Curt Harler

Wednesday, 26 March 2008 20:00

Keep your lists safe

Few assets are as important both to a company’s sales efforts and to maintaining good customer relations as its list of client names and data. Lose the list and you give away much of the proprietary information that you built up during the years of working with the customer. Your firm stands to lose face — and business — if the list is stolen and used by others to undercut your business. When possible, customer lists should be protected as trade secrets, says J. Robert Arnett II, an attorney with the Dallas law firm of Munck Butrus Carter, P.C.

Are all client lists protectable as trade secrets?

Not by a long shot. First, they have to be secret. That does not require an absolute secret — known to one person and one person only — but it does mean the information cannot be well-known or easily acquired in the trade or industry. Second, they have to derive value or at least potential value from the fact that the information is not generally known or easily acquired. In other words, the fact that you have the information and your competitors do not gives you a competitive advantage. Third, the owner has to take reasonable efforts to maintain the secrecy of the list, which includes physical security and educating employees about their obligation to keep the information confidential. If customer lists are legitimate trade secrets, courts will give them a high level of protection.

How can a firm protect its customer lists?

First, you can employ physical security measures — keeping the lists secured, restricting access to the area within your facility where the lists are kept, limiting access to those employees who have a need to know and use them, password protecting files, and limiting access to computer servers where the lists are kept. Second, you can take steps with your existing employees to reinforce the secrecy of the lists by training employees about the importance of protecting trade secrets and requiring employees to sign nondisclosure and/or noncompete agreements. Third, you can take steps with departing employees to reduce the risk of them stealing your lists — conducting exit interviews to remind departing employees of their duty to not disclose trade secrets and confidential information, checking what materials the employees are taking with them as they leave, requiring them to leave immediately, retrieving their keys and pass cards, disabling their computer network access, and having them come back after hours to clean out their offices under supervision.

What about when a trusted employee leaves? A simple jump drive will download an entire hard drive.

You can’t completely stop employee theft, particularly when technology exists that makes it easy to copy information. You can minimize the risk by having employees sign nondisclosure and noncompete agreements. Noncompete agreements have to be reasonable as to duration, scope of prohibited activities and geographic extent, but courts are willing to enforce reasonable noncompetes by issuing injunctions against departing employees. If they can’t go after your customers at all for some period of time — say two years — stolen lists have less value to them, and by the time they can compete the stolen list may have lost most of its value. Some firms also employ measures that will alert them if someone has stolen and is using a list, for example, by ‘salting’ the list with people who are not real customers or prospects and who will inform the firm if someone has contacted them to solicit business.

Isn’t it difficult, even with names ‘salted’ in a list, to prove a list was stolen?

It is a rare case in which a departing employee admits to stealing a list. Unless you get some direct evidence through discovery, you generally have to rely on circumstantial evidence. But that is broadly true in all types of business litigation and is not a barrier to enforcing your rights.

For example, if a competitor who hired your former employee suddenly contacts your best customers and undercuts your prices, that is pretty good circumstantial evidence it is using your list. And, if a competitor calls a ‘salted’ name — like your uncle who is not in the relevant market — it is hard to envision the competitor coming up with an innocent explanation. That’s very good evidence, even if it is circumstantial.

You may also be able to get direct evidence that the competitor has your list through aggressive discovery, including seeking a forensic examination of your competitor’s electronic files. That can be expensive, but if the list you are trying to protect is valuable it can be worth the effort and expense.

J. ROBERT ARNETT II has more than 20 years of experience in all aspects of civil litigation at trial and appellate levels in state and federal courts as well as before domestic and international arbitration tribunals. A shareholder at the Dallas law firm of Munck Butrus Carter, P.C., 100 percent of his practice is devoted to litigation. Reach him at

Tuesday, 29 January 2008 19:00

Efficient projects

Today, more than ever, it’s important to avoid costly delays and unexpected overruns associated with providing solutions to corporate real estate needs. As vacancy rates drop, landlord-driven markets strike out at tenants with a harsh onetwo punch. Not only are rents on the rise, but the Tenant Improvement Allowance is shrinking while the cost of construction and related services grows.

Rick Martin, who leads project management activities for CresaPartners of Orange County, says he believes this should be anticipated, negotiated and actively managed as part of the real estate transaction process.

Smart Business talked to Martin about keeping project costs in line and the dreaded “gotcha.”

Where do you start with clients when planning a project?

You engage a real estate broker to find a building or negotiate rent. But it is risky to then use in-house resources to marshal the professionals, contractors and other service providers through the tangle of scope definition, service agreements, schedules, bidding, change management, ris management and nonperformance issues that are part of every project.

A key differentiator is our approach to actively protecting our client against unexpected cost and delays through the early and effective use of project management.

Do you have a process you recommend so clients can protect themselves against ‘gotchas’?

Project managers should bring to the table a five-step process tailored to the specific needs of each client.

It begins with the early establishment of a comprehensive master schedule that is inclusive of all transaction activities in addition to those related to design, construction, technology, furniture, fixtures, equipment and expansion/relocation. This important tool guides the efforts of the entire team and works as a ship’s rudder to keep the project on course and protects against delays and added cost.

A cost forecast provides a comprehensive accounting of all non-reoccurring expenditures including design, documentation, permits, technology, construction, furniture, fixtures, equipment, and move costs is developed by the project manager. This forecast helps the transaction manager analyze each real estate opportunity clearly, with a well-grounded understanding of the “out-of-pocket” costs associated with each location, not just the reoccurring cost of rent and operating expenses.

To determine the exact amount of space required by a business and to facilitate the creation of the cost forecast, a space use program should be developed. The project manager uses competitive forces to help select the most qualified architect to work with the team and develop the space use program — which is the accumulation, and tabular presentation of, objective and subjective space needs. Objective space needs include the size and quantity of private offices, work stations, conference rooms, work rooms, specialty areas, reception and all other space needs.

Utility and service needs such as unusual HVAC and electrical requirements should be identified. Subjective needs are also identified that may involve corporate image or indicate the need or desire to occupy smaller or larger floor plates, multiple floors versus single floor, single-occupant building versus a multi-tenant building. This tool provides the criteria that will ultimately qualify available space for consideration and develop a space plan to evaluate each building’s efficiencies.

Each transaction should include a work letter and a description of landlord’s work. Together, these two documents should: 1) precisely define the physical condition the space will be in when delivered to the tenant, and 2) define specific conditions and requirements the landlord (or its lender) may have related to the use of materials, architects, engineers, and contactors, restrictions on the use of the Tenant Improvement Allowance, and other performance-related obligations.

In a strengthening landlord market, each issue within these documents will have a direct impact on cost.

What’s your advice on change orders and modifications to the work process?

The preceding four steps serve to set the course. Developing and using an implementation plan is the final step. The implementation plan steers the ship through the straits and narrows of design, engineering and construction.

By employing current market knowledge of service provider capability, contractor availability and labor and material costs, the project manager uses competitive forces to assure the best teams at the best price.

The project manager should use past success and experience to craft comprehensive service agreements that protect the client and provide for open bidding of the construction — thereby assuring the highest quality and lowest cost. Acting as the team quarterback during this phase, the project manager should continually represent the client’s best interest: protect against inappropriate change orders, prevent delays and advise in advance of important decisions.

RICK MARTIN leads project management activities for CresaPartners of Orange County and exclusively represents users of commercial real estate. Reach him at

Tuesday, 29 January 2008 19:00

Know how to stay

Astay can be a potent legal tool when used in the right place and at the right time. A stay, in legal terms, is a temporary halt to a legal proceeding until the occurrence of some future event.

“In complex cases, courts stay a case when a pending motion or other proceeding could impact the case,” explains Jamil N. Alibhai, shareholder and attorney in the litigation section at Munck Butrus Carter, P.C. For example, in securities litigation cases, the filing of a motion to dismiss “stays” the case and precludes the parties from engaging in time-consuming and expensive discovery in a situation where the court may end up dismissing the case in its entirety.

Aren’t stays frequently used in an administrative re-examination of a patent or the like?

The United States Patent and Trademark Office (PTO) has established a procedure by which any person at any time may file a request for re-examination of any claim of a patent. Basically, an individual or a company can ask the PTO to review a patent and determine whether it is valid. When a defendant in a patent case seeks re-examination in the PTO of the patent asserted against it in the litigation, a defendant will often ask for a stay of the proceeding pending the re-examination.

Re-examination permits efficient resolution of questions about the validity of issued patents without expensive and sometimes lengthy litigation. Courts have the inherent power to issue stays as part of their control of the disposition of their dockets. The inherent power to stay proceedings specifically applies to patent cases while the PTO re-examines a patent at issue in the litigation.

When will the courts allow a stay?

Courts usually consider three factors in deciding whether to stay litigation pending re-examination: (1) whether a stay will unduly prejudice or present a clear tactical disadvantage to the nonmoving party; (2) whether the re-examination will simplify the issues in question and trial of the case; and,

(3) the status of discovery and whether a trial date has been set.

Courts first look at whether all of the claims asserted in the action are under reexamination. If the re-examination does not cover all of the patent claims asserted in the litigation, a court will not be inclined to stay a case because the court will still need to consider the validity and infringement issues regarding patent claims not under re-examination.

Courts also prefer to grant stays that are requested early in the lawsuit and before the parties have engaged in discovery and claim construction proceedings.

What are the advantages of obtaining a stay?

If the court grants a stay, the parties can wait for the conclusion of the re-examination. The stay allows the parties to save the time and money that otherwise would be spent on discovery and claim construction proceedings.

An advantage of the re-examination process is that it allows the validity of a patent to be tested in the PTO by a Central Re-examination Unit made up of highly qualified examiners. If a re-examination proceeding results in cancellation of the asserted patent claims, the suit likely will be dismissed. In over 70 percent of all granted re-examinations, the patent claims are canceled or amended.

If claims survive the re-examination proceeding, re-examination may facilitate a trial because the court will have been provided with the expert view of the PTO regarding the validity of the patent.

How much time is allotted for a stay?

Most courts will stay the case pending the outcome of the re-examination proceeding. According to federal patent law, reexamination proceedings are conducted with ‘special dispatch.’ Depending on the type of patent involved, the first office action by the PTO can be as quick as three to six months.

Can’t stays be used to drag out an issue to the detriment of one party or the other?

A plaintiff facing a motion for stay pending re-examination will often claim that the re-examination is a stall tactic. A court will have to compare the patent claims in reexamination versus the patent claims asserted in the litigation to determine whether a stay is warranted. If a party can make a showing of harm or prejudice, a court will not likely stay the case.

What should be accomplished during the stay?

During the stay, the PTO will re-examine the patent and determine whether it is valid. The patent owner will respond to office actions from the PTO and has the opportunity to amend claims in the patent. The defendant should keep track of the proceedings in the PTO, and both parties should also keep the court apprised of the status of the re-examination proceeding.

JAMIL N. ALIBHAI is a shareholder in the litigation section at Munck Butrus Carter, P.C. His practice focuses on intellectual property and complex commercial litigation and appeals. Reach him at

Tuesday, 29 January 2008 19:00

A precarious situation

Companies in industries that have highly leveraged balance sheets should renegotiate interest rates now if they have

not already done so, according to Will Thatcher, vice president and affiliate head of business banking for Fifth Third Bank.

“Your bank should always be willing to review your companies’ financial position, and reviewing interest rates in a reducing rate environment is part of that,” Thatcher says. In times of volatile interest rates, there are several opportunities for both borrowers and depositors to improve their financial situations.

Smart Business spoke with Thatcher about interest rates and what companies can do to combat them in today’s market.

Are banks really happy to renegotiate rates?

Banks are trying to manage the fact that interest rates are moving around. I would always tell people to meet with their banker to take advantage of the situation. The same thing holds true if interest rates are headed up. We know higher rates make it more costly to run a business. In fact, the more capital intensive your business is, the more important it is to meet with your lender — no matter which way rates are going.

Which way are rates going?

There is definite downward pressure on interest rates. There is discussion that at the next Federal Reserve meeting the Federal Funds Rate may fall as much as 50 basis points. The yield curve continues to be inverted. That is, the cost of borrowing money for the short term is greater than that of long term. This will place some stress on companies and individuals that rely on returns on liquid investments for income as banks and other financial institutions reduce the amount of interest paid out. Contrary, the individuals and companies that have large amounts of debt to repay may be able to review their strategies for financing indebtedness and lower their overhead costs.

So, these are strange times?

Everyone who has been in the banking industry for a while agrees we’re in a situation that we’ve not seen for a long time. My advice, if you are looking to borrow money, is to utilize a fixed rate, for the environment is at historical low levels. Do not attempt to time the market for its lowest trough, for interest rates can turn quickly. Rather, make certain that your ROI analysis works for the level of debt and productivity you expect for the asset to be purchased. Also, talk to your banker about performing an interest rate buy-down. Most likely a fee will be incurred to break an existing contract, but the interest rate received may be lower.

What about my other business accounts?

As rates move around, your earnings credit rate (ECR) will adjust. ECR is the interest-like payment banks give customers in lieu of interest. As interest rates fall, the ECR falls, too. So, revisit your depository relationship. Decide which features you need since, in effect, a lower ECR costs you more for each transaction, whether online banking, check writing or ACH activity. When rates go back up, add back the ‘nice to have’ services since you will get a higher ECR. They effectively become free add-ons. It’s like frequent flier miles — use them or lose them.

What about deposits?

If you are a depositor, you may not want to tie your money up long term. Therefore, meet with your banker to review other investment alternatives inside the organization, i.e. brokerage, insurance, commercial paper, other than certificates of deposits.

Is rate volatility good for real estate?

As rates go down, it is quite favorable for real estate. Interest is the most significant cost for most borrowers. A $2 million property will cash flow better at 6 percent than at 7 or 8 percent. If you are selling, look for a price premium, since the cost of the property to the buyer is effectively lower. Since you are likely to find more people interested in buying, it might be a good time to take your gains and move on. If you are building a large building or buying large, expensive equipment, your bank can lock in your rate a year in advance using interest rate hedges or derivatives to manage risk. That way you won’t run into a difficult situation a year from now if rates rise before the building is completed. This is also a good time to look at leasing equipment. The tax advantages inherent in an operating lease are still present, while the overall monthly payment will fall as well.

How long will the topsy-turvy situation last?

I don’t know that we have a pulse on it, but there is certainly a bias towards further rate reductions. A common mistake by business owners is that they try to ride the variable rates down as far as possible and then lock into a fixed rate agreement. My recommendation — don’t be greedy. Pick a target with your banker. When rates creep to that number, lock in your rate. If you fear rates are rising, lock them in fast. Talk to your vendors, too. Low interest rates may have lowered their costs as well. It may be time to revisit the cost of items you buy. But remember, playing interest rates will make you less money than what you do for a living. Manage your interest rate to a target. You may lose if you wait for the lowest rate.

WILL THATCHER is vice president and affiliate head of business banking for Fifth Third Bank’s Cincinnati and Kentucky markets. Reach him at

Tuesday, 29 January 2008 19:00

Exceeding expectations

Everyone appreciates a little something extra. In New Orleans, it’s called lagniappe. It’s the small wind-fall that makes a customer feel good about doing business with a particular firm. In an era when customers often are relieved when a deal meets minimum contract standards, the company that exceeds client expectations is going to shine.

“We have always believed it is better to underpromise and overdeliver,” says Carl Albright, president and chief executive officer of InfoCision Management Corp., Akron, Ohio. While it is not always simple to achieve that goal, the benefits of going beyond what is expected are great. The idea works at all levels — including an executive’s dealings with the company’s customers and dealings with the company’s employees.

Smart Business asked Albright for a peek behind the curtain to see how a successful company can set about exceeding expectations.

Before you can exceed client expectations you have to set a level of expectation, correct?

You absolutely need to set ‘initial’ expectations. If a client knows you are going to do what you tell them, you build immediate trust and confidence. When you exceed those numbers, goals or service levels, your clients know you are always working in their best interests.

Exceeding your client’s expectations is not only a great way to endear yourself to your client, it is simply good business. It is a way to build a level of trust and security for future dealings.

An old butcher’s maxim used to be: Always give them a bit more meat than they ask for but don’t be afraid to charge them for it. Does this hold?

We certainly strive to overdeliver. However, we do not charge our clients when we exceed those original expectations. Delivering a bit more than the client expects should simply be part of everyday operations.

Does this concept have other applications, as well?

We strongly believe that this whole concept works internally, as well. Exceed your staff’s expectations. Exceed your employees’ expectations. Exceed your boss’s expectations. You will shine through every time someone thinks about you.

Whenever you deliver higher numbers, more sales or a higher return than you originally told your client — whether that client is external or internal — you are putting yourself into a partnership with that person. You are avoiding explaining problems away and you are avoiding difficult conversations at a later time. It runs in tandem with the ‘no surprises’ philosophy of management. The only surprises should be good ones.

No matter what you do, doesn’t everyone always want ‘more, better, faster’?

In my experience, I don’t think that everyone wants more, better, faster. In actuality, most clients and most customers are very realistic with their expectations. They go into a situation with a good understanding of the transaction and the services involved. Just as with anything in life, you are likely to find that some people are more demanding than others. Some people are less appreciative than others. All in all, a good business arrangement allows you to set expectations up ahead of time with your clients and establish the goals that they want you to meet. Then, when you achieve them and then surpass them, things almost always work out very positively for everyone involved.

How forcefully should you ‘sell’ the notion that you gave extra?

When things go well and an organization or person is able to exceed expectations, you really do not need to sell your services or brag about the idea that you gave them something extra, because they are aware of the parameters of the original agreement and usually are very appreciative when you exceed their expectations.

No matter what happens, you always want to deliver more than you did the previous year. You always want to make sure you did not ‘sell’ clients on the expectations. It needs to be a collaborative effort, so they know you want them to be happy. The goal should be to not continually tell clients how well you are doing, but get them to tell you that you are doing a good job and then continually meet and exceed their expectations. <<

CARL ALBRIGHT is president and CEO of InfoCision Management Corporation., Akron, Ohio. He oversees all aspects of the company’s day-to-day operations from sales to marketing to information technology. Reach him at In business for 25 years, InfoCision Management Corporation is the second largest privately held teleservices company and a leading provider of customer care services, commercial sales and marketing for a variety of Fortune 100 companies and smaller businesses. InfoCision is also a leader of inbound and outbound marketing for nonprofit, religious and political organizations. InfoCision operates 32 call centers at 13 locations throughout Ohio, Pennsylvania and West Virginia. For more information, visit

Wednesday, 26 December 2007 19:00

A true asset

Asset-based loans aren’t just for companies in trouble. Today’s CEOs see them as one of many working capital financial tools available to them.

“An old stereotype is that asset-based loans are for companies that are distressed,” says Tim Mauter, vice president, commercial banking with FirstMerit Bank in Columbus.

However, he says many businesses can use asset-based loans to gain more freedom to obtain loans that match their business growth and borrowing needs.

Asset-based loans are an excellent fit for business owners in promising turnaround situations, as well as for manufacturing concerns and companies experiencing fast-paced growth. Seasonal businesses and companies going through ownership transition also benefit from this type of loan.

Smart Business spoke with Mauter about why asset-based loans are solutions for companies at many stages.

How does an asset-based loan work?

Rather than basing a loan off a company’s cash flow and overall balance sheet leverage, as in a traditional secured line of credit or term loan, the asset-based lender lends a percentage against the company’s working capital assets. This typically includes accounts receivable and inventory. As the business experiences fluctuations in sales, working capital assets increase or shrink to match sales levels. At the same time, the asset-based loan increases or decreases, matching borrowings with asset levels.

What is an example of a business that can benefit from this structure?

Manufacturing, distribution, seasonal and high-growth businesses are great examples. The best candidates have good internal controls and accounting software. Also, the quality of a company’s accounts receivable and inventory controls and its ability to ‘turn’ these short-term assets quickly is a plus. The quality of the company’s working capital assets also will determine what percentage the bank is willing to lend. The higher the quality of assets, the higher advance rate the lender can offer, which translates into more borrowing availability for the borrower.

What types of businesses are best suited for asset-based loans?

Asset-based loans fit high-growth companies or companies with a great deal of working-capital assets. Companies with direct contracts with government entities or foreign accounts receivables also make good candidates. With proper documentation, the lender may be able to advance a higher percentage on these specific receivables. Companies going through an ownership transition or estate planning that leverage the balance sheet may also benefit. In addition, highly leveraged companies or companies in a turnaround situation are good fits.

What is the lending formula for an asset-based loan?

Advance rates for accounts receivable may range from 60 to 95 percent. The asset-based lender will base this advance rate on the quality or collectability of the receivables. Advance rates on inventory may range from 20 to 70 percent, depending on the type of inventory and how often the borrower ‘turns’ or sells the inventory each year. Commodity inventory or finished goods may allow for a higher advance rate, as they are readily marketable.

In the past, asset-based lenders typically did not lend against work-in-process (WIP) because it was difficult to determine the cost or likelihood of converting it to salable inventory. Today, some lenders will lend against WIP, but the advance rates may vary.

What qualities do banks look for in a company before extending an asset-based loan?

It is vital to demonstrate that your firm has a talented management team, good financial controls and is focused on the execution of your business plan. Banks like to work with management that has proven its ability to succeed in good times and bad.

A quality accounting system and internal controls indicate that a company is invoicing in a timely and effective manner, which ultimately produces better cash flow — including solid inventory controls. A perpetual inventory system with periodic physical counts is a plus. Solid internal controls and systems also will assist the borrower with the daily, weekly or monthly reporting requirements of the asset-based lender.

How do you know if a company’s internal controls are acceptable?

The asset-based lender will conduct a field exam, during which the examiner will evaluate various issues, including credit policies and collections, books and records, systems, controls and inventory. The examiner will interview company personnel and review accounts receivable, accounts payable and inventory reports. In addition, he or she may take a physical inventory or spot-check specific items for accuracy. Ultimately, asset-based loans allow businesses the flexibility to match their borrowing needs to actual asset (revenue) growth. Asset-based lenders can respond quickly to companies’ needs for more working capital with an asset-based structure, increasing the loan amount along with borrowers’ receivables and inventory.

TIM MAUTER is vice president, commercial banking with FirstMerit Bank in Columbus. Reach him at (614) 545-2769 or

Wednesday, 26 December 2007 19:00

Hiring good people

Good employees are those who show up for work on time and are enthusiastic about getting down to business. They bring the skill sets needed. They get along well with fellow workers.

However, there is more to it than that. Both in his job and in the offices of his customers, Ron Biggs, vice president of business banking with Fifth Third Bank in Cincinnati, has seen a lot of successful hires.

Smart Business spoke with Biggs about what makes a good employee, and what a company can do to find successful hires.

Beyond showing up on time, what other aspects make a good employee?

Dependability. When you say you’re going to do something, then do it. When you are expected to be at work at a certain time or at a specific location, be there. When you receive a phone message or e-mail, return it in a timely manner — no excuses. When employers and co-workers know you are dependable, it makes scheduling and workload distribution much easier.

Trustworthiness. A reputation of being honest and above reproach in all your dealings will go a long way with any employer. When problems arise involving losses, questionable activities or other difficult situations, it’s worth a lot to know you can be trusted.

Manageability. There’s little that makes life more difficult for an employer than an employee who is difficult to supervise or always knows a better way to do things. There are no perfect bosses, but insubordination and resistance to doing a job the way the boss wants it done is no good for anyone.

Teamwork. Employers usually don’t cherish ‘lone rangers’ or employees who compete out of greed. An exemplary employee is one who others want to work with and spend time with in the workplace.

Are referrals from good employees generally successful hires?

Yes. A good employee sees the value in individuals who share the same work ethic or similar work-related aspects that would work well in the company. Employee referrals should be encouraged.

How does one assure that HR is a help — not a roadblock — to finding the right person?

Be involved in the process early. HR has to fill many positions in the organization and typically cannot know everything about every job class and who would fit best. Groups have personalities just as individuals do. The manager of that group should be involved to assist in finding an individual who gels with his or her group.

Does it cost more to hire and train a worker than to keep a good one happy?

Typically, yes. However, if an employee is unhappy due to pay or some other situation at the organization, then that problem may be too costly for the organization to resolve. Sometimes, it may be best to part ways with an unhappy employee because his or her influence on other employees may make a difficult situation worse — then the cost can be far greater than hiring a new employee.

Is money the key factor in job satisfaction?

Absolutely not. Employees may say this is their major motivator, however, if you have to come into a work environment every day that is toxic, then the money will play a minor role. A good employer will pay a fair wage and offer a good work environment. There needs to be a good balance between work and employees’ home life. Employees cannot feel like their work lives weigh heavy on them when they are at home with their families.

Is it usually better to promote from within?

Typically, if you can hire within, I would recommend it. The current employee knows the systems and would be more efficient initially. If the promotion is seen as justified by the other employees, then it is an easier buy in to follow this individual’s lead. However, sometimes to move an organization forward, a hire from outside the organization may bring in ideas that have worked at his or her organization and can be duplicated at your organization.

Younger people want to know where they are going in an organization. A more experienced individual may want to know if he or she is going to be an integral part of an organization going forward. I think great organizations have a good mix of both. Experienced workers have the knowledge and should be the mentors for younger employees. I have found younger employees can sometimes mentor the more experienced. More experienced workers may do something a certain way because ‘that’s the way we’ve always done it.’ However, a younger employee may look at it in a totally different and better way.

At what point is it worth paying the right individual more money?

If that individual can bring greater success to the individuals working around him or her, then it may very well be worth it to overpay that employee. Look at successful professional sports teams where one individual can elevate an entire team.

RONALD BIGGS is vice president, business banking, with Fifth Third Bank in Cincinnati. Reach him at

Wednesday, 26 December 2007 19:00

Selling points

Sales is a tough business. A complex sales cycle can take six months to a year before the deal is closed. The process is long and involved. Since every customer sees many salespeople every week, it is important to differentiate yourself and your company from the pack.

Smart Business asked Rick Lawson, vice president of new business development for InfoCision Management Corp., Akron, for some advice on how to get customers to the bottom line in an effective, efficient manner.

What is the first step in getting a customer to ‘yes’?

The most important step in new business development is to spend time researching the prospect. First, figure out whether the needs of the prospect align with the services or products you provide. As an example, don’t go to a prospect with international operations if your support capabilities are limited to domestic sales and service.

Spend time researching the prospect. Look at its annual reports. Do Internet searches. Look for articles that quote the company’s CEO. Try to get a feel for where it sees its business in three to five years. This process opens up your understanding of the market and the companies you anticipate engaging. Be prepared to understand — in detail — what your company can do for them.

Then, identify the highest-level executive you can speak to in that organization. Don’t start low and try to work your way up. You might see a person in a lower-level position who is nice and listens to your proposal — but it’s really a waste of time. Identify and approach an executive who has a broad view across the prospect’s strategic landscape.

Once you identify a target, what’s next?

The next step is to obtain an interview, to get in front of that senior-level prospect. The mistake many people make once they get the interview is to load up on PowerPoint presentations and give a one-sided talk about their business, their manufacturing capability or JD Power ratings. Instead, give the other side time to explain its needs. I like to go into an interview with a blank piece of paper. On one side, list the prospect’s current state. On the other, list the desired state. Work from global concepts to specifics. This model is a fantastic tool to glean where the prospect’s strategic objectives are headed. When you are done, the prospect — not you — has built a bridge to where it wants to be. That bridge should be your offering.

Is it now time to ask for the sale?

Right. Craft a proposal. Target the proposal based on how your company’s products and services will get prospects where they want to be in one, three or five years. This is much more powerful than talking about manufacturing capability or ISO approvals. This approach lets you establish credibility. You’ve built a relationship. They know you are serious about the process and understand the complexities and the gaps in their program.

What should be in the proposal?

Write something that is aligned with the areas that you plan to address. Be sure it states that these are needs that the prospect has identified, not just things that you want to sell. Say, in so many words, ‘Here’s what we propose to meet the needs you’ve identified.’

Don’t just pull up a boilerplate document and change names on the company’s standard proposal. You must respond to the prospect’s specific needs. It helps to bring in cross-functional teams so everyone is on board within your company. Give prospects an actionable document that they can take to their CEO for approval.

What if the prospect says ‘no’?

You will have to overcome objections. Some are in the form of questions: ‘Is this your best deal?’ Others will be statements: ‘You’re too expensive.’ This is the time to file off the rough edges.

Always respond from a position of strength. Don’t back down. Tie your responses to how your product or service will help prospects meet their strategic plans. Always loop the answer back to helping them get where they want to be. Then, close the deal. Don’t be afraid to ask for the business. Make presumptive statements like, ‘Can we start in 10 days?’ or, ‘Where can I send the contract?’

What about following up?

The sales process does not stop here, in fact, it is really just beginning. This is where most sales organizations really fall short. Remember to measure, monitor and platform. By this, I mean that once the program is up and running, the salesperson must measure and monitor the program. Be sure to live up to your proposal.

Being successful in measuring and monitoring your service once you have started will position you for future sales. Look for add-on sales. See if you can make a similar sale to a different division. Get referrals. It’s much easier to use a reference to get another job than it is to try to find a new prospect.

RICK LAWSON is vice president of new business development at InfoCision Management Corp., Akron. He has a broad background in financial and outsourcing services. He can be reached at In business for 25 years, InfoCision Management Corporation is the second largest privately held teleservices company and a leading provider of customer care services, commercial sales and marketing for a variety of Fortune 100 companies and smaller businesses. InfoCision is also a leader of inbound and outbound marketing for nonprofit, religious and political organizations. InfoCision operates 32 call centers at 13 locations throughout Ohio, Pennsylvania and West Virginia. For more information, visit

Sunday, 25 November 2007 19:00

A fresh start

A new year, like a new job or a new baby, comes full of promise. The hassles of last year are gone, and the first months of a year are filled with hopes of better business, better profits and better performance.

And those hopes can be fulfilled — if we get things lined up today, so we can improve the bottom line in 2008. Since it all comes down to dollars and sense, we asked Bob Friend, senior vice president at FirstMerit Bank, to gift-wrap some good ideas on how to benchmark performance improvement.

How important is budgeting in the annual review process?

Establishing a budget that encompasses the direction that the company wants to go is an essential part of the planning process for the coming year. The budget process, if done properly, enables the company to review sales plans and expectations, review cost structures and plan for impact on cash flow.

In addition, the process provides the company an opportunity to consider different options and their impacts. Such items to be considered would be the impact of significant growth in sales and the effect on the cost structure. Questions need to be asked, such as: Can the increase truly be achieved? If so, will the cost structure be able to be maintained? What is the impact on cash flow if higher levels of inventory are needed to achieve the sales level? The budget process lets management review various scenarios to determine the most desirable result, the likelihood of achieving the result and the overall impact on the company.

What are the key measurements to be reviewed in the budget process?

The principal items to be considered in preparing the budget are sales levels, changes to the existing cost structure and significant cash flow events, such as capital expenditures, debt repayment or distributions. Resolving these major items allows the income statement to be generated and operating performance to be determined. Other factors include expected changes in receivable and inventory turns. A significant change in either could have a major impact on the expected cash flows of the business.

Who should be involved in the process?

Although the budgeting process is typically a management-directed exercise, it is important to get everyone’s input. The key is to get the concurrence of the expectations and assumptions in the process, especially from those that can impact the results. Without the input of the parties that direct activities, key assumptions can be incorrect, leading to faulty conclusions. For example, if purchasing is not involved in establishing the margin assumptions, recent price increases may not be factored in. Also, it is important that everyone on the team is aware of the targets and goals for the coming year and agrees that the budgeted results are achievable. In this way, everyone has a vested interest in the success of the plan and can take ownership in the plan. Getting all of the key people involved in the process keeps the company headed in a unified direction.

Whom should a business use as advisers in reviewing plans for the coming year?

Each company’s owners will have different key advisers, whether they are suppliers, industry experts or professionals, but I think there are four key advisers that a company should use during the annual planning process. They are the company’s accountant, lawyer, insurance agent and banker. Each of those advisers looks at the financial statements from a different perspective. The accountant can look for ways to implement various tax strategies. The insurance agent will make sure the level of coverage is adequate, especially if significant growth is planned or a new line of business is anticipated. Similarly, the attorney needs to be aware of any organization changes that may be anticipated or liability issues that may result. Finally, the banker needs to be aware if events will affect the current loans or if new borrowings are anticipated so that a proper structure can be put in place. The company does not want to start down a path that’s not achievable due to an improper assumption. Meeting with advisers can help test the assumptions and conclusions reached. This process will greatly assist in eliminating potentially unwanted surprises.

How should advisers be used in the process?

It’s important that advisers are used throughout the process, as assumptions and planning are completed. The advisers should help test the goals and assumptions. If the advisers are not consulted during key phases of the process, the company can get to the end of the budget process with completely erroneous results. For example, the company may need to make a significant capital expenditure to reach certain sales levels and assumes the equipment can be easily financed. A discussion with the banker will provide guidance into how much financing is likely to be acceptable, along with potential terms, such as repayment. Without that, the company could start generating the sales without the ability to obtain the necessary equipment. The planning and budgeting process is a key step to set the goals, directions and expectations for the year. It’s key that management gets involvement and buyin from everyone involved in the execution of the plan. Finally, it’s essential that key advisers test the assumptions and conclusions reached to end the process with a plan that is not only accurate, but also achievable.

BOB FRIEND is senior vice president of commercial banking, FirstMerit Bank in Columbus. Reach him at (614) 545-2763 or

Sunday, 25 November 2007 19:00

The value of integrated outsourcing

Like any of a company’s resources, computers and software have a life cycle that must be managed. In the IT arena, that life cycle can be broken into several discrete steps: product acquisition, configuration of the computer for the user’s special needs, deploying the unit to the user’s workstation, supporting the computer through its active life cycle and disposing of the product at the end of its useful existence.

Most companies deal with each step of the cycle as if each is a separate, compartmentalized event. However, Barry W. Savage, vice president of strategic sales with Pomeroy IT Solutions, Inc., says there is solid value in managing the life cycle as a unified process, taking a holistic view of management.

Smart Business talked to Savage about what he calls “integrated outsourcing” or “computer life cycle services.”

How far should this integration go?

When you step back and view a computer’s entire life cycle as a single event, and tie all of those separate steps together. This process will enable additional savings in the process. A good outsourcing partner provides support for each step in the management of all of a client’s technology assets throughout the life cycle.

In a world where this life cycle is conceptually integrated, strategic sourcing, configuration, deployment, ongoing support and disposal create leverage points that allow a single authorized outsourcer to support this entire life cycle. This linkage allows savings by eliminating internal and external costs that show up when a customer supports systems in silos.

Thus, the elimination of those silos should extend to the entire life cycle. This view allows IT shops to gain savings and efficiencies by reducing support personnel, leveraging buying power of your outsourcer, and recouping dollars on the sale of your old equipment.

What are some other places where a client gains efficiency?

Right from the start, a good outsourcing partner creates a competitive environment that allows sourcing equipment at a better price. A client can typically save 2 to 4 percent there. Those savings continue through the computer’s entire life cycle. Your outsourcer can also leverage costs of configuring your assets by doing the work with lower cost resources, saving another 2 to 4 percent.

The other interesting concept is that if you use an outsourcer who can leverage break fix and help desk resources, the savings can be as high as 20 to 30 percent versus doing this support internally. Then, at end of life, the owner has a record of that unit’s life. Rather than dumping or recycling the computer, it is possible to resell it and regain some of its value.

Through its business networking links, a good outsourcing partner will have many more resale contacts than the typical manufacturer or service provider. That means better return at the end of life for the seller and, perhaps, a bargain for the buyer.

How about specific areas like integration and distribution?

Good outsourcing partners will have a guaranteed order turnaround and delivery program. Since they do volume shipping with several major carriers, they will pass along the value of lower freight costs. They will also have Certified Stock orders placed with all the big-name vendors, such as HP, IBM, Dell, Cisco, Nortel, Microsoft and Symantec. An outsourcing partner can stock product in its safety inventory — in effect, acting as the customer’s warehouse without the customer having to manage the inventory or pay the square-foot cost, which is considerable in any downtown office.

Should a company expect a dedicated team to work its IT all the time?

It really depends on what is needed to solve your business problem. ROI is also a consideration. For some customers, a dedicated team is the best solution. Others can take advantage of lowered costs through a shared resource model. It goes back to what is the best fit for you.

How do you get the service you need?

Service Level Agreements (SLAs) are guarantees of response times for various situations, which helps set and manage expectations for both the client and the provider. The SLAs have to be tied to the client’s business objectives because they drive the specifics of the SLAs. If it is a key business function, then it might be reasonable to call for 24-7 help desk service with a four-hour, or even one-hour, fix time. But that will be expensive. Other business functions may only require a 12-hour fix time. Make your SLAs appropriate and reasonable for your business. Specify critical functions and have separate SLAs for them.

What sort of dollar savings should I expect?

Assuming that you execute a complete life cycle solution, I would expect anywhere from 15 to 50 percent of your current costs could be realized. Again, you might save 2 percent on purchase of equipment, but if you incorporate all of the life cycle into a complete solution outsource you can achieve 15 to 50 percent cost savings.

BARRY W. SAVAGE is vice president of strategic sales at Pomeroy IT Solutions, Inc. Reach him at (512) 738-6074 or