Cincinnati (1116)

Wednesday, 01 March 2006 04:36

The Houston file

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Born: Toronto, 1949

Education: I have no formal education, but ... I’ve taken 15 different courses through Cornell University and I’ve also attended Cornell University in an executive development course.

First job: A grocery clerk in a supermarket

What is the greatest business challenge you’ve faced?
I think that Alderwoods is a good business challenge, from where it was to where it is today. I’ve overcome the challenges by creating the environment we’ve been talking about and also focusing on the financial objectives and working hard every day at trying to achieve what we’ve been able to achieve.

It’s all about creating the proper environment for your work force, it’s all about having the right financial objectives and it’s about having a good strategy for making the company successful.

What is the greatest business lesson you’ve learned?
How important an organization is and the people on the team in the organization are in order to accomplish any kind of financial success.

Whom do you admire most in business and why?
That’s a tough one. Nowadays, that’s a dangerous one, too. Not a specific mentor — I guess it’s my business experience in the School of Hard Knocks.

If you said to me, ‘Would you rather have a formal education than have gotten where you are how you did?’ Absolutely not. Because it puts me in the position as a person to listen to people, understand them and empathize with them, and it helps to translate the objectives into something they can understand.

Tuesday, 28 February 2006 11:05

Education Strategies

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Making a decision about what type of education to pursue in college can be challenging, and a legitimate question students and their parents often ask is, “How will this help me succeed in the real world?”

While students entering college may not always completely understand how a liberal arts and sciences education will help them on the job, today’s savvy employers appreciate the skills students gain while pursing a liberal arts and science education, says Alan deCourcy, associate academic dean for graduate studies at the College of Mount St. Joseph.

“Today’s employers are specifically looking for skills that are emphasized in the liberal arts education, including critical thinking, communication and the ability to integrate information,” he says.

A liberal arts and sciences background lays the perfect foundation for any course of study, says deCourcy. Students gain important skills and knowledge that they can apply to any job, making them a valuable addition to any workplace.

Smart Business spoke with deCourcy about the benefits of a liberal arts and sciences education, the kinds of skills students can expect to learn and why these skills are so important to employers.

Why study the liberal arts and sciences?
That’s a question that gets a lot of attention in academic circles these days for a number of reasons. Liberal arts attempts to educate the whole person, not so much for a career but for living a meaningful life. It provides students with both the skills and the knowledge that will help them in that journey.

What benefits does this course of study have over other areas?
The liberal arts can be a foundation for all courses of study, whether someone pursues a specific discipline or a profession. Regardless of a student’s chosen field, one still needs the basis of the liberal arts and sciences.

Certainly other areas of education can teach some of these basic skills, but the difference is really in the degree of focus. Liberal arts gives students a group of skills that will enhance their ability and functioning in any area of study a student might undertake.

What skills are developed through the liberal arts and sciences?
Students pursuing a liberal arts education can expect to learn critical thinking and effective communication, and will develop a capacity for integrating knowledge and information, which is critical in today’s world. Additionally, liberal arts seeks to expand students’ knowledge of other cultures. Perhaps most important, liberal arts education develops values and helps build an ethical orientation.

I also think the interdependent nature of knowledge in our world today — emphasizing that we are all connected — is an important aspect of a liberal arts education. We can no longer think only in terms of local citizenship, but also in terms of global citizenship. This is done by learning and understanding not only one’s own culture and personal biases but also by developing empathy with those whose lives may differ significantly from our own.

How do these skills translate to the corporate world?
In today’s workplace, there’s an increased emphasis on technology and how to assimilate and assess information, as well as a heightened awareness of the importance of diversity and multiculturalism. There are obviously also some significant questions about values and ethics in the business world, and there’s also a real need for leadership. My sense is employers are more appreciative of an education that will not just turn out someone who knows a field but who can function in that field as a leader.

Why do employers want employees with a liberal arts degree?
Liberal arts teaches people to think. Students learn to not just robotically give back information, but they learn to process information and become critical thinkers. Employers are looking for people who have learned to communicate ideas, both verbally and in writing, which is emphasized in a liberal arts education. And, following workplace trends, today’s liberal arts education puts a lot of focus on learning with others and how to work in a team environment.

What kinds of jobs are available for liberal arts and sciences students?
There are a variety of things a liberal arts graduate will be equipped to do. A liberal arts and sciences education prepares students for any job. The kinds of skills acquired through the liberal arts and sciences background make a great foundation for whatever profession a student pursues.

Alan deCourcy, D.Min., is associate academic dean for graduate studies and associate professor of religious studies at the College of Mount St. Joseph. DeCourcy oversees curriculum for master’s degree programs and teaches both undergraduate and graduate courses. He is also a past director of the Mount’s honors program. Reach him at (513) 244-4487 or alan_decourcy@mail.msj.edu.

Sunday, 12 February 2006 19:00

King of the air

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Don’t expect Bill Stakelin to waste a lot of time complaining about the changes that are bringing uncertainty to the radio business.

To the 47-year veteran of radio, iPods, digital signals and Internet streaming are as much opportunities to be exploited as they are threats to Regent Communications Inc., a company that posted $84 million in revenue in 2004.

“Radio, ever since I’ve been in it, has been called ubiquitous,” says Stakelin. “Well, broadband is becoming ubiquitous, and we don’t look at it as something to be feared or brand-new competition out there. We look at it as opportunities to grow and expand our distribution system and expose our product to more and more people.”

President and CEO since last year of the 900-employee company he and partner Terry Jacobs started in 1996, Stakelin is following a strategy of acquiring radio properties in mid-sized markets and clustering stations in each to gain economies of scale and provide programming across a variety of formats.

Stakelin talked with Smart Business about how he’s stretching radio’s opportunities via new technology and why radio has to be local, local and local.

Have you focused on mid-sized markets because of your core competencies or because of the opportunities?
It’s a combination. Core competencies are certainly there, but I think one, it’s the reality of the marketplace. This is not your daddy’s radio company. The new opportunities that are being brought by the expansion of media convergence just give brand-new opportunities to lots of people, and we want to make sure that we expand and play in the modern-day arenas.

How do you evaluate opportunities for expansion?
We examine all the opportunities for the distribution of our audio product. Radio is a product-driven business, and it’s the product that is the key, the content, the software, if you will, of this business.

The very first thing we do is try to make sure we are producing content, programming that is entertaining and informative and worthy of the consumer’s time. As long as the consumer wants what we have and is spending time with us, then we have our core element, our core business in place.

The rest of it is simply expanding into the new areas going forward with extending the distribution system.

How do you determine what properties to buy?
We like for it to be a good technical facility. If they can’t hear it, then it’s hard to grow it. So you want to make sure you buy a competitive signal.

All radio signals and radio stations aren’t created equal, so we try to make sure that we are buying a technical facility that can be competitive. We also want to go into a market that is big enough where we can generate a minimum of $1 million in cash flow, because what we’ve found is in order to attract good talent, do good programming, the market has to be of a certain size to sustain that.

What is your strategy in each of your markets?
What we look for is the ability to cluster or own as many radio stations in a given marketplace that the law will allow.

It’s very difficult anymore for a lone ranger to exist in a marketplace. It’s very difficult for someone that owns one or two radio stations to compete with someone who owns six.

After that, we take a look at format opportunities and how we cluster them, how we market them and how we sell them to the different segments of the consumer and advertising base in each of those markets.

We go in by opportunity. You buy something looking for a new opportunity, or you buy something knowing that you can do it better than the guy you’re buying it from. So you have to analyze the marketplace, see what formats are there and how well things are being done.

Then you can make your decision as to how you’re going to design your product for the marketplace.

How do you determine that you can do it better than the other players in a given market?
You make sure that you understand and analyze the market properly. You certainly have a lot of data in your hands.

If you’re looking at buying a specific facility, you know what the ratings are, so you know whether or not they’re good ratings with the format they have. If you have the financials, then you know what their margins are, what share of the market revenue they are retaining.

Is it in line with the ratings they have, are they underperforming or overperforming? How many competitors are there in that particular format, and might they hinder your growth?

There are all kinds of things you can analyze, but saying you can do better than the other guy is usually based on the fact that they have pretty good ratings, but they are unable to sell and market their product.

How does your selling and marketing technique differ from others in the industry?
A large part of my background was as the CEO of the Radio Advertising Bureau, developing sales and marketing, developing different techniques and systems and teaching and training programs. We put a large emphasis on it inside our company after the development of a product, which is always primary to our operation.

Even in downtimes, as a small company, we’ve been able to continue to perform at the top of the radio sector. I contribute that to the fact that we are able to do so much of what we call direct business without the middleman or the agencies in a lot of our marketplaces.

We’ve coming up with the ideas, we’re establishing the approach and the relationships and partnerships directly with the client, and that means we’re more in control of our financial destiny rather than relying just on ratings or cost-per-point or agencies to place business.

How do you develop strategies to take advantages of those opportunities?
It starts out with trying to make sure that you educate yourself and your people to the opportunities that are there. We spend a great deal of time as a senior management team educating ourselves so that we can come up with the strategies and the education of our own people to be able to play in this game and expand, rather than fear change and sitting on the sidelines hoping we’ll be OK.

How do you view the challenges posed by emerging media?
New technologies have come along ever since I’ve been in the business. I can remember when 8-track tapes would put us out of business, cassettes would put us out of business, movies would go out of business because of television.

I see what’s happening now with the iPods, satellite radio and other delivery systems as a continuation of that evolution, and certainly, the marketplace continues to change. It’s the person who can take the content and keep the interest and the time of the consumers with whatever, they’re going to win the battle in the end.

How to reach: Regent Communications Inc., www.regentcomm.com

Thursday, 26 January 2006 19:00

Kadien appointed president, xpedx

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Tom Kadien was appointed president of xpedx.

Xpedx is a division of International Paper (IP), where Kadien has worked for 27 years.

“My highest priority is to continue deepening customer relationships with commercial printers, publishers, manufacturers and other businesses across North America,” says Kadien. “Xpedx is intensely focused on helping customers grow profitably and ensuring they get the products and services they need, when they need them, with service and value that support their business objectives.”

Kadien has been a senior vice president of IP since 2004. He served as president of IP Europe from 2003 to 2005 and before that, served as vice president and general manager of the commercial printing and imaging papers division from 2000 to 2003.

He has also worked as vice president/general manager of IP’s former Fine Papers Division, as general manager of IP’s former Pressure Sensitive Papers Business, and as general manager and manufacturing manager for IP’s former Nicolet specialty papers unit. He also has held a variety of sales, sales management and marketing positions within IP’s packaging businesses.

Kadien formerly served on the executive committee of the National Paper Trade Association. He earned a bachelor of science degree in science and business administration from Bucknell University and an MBA in marketing from Drexel University.

HAMMOND LAW GROUP LLC
Michael McCabe
has rejoined Hammond Law Group LLC as director of Toronto operations/electronic marketing.

He brings electronic media knowledge and sales and marketing experience. He will also head the firm’s eZine marketing campaigns and Web development efforts.

HUNTINGTON BANCSHARES INC.
Shelly Rizzo
was promoted to team leader of Huntington’s local commercial portfolio management group. Rizzo has worked with the company for 13 years in various positions.

Belinda Sherman joined the Huntington Investment Co. as vice president, securities sales manager. She has nine years of banking experience and manages the investment sales team in Cincinnati, Dayton, Springfield and Northern Kentucky.

Also at Huntington, Chris Henn was promoted to regional credit officer of Huntington Bank’s Southern Ohio/Northern Kentucky area. He has worked for Huntington since 1997. He previously worked as team leader of the portfolio management group.

David Bock was promoted from banking officer to banking officer manager at the bank’s Silverton office.

And Kathy Nunlist was promoted from assistant vice president to banking office manager at the bank’s Anderson office.

XPEDX
After restructuring its regions, xpedx has named three executive vice presidents to lead the company.

Thomas J. Weisenbach was named executive vice president of the South Central region.

Richard B. Lowe is executive vice president of xpedx’s Western region and vice president and officer of International Paper

And James A. Connelly was named executive vice president of the North Central region.

DINSMORE & SHOHL LLP
Michael J. Newman
was appointed co-chair of the Professional Ethics Committee for the Federal Bar Association in Washington, D.C. Newman is an attorney with Dinsmore & Shohl LLP. He was president of the Cincinnati-Northern Kentucky chapter of the Federal Bar Association 2004-2005.

Also from Dinsmore & Shohl, attorney Jennifer Mitchell was named to the board of directors of the Contemporary Dance Theater.

POMEROY IT SOLUTIONS INC.
POMEROY IT Solutions Inc. appointed Kevin Gregory chief financial officer.

Previously, Gregory worked as senior vice president and chief financial officer for ProQuest Co. He has experience in finance and accounting, including SEC reporting, operational finance, tax, audit procurement and investor relations.

Gregory earned his bachelor’s degree in accounting from the University of Notre Dame and is a CPA. He earned a law degree and a master’s degree in law in taxation from the DePaul University College of Law.

NATIONAL CITY CORP.
National City promoted Tammy Huth to manager of the branch at 4221 Glenway Ave. in Price Hill. She has seven years of experience in financial services. She previously worked as a financial adviser and office manager, most recently serving as senior office manager at Fifth Third Bank.

Mitchell T. Robinson joined the Private Client Group as a vice president and private banker. He most recently worked as a vice president and relationship manager of National City’s Wholesale Banking group. He brings 24 years of experience related to financial services, consulting, middle-market commercial banking and small business banking. He previously held positions with Key Bank and Bank One.

National City also promoted Stephanie M. Murdock to assistant vice president, branch manager, for the branch at 1790 North Bend Road in Hebron. She brings five years of banking experience, most recently serving as banking center manager at US Bank in Florence.

National City also promoted Chris Corbitt to assistant vice president and branch manager for the branch at 4650 Smith Road in Norwood. He has five years of experience in financial services.

Submit items and photos to movers@sbnonline.com

Tuesday, 27 December 2005 05:55

Service solutions

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For any business in a services industry, ensuring customer satisfaction is a vital component to success. And Mike Viox, president of Cincinnati-based Viox Services, understands this better than anyone.

So when Viox Services, a 900-employee construction and facilities management company, secured a $9 million facilities management contract with Fifth Third Bank, Viox worked closely with the bank to come up with a suitable service plan.

The result was a new, e-mail-based process for submitting a work order request and a fee-at-risk program that holds Viox Services accountable for meeting specific contract points. The system provides better service, creates more efficiencies and has changed the way Viox Services conducts business.

Smart Business spoke with Viox about how the system works and how it has improved the company’s service.

How does the new work order system you designed for Fifth Third Bank work?
This was [implemented] when Fifth Third awarded us a contract to centralize all their facility management functions. Prior to that, it was a totally decentralized facility services system.

Thirteen affiliates covering 10 states, and all 13 affiliates did it a little bit differently. So this brought it all into one central function.

A banking center manager at a Fifth Third location — anywhere in their footprint, and there’s over 1,100 locations — can go right on to the intranet and pull up a facilities service page and they can put in a work order request. All work requests are done strictly via e-mail; there’s no live voices here. And this was Fifth Third’s desire to have it this way.

And then right away, the field populates based on their name and location, and then they have drop-down boxes where they can choose whatever service they’re needing, if they have a light out or have a heating and air conditioning problem.

It’ll complete a work order and send it on to EMCOR’s [Viox Services’ parent company] Facility Knowledge Center in Phoenix, Ariz., and from there, another e-mail comes back to Viox here in Cincinnati. And then we dispatch that work out.

If it’s an emergency, it has to be done in less than four hours. And it goes up from a day to two days to a week, two weeks, depending on the priority. So the work will get completed ... that information will be fed back to Phoenix, to have the work order then totally closed out and completed.

[On] 3 percent of those work orders, an automatic survey goes back to that client and says, ‘Were you satisfied with how this work order was handled?’

Beyond surveys, how else do you gauge your service level?
We have as part of our contract structure something called fee-at-risk. A certain portion of our fee is put at risk based on critical performance indicators. And there’s nine critical performance indicators.

Based on our performance, we’re scored on this every month, and then every quarter, we actually settle up with the customer.

If we’re not hitting the work order completion date, if we’re not getting good satisfaction rankings from the center managers, if we’re not hitting good safety measures from OSHA ... there’s things like building up-time, to make sure any mission-critical buildings are not experiencing any downtime. All these measures are really driving our performance.

If we don’t hit these measures as we negotiated at the front of this contract, we lose part of our fee. So that’s some darn good incentive.

It’s the first one of these fee-at-risk contracts that we’ve entered into, and it’s going to be more of the fad for future contracts.

How do you settle up each quarter with clients?
We have a monthly meeting called the spearing team meeting, with the key players on the contract. We review all of the data, all of the financial performance, how are we doing against budget. We review all of these critical performance indicators, talk about any areas that are out of spec, our performance, and we go over current issues.

Then quarterly, we settle up on that fee-at-risk piece. So four times a year we’ll go in and say, ‘We hit 94 percent of our fee-at-risk.’

There’s a very strong communications process in this whole thing. It really drives our performance, drives how you’re going to do the work, drives behaviors. And then we share that information with all of our people on the account, so no one wants to lose fee.

It’s called put your money where your mouth is. We can talk about it, but we better fix what issues there are. Otherwise, it’ll cost us.

How has this process cut costs and created efficiencies?
Because we’ve expanded the amount of work, we’re self-performing a lot of work that used to be subcontracted to others. So we’re not adding costs, we’re cutting costs. This is all about efficiency and better service and cost reduction, a strategic play.

It has helped us expand our work force — we see opportunities to self-perform the work at a better cost than what it was when it was contracted. Eliminating the markup of a subcontractor gives the whole standardization.

We do about 100,000 work orders in this process, and about 30,000 of those work orders are preventative maintenance. We’re moving away from reactive maintenance, corrective maintenance, which is always more expensive.

It’s like driving your car. If you wait for it to just fail, it’s going to cost you a lot more to fix it, versus just changing the oil every three to four thousand miles and doing the maintenance in that phase. The same concept is in play here. We take a preventative and proactive approach, and in that way, drive costs down in the long haul.

And then there is the whole centralization in the business. There’s a lot of redundancies when you’re doing something 13 different ways, and Fifth Third recognized that.

We now have all the data through this knowledge center process and through Viox’s enterprise system. We can download every work order and say exactly how much it costs to do that work order. Then we can benchmark all that information against the different regions in the country and for different customers, for that matter, and then look for ways to improve the cost of the service.

Having the data is probably one of the most important aspects of this, which is something that most organizations struggle with — they don’t [collect data] from the facility services side; that’s just not their priority. They’re collecting data on things that are more important to their core.

What we bring to the table is, this is our core business. We can tell you what happened and have the data to analyze and tell you how you might be able to do it differently in the future.

What challenges did you encounter in implementing this solution, and how did you overcome them?
One of the biggest challenges doing this whole thing was the timeframe we worked in. We turned this whole thing around in about three months’ time, from the time we started talking to Fifth Third to the time we actually flipped the switch and went live.

So we took a facilities services organization that was in-house or insourced, if you will, and went ... to a total outsourced model and put all these systems into place — this whole call center and all the measures and [data] collection and all the training of all the facility managers and all the mechanics and our staff — in a three month timespan. Given the size and magnitude of all this, it was certainly the fastest outsource I’ve ever been a part of.

We worked pretty much day, night, weekends until we pulled this thing together. We had a hard March 1st deadline that just had to be up and live and running.

So we worked backward from that, (said) what do we have to do to get it running, and we had it up pretty much as planned. Not to say there weren’t little wrinkles along the way, but no major outages.

How does this Web-based solution help Viox provide better service?
It’s just become easier for the customer to enter a request. It’s all set on the screen, and they’re able to easily enter a request, know what the response time is for that request. We’re then able to dispatch the correct service person at the right cost. So all of that just boils down to it’s simpler.

You’ve got one request you put into an e-mail package and one solution, and you pretty much know where that request is at in the system and what kind of response you’re going to receive. And at the end of the day, we’ve saved them significant dollars.

All that adds up to significant value.

HOW TO REACH: Viox Services, (888) VIOX.INC or www.viox-services.com

Wednesday, 23 November 2005 05:53

A firm foundation

Written by
When Majid Samarghandi left the first mechanical contracting company he launched, the scene was a moving one for both him and his employees. It was 1998, and Samarghandi decided it was time to move on after fulfilling a management agreement with the company that had acquired his firm five years before.

“When I left, it was an emotional time because I had built that company from ground zero. I was there 18 years and when I left, there was a big crying session,” says Samarghandi. “They were very gracious, my employees, because they were the ones who made me what I was.”

He enjoyed similar loyalty from his clients, and many took their business to him when he started a new contracting company, Triton Services Inc., in 2003. He maintains that his success is built in no small part on his insistence on doing business in an ethical manner, a plus in an industry in which shady operators too often mar its reputation.

The company’s performance would seem to back Samarghandi’s contention. He predicted that Triton Services would stand at around $20 million in revenue at the end of five years. In contrast, by the end of its third year, revenue should instead be approximately $30 million, says Samarghandi. That dwarfs the performance of his previous company, which took nearly 10 years to reach the $5 million mark.

“I remember with my old company, it took seven years to secure my first $1 million bid,” Samarghandi says. “With this company, in months, if not weeks, we secured our first multimillion-dollar contract.”

Samarghandi spoke with Smart Business about how and why he holds fast to his ethical principles and how it benefits his business.

How have you managed to grow Triton Services so successfully?
There are a lot of contractors, and I always tease my friends and tell them that anyone that gets mad at their wife opens a mechanical contractor business because lot of times, it doesn’t take much. But a lot of times, what differentiates you from others in our industry — because the construction industry as a whole has such a bad reputation — is that you honor what you say you will do, that you meet or exceed what you promised and what is expected of you.

I ask myself, if I were a customer, ‘What would I expect from Trito? Am I getting the best value?’ One of the reasons that Triton has been so successful, has grown so fast, is that almost every customer has come back to us and used us. I’m proud of that fact, not that I ever claim infallibility. Our company has weaknesses like every other, but hopefully, we are men enough, principled enough, to acknowledge our mistake, pick up the phone and call a customer and say we’ve made a mistake and take care of it.

I’ve had instances where we were right and the customer said, for whatever reason, they felt we owed them something. And I always told them, ‘If you think I owe it to you, I’ll take care of it.’ And I’ll tell you, a majority of the time they’ll back off. But sometimes they’ll insist on it, and we’ll deliver on it. My reputation means more to me than any dollar amount.

What’s the source of your ethical principles?
I learned my lesson mostly from my upbringing. My father taught me how to treat people. I’m a Baha’i, and in my religion, you have to live your life the way you talk, you have to show with your conduct how you live your life.

For me, I’m aware every moment, I’m cognizant of my behavior. What I hope to never do is to do something wrong intentionally, to cheat someone. We have sent invoices to people by mistake, and they’ve paid us. We’ve sent the same invoice to a customer twice by mistake, they’ve paid us for the second invoice, too. We turned around and sent the money back, and I assure you, you have those customers for life.

Why does the industry have such a negative image?
There are many temptations. It’s not unique to our industry. Some businesses are exposed to it more than others. Just like the stock market, brokers sometimes compromise their ethics to make a quick buck. The same thing in our business.

The worst thing is what they call ‘shopping,’ where you get prices from different vendors and subcontractors, and after you secure the job, you let every bidder bid against each other again and it becomes an auction. It’s legal but it’s not ethical, and that is very prevalent in our industry, to a point where people just literally expect it.

And there are a lot of general contractors that play that same ‘shopping’ game, and I don’t want my low price to be a ticket to an auction, and one that doesn’t even guarantee you a front seat.

How do you filter out the risks of becoming vulnerable to the unethical practices of others in your industry?
Our industry, regardless of how you look at it, is a small industry. You come across them even on a national basis. Their reputation is there, you can make one phone call to a friend in a different town and you get so much information.

And if you live in this town and the company’s in this town, I can assure you that any vendor, any contractor, subcontractor, they can give you vast information as far as any company you wish to know about. We just call around. If we come across such folks — and I won’t mention names, but there are many of them locally — we flat out would not do business with them.

I haven’t done business with them for 17, 18 years, and I will never do business with them.

What kind of contracting practices do you look out for?
Obviously, the most important thing is that your contract is a good one that protects your interests. We have actually walked away from many, many contracts because I will refuse to sign a contract ... that I feel is unfair, is one-sided, that leaves us exposed to a lot of things we could not defend ourselves against.

Like lately, a lot of contractors write into their contract clauses that you waive all your lien rights. That’s the only protection that a contractor has against nonpayment. If you waive that, you’re flat out of luck.

How do you overcome the negative image that a few bad practitioners have created for your industry?
The only way I can earn my trust with you is to be given an opportunity, and many, many times, I tell people, ‘Don’t give us a $2 million contract, give us a two-hour project, let us show you what we can do, and if we do a decent job and if the chance for a bigger job comes along, God willing, we can earn it.’

My first customer when I started Triton Services was a customer I had done business with for 15 years with my old company. They said, ‘Here’s a design/build project, not a very big one,’ for a bid of $130,000 that my old company gave them.

Now typically, if someone gives you a $130,000 price from someone else, the typical contractor would be at $128,000 or $129,000. My price was $87,000 and some change. They came to me and said, ‘Majid, you’re too low’ and I said, ‘No, it’s a fair price, I’m fine with it.’

We did the job, we didn’t make a killing but we did it. He sent us a check for $105,000 because, he said, he budgeted $130,000. ‘You were fair enough,’ he said, ‘so we’ll split the difference.’

And three months later, they gave us a contract for more than $1 million.

How do you keep those relationships going?
To be there with them when there’s not a contract pending. Usually, people go call on clients when there is a contract pending or they’re in negotiations or something.

You build a relationship over the long-term. One handicap that I had with my old company was that many, many of the contractors in town are second, third, fourth generation companies. I’m an outsider, I came to Cincinnati to build Procter & Gamble’s world headquarters project.

So you had to build a relationship from ground zero, and it was an uphill battle. I remember how I used to call people — this goes back 20 years ago — to even try to get on the bid list, forget getting the job, and many times, people would just laugh and hang up the phone.

Now, people call us, and we pick which jobs we want to bid on.

How to reach: Triton Services Inc., www.tritonservices.com

Wednesday, 28 September 2005 12:21

The Strike file

Written by
Born: Salt Lake City

Education: Harvard College, Harvard Business School

First job: Bain & Co., Boston, management strategy consultant

Community service: I was on the board of the Cincinnati Council on World Affairs.

What is the greatest business lesson you’ve learned?

To be willing to think creatively and act on what you believe.

What has been your greatest business challenge?

I would say working with the large variety of franchisees that we have, with their different personalities and interests, and being in different stages of life and their careers. Being able to provide what we need to provide to help each of them meet their goals, and at the same time, maintain the integrity of the franchise.

Whom do you admire most and why?

I admire my father [George Strike, principle owner and chairman of the board of Martin Franchises Inc.] because of his integrity and the consistently thoughtful way he treats people.

Wednesday, 28 September 2005 11:47

Building on success

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In 1997, Stonehouse Building Products began producing specialty bathroom countertops from a small production facility in Hamersville.

Seven years later, production couldn’t keep up with consumer demand, so the company moved to a brand-new, state-of-the-art production facility in Florence, Ky., allowing it to increase production, keep a close eye on quality and nearly double its work force to more than 200 employees.

Smart Business spoke with Stonehouse President Bill Barkalow about the challenges and benefits that come with a new facility and new technology.

What challenges does the fast growth of your company pose?

The only thing that really is consistent is change — everything is moving so fast, it’s always changing.

We have to be able to compete against much larger competitors, and they have more resources, more marketing programs, more things to put out, so our marketing programs have to be very well-positioned and we have to move faster.

In other areas, [it’s challenging to] forecast accurately the things that are going to happen, whether it be sales or our business plan. Reality today is really different from what the perception was yesterday, so you have to be flexible and react to those kinds of changes.

What led you to build a new facility?

The size of the market that we’re in. It’s a huge market, and we have identified a very unique niche within that market and have, fortunately, created a lot of excitement around our [products]. It became pretty obvious, as this idea that we had was catching on, that we were going to need capacity in order to grow our business. And in doing that, we wanted to become more efficient as we built a new plant and designed our longer-term business focus.

So it was really out of need, because the demand for our product was strong enough that we could never do it in the facility we started out with. It’s a good thing, but it comes with a lot of headaches.

What were some of those headaches?

One of the biggest things is that we’ve entered a lot of new technologies into our manufacturing process. They’re not necessarily unique processes, but they’re unique to our industry. And a lot of it has been applying those technologies and building the right team of people around those technologies to drive the business.

One of (those technologies) has been robotics. They’re really not used in our type of industry to any degree that I’m aware of. We’ve introduced them into our manufacturing processes and gotten them to work, but it wasn’t easy. You couldn’t go tap on someone in the industry and say, ™Hey, can you come over and help me with this?’ You had to adapt.

As we got involved in applying all this new technology, we’ve had a lot of learning that we’ve had to come up, and that’s been a challenge.

How has this new facility helped Stonehouse manage its growth?

It comes down to, as we’ve added capacity, growing our distribution. It’s also allowed us to make some longer-range investments, such as the people and computer systems.

And we have brought on all of the latest technology and computer systems. Our systems are very sophisticated and allow us to measure every aspect of our business. That will improve our cost and provide information so we can make faster decisions.

With increased production ability, how do you ensure that product quality remains high?

The systems will be part of that, because they will provide information about our manufacturing process and all kinds of things that go into that. But also, our people — we first get the right people to join the company and then we provide them the proper training, not just with the systems, but with the operations, the safety, the quality. They need to know as much about the product and the business [as possible], and we provide them as much training as we possibly can.

Some of our people take on certain training roles, some of it is done through outside processes, or outside people or groups that come in, some of it is done as computer training, some of it is done through outside seminars.

What benefits have you seen from this new facility?

We’ve had a lot of things that have been positive and impactive on our cost, our scrap, producing higher volume, our speed at which we make things, as well as our quality. The long-term impacts that we will have are pretty obvious.

We will have a lot higher capacity, we will have a lot lower cost, we will have a lot higher quality as a result of all of these technologies. It’s proven itself out to be a good decision, and we continue to be learning on it every day.

How to reach: Stonehouse Building Products, http://www.stonehousebuildingproducts.com

Wednesday, 28 September 2005 10:37

New stock options

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Hedge funds used to be an investment reserved for the mega-rich, and except for an occasional headline, they operated mainly in obscurity. Those days are over. Broadening appeal has led to explosive growth and a huge impact on the markets. Since 2000, the number of hedge funds has increased 60 percent and assets under management recently surpassed $1 trillion (accounting for more than one-half of the daily volume on the New York Stock Exchange).

Hedge funds defined
Hedge funds originated in the late 1940s with the objective of profiting on market declines or advances. The use of shorting shares (betting on a stock decline) in theory protected against a downturn, thus the name hedge. The strategy has greatly expanded since then, with hedging now just one tool in the toolbox. Since these funds are largely free from regulatory oversight, basically anything goes.

There are generally three types of strategies, and all span the risk/return spectrum. Tactical strategies strive to take advantage of global market trends affected by currency/exchange rates, interest rates and other factors. An example would be a long/short position in an equity or currency. Event-driven strategies aim to profit from price imbalance tied to a specific event (i.e. merger or takeover). Arbitrage strategies exploit pricing discrepancies between closely related securities (i.e. buy a convertible bond and then bet against the underlying equity security as a hedge).

What’s causing the growth?
When the stock market is booming, there is a sense that anyone can make money, so there is less demand for hedge funds. When the outlook is less rosy, strategies that aim to profit regardless of the market direction have appeal. With large-cap stocks basically flat since 1998, investors have been drawn to alternative investments. Also, the proliferation of technology has inspired creative traders to identify new investment opportunities and develop even more complex strategies.

While return data is less reliable, hedge fund indices have been able to provide alpha (returns in excess of the broad market) in recent years. Funds are also migrating down in terms of the minimum investment size for individual investors, and a fund-of-funds approach developed to provide exposure to different strategies. In addition to high-net-worth individuals, institutions have been jumping on the bandwagon to get excess returns with lower correlation.

Investment drawbacks
Hedge funds are marked by secrecy, and given the complexity of the strategies involved, investors must inherently trust the manager in lieu of disclosure. The lack of regulations also raises potential ethical issues. Performance tracking is difficult, since the hedge fund indices are unreliable. For instance, the data is based upon self-reporting and the index data is subject to survivorship bias (underperforming funds could drop out of the index, thereby overstating index returns).

Performance reporting can be delayed, and returns for shareholders with the same manager can vary greatly. Importantly, hedge funds don’t come cheap. A common fee arrangement is 2-and-20, or two percent of assets and 20 percent of trading profits above the risk-free rate of return. After-tax returns will also be affected, given the amount of short-term trading that occurs.

The future
Some wonder if the thousands of new funds entering the market will result in a declining alpha, because there may be fewer opportunities to exploit. It could be, however, that as talented managers continue to join the hedge fund crowd, new and creative strategies will continually be developed. Regardless, if alpha can still be generated (or at least the perception of it), hedge funds will continue to grow.

Timothy C. Gehner, CFA, CFP, is a portfolio manager and shareholder of Johnson Investment Counsel Inc., one of Greater Cincinnati’s largest investment management firms. Johnson Investment Counsel manages more than $3.2 billion in assets and has been serving clients nationwide since 1965 through three divisions: Johnson Wealth Advisors, Johnson Institutional Management and Johnson Trust Co., Greater Cincinnati’s only independent trust company.

Tuesday, 30 August 2005 07:49

Estate planning

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Permanent repeal of federal estate taxes has been a recurring issue, arising during the presidential election and in Congress. In the last two Congressional sessions, the House voted to repeal estate taxes, but each time the Senate was unable to pass a permanent repeal.

With the uncertainty of a dramatically varying tax-free exclusion between 2005 and 2011 and the continuing potential for permanent repeal of the estate tax, you should review your estate plans more frequently and build more flexibility into plans. Also, remain mindful of the nontax goals of estate planning.

On June 22, 2005, the Wall Street Journal reported Republican and Democratic senators are increasingly confident they will reach compromise on the estate-tax law by the end of the summer, with Senate negotiators reportedly having already agreed to permanently lower the estate tax rate beyond 2010 and boost the tax-free exclusion to more than $3 million per person. Any Senate compromise will most likely pass in the House and would be difficult for President Bush to veto.

State death taxes will likely continue and could increase. Ohio’s estate tax rates range from 2 percent to 7 percent, depending on the size of the estate, applied to estates exceeding $338,333. Varying death-tax laws across state lines will require individuals to update their estate plans for every state where they establish residence.

How might the new estate-tax laws affect your current estate plans?

  • Retirement planning. Income taxes on IRAs and retirement accounts will still be in effect. Planning to avoid income taxes and stretch out withdrawals from retirement accounts will still be important.
  • Capital gains and income tax savings. Charitable remainder trusts will continue to be a popular way to generate income tax savings and provide a means to reinvest highly appreciated assets to produce increased income without incurring capital gains taxes.
  • Family members with special needs. Trusts will still be needed to delay distributions to minor children and provide for disabled children or elderly parents.
  • Protection of assets from creditors or lawsuits. Trusts will continue to be used by individuals to shelter wealth from liability or preserve family wealth for spendthrift family members.
  • Second marriages. Trusts will continue to be used to hold assets for a surviving spouse’s support, with eventual distribution to children from a first marriage.
  • Consolidation of investment and control. For high-net-worth families, trusts provide a means for efficient, diversified investment and control of family wealth.

It is a good idea to make an effort to review your estate plans more frequently and to focus on four specific factors.

  • Consider limiting the full funding of credit shelter trusts, intended to hold a decedent’s tax-free exclusion amount, or giving surviving spouses the ability to decide the extent of funding of these trusts.
  • Revisit the need for life insurance policies or irrevocable life insurance trusts, previously established to replace funds reserved to pay estate taxes.
  • As always, revisit beneficiary designations for IRAs and retirement accounts to ensure flexibility and avoid overfunding the tax-free exclusion amount, particularly if trusts are currently designated as a beneficiary.
  • Revisit the need for existing irrevocable plans and be cautious about implementing new irrevocable plans based on tax laws that may dramatically change.

Michael D. Barnes, Esq., is vice president of Johnson Trust Co., a division of Johnson Investment Counsel Inc., one of Greater Cincinnati’s largest independent investment management firms. Managing more than $3.2 billion in assets, Johnson Investment Counsel has been serving clients since 1965. Reach Barnes at (513) 661-3100.