators and loan servicers in the United Sates.
CORBETT ACCEL HEALTHCARE GROUP
Corbett Accel Healthcare Group appointed Phila Broich executive vice president, chief talent officer.
Prior to joining Corbett Accel, Broich worked as a consultant for IBM's Business Consulting Services Practice. Previously, she worked for J. Brown & Associates, a subsidiary of Grey Advertising, as senior vice president, director of operations and organizational development. Broich also worked for Tatham Euro RSCG as a broadcast business supervisor and at Darcy Masius Benton & Bowles as a senior production coordinator.
Broich completed a double major in mass communications and theatre at Western Illinois University and holds a master's of fine arts degree from the California Institute of the Arts and a master's of science in organizational development from Loyola University.
CCC INFORMATION SERVICES GROUP INC.
CCC Information Services Group Inc. named Andrew G. Balbirer executive vice president and chief financial officer. Balbirer succeeds interim chief financial officer David L. Harbert.
Balbirer most recently held the position of CFO at Information Resources Inc., a provider of content and analytic services to consumer packaged goods manufacturers and retailers.
Prior to Information Resources, Balbirer held executive positions with Specialty Foods Corp. where he was CFO as well as CEO and COO for two of its businesses. He also spent 13 years with The NutraSweet Co., a division of Monsanto Co., where he served in various roles including CFO and general manager of NutraSweet's consumer business. Balbirer earned an MBA degree at Northwestern University's Kellogg Graduate School of Management and a bachelor of science degree in business administration at the University of Missouri. He is a certified public accountant.
USF Corp. appointed Glenn R. Richter to its board of directors. Richter is executive vice president and chief financial officer for Sears, Roebuck and Co., where he is responsible for the company's financial reporting, planning and business development functions. He also leads Sears' strategy, information technology, credit and financial services, real estate and continuous improvement initiatives.
Richter joined Sears as vice president and controller in 2002, and held the position of vice president of finance. Prior to joining Sears, he held senior financial positions at Dade Behring International and PepsiCo. Earlier in his career, he was a consultant at McKinsey and Co.
Richter holds a bachelor's degree from George Washington University and an MBA from Duke University.
Oce, a global leader in digital document management and delivery solutions, appointed Dale Drufke and Jack McNulty vice presidents of Oce Digital Document Systems and Oce Wide Format Printing Systems, respectively.
Drufke is vice president, business controlling, for the Oce Digital Document Systems division (DDS) of Oce North America Inc. He operates the financial activities of the division, including budgeting, expense control, reporting and analysis. He joins DDS from Oce Wide Format Printing Systems (WFPS), where he was vice president, business controlling. Previously, Drufke was vice president, finance for Oce-USA.
McNulty is vice president, business controlling, for the WFPS division of Oce North America Inc. He operates the financial activities, including budgeting, expense control, reporting and analysis. He previously served as financial controller, Oce North America Inc. He has also been controller for Oce Imaging and financial controller for Oce-USA Inc.
COGNITIVE CONCEPTS INC.
Donald Davidson joined Cognitive Concepts Inc. as vice president of sales. Davidson directs the company's sales strategy; recruits, builds and manages a nationwide sales team; and strategically grows the company's revenue and profit.
Throughout his career, he has dramatically grown revenue and profits, developed new markets and niches, created programs and built, managed and motivated teams to achieve challenging business goals. Prior to joining CCI, Davidson held executive positions at Riverdeep, The Learning Co., Pearson Inc., Advanced Access, Jostens Learning Corp., ESC and Arista.
But every business is bearing the burden of uninsured Americans and can help ease the problem by taking some simple, practical steps.
According to the U.S. Census Bureau, there were about 45 million uninsured Americans in 2003, a number that continues to grow. Uninsured individuals commonly forego necessary medical care; nearly 40 percent postpone care due to the cost, according to the Kaiser Family Foundation. In addition, according to The Institute of Medicine, uninsured people receive fewer preventive services and less care for chronic conditions than their insured counterparts.
As a result, the uninsured tend to get sick more often and for longer periods, adding significantly to the spiraling medical costs that show up in every business's annual health care costs.
Hard working and uninsured
Businesses have an even deeper connection to the uninsured problem -- most of the uninsured are, in fact, employed. Six out of 10 have full-time jobs and another 15 percent work part time or part of the year. Some work two part-time jobs without coverage through either employer.
Those without health insurance are working in virtually every American business, uninsured because they are ineligible for benefits or because the cost of premiums or deductibles is too high.
As a result, the working uninsured are prone to missing preventive care and suffering more serious conditions later, resulting in a threefold problem for businesses:
* Short-term presenteeism (being at work but preoccupied with personal matters to the detriment of productivity) as workers struggle through personal and family health issues without seeking appropriate care.
* Longer-term productivity losses as workers leave your employ to seek jobs that provide benefits, wind up in emergency rooms or are lost to disability
* Continuing increases in health plan costs as local care providers pass on the nonreimbursed expense of treating uninsured patients.
According to a May 2004 statement released by the Health Care Policy Roundtable, a cross-industry collaboration of human resources leaders, the economic impact of the lack of health insurance on productivity, absenteeism, turnover and increased health care costs could be as high as $152 billion per year, or about $1,000 for every American worker in 2004.
Plans reduce turnover
Many businesses are taking advantage of a new breed of "limited benefit" plans. In essence, employees gain access to preferred-provider networks, service discounts and other benefits, typically subject to annual benefits caps. In addition, an employer can choose any level of premium subsidy -- including none at all.
Offering benefits to employees who are typically ineligible for company-sponsored benefits can provide businesses with two advantages beyond chipping away at the problem of spiraling health care costs.
First, it helps to stabilize your work force. Offering easy-to-access health care can increase productivity because employees will be more likely to get the treatment they need and thus stay healthy.
Second, high turnover is a major issue in many industries as benefits-exempt employees float from company to company seeking a slightly higher wage. Businesses then spend excessive amounts of money and time recruiting and training replacements. These same employees, equipped with a meaningful differentiator -- access to health care benefits -- will be less likely to slip away to a competitor.
The benefit types and dollar maximums offered under these plans are flexible and may include medical, dental, vision, term life and short-term disability coverage, as well as in-hospital cash benefits. In addition, plan designs could include out-patient expenses for office visits, lab, diagnostic tests, X-rays, surgery, anesthesiology and prescription drug coverage.
If you don't offer access to health benefits for all of your employees, look at these new plans. Your insurance broker or consultant and your company's financial advisers can help you find a plan that fits your budget -- and helps you maintain a more stable and healthy part-time work force.
Paul Martino is vice president of sales and service, covering Illinois and Wisconsin. He is responsible for managing sales and client management for Aetna's middle market segment, which includes businesses with 51 to 3,000 employee lives. Reach him at (312) 928-3754 or MartinoP@aetna.com.
"As I started to read the magazine, I came to recognize how remarkable it was that my father was advocating philosophy and points of view that were in step with my generation and out of step with his own, whether that was the war in Vietnam, the environmental movement or changes in attitude about sexual behavior and birth control," says Hefner, chairman and CEO of Playboy Enterprises Inc. "As I grew up, I was able to appreciate and be extremely proud of what Playboy stands for, not so much as a business success but really as a philosophy of values about the world."
Coming of age in the 1970s, Hefner adopted that philosophy and followed in her father's journalism footsteps, joining the staff of the Boston Phoenix, an alternative Village Voice-style publication. But she quickly learned she didn't like that side of the notebook.
"It taught me I didn't want to be a journalist because I didn't get to write what I wanted to write about," she says. "(I) had visions of being an Ellen Goodman-style columnist, getting to offer my point of view on the world. And if that were ever going to be an option for me, it certainly wasn't going to be in the early part of my career.
"At that point, I decided I would probably go to law school. But before I could do that, my father persuaded me to come back to Chicago and learn a little bit about the business. Once I got here, I never left."
With Hefner at the helm, Playboy has expanded the venerable men's entertainment enterprise from a staid print publication into an entertainment powerhouse on television, the Internet and now the wireless world.
In 1988, Hefner was elected chairman and CEO of a company in financial distress. And while she has returned Playboy to profitability -- the company reported a $10 million profit last year on revenue of $329 million -- it was quite a struggle.
Built to last
Hefner spent seven years in a variety of roles before, in 1982, assertively seeking the vacant position of president after her father was forced, because of a regulatory dispute, to divest the company's single largest profit center, its United Kingdom casinos.
"I felt (an outside search) would take a fair amount of time," she says. "The person coming in would have to take time to understand the businesses and the organization and develop plans to move forward and rally the troops to move forward.
"We didn't have the time to do that. I felt we could get started right away making the changes that needed to be made in terms of divesting the company of the businesses that weren't profitable and cutting back on costs and trying to refocus."
The board and her father agreed, naming Hefner president, while her father retained the titles chairman and CEO.
She quickly realized the loss of the casinos only added to the company's troubles, which were much larger than she had thought.
"The biggest challenge was that the company was losing a lot of money," Hefner says. "The single biggest profit centers were the casinos in the U.K., and because of a regulatory dispute, it sold those businesses shortly before I became president. It went overnight from being profitable to reporting a loss of $50 million. Given the capital base of the company, we didn't have a lot of time to turn it around.
"I never really stopped to think about the magnitude of the challenges. I just focused on what I thought we needed to do, get as much done every day and every week as we could, and kept my focus on cash, not on earnings or the stock price, which is one of the luxuries we have as a family-controlled company."
Hefner started by restructuring operations and stripping away unproductive parts of the business.
"The turnaround was really a function of being able to shed those businesses that weren't successful -- like the clubs, the record business or the book publishing business," she says. "We focused to make sure the magazine retained its leadership in the men's market and then looked for opportunities for growth."
That led to the only disagreement Hefner ever had about business with her father.
"I was president, not CEO," she says, "and felt since we had sold the hotels and resorts, it was a good time to get out the club business. My father noted there were still half a million people paying us for their Playboy Club key cards every year. How did we know it couldn't be successful if we didn't try and update the business?
"It was impossible to answer without trying, so, in effect, we did. We opened a newer club in New York City, which was in many ways very successful in the sense that it was a neat place and attracted a nice crowd. But it also reinforced the basic problem, which is it is very hard to make money in the club business, especially when the heyday of all night clubs came at time when you could afford for those small venues great live entertainment, which you really can't do anymore. To his credit, when the results came in after the first year, he said, 'You're right. Let's move on.' And we went through the process of closing down the clubs."
The incident highlights the difference between Christie Hefner and the iconic "Hef."
"In terms of differences between my father and me, I think the principle one is that his real focus and genius has always been on the creative and promotional side of it, whereas I've always enjoyed and focused more on the strategic and management side of the business," she says.
As founder and editor-in-chief, Hugh Hefner still decides the next Playmate of the Month, but it's Christie Hefner who decides where Playboy Enterprises will be next month and next year.
One of those decisions helped lead the company onto the small screen with Playboy TV and the purchase of the Spice Channel. Playboy's channels are available in approximately 130 million U.S. households, and its programming reaches more than 70 countries.
And more than a decade ago, Hefner made Playboy the first national magazine with a presence on the Web with its Playboy.com venture. The site is comprised of original content, as well as repurposed content from the magazine and television. Under Hefner, Playboy.com has become a multiple revenue business with subscription sites, e-commerce, advertising and online gaming. It has grown into one of the most popular online destinations for men and is the company's fastest-growing profit center.
"Clearly one of the reasons we've been successful is that we've positioned ourselves as a content creator with strong brands and we're agnostic with regard to making bets on technology," Hefner says. "A lot of our growth has come from new technologies, whether it's digital homes in the television arena -- which is now being further expanded because of the embracing of video-on-demand and subscription video-on-demand as a technology to deliver content to consumers -- or whether it's the growth of accessing of content via broadband online or the growth in wireless."
Eyes wide open
In her 17 years as Playboy CEO, Hefner has made a name for her ability to deliver the Playboy brand to new audiences. She's even trumped conventional wisdom and looked for ways to draw women into the company's demographics.
"Television, as a segment, is our single biggest profit center," she says. "From a financial perspective, it's been very successful. For Playboy itself, it's had additional benefits. Moving from the magazine to Playboy TV gave us an opportunity to expand our market to women because the majority of viewing of Playboy TV is by couples."
And Hefner has capitalized on that.
"We have built on that with our licensed products division, which has a strong base in women's apparel and accessories, as well as in men's," she says. "That was very positive for us. That we have been able to extend the brand into a multimedia opportunity from print to TV was very important because it encouraged us to add the third business segment -- online."
Hefner's vision led Playboy to the Internet far before it was fashionable.
"We were very influenced by the fact that by '94, we were making a lot of money in television and therefore had demonstrated the ability to move the brand from one medium to another, which is not as easy to do as some might think," she says. "It's not just that we were the first magazine to become a successful network. It's that no other magazine has done it, even in categories where, as a result in the growth of the number of channels from cable and satellite, there are strong categories of programming, but they didn't start from their magazine bases.
"For example, Music Television is not called Rolling Stone; it's MTV," Hefner says. "And news television isn't Time or Newsweek, it's CNN. Even sports wasn't Sports Illustrated, but ESPN, which then turned around and launched a magazine after the fact."
Those opportunities for new players caught Hefner's attention.
"One of the reasons we got interested in the Internet space was that we had made the transition into electronic media," she says. "It also seemed to me that part of the potential appeal of the online world was that you wouldn't have to edit for space or time, so you could really let the consumer be the editor in terms of what their interests were and what they wanted more information on."
Not only has Hefner given consumers the ability to become their own editors, she has also given up control of the magazine -- virtually speaking, that is, following the launch of the company's first-ever video game, "Playboy: The Mansion."
"Ten years ago, (video gaming) was a business for young boys," she says. "It is now very much a young adult market. And that, we think, plays to our sweet spot. So we got interested in moving into that as another category of entertainment and looked for a partner that we thought had a good creative vision for what the first Playboy game could be."
Hefner confesses she isn't very good at the game. Then again, she runs the real thing and learned from the real "Hef."
"One of the most important lessons is, don't compromise on the quality of what you're doing," she says. "He's a very strict taskmaster in that regard, as I think entrepreneurs often are. And I think that's how companies sometimes get in trouble. When they grow so large that they can't be run any more by their entrepreneurial founders, some of that passion for the quality of what you do and frankly, also a passion for the culture you're creating, gets lost.
"Hopefully, I've been able to keep that from happening here. We've been able to grow by professionalizing how we make decisions and how we allocate capital and how we've developed strategies for growth. But at the same time, we've preserved the qualities of the pride in what we do and the respect for the individuals that make good people want to come and do their best work here."
And for that, Hefner just might make the magazine centerfold -- of Fortune.
HOW TO REACH: Playboy Enterprises Inc., (312)751.8000 or www.playboy.com
PR is an important part of business -- publicity, promotions and community relations help businesses build prestige, recognition and better images. When PR efforts co-exist in business with marketing and merchandising initiatives, companies can increase sales and profits.
And by using PR to interact with clients, other businesses and your community, you will enhance your company's business and the industry in general.
Every aspect of your company affects its image. When clients see your offices, warehouse or even trucks, they instantly form opinions about your company. How you present your company and employees is important to your image and is a direct reflection of your company's work, which plays a role in the success of your business.
One way to favorably present your company is to contribute to your community and publicize your efforts -- clients and consumers will be more likely to use your company's services if its name is familiar.
Because the majority of your business comes from surrounding communities, it is logical to involve your company in community programs or local organizations, such as a professional society, civic organization or park district. When your company's name is linked to noteworthy causes or organizations, it enhances credibility and may be the name remembered when services are needed. Networking opportunities also can arise from community involvement.
When deciding how to become active in the community, consider the amount of effort, time, money, equipment and resources you have available. Also, look for organizations that will benefit from your professional expertise. Contact local schools, park districts and religious institutions for volunteer opportunities unrelated to your industry, such as working at a homeless shelter or spending a day at a retirement center.
Speaking engagements are also an opportunity to give back to the community, as well as impress potential clients. Use your speaking engagements as a way to share information about your industry. Contact your local chamber of commerce and other business-related organizations to determine whether speaking opportunities are available.
Positive exposure can also result from fund-raising events. If you fund-raise for charitable organizations, the community will recognize your concern for a cause, and local newspapers may report about the human interest story.
Publicity can play an important role in creating positive images for your business and industry and should not be considered self-serving. People enjoy learning about local companies that help their communities, and it is to your advantage to be known as a company that gives.
In additions, urge employees to get involved with community opportunities, such as fund-raising events or community programs. Rewarding employees for community involvement helps motivate them to participate in events and increases morale.
There are many ways to gain publicity, including the basic PR tool -- the news release. A well-written news release can provide the media with background information and the who, what, when and why of a potential news story. A benefit of a press release is its low cost.
Consider the following as potential news release topics.
* Company or personal awards received
* Personal elections to boards of directors or memberships in associations
* Educational seminars in which the company has participated or that it has provided
* Anniversaries or events, such as the commencement of business
* Introduction of innovative services
* Special events, such as food drives, blood drives, fund-raisers or other volunteer projects
Brochures, flyers, newsletters and handouts are other inexpensive ways to raise awareness about your company. These methods can be as simple as a photocopied page of information or as elaborate as a professionally printed pamphlet. Handouts can be given to clients, potential clients and the media.
Another way to gain publicity is to maintain a company Web site. A Web site is a good place for potential clients to research your company and see examples of the work you have done.
Public relations can help build company name recognition, increase profits and improve company image. When done correctly, efforts to gain publicity can play a vital role in your company's success.
Jennifer Valencia Cumbee is director of corporate communications for International Profit Associates. IPA's 1,800 employees offer consulting services to businesses throughout the United States, including Alaska and Hawaii, as well as Canada. Reach her at Jennifer.Cumbee@ipa-iba.com or at www.ipa-iba.com.
That year, people used credit cards, debit cards and automated clearinghouse transactions to complete 44.5 billion transactions totaling $27.4 trillion. During the same period, they wrote 36.7 billion checks totaling $39.3 trillion.
Checks may not be on the endangered species list yet, but there is no reason to believe the trend toward plastic will dwindle. On the contrary, there is every reason to suppose it will continue to pick up speed as baby boomers grow into their relatively affluent and mobile retirement years.
That means businesses -- including small businesses -- must accept credit and debit card payments if they are to remain competitive. It also means that businesses must be smart about finding the best possible provider for credit/debit card services, whether they are just starting to accept such payments or have been doing so for years.
Cost is the biggest deterrent for businesses in starting or expanding their credit/debit card services. However, costs can, to some extent, be controlled.
Typically, credit or debit card transactions cost businesses anywhere from 2 percent to 4 percent of each sale. The bulk of the expense -- as much as 66 percent -- is dictated by MasterCard and VISA associations. Businesses can reduce these expenses by working with their service providers to be sure they are following the correct procedures, such as verifying billing addresses or asking for the code on the back of the card when taking orders by phone or Internet.
Not only do such precautions help minimize costs, they are safeguards against the other major concern of business owners -- that they will become entangled in fraudulent transactions for which they ultimately will be held liable. Some basic precautions, including verifying identification during terminal-swipe transactions, are the first line of defense, but shrewd selection of a merchant services provider is additional protection.
No business can overlook the importance of doing business on the Internet, and a good service provider can make recommendations to keep businesses safe in that high-risk world. For example, a provider that takes the time to learn about each company's way of doing business can make suggestions that will minimize credit/debit card transaction fees while maximizing customer accessibility.
Additionally, a good provider will be sure businesses are protecting cardholder data. That includes being sure full account numbers are not printed on receipts and that data is stored where it can't be hacked into from the outside -- meaning it is not stored on computer terminals in the store or office.
Finally, a good provider will have an excellent service reputation and will fully disclose all monthly and transaction fees. Businesses must understand that the lowest presumed cost is not always the lowest pricing and should look for hidden fees. A good provider also will offer round-the-clock technical support that businesses can rely on for help when a problem arises.
With the use of checks on the decline, businesses are required to offer customers a full range of the best payment options, including credit/debit cards. Credit and debit card transaction capability can increase sales and reduce receivables. Businesses should take the time to find the right provider to be sure those sales come with more pleasure than pain.
The right merchants' services provider can help even the most experienced business negotiate the often-confusing byways of electronic transactions, but it's incumbent on businesses to be as diligent in managing credit card fees as they are in managing any other finances. Finding the right provider may require some legwork, but it can save serious headaches in the long run.
Pat Bazley is vice president of merchant banking solutions at MB Financial Bank. Reach her at (847) 653-1980 or www.mbfinancial.com.
It wasn't too much of a worry; the metal fabrication business had its up and down cycles like any industry. But when one month stretched into several, and phone calls went unreturned, the pair returned to Chicago to find the operation closed down.
"Basically, the business was shut down," says John J. Dombek, owner of JJD Industries Inc., the umbrella corporation under which he owns five companies. "Whoever bought it from them couldn't make a go of it for whatever reason. (The owners) came back and brought back a few of their customers."
They then put the business up for sale again.
"My father actually saw it in the (Chicago) Tribune and said, 'I looked at this business a few years ago, and it might be something you're interested in.' That's how I got started."
Single and just 27 years old at the time, the man who had been a consultant at Peat Marwick (now KPMG), bought Akorat Metal Fabricators, which has since been rolled into Dombek's Smithco Metal Fabricating. Now 41 years old, Dombek owns five enterprises in and around Chicago under the umbrella of JJD Industries Inc., and he is looking to expand his offerings.
"I went into consulting because I wanted to look at a variety of different businesses to get a broader-based background," he says. "I always wanted my own business. (This opportunity) came along at the right time. The longer you stay in the world of consulting sometimes, the tougher it is to actually leave.
"You don't make a lot when you start off in your own business. It's tough to give up that income. I was single at the time, so I had a big advantage. If you're married with kids, going into a business with one employee is a big commitment."
Smart Business spoke with Dombek, a 2003 regional finalist in Ernst & Young's Entrepreneur Of The Year awards, to learn how he turned a small metal fabricator with one employee into a $70 million enterprise.
Did Akorat's troubled history concern you?
No, I figured it was a platform to build off of. The former owners and I got some of the customers back. Then I went out and bought a laser.
There weren't a lot of them around at the time. That opened a few more doors. It already had some form of structure in place -- customers and accounting systems -- no matter how basic they are.
Has your goal always been to be a one-stop shop or did that plan evolve?
It's been a little bit of both. The goal has always been to have businesses that can meet a variety of customers' needs. I've diversified from what I was planning when I started.
I was looking more for the metal products side, with maybe some electrical assembly along with that. We've gone more into some of the plastics. The basic plan was there. The details are being developed as time goes on.
What drives those changes?
I view manufacturing as a service business. I know that's the wrong terminology for it, but it really is. To differentiate yourself -- it's really the level of service and quality you can provide -- especially with the off-shore competition.
I never want to compete strictly on price. We (earned) a number of vendor awards because we really focus on trying to service the customers.
What makes a company attractive as an acquisition?
A couple of things, and they don't all have to exist on every deal. The first thing we're looking for is, does it advance us in the marketplace a little bit? Can it help serve some needs, or does it tie in to what we already do? Does it make sense financially? And then there is the intangible side, which is, is it a good business or not?
Just because they have sales volume doesn't mean they're in a position where they can make money. That doesn't necessarily stop you, but going into a deal, you have to know you've got to replace a lot of their existing structure. Some businesses we buy just to pick up the volume and move it in.
It's a whole variety of things. I guess the first thing you look at is, can you make money at the business. The second thing, is it a business you want to do.
Have you made troubled companies a specialty?
We feel that's one of our strengths. Because of the size of the businesses that we target, there isn't a huge (number) of people targeting businesses that size, at least around Chicago. We had some pretty good success doing that. As we get some of those foreclosures, then other business deals make sense fitting in with them.
I feel we've got a real strength to go in and identify what are the real key drivers to the business and how can we address those between personnel and equipment. We take, maybe, a little different approach to turnarounds.
There's the typical financial aspect, but we're looking at it in terms of driving the business forward. What are the core strengths, and how can we bring those to the marketplace? Turnarounds are all different; they all have a life of their own, but you usually can get the assets at a pretty good price.
Then it's just how much additional funding and resources are going to have to be put into the business to get it going again.
Is it a challenge to meld the business cultures?
Some businesses we've taken over we've kept pretty much the entire management staff, with just a little change here and there. And then there are other businesses where pretty much everybody was gone.
We put some of our personnel in place in certain positions, but we pretty much leave who's there -- give them direction, give them our management philosophy, our reporting structure, and see how they operate, see how they fit in or not. It's not uncommon to have someone that we take out of a company that we take over and move them into an existing business. They may not fit with what we need for a turnaround, but they might be a good day-to-day manager.
They just work at two different paces. They may have a skill set we have lacking. Sometimes, the management group just doesn't fit in with the philosophy or they don't like what we do.
Will you ever look outside Illinois for acquisition opportunities?
There're a couple of out-of-state possibilities that we're looking at. We're looking into moving into adjoining states to give ourselves a little more geographic presence, along with something possibly in Mexico and something off shore. We're going to be customer-driven in terms of doing those things.
How has manufacturing changed in the past several years?
Manufacturing is not going away. It's going to be around and it's going to be strong going forward. It's just going to be different than what you saw five years ago or from what you see today. I'm betting my future on it.
There's a lot of manufacturing that makes sense in Western Europe and the United States -- the high labor-dollar countries.
Where will your business be three years from now?
We're definitely going to be consolidating some of the operations over the next few years. As we grow, we're consolidating into some larger facilities to handle some of that growth all in the same geographic area. There's definitely going to be one, possibly two, international plants or locations that we'll have.
We've been doubling our revenues every 24 months (for the last six or seven years). We've done a little bit better than that during the (recent) economic downturn. I don't see any reason why that can't necessarily continue. Part of that is internal growth and part of that is through acquisition.
We're not going to force that issue. If we can't keep the profitability up, I'm not interested in growing just for the sake of having more dollars going through.
HOW TO REACH: JJD Industries, www.jjdind.com or (847) 678-1600
* Lack of strategic planning. The tendency to react to each circumstance without the advantage of a strategic plan is a downfall for any business. Without a plan, owners jump from crisis to crisis without control, teaching employees to do the same.
A strategic plan must be designed to increase the chances of success, not simply reduce the likelihood of failure. It must identify a competitive advantage by differentiation and value.
* Inaccurate financial information. If there is a lack of truly useful financial information, it is impossible for executives to manage or make solid decisions. Without accurate information, owners are unaware of the financial impact of their decisions and how those decisions impact the break-even rate, overhead application and pricing matrix. A business owner who relies on gut feeling leads with a false sense of security.
Solid financial information is developed by analyzing critical functions. Based on this information, specific productivity goals should be set, along with a reporting mechanism to monitor costs to enhance profitability.
* Insufficient liquid assets. Business owners who use U.S. Government Trust funds to cover costs put tremendous pressure on themselves to resolve financial crises. Often, this leads to making expedient short-term decisions, to the detriment of the long-term survival of the company.
Understanding the true cost of running the business is the first step in gaining control of the company's finances and, ultimately, the success of the business. Utilizing break-even for pricing and competitive advantage, understanding the impact of indirect and administrative overhead and making profit the first item of expense allow the company to generate enough cash flow to meet its needs and generate a substantial profit.
* Inability to measure employee productivity. A business owner who is not able to measure employee productivity is forced to discipline negative work habits based upon visual observations. If a company has not defined employee performance standards or has not quantified the desired results, it will have a difficult time providing incentives to employees.
The lack of a system to measure productivity leads to an inverse pyramid organizational structure, with the owner spending less time on long-term planning and more time on daily crisis situations. This structure can lead to discouragement and poor performance among the best employees.
Incentive programs and performance job descriptions allow management to motivate employees, shift responsibility to a lower position within the structure and hold employees accountable for overall performance.
* Inability to identify company costs. When no system is in place to identify costs, business owners must rely on visual observation to determine how each section of the company is managed. This can lead to a wasted budget or time, in turn leading to a decrease in billings or costing the company clients.
Business owners should identify the critical variables within the company, such as revenue, direct job cost, margin contribution, indirect costs, administrative and general overhead.
Each business is unique in its cost structure, employee and management profile and market, but owners must follow the principles of sound business management and learn to adapt these techniques to their specific industry. Each category works in conjunction with the others to provide the necessary information to make cogent decisions that are critical to the success of a company.
For business owners to realize their profit potential, they must understand that every decision has an impact on profit. If owners are diligent in the execution and follow-through of sound management techniques, they will achieve their predetermined profit.
Mike Rudd (email@example.com) is director of client services for International Profit Associates. IPA's 1,700 employees offer consulting services to businesses throughout the United States, including Alaska and Hawaii, as well as Canada. Reach him at (847) 808-5590 or at www.ipa-iba.com.