Nancy Byron

Wednesday, 02 November 2005 06:34

Heating up

Mark Swepston knew he had to make a change - at the top.

As president and CEO of Atlas Butler Heating & Cooling, he knew the revenue numbers intimately and he knew why they weren’t growing as fast as they could be — poor sales management. Problem was, he was the sales manager.

“Even though I enjoy sales management, my background is more financial, so I do much better in that,” says Swepston, recalling the epiphany he had about 12 years ago that led to the hiring of the first true sales manager at the now 84-year-old Columbus company.

“Learn to hire people to work for you that can do things better than you can,” Swepston says. “Basically fire yourself from the things you don’t do as well and have the guts to go out and hire somebody who can do the job and move forward.”

It’s a lesson that has paid off.

Atlas Butler’s sales last year topped $10 million, up from $4 million when Swepston took the helm in 1986 and was trying to do it all.

“Having a good accountant/controller in place without really having any other management positions in place, well, we just wouldn’t have grown to nearly the size we are today,” he says.

Today, Atlas Butler’s more than 100 associates include not one, but two full-time sales managers - one dedicated to the commercial side of the business, the other overseeing residential sales — as well as a general manager and a CFO.

“Now I have to perform in a different way,” Swepston says of relinquishing these management roles. “Before, when you’re the CEO of a smaller business and you don’t have to report to anybody or you don’t have anybody that really has the skills you have in probably three-fourths of the areas you’re working in, it’s tough for anybody to challenge you or to step up and say, ‘Do it better.’

“So I have to look at it from both sides now. They do a great job at what they’re doing. In a way, I have to measure up and take a step up to the next level also.”

The adjustment hasn’t always been easy.

“You step back and you wonder, ‘Boy, if you would’ve done it this way, would it have come out better?’ But I don’t question it every day. It takes some letting go to let other people do it and get it done. It’s a challenge. At least it is for me.”

HOW TO REACH: Atlas Butler Heating & Cooling, (800) 387-6223 or www.atlasbutler.com

Monday, 22 July 2002 10:10

On the prowl

On the prowl

By Nancy Byron

A plaque hanging outside Randy Wilcox's modest office at Sarcom Inc. speaks volumes about his business philosophy.

Upon it is the inspirational speech by legendary football coach Vince Lombardi: "What it takes to be No. 1."

Wilcox's pursuit of this lofty goal has accelerated in the past 16 months at his Polaris-based computer reselling business, thanks to a string of multimillion-dollar competitor buyouts.

"It's much easier to buy than to build-at least in this industry," says Wilcox, whose 15-year-old company has more than doubled its sales, workforce and geographic reach since embarking on its recent acquisitions tear.

Craig Hoyt, president of Buckeye Boxes Inc. on Columbus' West Side, also sees the benefit in buying companies to help his business grow.

"When we bought Columbus Cello-Poly Corp., we went from 50 to 105 people overnight," Hoyt says. "That was a little interesting."

It was also a little profitable, he adds, declining to give specific earnings, but noting that the $2 million investment has more than paid for itself. That's because volume drives profits in Hoyt's industry, where warehouses full of expensive machinery can't afford to sit idle.

"So much of the costs are fixed," he says. "When we run more jobs, the return comes back exponentially."

That was the impetus behind Hoyt's decision to buy the Sandusky division of Mid-States Container Corp. last fall. Buckeye Boxes gained nearly 100 accounts and raised its revenues from $10 million to $13 million as a result of the $2 million deal while adding no new equipment and only increasing payroll by about 30 employees.

"In that case, we actually sold off a lot of equipment," Hoyt notes. "And with what we have now, we could as easily run $20 million."

Though both have seen tangible returns on their investments, Hoyt and Wilcox are quick to point out that acquiring competitors brings its own set of challenges.

"Buying the companies is easy," Wilcox says. "Integrating the companies is the hard part."

At Sarcom, that process starts with an orientation for all employees at the company being acquired.

"We take them through the same process new employees go through," Wilcox says. "We teach them how we do things. We hold meetings with them once a month and we survey customers every month to see how we're doing. We also see what they do well so we can incorporate that into the rest of the company rather than just imposing our ideas on them."

Wilcox is in the process of forming a four-person team dedicated solely to integrating the companies Sarcom purchases. That will become increasingly important as the company's acquisition activity steps up this year. At least four more purchases are expected in 1998, Wilcox says.

Sarcom, whose revenues lingered around $235 million at the end of 1996, is on target to gross upwards of $500 million this year. Acquisitions have also expanded the company's geographic reach from three to eight states in the same time period.

"It's a great way to grow a business, despite all the issues you run into," Wilcox says. "I think it's the best way if you want to grow rapidly."

Monday, 22 July 2002 10:08

Smoke alarm at the Statehouse

Who's responsible when a minor buys tobacco? The clerk who sold it? The store owner? The parent? The youth? It all depends on who you ask-especially around the Statehouse.

At least three proposals addressing underage tobacco use have been introduced in the Ohio Senate this session, and the Governor has teamed up with the Ohio Attorney General to offer a fourth. Most would stiffen penalties for businesses that sell tobacco products to underage consumers.

The good news for retailers is none of these proposals appear to be headed for a floor vote anytime soon. State lawmakers have recessed for the summer and aren't likely to return until after the fall elections. Even then, a lame duck legislature is unlikely to take up such a heated issue. But that doesn't mean the debate won't be rekindled when the 1999-2000 session begins in January.

"This will be a political issue for awhile because of what's going on at the federal level," says Andy Herf, executive director of the Ohio Association of Convenience Stores.

Current state law prohibits tobacco sales to those under age 18. Retail clerks who sell tobacco to minors can be fined up to $250 for a first offense and $500 for a second offense. There are no penalties for minors who purchase tobacco.

"It's not even illegal in Ohio for anyone under 18 to possess tobacco," says Tom Jackson, president of the Ohio Grocers Association. "It's illegal for them to purchase it, but there are no sanctions for [the] purchasing youth. If you are caught with tobacco, it is no big thing."

Sen. Rhine McLin (D-Dayton) apparently wants to close that loophole. She got the ball rolling last fall with Senate Bill 152, which would prohibit minors from using, possessing, purchasing or attempting to purchase any tobacco product. First-time violators would be required to attend a smoking cessation class. A second offense would result in another class plus community service. A third offense would add a 1,000-word essay assignment on the effects of smoking.

Senate Bill 220, offered by Robert Latta (R-Bowling Green), takes the issue a step farther. It would penalize minors for purchasing or possessing tobacco-and allow a judge to temporarily prohibit tobacco sales by retailers who repeatedly sell to underage consumers.

"People should be punished for selling to kids," Herf says, noting that Ohio retailers have been stepping up their own efforts to curb underage tobacco sales by participating in the national "We Card" program for the past two years.

Under Senate Bill 220, the parents of minors who possess or purchase tobacco would be notified on a first offense. Penalties for a second offense could include public service or smoking cessation classes at a judge's discretion. The bill calls for a third offense to result in a fine, but that could be amended to temporarily suspending the youth's driving privileges.

"Some groups say fines are too harsh," says Herf, whose group is backing this bill along with several other business organizations. "But if you want kids not to smoke, let's start by telling them not to smoke. You have to do something to them."

Sen. Grace Drake (R-Solon) sees things differently. Her proposal, House Bill 221, would not penalize youths who use or possess tobacco. Instead, it would raise the minimum age to buy such products from 18 to 21, impose civil rather than criminal penalties on those who sell to underage consumers, and require all retail outlets in Ohio to pay an undetermined licensing fee to sell tobacco products. Business owners could lose these licenses if their employees sell tobacco to underage buyers three or more times within two years. The bill does not indicate whether violations would be tallied by individual stores or across a chain.

Gov. Voinovich and Ohio Attorney General Betty Montgomery would also like to see a statewide tobacco licensing program that would raise funds for stricter enforcement of tobacco laws-and direct monetary penalties for violations to business owners for the first time. The two say more enforcement is needed since tobacco use among minors continues to increase with nearly a third of Ohio's high school seniors using tobacco daily. Ohio's retailers insist, however, that youth access to tobacco has decreased 25 percent since the "We Card" program began in 1996.

"I think the legislature wants to do the right thing," says Jackson. "We just have to get the right bill in front of them. Until we hold those who smoke accountable for their actions, licensing won't be effective in this."


Who to call

To voice your opinion on Senate Bill 152 or Senate Bill 220, contact Senate Judiciary Committee Chairman Louis Blessing Jr. (R-Cincinnati) at (614) 466-8068 in Columbus or at (513) 385-5302 in his home district.

To voice your opinion on Senate Bill 221, contact Senate Health Committee Chairwoman Grace Drake (R-Solon) at (614) 466-7505 in Columbus or at (216) 248-9297 in her home district.

To share your opinion on tobacco legislation in general, contact the state senator representing your area. To get a listing of home and office phone numbers for your state senator, contact Nancy Byron of Small Business News at (614) 848-6397.

Monday, 22 July 2002 10:07

It almost happened to us

The message was calm, but firm: “We’ve decided to evacuate the building. Several of us smell smoke, and there are police officers in the building.” It was all we needed to hear.

As the SBN editorial staff filed quietly out of our publisher’s office and down the back stairs of the suburban Cleveland office building that housed our company headquarters, we heard fire engines scream to a halt. From outside, we could smell the pungent smoke, which drifted in and out of view as the wind changed directions. There were reports of a thick, sooty cloud billowing out the front doors. Rumors quickly took hold that a construction project in the basement had gone amok and sparked the fire.

The realization by both our publisher and CEO that property damage might be imminent sent them running back into the smoldering building to retrieve items such as day planners and briefcases left behind by our staff. It was a foolish move, given the unknown intensity and location of the fire, and it terrified our Columbus staff writer Joan Slattery Wall, who once worked as a police and fire reporter for the daily newspaper in Lancaster. She knew all too well the hideous consequences such a well-intentioned move can bring.

The good news is that our two leaders emerged safely, and though we were unable to return to the building for several hours because of the lingering, potentially dangerous fumes, the fire was quickly doused and our second-floor offices escaped unscathed.

We were fortunate. I shudder to think what might have happened if the fire had worked its way up another level or two, destroying valuable operational, accounting and circulation records; wiping out entire hard drives of editorial work and advertising layouts; crippling our already overworked production department, which has to keep an insanely tight schedule to churn out nine publications each month. Then there would have been the insurance headaches—and the effort to get up and running again.

Greg Hopkins and Jim Darfus know what that’s like. These Central Ohio business owners weren’t as lucky as SBN. Both know the agony of watching a business burn down—and the struggle involved in rebuilding.

Their stories, featured in this month’s cover piece, couldn’t have been easy to share. In fact, some tears were shed during the interviews. Yet, both agreed to relive their memories so others could learn from their experiences. Don’t let them down.

As you read Joan’s article, “Refusing to go down in flames,” you’ll feel the grief, the aggravation and even the regret of these two businessmen. Don’t let their words stop there. Take action. After our close call with disaster in the Cleveland office, I know it can happen to us. It happens to hundreds of Ohio business-owners each year—many of whom are improperly insured. Don’t think it can’t happen to you. It can. Are you ready?

Nancy Byron, editor of SBN Columbus, welcomes your comments by fax at 842-6093 or by e-mail at sbnpubco@psinet.com.

Monday, 22 July 2002 10:07

School funding and a whole lot more

Legislation pending at the Statehouse could pave a new marketing avenue for private business, but it’s a path that will have to be tread with caution.

House Bill 48, introduced by Rep. William Schuck (R-Columbus) would permit state agencies, counties, school districts and townships to sell advertising space on or in buildings, vehicles, publications and electronic broadcasts. It would also let these entities accept and distribute items containing commercial advertising as long as the items are provided to the public agency for free.

Imagine the possibilities: immaculately maintained city softball diamonds with signs for Pepsi and Ohio State Sports Medicine in the outfield; school field trips underwritten by Wendy’s; new state vehicle fleets plugging State Farm Insurance and Goodyear Tires.

In theory, such a law could open up many opportunities for cash-strapped school districts, cities and townships. It could also postpone budget increases for certain state agencies—especially since the advertising contracts would be sold to the highest responsive bidders. Of course, that’s also likely to make this an expensive game for businesses to play.

Not everyone would be permitted to submit advertising bids under this proposal, either. No libelous, discriminatory or obscene advertising would be allowed, though the definitions of those terms are left open to interpretation in the bill. Advertising in support or opposition of any political candidate, cause or organization would also be forbidden. Ditto for promoting alcohol, tobacco or any illegal product or service.

Individual state agencies, school districts, counties and townships would be able to adopt additional rules to regulate advertising content and display. Toward that end, the bill authorizes the governor to appoint an advisory council from the private sector to assist state agencies in assessing appropriate opportunities for such advertising. School districts, cities and townships would also be able to form advisory boards to determine what space is for sale and which areas are off-limits.

The bill, assigned to the House’s State Government Committee, makes no mention of naming rights—the increasingly common practice by which some corporations have gotten their names added for a steep fee to the marquees of sports facilities or events. That’s apt to be an issue that surfaces during the bill’s debate.

To offer your opinion on this bill, contact committee Chairman Rep. Lynn Wachtmann (R-Napoleon) at (614) 466-3760 in Columbus or (419) 599-9863 in his home district.


Pocket-lining limits

With so many candidates gearing up for the fall campaign season, we thought a refresher on campaign contribution limits might be in order. Here are the basics:

• Individual contributions to a statewide candidate, a Senate candidate or a House candidate must not exceed $2,500. Political action committees are bound by the same limits.

• Individual contributions to a state political party may not exceed $15,500 per calendar year. PACs are also generally bound by this limit, but it does not apply to PACs making a contribution to another PAC with which it is affiliated.

• Individual contributions to a PAC cannot exceed $5,000 per calendar year.

• Individual or PAC contributions to a legislative campaign fund or county political party may not exceed $5,000 per calendar year. Again, this limit does not apply to PACs making a contribution to another PAC with which it is affiliated.

If you have further questions about campaign contributions, contact the Ohio Secretary of State’s office at (614) 466-0565 or visit its Website at http://www.state.oh.us/sos/.

Monday, 22 July 2002 10:04

When emotions get in the way

He had a hunch the business wasn't on the best financial footing when he bought it in January 1989. The numbers didn't quite jive. But Todd Boyer had a personal attachment to Penguin Ice Cream, a small, campus area shop a short jaunt from his apartment at The Ohio State University.

Boyer had worked there for nearly two years, supporting his young family while finishing college. He liked and trusted the owner. Most of all, Boyer knew if he didn't buy the shop, the owner would probably close it.

"The expenses were not in line with what my experience was in managing the store," Boyer admits. "It didn't seem like the numbers were entirely accurate. That should've been a red flag to me that I should've backed away from it. But I was really in love with the idea by then. My wife and I were both in school.

We had a daughter who we didn't want in day care. We knew we could bring her to the shop with us if we bought it ... it was a means to an end."

So Boyer, a 24-year-old journalism and history major, convinced himself he could turn around Penguin Ice Cream. Then he convinced a high school buddy, who bought a share of the business.

"We wanted to run it until we could pay off what obligations we had and then sell it off and split up the profit," Boyer explains. "We had no grandiose plans to franchise or open other locations."

In the end, it was all they could do to get out of it with their shirts intact.


Welcome to retail

Retail sales can be hard enough with the long hours and fickle customers. But add to that the seasonal slumps and thin profit margins of an ice cream shop and you've got very little room for error.

Boyer's plan was to maximize profits by keeping employee hours to a minimum.

"I expected we could squeeze more money out of the business working more hours myself and my wife," he explains.

The shop soon became an extension of their home. That wasn't always good.

"It was hard sharing my family with my business," he says. "There was a lot of competition for my time and attention."

Grabbing the attention of customers was another concern-especially during the sparse winter months. Boyer began experimenting with Penguin's menu, introducing hot-food items in addition to his lineup of frozen confections.

"That was popular for a while, but it became more of a financial drain," he says. "There wasn't enough traffic to enable us to keep it fresh and available right away."

Boyer also remodeled the shop's interior to make it more inviting, but vagrants started taking refuge there to hide from the cold. That wasn't good for business.

Then there were the floods, the break-ins, the robberies, the tuition increases.

"Our customer traffic dropped off by almost one-third [in the fall of 1990] after OSU's tuition increase," Boyer says. "We were too far down the priority list for students after that. Once they paid for tuition, books, pizza and beer, there was no money left over for ice cream."

The transient nature of Ohio State's student body didn't help either.

"We'd get some loyal customers, but they'd move to a new apartment the next year or their class would end and their traffic patterns would change," Boyer says. "Ice cream is an impulse product. Most of our business came from people walking by."

Still, the shop had its moments. A warm spring day could bring upwards of $700 in sales-a good deal more than the $100 per day Penguin often brought in during the winter months.

"We'd work 100 hours a week and sock a lot of money away during the good months," Boyer says. "We were meeting our expenses until the third year. Then we had to put more money into it to keep it operating. It was a good fit for our family at times with the flexibility of hours and schedules, but it got to a point where we had to decide if it was worth sinking more money into it. We were putting more money in than we were getting out and it didn't look like it was going to get any better."

Boyer traditionally closed the ice cream shop for three weeks each December since the cooler weather combined with OSU's winter break kept customer traffic abysmally thin.

"When it was time to close shop that December, we decided it would be foolish to open it up again in January," Boyer says. "You kind of swallow hard when you make a major decision like that. You've invested personal effort and creativity into it. That was our life for five years. We knew it would be difficult closing, but it would be more foolish to put ourselves deeper into debt."


A sticky mess

When Boyer shuttered Penguin Ice Cream in late 1991, he was thousands of dollars in debt.

Boyer says he considered looking for a buyer, but he knew the odds of finding one were slim. Besides, he thought it might pose an ethical dilemma.

"I couldn't, in good conscience, sell for anything near what I owed," he explains. "Rather than saddle someone else with a struggling business, we decided to move on."

Friends helped Boyer clean out the ice cream shop and prepare it for closing. He sent letters to his landlord and suppliers notifying them of his plans. Then he scraped together enough money to hire an attorney. Good thing. Some of Boyer's suppliers didn't take the news of Penguin's closing very well.

"Some suppliers ended up suing us," he says. "We had in the neighborhood of $30,000 still outstanding at the time we closed. Most of them were pretty reasonable about what we could afford."

Boyer tapped into his personal savings to pony up the several hundred dollars he owned one supplier who wouldn't settle for partial reimbursement. That was the "last little nest egg" Boyer had saved. Suddenly, he was on the verge of personal bankruptcy. Though his attorney considered it a serious option, Boyer couldn't stomach the thought.

"What was most distasteful to me was I saw it as the ultimate sign of failure," he says. "Not only couldn't you make it work, but you couldn't meet your obligations to other people. I didn't want to do that. It seemed smarter to scrape by."


Landing on his feet

Boyer made ends meet after Penguin's closing by working odd jobs, such as painting and roofing, for a few months before landing a position as clerk of the statehouse press room. Today he's a public information officer with the Ohio attorney general's office.

"I don't think I have a true entrepreneurial temperament," Boyer now says. "It's nice to be able to walk away from work at the end of the day and not worry about it."

Still, he says owning a business was a worthwhile experience.

"Given the same circumstances and the same opportunity, it would be hard not to do it again," he confesses. "While I regret we couldn't keep it running a little longer and sell or close it cleanly, it was a great ride. It gave me an experience a lot of people don't get to have."

In hindsight, having someone with more objectivity look over Penguin's financials before the sale would've been helpful, he says. The same goes for knowing more about business in general.

"A lot of the financial aspects of running a business I learned on the fly," Boyer says. "I talked to counselors at SCORE. I talked to other business owners on campus." It wasn't enough.

"It was painful at the end ⊃ It was like losing a child, but I was doing what was right. I truly believe closing the store was the right thing to do.

"You learn a lot about yourself when the success of an entire business rests upon your shoulders," Boyer concludes. "I think you're only better for that in the end."

Monday, 22 July 2002 10:01

How we did last year

Gerbig, Snell/Weisheimer & Associates

Top officer then: Robert L. Gerbig

Top officers now: Robert L. Gerbig & R. Blane Walter

Estimated billings then: $84 million

Estimated billings now: $225 million

Employees then: 93

Employees now: 228

Forecast then: Expecting revenue increases in excess of 30 percent and billings high enough to make Gerbig among the three top-grossing ad agencies in the city.

Where it is now: Gerbig, Snell/Weisheimer far exceeded our expectations by more than doubling its employees and billings.

The agency rose to the top of the Columbus ad agency list in terms of local employees and gross billings and now runs neck-and-neck with HMS Partners in terms of gross income.

The firm netted three more accounts from Eli Lilly & Co. as well as that of Madison, Wisc.-based Bone Care International Inc., and Gerbig says that within the next 18 months, the firm will move from its current three locations to one larger.

Also in 1998, R. Blane Walter was named president and COO of the agency, and Vice President Karen Waldbillig Kasich's role expanded to include a search for nonpharmaceutical business.

Gerbig says he also expects to open an office on the East Coast this year.


Doctors Hospital

Top officer then: Rick Vincent

Top officer now: John Bowers

Estimated billings then: $265 million

Estimated billings now: $265 million

Employees then: 1,900

Employees now: 1,900

Forecast then: Expecting renewed negotiations with competing hospital systems and possibly an affiliation or merger.

Where it is now: Doctors Hospital proved to be too good of a deal for its competitors to pass by. In August, OhioHealth won the race to purchase the three-hospital system over numerous local and out-of-state suitors which pursued Doctors.

The $142.5 million deal was expected to close late last year, giving Doctors Hospital more leverage to survive in the face of managed care, says Howard Sniderman, vice president of planning and marketing.

"Our goal was to sell the hospital when we were still in a very positive financial position, and because of the growth at Doctors West and all the building we did out there, we are in a positive financial position," he says.

In addition, Doctors leased out during 1998 part of its North hospital to Select Specialty Hospitals of Mechanicsburg, Pa., for a long-term acute care facility.

OhioHealth has pledged to maintain the osteopathic medical education programs at Doctors. The Doctors Hospital Foundation, led by former Doctors President and CEO Rick Vincent, will be separate from the hospital and will focus on osteopathic medical education and community health.


Max & Erma's Restaurants Inc.

Top officer then: Todd Barnum

Top officer now: Todd Barnum

Estimated revenues then: $91 million

Estimated revenues now: $100 million

Employees then: 3,800

Employees now: 4,500

Forecast then: Expecting five new locations, greater interest in franchising-including a possible push to franchise the company's core concept-and revenues to top the $100 million mark

Where it is now: Max & Erma's first two franchisees exceeded all company expectations financially and operationally in 1998. Due in part to those successes at Columbus and Cleveland airports, Max & Erma's wasted no time in launching a strategic initiative to franchise its core concept. The company created a dedicated franchise development division and retained Lexington, Ky.-based KMH Partners LLC, a firm known for developing franchise programs that favor multi-unit operators.

In 1998, Max & Erma's also opened its first Ironwood Cafe, a more intimate, upscale dining concept, and added three more company-owned Max & Erma's locations to the 46 it had at the beginning of last year.

Max & Erma's broke new ground financially, too, in 1998, topping the $100 million mark for the first time and setting records in net income and earnings per share.


Executive Jet

Top local officer then: Richard G. Smith III

Top local officer now: Richard G. Smith III

Estimated revenues then: $200 million to $600 million*

Estimated revenues now: $900 million

Employees then: 690

Employees now: 1,050

Forecast then: Expecting preparation for a public offering to raise capital, significant employment growth, expansion into a hangar at the former McDonnell Douglas plant and a new office building

Where it is now: Executive Jet's search for capital didn't land it on Wall Street after all. Instead, Warren Buffett stepped in and officially closed on a deal in July to purchase the company through his own investment business, Berkshire Hathaway Inc., for $725 million in cash and stock.

Company officials say an initial public offering would not have been a good fit, as they wanted to retain more control than would be permitted by stockholders. Buffett, on the other hand, will allow Executive Jet's existing management to continue running the company, which-with his financial assistance-expects to expand around the globe, including into the Middle East, Asia and South America.

The company will move into new headquarters on Port Columbus's north airfield late this summer. More than 300 aircraft are on order for delivery during the next 10 years and employment at Executive Jet has risen by 50 percent.


AEP

Top officer then: E. Linn Draper Jr.

Top officer now: E. Linn Draper Jr.

Estimated revenues then: $5.9 billion

Estimated revenues now: $12.7 billion**

Employees then: 18,000

Employees now: 18,000

Forecast then: Expecting further acquisitions, international expansion-especially in South America, India, Central America and New Zealand-and further diversification of services.

Where it is now: AEP announced in February plans to purchase a 20 percent stake in Australian utility Pacific Hydro, marking its first market entry Down Under. In addition, AEP Resources, a subsidiary of AEP, opened offices in London and Singapore last year-and announced plans to buy Louisiana Interstate Gas and Australia-based CitiPower.

AEP Communications, another subsidiary, introduced an energy-consumption monitoring service last year for business customers, further diversifying AEP's portfolio of services.

What was supposed to be AEP's biggest news of the year-finalization of its planned merger with Central and South West Corp.-fizzled a bit when the Public Utilities Commission of Ohio filed a protest with the Federal Energy Regulatory Commission. The merger, approved by shareholders in mid-1998, would make AEP the country's largest utility, with 4.6 million customers in 11 states. Hearings on the merger are expected to begin this month.


Glimcher Realty Trust

Top officer then: Herb Glimcher

Top officer now: Herb Glimcher

Estimated revenues then: $130 million

Estimated revenues now: $168 million

Employees then: 714

Employees now: 526

Forecast then: Expecting more growth through mall acquisitions, the announcement of a new headquarters building downtown and funds from operations increases in the 8 to 10 percent range.

Where it is now: Glimcher made its largest acquisition ever in 1998 with the $375 million purchase of five shopping malls with a combined 5 million square feet of space. This purchase increased Glimcher's total holdings by 20 percent to 30 million square feet and gave the company its first properties in Oregon, California and Minnesota. In addition, the company announced plans in mid-October to build a 1 million-square-foot mall on 203 acres just outside Chicago. Closer to home, Glimcher completed the $5.1 million purchase of 90 acres at Polaris to build a super-regional mall with anchors including Sak's Fifth Avenue, Kaufmann's and Lord & Taylor.

On the financial side, funds from operations-the best measure of a real estate investment trust's performance-increased nearly 14 percent through the end of September.

With all this growth, the company's search for a larger headquarters building has taken a backseat, but company officials say it is still in the plans.


Buckeye Egg Farm L.P.

Top officer then: Andy Hansen

Top officer now: Andy Hansen

Estimated revenues then: $125 million

Estimated revenues now: $125 million

Employees then: 426

Employees now: 480

Forecast then: Expecting expansion into Wyandot and Hardin counties, and a new, more responsive approach to dealing with neighbors and government entities

Where it is now: Buckeye Egg Farm has begun facility expansions in Northwest Ohio as well as at its Licking County location, despite continued objections from neighbors.

In Marseilles and Mount Victory, expansions are under way or under review by the Ohio Environmental Protection Agency. A feed mill in Northwest Ohio is under construction as well.

In Licking County, plans are moving forward-despite a pending appeal of EPA permits-to add laying houses as well as remodel older buildings to reduce odor and insect problems.

Despite harsh media reports, President Andy Hansen says he was successful in his efforts to improve attitude at the company and emphasize response to neighbors and government entities. For example, a settlement was reached in a class action lawsuit filed against the company by Marion County residents, although claims for monetary damages remain. The company also reached a settlement with the U.S. Occupational Safety and Health Administration to pay $425,000 in fines and increase health and safety training and auditing at all of its facilities.


Metatec Corp.

Top officer then: Jeff Wilkins

Top officer now: Jeff Wilkins

Estimated revenues then: $48 million

Estimated revenues now: $63.7 million**

Employees then: 375

Employees now: 650

Forecast then: Expecting the company's ongoing push toward Digital Versatile Disc technology to either break-through or bust

Where it is now: Metatec began mastering and manufacturing DVDs nationwide in February. In July, the company announced a definitive agreement to buy the CD-ROM business of Imation Corp., which included plants in California, Wisconsin and The Netherlands. This gave Metatec its first European presence and nearly doubled its manufacturing and fulfillment capacity.

In addition, Metatec began manufacturing last year a new generation of DVD with two data layers that can be read without turning over the disc. The company also broke ground on a 151,000-square-foot fulfillment center.

As for Metatec's financial situation, earnings per share averaged 20 cents during the first nine months of 1998-a far cry from the 3 cents per share reported in the same period of 1997-but not quite as high as the 25 cents we predicted if this DVD technology took hold.


Excel Management Systems Inc.

Top officer then: Curtis Jewell

Top officer now: Curtis Jewell

Estimated revenues then:$11.5 million

Estimated revenues now:$10.7 million

Employees then: 90

Employees now: 90

Forecast then: Expecting a narrower focus which will jump-start sales growth and send revenues past $20 million

Where it is now: Despite effort and investment, 1998 did not yield the benefits Curtis Jewell expected for Excel Management.

A success came from putting in place financing vehicles and contracts to allow government agencies to buy his services without having to bid on them, allowing him to take on more government contracts.

However, Jewell spent much of the year working toward what turned out to be an unsuccessful merger with a company he declined to name. The merger would have provided Excel with commercial business to supplement its government contract focus, but miscommunications scratched the deal. He does not rule out future acquisitions or mergers.

In addition, a national sales effort faltered when the newly-hired director and some staff did not work out. Now, Jewell's taking on the responsibility of marketing while he searches for replacements.

"We did all that planning and made great investments in '98, and it did not come through," Jewell says. "It's a difficult thing for a small company to do-get over the $10 million to $12 million mark to $25 million. It requires great investment and strategy."

Despite the disappointments, Jewell still expected a profitable 1998 and he'll renew his efforts this year.

*As listed in Arthur Andersen's 1997 survey of the top 100 privately held companies in Central Ohio

**Figure based on average revenue growth through first three quarters of 1998 projected at same rate through fourth quarter.

Monday, 22 July 2002 10:01

Bigmar Inc.

Bigmar Inc. has never made money. Annual losses at the Johnstown-based pharmaceutical company are routinely in the millions and if a fund-raising deal doesn’t come through soon, Bigmar could run out of capital this quarter.

So why, then, are so many people still optimistic about Bigmar? This will be the year we find out what this hopeful, young company is made of.

Michael Medors, Bigmar’s treasurer and secretary, describes the company’s overall financial situation as “tenuous,” but quickly adds that Bigmar’s repeated losses have been expected.

“We are in a very capital-intensive business being in pharmaceuticals,” he says. “And time is not on your side, so to speak, due to the fact that even for [abbreviated new drug applications], it takes one to three years to get approved by the FDA.”

That’s key. Although Bigmar received blanket authorization from the Swiss equivalent of the U.S. Food & Drug Administration last year to distribute its injectable drug products from a Switzerland facility, it does not yet have approval from the FDA to distribute in the U.S.

Bigmar’s success—perhaps even its survival—hinges on getting FDA approval this year. If it comes, the repercussions could be huge.

“I think you’ll see a real breakout in the next six months,” says Harold C. Baldauf, an Arizona businessman who has been asked to raise between $5 million and $10 million for Bigmar in a private placement to keep the company operating through 1999. Baldauf is the founder of several companies, including Michigan-based Graminex, a Bigmar supplier. He is also a minority member of Jericho II LLC, a private investment firm which purchased enough shares of Bigmar stock last year to raise $6 million for the company.

“If we get the FDA approvals, I think it could be a $30 stock,” Baldauf continues. “I feel real positive that we can achieve that.”

But first, he must get the funds to hold the company over until those approvals come in.

“We’ve always been able to find financing,” Medors says. “I’m optimistic that we’ll be able to raise the money.”

Let’s hope so.

If an influx of cash does surface soon, look for Bigmar to start pursuing acquisitions that could enhance the company’s production capabilities. After all, Bigmar wants to be ready to move immediately out of its research and development phase and into full-scale manufacturing and distribution once the FDA approvals are in hand. It’s the only way the company will turn a profit.

If that pot of money and the FDA approvals don’t materialize this year, however, the financial crunch may be too much to bear.

Either way, 1999 is apt to be a true turning point for this company.


Bigmar Inc.
9711 Sportsman Club Road, Johnstown
Top officer: John Tramontana
Founded 1995
Employees: 70
Estimated 1998 revenues: $6.47 million ††
Revenue growth, ’96 to ’97: -17%
Ownership: Public
1996 IPO share price: $7.50
1998 average share price: $3.25
†† Figure based on average revenue growth through first three quarters of 1998 projected at same rate through fourth quarter.

Monday, 22 July 2002 10:00

We don't mean to depress you

It wasn't long ago that a business owner, preparing to pose for one of our cover photos, half-jokingly asked how big of a frown he should make for the picture. He proceeded to scowl and grimace good naturedly for a few warm-up shots before we told him a serious, confident pose would be fine, thank you.

Although it was an off-the-cuff remark, that business owner's comment struck me. And when I began recalling the cover stories we ran in the latter half of 1998, I quickly understood why he'd developed that image of SBN.

We featured-in no particular order-stories about the forced sale of a local company, the demise of a once-prominent downtown law firm, the agony of rebuilding after a business fire, the struggle of doing business in a war-torn country, the pain of uncontrolled business growth. I've got to admit, it's a rather somber string of covers. Unfortunately, that's the reality of doing business in today's world.

There are serious decisions we face-and grave lessons we often learn-in the course of running a company. While that may not afford us much reason to smile at times, these stories need to be told. Readers tell me they appreciate them; they identify with them; they share them with other CEOs. That's what our publication is all about: educating business owners about how to win the war of business growth without having to fight so many battles along the way.

That said, I have to admit there's also a fine line between delivering hard-hitting articles and depressing our readers. With the line-up we've produced in the past year, we may be teetering a bit close to the brink. And God knows in these gloomy, waning weeks of winter, it doesn't take much to push us over the edge.

So here, for your sheer amusement, is some obscure business-related trivia I've gleaned from various friends and business associates who use the Internet (which, of course, means some of this may just be urban legend). While these tidbits may not directly help your balance sheet, the stress relief you get from a quick chuckle just might make you more productive-and give you something new to talk about during your next business dinner. Enjoy.

  • In Europe, Super Glue is commonly used in place of surgical sutures.

  • Al Capone's business card said he was a used furniture dealer.

  • More Monopoly money is printed in a year than real money.

  • In most television and newspaper advertisements, the time displayed on a watch is 10:10.

  • Proctor & Gamble has more than 100 registered Internet domain names including underarm.com and badbreath.com.

  • There are more plastic flamingos in the U.S. than real ones.

  • The founder of FedEx got a C on his college economics paper outlining his idea for the business.

  • The electric chair was invented by a dentist. (We should've known.)

Nancy Byron, editor of SBN Columbus, welcomes your comments by fax at 428-2649 or by e-mail at nbyron@sbnnet.com.

I’m my own worst critic. I think we all are. That’s because only we know what we’re truly capable of achieving—and there’s almost always something we could be doing better.

Think about it. Could you be a better manager? Of course you could. Could you spend your money more wisely? Absolutely. Could you be more active in the community? Without a doubt. So when are you going to do something about it? That’s the real question—and by far the hardest to answer.

Our publisher, Michael Marzec, repeatedly challenges our staff to ponder these sort of questions. After all, he continually asks them of our company. Change keeps us on our toes. It forces us to grow, to evolve. It prevents us from falling into a rut; from letting our publication become too predictable; from growing stale. Without a new challenge, without change, a business will quickly stagnate. It doesn’t matter how good you think your product or service is now—or even how good your customers tell you it is. If it doesn’t improve, you’ll wind up behind.

Making changes, however, can be scary business. We fear the unknown. We fear the awkwardness that comes with trying something new. We fear failure. What we should fear, however, is complacency.

In a world where expectations continually rise and attention spans continually shrink, you’ve got to reinvent yourself every so often. You’ve got to offer something fresh; something tantalizing; something that gets people talking. You want your product to stop a frenzied executive dead in his tracks and make him say, “Wow.”

That’s what this redesigned issue of SBN is all about.

We know our readers are busy, so we’ve simplified our publication. From our extra-bold, abbreviated name on the cover to the shorter, more pointed articles inside, our goal is to make SBN easier to navigate and learn from than ever before. We’re using more bullet points and other visual aids to highlight important details. We’re expanding and moving our Managing Your Business section to the front of the publication because reader surveys have found it’s one of the most popular parts of the magazine. We’re telling you, up front, what to expect from us: smart ideas for growing companies. We’re adding more resources, more quick tips and more contact information to help you stay in touch with us—and the people we write about each month.

We’re doing all this because we want to serve you, our customers, even better. It’s that simple.

So give us a long, hard look this month. Tell me what you like. Tell me what we could still improve upon. You know I’ll listen. What about you? There’s got to be something your company could be doing better. Find it. Embrace it. Change it—now. Your customers are waiting.



No more baloney

Four months ago, I blasted Kroger for banning a Columbus boy from its in-store play areas simply because he was HIV-positive [“Now on special: baloney,” SBN, November 1998]. The company’s claim that this child posed a potential danger to others struck me as ignorant and shameful. Apparently Kroger has realized its mistake.

Roughly five weeks ago, the company modified its decision. Now HIV-positive children will be treated the same as any other child, which is how it should’ve been all along. Children who display symptoms of a contagious disease, such as the flu or chicken pox, will still be banned from play areas, as will those who play too rough, but that’s a decision I can respect. It’s not discriminatory.

In addition, Kroger took the impressive—and much needed—step of committing itself to better educating its play area workers about infectious diseases. That’s certainly a step in the right direction. After all, ignorance breeds fear. And there’s already too much needless fear surrounding HIV and AIDS.

So here’s to the Kroger officials who reconsidered their policy and sought the advice of informed medical experts in deciding what to do. I think you emerged with a reasonable solution. Thank you. I’ll be patronizing your stores again soon.

Nancy Byron, editor of SBN Columbus, can be reached by fax at 428-2649, by phone at 428-2648 or by e-mail at nbyron@sbnnet.com.