Daniel G. Jacobs

Wednesday, 17 March 2004 11:50

The Cathy file

Born: 1921, Eatonton, Ga.

 

First job: Newspaper delivery boy

 

Career moves: U.S. Civil Service; U.S. Army, restaurant manager; owner (with brother) of Dwarf Grill; founded Chick-fil-A in 1967

 

Sponsorships: Chick-fil-A Peach Bowl, the annual college football match-up between top teams for the Atlanta Coast Conference and Southeastern Conference; LPGA Chick-fil-A Charity Championship

 

Publications: The Generosity Factor (2002 Blanchard Family Partnership and STC Literary); Eat More Chikin: Inspire More People (2002 Looking Glass Books)

 

What is the greatest business lesson you've learned?

Even though you are successful in one business, you may not necessarily be successful in other businesses. Stay in your area of expertise.

What is the greatest business challenge you've faced, and how did you overcome it?

The recession of 1982 presented a challenge. Interest rates were above 20 percent, and our sales figures were dismal. Our executive committee gathered together in an off-site location, and after several hours of discussion, developed our Corporate Purpose: To glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-fil-A.

We established a goal to live and work toward.

Whom to you admire most in business and why?

 

J.B. Fuqua, because he taught me by example. 'The more you give, the more you have.'

 

 

 

Bonus questions:

 

You grew up during the Great Depression. How does your upbringing differ from the experience of your children, all of whom are involved in the business?

 

I have three children who are very active in my business, but they don't have the advantage of going through the Depression, where they had to struggle for their existence. That's been to my advantage to have that experience, although it's not the kind of experience you ask for. It's just handed to you.

It's how we handle our difficult situations that make a difference. Most of us can fare pretty well when everything is normal. The test comes when you have difficult situations. That's a growing period, or it could be a time of discouragement where you give up because you're not having the things you expect in life.

 

When you and your brother opened that first restaurant following World War II, there were some challenges getting materials and labor. Did you ever think of stepping away from the business?

 

It was a good thing I was ignorant in that respect. I thought with $10,600 you could buy any part of the world that you wanted. We made it through.

The hard part is getting started. A lot of people have dreams and aspirations to achieve certain goals they set for themselves. It's easy to get discouraged, but I was fully committed to the task.

 

You've spent 49 years teaching Sunday school. You do an enormous amount of charity work. What benefit comes from that?

 

I've been permitted to do a lot of things that otherwise I wouldn't be able to do if I hadn't had the resources. I have 14 foster homes. We built the homes.

We try to identify those who do not have any serious behavior problems; they're just victims of circumstances. We've been successful. I have 135 children that I've played the role of adoptive grandpa for them. I told them they don't have to call me grandpa, but those that call me grandpa get more.

It's a big joy to drive out to the homes. They come running out of the house, 'Grandpa's here, grandpa's here,' get yourself a hug and sometimes a kiss on the cheek. Those things you can't buy with dollars and cents.

 

What are your hobbies outside the office?

 

I like motorcycles and I like automobiles. That's one of my weaknesses, collecting classic cars. I'm doing the things now that I wished I'd had when I was 18.

I get a lot of enjoyment in things that I do, but I get enjoyment coming to the office as well. So why would you give up something where your heart is? If you've got heart and soul into it, it's not work at all. It's a pleasure.

Monday, 22 July 2002 09:55

Honoring the best

Every year, Ernst & Young LLP recognizes those individuals who best embody the spirit and practice of the entrepreneur. And every year, the judges come away shaking their heads in amazement at the extraordinary stories the business owners tell.

But surmounting enormous obstacles or starting on a shoestring aren’t the only criteria for recognition. The judges, according to Ed T. Eliopolous, director of the EOY program and a partner at Ernst & Young, look for so much more. Below, Eliopolous gives his insight into the judging process.

“I think what is most significant about the Entrepreneur of the Year relative to other business award programs is the judging process,” he says. “Here, what we like to do is get a panel of judges that consists of business leaders and civic leaders. We have really tried to stay away from, I think, making it any kind of political statement or any kind of academic statement.

“I really want it to be an award about entrepreneurial spirit and entrepreneurs and focus on business leaders and civic leaders to make those determinations.”

This is the 12th year for the program in Cleveland. Nationally, it began in 1986 in Minneapolis. It’s now in 47 sites across the country and has expanded to 31 countries.

“It was a great idea,” Eliopolous says. “It’s sort of one of those best practices that really works.”

Not all business owners are created equal.

“At birth,” Eliopolous says, “they all have common entrepreneurial traits, but at some point, one may grow at a much faster rate. One may get to levels that will be unseen by the others.

“At the birth of a company, there’s a tremendous amount of entrepreneurial spirit. There’s a difference, though, how far the entrepreneur takes things. These success entrepreneurs, they are viewing the growth of their company as very important, and it’s not for their own personal benefit. It’s not for their own personal wealth and fame. It’s for the benefit of the company, and in many cases, for the benefit of the employees.”

And the process through which those entrepreneurs get to their goals is what the judges look at.

“What’s neat about our judging process or different about our judging process, it’s really a qualitative process. It’s not a simple matrix — did you grow by 50 percent and did you add 50 percent employees over the last three years. It’s much more detailed than that.

“We really want to understand the spirit of the entrepreneur. Where the company has come from, where its roots were, where it’s headed. And I think the judges have historically placed a lot of emphasis on what was at risk. What did the entrepreneur risk? And how well did they persevere. It’s not a flash in the pan, just started and things look good for one year, two years and therefore you’re a winner,” Eliopolous says.

“They’re looking for a trend and it’s a long-term trend. In the past, judges have focused on companies where the entrepreneur treats the employees like family, reinvests in the business and shares the wealth.”

John Haag, owner of SGS Tool, a winner from the 1998 class, is one example of the attitude many winners exhibit. He doesn’t refer to his employees as employees.

“Everyone is an associate,” Haag says. “You’re not allowed to use the word employees. It may just be rhetoric, but I think you do act and you treat people differently based on labels you put on them.”

Another example is former winner Sam Minoff of Kichler Lighting.

“Sam is a wonderful person. He treats everyone with some dignity and respect,” Eliopolous says. “And that includes all of his employees, all of his suppliers and everyone that his company comes in contact with. Sam believes that the employees are nothing but an extension of your family and that your place of business is an extension of your home, and that you should treat it that way. He believes that it’s your duty to reinvest in the business, which is pretty remarkable today.”

Success is only one of many criteria the judges consider. One part of what makes an entrepreneur is the ultimate goal. With his response to one of the common questions judges ask, one finalist basically eliminated himself from competition. The question: Where do you see yourself in five years?

“And the entrepreneur said: ‘Well, I don’t know how long it’ll take. I hope it will take less than five years, but I see myself on the beach, sitting in a lounge chair sipping a pina colada.’ When this particular finalist walked out of the room, the judges said, ‘Well, that doesn’t exactly embody the entrepreneurial spirit. This guy wants to cash out.’ So he was not a winner.”

Monday, 22 July 2002 09:55

Drawing people in

The money’s been spent. Your Web site is beautiful — a graphic masterpiece that inspires comparisons to Picasso. The only problem is, those comments come from your employees, because they’re the only ones who visit the site.

What you need is a way to get customers to come to your extranet — and a way to get them to come back. The best way to do that, says Mark Fracker, president of Web site design company Double Infinity, is the same way you draw people to your Web site in the first place: give them something they need or want.

The Federal Express extranet is one of the better known sites. With tracking numbers, users can check on the status of their packages.

Even if they’re not buying products directly from the site, there should be useful information customers can access. The AFL-CIO Web site brings visitors back by keeping track of the salaries of CEOs around the country. Banks offer amortization tables. The latest research and industry news are also popular extranet amenities.

If you want someone to come back to your site, Fracker says, it’s vital you update the information regularly. No one wants to read about the company’s August picnic in the middle of December.

“I think it’s very important,” Fracker says, “that the freshness of somebody’s Web site be kept up to date. You get a bad taste in your mouth — that these people aren’t really interested in their Web site.

“But if you have the ability to go in there and change that content by simply cutting and pasting out of an existing document or typing in a short paragraph or couple of sentences, well, the chances of that getting updated are much greater. And then (there is) the chance of people having more visitation and more respect for the information that’s on your page.”

Scott Manners, director of marketing at Double Infinity, agrees.

“That’s another thing people overlook,” Manners said. “So when you say ‘drive people to a Web site,’ people are thinking about the person making their first visit to your Web site. If I can make that guy come back, that’s a great way to increase your traffic.”

Cellular Concepts Online, one of Double Infinity’s clients, offers a glossary of technological terms used in the phone accessory business. Owner William Delligatti Jr. doesn’t have a traditional storefront, so if customers don’t visit his site, he doesn’t have a business.

Of course, before you can get customers to come back to your extranet, you have to get them there in the first place. And to get them, you must know where to find them.

Fracker and Manners offer traditional marketing services. Including your URL in newsletters, press releases and print advertising is one way to draw attention to your extranet. Visiting listservs and news groups such as Usenet is another.

Delligatti cautions against doing too much soliciting in newsgroups.

“I’ve done a little bit in newsgroups. You can sometimes really, really get yourself into (trouble) with them, because people don’t like you advertising in newsgroups,” Delligatti says. “Newsgroups are a place for discussions on certain topics and not actual advertising. I’ve gotten away with it pretty well. But the search engines are my main thing.”

E-zines are another method for drawing attention to your extranet, Delligatti says, although he confesses he doesn’t use them.

“I am 100 percent search engines,” he says. “That is the only way I promote my Web site is search engines.”

If a client is interested in finding out more about a product or service, they have any number of companies to choose from, including your competitors. A search engine is the easiest and quickest way to find a variety of sources for products with the least amount of work. The right key words are the best way to get your company to appear at the top of their search list.

Fracker likens it to a using a shotgun instead of a rifle.

“You can go out there with a rifle and you’re going to put one hole in the target,” he says. “And you’re going to hope you hit it in the heart. When we go out there with a shotgun, we’ve got 50 little holes in that target. And three or four of them are in the heart and three or four are in the head. So we’ve got a kill.”

Over time, though, a company’s Web site will drift toward the bottom of the list or disappear completely.

“It’s an ongoing process,” Delligatti says. “It never ends. Your rank will drop. You have to really stay on top of it.”

Delligatti has a trick, which he uses to make sure he will always be among the leaders. First, he says, do a search on a key word appropriate to your business.

“Find out who comes at the top. Right click on them. Copy their source, their key word and paste it into a page. It’s really working well for me already. You find somebody that’s one or two, you’re going to come up two or three.”

How to reach: Double Infinity, (216) 589-0464; Cellular Concepts Online, (330) 468-5691

Monday, 22 July 2002 09:53

Enough to go around

With the economy thriving, alternative publications seem to pop up like weeds in a vegetable garden. Sporting the same stubborn attitude, they also vanish as quickly as they appear.

In a weak economy, advertising revenues — a publication’s lifeblood — shrivel as quickly as DDT delivering a deathblow to dandelions. Three of Cleveland’s most resilient journalistic ventures have enjoyed a long, strong economic run. But how long can the prosperity last?

Editors Frank Kuznik of Scene, Tom Vasich of the Free Times and Larry Durstin of the Cleveland Tab, stepped away from their gritty, sardonic ways in May to discuss the future of the alternative press for a few hours at the Play House Club. The trio exchanged barbs and took turns explaining why there is both room and a need for three alternative publications in Northeast Ohio.

“If you go to any medium or decent-sized city in this country right now, you will see more than one alternative weekly,” Kuznik said. “And I don’t think there’s any reason this market can’t support more than one. But I also think it’s been a long time since this town has seen some good journalistic competition. And we’re definitely up for that.”

Durstin agreed, but added one cautionary thought. “We’re going to find out when the economy downturns. We’ve been on pretty much of a roll for five or six years. One of the first things to go (when the economy slows) is advertising revenue. In some ways, we need to find alternative ways to improve our bottom line.”

Two of the publications — the Free Times and Scene — were purchased by national chains and enjoy the benefits that national advertising brings. That type of financial boost allows the publications to expand beyond typical entertainment-type coverage and offer more hard-hitting stories.

According to the Free Times’ Vasich, the best journalism is provocative; it forces the reader to reexamine the issues.

“I appreciate any writer who makes that effort to try and challenge the reader with ideas, a point of view or an opinion. I think it’s important about what we do. These papers are good because they are done by human beings who will give you a perspective, who will challenge you.”

Durstin said the Cleveland Tab, which recently announced it would return to monthly publication, follows the tradition of the ’60s underground press. “(We are) a small group of people who kind of have a perspective and an agenda to carry out. We’re more of a group of people that wants to represent a certain viewpoint, a certain niche.”

But with the strength of national ownership behind two of the three publications, their futures are less in doubt, and Cleveland should enjoy watching the product of their rivalry for years to come.

Monday, 22 July 2002 09:52

Hitting the wall

Business couldn’t have been better for C.T. Industries Inc. It was 1997, and the ink was barely dry on a deal President Charles “Bud” Tetzlaff had signed with a new customer that would triple the company’s sales.

In preparation, the 67-year-old job plating, finishing and custom manufacturing company ordered more than $500,000 in new equipment and hired 30 new employees, effectively doubling its staff. Less than a year later, however, the unthinkable happened.

“It became apparent that this big order was going to dry up,” explains Tetzlaff. “It was literally an overnight thing. We had debt issues to deal with because we had added significant capital expenditure. It certainly was in that mode of crisis.”

Tetzlaff’s first instinct was to rush to his bank and quickly negotiate new terms that would allow C.T. to spread out its debt. But when he got there, he found no familiar faces.

“My bank got bought out,” he says. “So now you’ve got different players involved. There was a period of time for about four months, almost five months, when I never heard from my bank. (We) didn’t have an account officer. The officer that we had before the transition from one bank to the other left. It was just a nightmare.”

As though that weren’t enough, Tetzlaff was mired in the laborious task of interviewing for a new CPA firm. Recalls Tetzlaff, “It was hitting the wall.”

Tetzlaff’s wall is something every business owner eventually faces. The wall comes in different forms and sizes, and often much earlier in a company’s lifespan. But make no mistake, it will come. If you haven’t confronted your wall yet, it might be because you’ve been too busy looking back at your business. So turn around. That shadow creeping toward you could be the first portent of the difficult choices you’ll be forced to make.

Simply put, the wall is that moment when a business’s needs outstrip its means. Those needs can be measured using different benchmarks, including finances, personnel, equipment and management.

Surviving the wall requires a delicate balancing act. It’s hiring people before you need them full-time, or before you can justify paying them based on how much work you have available. It’s buying new equipment before you have enough orders to fill your company’s current capacity. And it’s surviving the crushing loss of a customer or a key manager.

SBN spoke with three business owners, all of whose companies are at different stages in their life cycles. Each has faced at least one wall and lived to tell about it. Theirs are stories of confusion, fear, realization, struggle, and ultimately, survival.

I don’t think the wall suddenly smacks you in the face,” says Stanton Cort, an associate professor and head of the marketing division at Case Western Reserve University’s Weatherhead School of Management. “You can be unwilling to cross the wall. You can come up to the wall and stand there and stare out at it. And then something may make you confront it. When you go over the wall, or through the wall, it can be either a matter of choice or a matter of dictate.”

There are other choices as well, Cort says, such as ignoring the wall. But those, too, have their problems.

“If you don’t go through the wall and continue growing, you may still be able to operate profitably, but you probably become a weaker and weaker force in your industry and in your market. So it can be a very, very long process before the company goes away.”

That’s the situation which faces Eventworks Inc.


Up against the wall

“We have faced the wall right from the beginning,” says Joel Solloway, president of Eventworks Inc., an event planning company which has done work for the White House and the Pro Football Hall of Fame. “Cash flow was always a very serious dilemma. We had, and continue to have, a tremendous amount of obligations.”

Eventworks’ origins were so precarious that when it finally moved into an office in the trendy Caxton Building near Jacobs Field in 1997, the building’s other tenants took bets on how long the company would last. Solloway, with the help of his accountant, secured a $50,000 loan from the Small Business Administration to help pay for the move.

“If there’s anything I look back at, it is that we may have actually started out too small,” admits Solloway. “When we got in here, business was pretty good. I ended up paying for a lot of our expansion into this office space out of my own pocket. It really depleted a lot of (our) cash flow. That made things interesting for awhile because we’d be going day to day until we started to fill up.”

The fine art of bootstrapping, however, wasn’t new to Solloway — he founded Eventworks in 1994 out of a spare bedroom in his home. Nor was the timing of Solloway’s tightening cash flow. It came at a time when young companies traditionally face that first wall, explains Michael D. McManus, president of McManus, Dosen & Co. CPAs.

“Every successful business hits the wall,” McManus says. “They typically hit it somewhere between years three and five. At that point, a decision has to be made by the owner. Either he or she does not grow, and ends up turning away business, which is always very difficult for someone to do when for the first three to five years they’ve been taking anything they can get. Or, they look for additional funds. Basically, what happens is you get to the point where you’ve got to bring in excess capacity, people-wise or equipment-wise, before the work hits.”

That’s a problem Solloway today faces. Eventworks has nearly stretched its capacity to the limit.

“The biggest thing has always been that I can only take on so many jobs,” Solloway says. “When you maximize your service, you have to say, ‘No.’ We’ve been trying desperately not to say no. But we’re very, very close to being maxed out.”

According to Robert D. Hisrich, a professor and A. Malachi Mixon III Chair in Entrepreneurial Studies at the Weatherhead School of Management at Case Western Reserve University, this is one of the most critical times for a business.

“This decision is, ‘Do I grow, and how am I going to do that?’” he says. “Then it’s a matter of, ‘Do I give up some of my own responsibility, and do I start hiring people?’”

The decision to hire is crucial, Hisrich says, and an area where a lot of entrepreneurs have a difficult time. The owner of a growing company senses it’s time to hire to prepare for an expected increase in demand. But, because the work isn’t yet needed, those new employees don’t pay for themselves. That’s tricky, explains Hisrich. “You need them. Otherwise, if you don’t get them at that time, you’re really hurting yourself and you may not be able to grow.”

There is also a short window of opportunity. If you try to leap through it too soon, you may stretch your company’s financial resources dangerously thin. But, if you hesitate too long, the window slams shut. “Timing is a critical issue,” says Hisrich. “Particularly in areas such as marketing and finance.”

In Solloway’s situation, he started hiring new people and can free-lance event producers on an as-needed basis. He has also taken on new debt since his initial SBA loan. Eventworks has begun to scale the wall. But whether the company’s made it to the top is a question not yet answered. Says Solloway, “In another year that question may hold more meaning. I’ll know if we really have made the leap.”


Making the tough choices

Michael McManus and his partner, Michael Dosen, once stood in Solloway’s shoes. They were able to successfully j ump a similar hurdle.

“We hit the wall probably at the four-to-five year point,” McManus explains. “For us, that wall was one where my partner and I could not handle everything that needed (our) level of expertise. We had him, me, and maybe three or four people on staff. So we decided that we had to go out and spend some serious dollars to bring in someone with seven to 10 years of experience that we could say, ‘OK, here’s some of (my clients), here’s some of my partner’s. This is (now) our client base.’”

McManus admits he was concerned that his existing client base wasn’t getting the attention it deserved. That made finding new clients nearly impossible.

“What we realized,” he says, “and we realized this after the fact, is that before we had that person in-house, we’d get a lead on something and it would take us a while to follow up on it. (It) was almost because we were afraid it was going to pan out. But you didn’t want to say, ‘No.’”

Their answer was to hire an experienced accountant before building a full work load to support the extra salary. McManus and Dosen took pay cuts to accommodate him.

“We needed to free up our time to handle the additional business that kept coming in,” McManus says. “The day that person walked in the door, we probably only had 20 hours worth of work a week for them. It didn’t take long to fill up their plate. Within three months, we had (him) pretty filled up.”

Seeing a need, then dealing with it is a key issue owners of young businesses must overcome, Hisrich says. Cort puts it more bluntly: “People say, ‘I’m not a very good delegator.’ Well, it doesn’t necessarily mean you’re not a good delegator; it may mean you’re a control freak. That limits growth — if you can’t abstract the business.”

Ironically, McManus & Dosen must deal with a similar situation once again. As the firm continues to grow, the pair faces the need to bring in another veteran. This time, however, the decision is less difficult.

“We’re sort of facing a second wall right now,” McManus says.


Slamming into the wall

According to Cort, the wall can be internal or external to the entrepreneur.

“The internal pieces are the entrepreneur’s capability to manage a larger organization. What is it that makes some entrepreneurs able to get through the wall and other ones unable to get through the wall? It is inside their heads.”

That is the type of wall McManus and Dosen have scrambled over, and Solloway has yet to master.

“The external part of the wall is the need for resources to grow at a rate rapid enough to maintain position in a market that may be growing very quickly,” he says. “That means money. Funding, capital for fixed assests, and also working capital. It means access to facilities. And it means access to skilled production labor and management labor for the entrepreneurial activity.”

This is the more traditional wall all companies face, and the one that nearly put C.T. Industries under.

The problems facing C.T. Industries were more unique. Started in the midst of the Great Depression, it’s a company that knows the value of good management and good customers. Bud Tetzlaff had a good customer, one that was the better part of its business. The problem was, that customer’s order lasted less than a year — long enough for C.T. to purchase new equipment and increase its staff, but not long enough to reap any substantial rewards.

The company had geared up to triple its business, only to be blindsided. The loss of business nearly put it under, but an advisory board member pointed Tetzlaff to a consultant who helped steer the company back on course.

Monday, 22 July 2002 09:52

A day of rest

It’s a Thursday afternoon. The lunch crowd has finally thinned out, and Nick Asimakis, owner of the Hylander Family Restaurant on Detroit Road in Lakewood, has a rare moment to rest. But even his busiest days are a far cry from the 15-plus hour days he put in seven days a week when he bought the restaurant three years ago.

“The first year that I opened, I was here open to close,” Asimakis says. “I missed a lot out of my children.”

Asimakis recalls those early days and what it’s like to serve other people when you would rather be spending time watching your children grow.

That’s why Asimakis decided to close his restaurant on his busiest day of the week — Sunday — so he and his employees could spend more time with their families.

“It’s a busy day; no question about it as far as dollars go,” Asimakis says. “It’s (at) the point where dollars don’t mean everything. And, it’s been pretty good with the employees and helped morale a lot.

“Sunday is a stressful day for everybody,” he says. “One, you want to be home with your family, and two, you see everybody out with their family.”

While there have been a few complaints from customers, Asimakis says the response has been generally favorable. “They sort of tip their hat that I’m doing it,” he says. “I guess they’re giving me the support to justify what I did.”

Many of the Sunday regulars now come on Saturday, and much to his surprise, Monday mornings have been busier since the change.

The Sunday crowd accounted for about 10 percent of business, in terms of gross dollars, Asimakis says. But with the decrease in utilities, not having to pay wages, and the increase on other days, he doesn’t expect any significant long-term losses.

His action has certainly caught his fellow restaurateurs by surprise.

“They call me up (asking) ‘Are you nuts?’ I say, “No, I’m not nuts. I’m enjoying my life.’ These are the same people (who) have problems with labor and finding good help. The biggest commodity in this business is your employees. They can either make you or break you.”

Asimakis also owns TNT Cleaning Services, which provides floor-cleaning services to a variety of businesses, including restaurants. The workers clean about 1 million square feet a day, but never on a Sunday, Asimakis says — it’s even written into the contracts.

And how will the Asimakis family spend its Sundays now? They moved within walking distance of their church in Rocky River, where his daughter attends Sunday school and his son is an altar boy. And rest assured there will be no phones and no pagers to destroy the quiet.

Daniel Jacobs (djacobs@sbnnet.com) is senior editor at SBN.

Monday, 22 July 2002 09:51

A green outlook

Payne Stewart’s par putt on the 18th hole during the final round of the 99th U.S. Open at Pinehurst Resort & Country Club rolled 15 feet uphill over a new grass called G2.

That grass is owned by Lesco Inc., the leading manufacturer and distributor of golf course, lawn care and pest control products. The Rocky River-based company services nearly 9,000 of the 15,000 golf courses around the country, as well as athletic facilities such as Jacobs Field.

What’s so important about the right kind of grass?

Well, according to Paul T. Jett, CGCS, Pinehurst superintendent, “Most U.S. Open sites focus a tremendous amount of time and energy on the greens. Pinehurst No. 2 is no different. But the new G2 grass is doing so well that the greens are fourth or fifth on my worry list.”

And whether it’s Pinehurst No. 2 or your company’s front yard, there’s a good chance that the products you’re using to make your lawn lush and green were manufactured or distributed by Lesco.

Lesco’s success can’t simply be pinned on its superior product line, though that’s what drives sales. The company became the industry leader because its management devised a specific goal-oriented product development and marketing strategy, then tied the two together.


Deliver what your competitors can’t

“We go to market differently than anyone else,” says William A. Foley, chairman and CEO. “We’re the only company that sells on a direct basis. We use two vehicles to do that. First of all, we use something called Store on Wheels, which is a 35-foot tractor-trailer designed and built just for us. It looks like a store.

“We take that to the golf course, the superintendent comes on, and he gets whatever products he wants and he leaves. He’ll get material on a real-time basis.”

The company has 234 service centers, which the Stores on Wheels use as refilling stations and storage facilities.

The combination gives the company an edge over other players in the market.

“If there is a competitive sales person making a presentation to a superintendent, because these (sales reps) are on a route and their time’s limited, the superintendent will leave the other sales man there,” Foley says. “He’ll come out and get on the truck, get what he needs, while the (rival sales rep) just cools his heels.

“They want the service and they love the service, because we’re bringing them 700 products specifically selected for a golf course. Nobody else brings that stuff to them.”


Use your customers for R&D

Lesco solicits the advice of those golf course superintendents to help develop new products. And 80 percent of Lesco’s sales reps are former superintendents themselves.

“So they’ve been on the working side of the golf course,” Foley says. “They know the customers’ needs, issues, threats, concerns, and so the language they talk is very symbiotic. They just know what’s going on.”

They’re also tuned in to what the superintendents need. Few other companies can boast such insight.

The strategy works. In 1992, Lesco sales were about $142 million. This year, they will surpass $450 million, with all but about $40 million of that due to internally generated growth.


If you come, they will buy

Lesco utilizes 71 trucks, and each is responsible for between 110 and 125 courses. That provides more personalized service and a regular face for the superintendents to see.

“Beyond that,” Foley says, “nobody really has as complete a product line to service all components of the business.”

In other words, offer customers more products and easier access to them.

The company also uses more traditional methods to reach customers. Three or four times each year, it sends out the Lesco News, a glossy newsletter containing technical information.

It’s not just a public relations piece with stories about Lesco, Foley says. The company really tries to make it a useful, informative publication.

“We can teach them about the product line. We try very hard to make sure the copy is objective, in focus, addresses their concerns, and then we stay out of the ‘You buy Lesco’ in the body copy.”

The company does about 135 trade shows each year, and gets its message across through envelope stuffers in invoices. There are also plans to develop an extranet, to provide existing customers access to company news and information.

But Lesco’s greatest strength is that it is uniquely positioned between the huge agricultural companies and the smaller operations. The big companies, Foley says, have a commodity mindset; their marketing skills are basically price and they really don’t have much value added in the marketplace.

Lesco’s size allows it to compete with the smaller operations on price. Those companies can’t compete with Lesco because of economies of scale.

“In most of those cases, we can be the low-cost guy,” Foley says. “He needs more resources in a market to run his business than we do.” How to reach: Lesco Inc. (440) 333-9250, or www.lesco.com

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor at SBN. Dustin Klein also contributed to this report.


Manufacturing on the Web

You’ve been told how the Internet is going to save your business. But what good is a Web site for a manufacturer?

According to the latest round of statistics in the 9th Annual Grant Thornton Survey of American Manufacturers Report, your competition knows. Here are some results of that survey:

Percentage of midsize U.S. manufacturers with Web sites:

  • Nov. 1995 — 14 percent

  • Nov. 1996 — 25 percent

  • March 1997 — 44 percent

  • April 1998 — 66 percent

  • Dec. 1998 — 82 percent

    And how are those Web sites being used?

  • Marketing/promotion — 89 percent

  • Customer feedback — 42 percent

  • Order processing — 27 percent

  • Recruitment — 25 percent

Monday, 22 July 2002 09:50

The business of nonprofit

Patricia Nobili knew the changes wouldn’t be easy. Although her organization had a long tradition of providing quality services, unless strident changes were made, the agency’s ability to continue providing the same high level of programming for its clients was in doubt.

But to everyone’s satisfaction — the board of trustees, clients and the staff — Nobili delivered on her stated goal. More important, she did it without ever turning a penny of profit.

Nobili is executive director of the Achievement Centers for Children, a nonprofit agency which serves mostly children and young adults with chronic disabilities and behavioral and emotional problems. She was hired to bring a fresh management perspective, a decidedly business-oriented approach, to the job. And while profit may not have been one of the board’s motives, that doesn’t mean the dollars were unimportant.

“The agency has a proud history of delivering quality programs,” Nobili says. “But what the board recognized is, the environment was changing dramatically and the agency was having increasing problems with expenses going up and revenue going down. There needed to be a change for the agency to remain a viable and vibrant organization for the future.”

Prior to her arrival in 1994, the agency — founded in 1940 as The Society for Crippled Children — was without an executive director for two years. The board of trustees even considered merging with other organizations with similar missions to keep the agency afloat.

Nobili has faced a twofold challenge: She was charged with changing the agency’s operating procedures so they resembled a for-profit business model. But to do that, she had to convince the staff that the changes were needed.

“In the first six months, I just learned, listened, asked questions,” Nobili says. “(I) was developing, at the same time, my own impressions of what would have to change and how.”

What she found was an organization that was extremely dedicated to its mission. Says Nobili, “The values were one of the things I wanted to protect. (There was) a lack of understanding about what the environment was doing — changing — and how that would dictate success for this agency.”

Without those operating changes, Nobili says it would have been impossible to continue the level of success to which the staff was accustomed. “It was an educational process with the staff to try to explain what the environment was saying to us, why we had to change and that it was, in fact, changing for the benefit of children with disabilities,” she says.

People often resist change, and the staff at the Achievement Center was no different. Nobili brought in a new computer system and restructured the way much of the paperwork was done. In hindsight, Nobili understands the staff’s initial concern.

“It was resistance because of human nature,” she says. “Most people don’t like change. If you’re changing and going into something you don’t know, you feel a little less competent and more vulnerable.”

And perhaps, Nobili says, it appeared to the staff that she was too motivated by financial and productivity issues and not the best interests of the clients. That belief, though, no longer exists. The concerns quickly dissolved.

“I can remember frequently stating to them if we sit back and continue to do it the way we’re doing (it), it might be easier for us, but we’re doing it at the expense of children who are born with disabilities tomorrow. And that’s unconscionable. And I know nobody in this agency wants to do that.”

Perhaps Nobili’s most businesslike adaptation was the adoption of a strategic plan. It had an enormous impact on the agency.

According to Director of Development Kerry O’Connor, “The agency saw a substantial cultural shift from informal to formal, from being service driven to market driven, and from subsidized to self-supporting.”

Among the changes instituted were cultivating marketing and public relations expertise, restructuring and enhancing services, upgrading technology, getting a better understanding of cost/pricing and tracking the quality of all services delivered to clients of the agency.

“Running a nonprofit is as challenging as running a for-profit,” Nobili says. “Perhaps (there are) some different challenges here and there. But you have to be ever mindful of everything a business is mindful of.”

How to reach: Achievement Centers for Children, (216) 795-7100

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor at SBN.

The plan is to transform Dicker and Dicker into the eBay of jewelry stores. And although co-owner David Dicker has yet to receive the notoriety of his larger online auction cousins, he is doing one thing many big name e-commerce sites aren’t — he’s turning a profit.

Dicker used to sell jewelry the old-fashioned way — telling customers that over time, it would appreciate in value. They would soon return, however, with their heirlooms in tow, looking to cash in on his friendly advice. In those days, Dicker would reply, “I don’t want your jewelry.”

That prompted the inevitable outcry from his customers: “But you said it would be worth more in the future.”

To which Dicker would answer, “Our jewelry’s worth more in the future. Nobody wants your jewelry.”

But, as Dicker soon learned, he was wrong.

“I’m telling them it’s going to be worth more and then I don’t want to buy it,” he explains. “That doesn’t make sense. In the 1960s, we bought our first estate piece and sold it almost that same day.”

It was then, 30 years ago, that Dicker realized he was on to something big. Over the next few decades, the jewelry store established a niche in the estate market, reaching clientele nationwide.

As with any good idea, imitators soon followed, and the jeweler’s hold on the estate market started to wane. Whenever Dicker offered a price for a piece of jewelry, no longer was it a straight take it or leave it decision. Customers had a choice.

“Too many people were walking away,” he recalls.

As a solution, and to maintain high traffic in the store, Dicker countered with an odd proposition.

“I said, I’m going to offer you $1,000, but you say you want $2,000. What if I had an auction? I’ll put it on the market for $2,000. If it sells for $2,000 or over, great — we’re partners, we love each other. If it doesn’t sell, I can still give you the $1,000.”

Customers agreed, and thus began the jewelry auctions.

In Dicker’s auctions, no fees paid by the seller. That’s different from the fee structure in traditional auctions. Auction houses generally tack on fees, including entry, photography, catalog and insurance, to name a few.

And there is no buyer premium. The store makes money by charging a 10 to 35 percent commission on the jewelry, 60 percent of which comes from private collections. The commission is based on how easy the item is to sell.

Dicker’s first auction, in 1994, was a live event. People came to the store to bid. But three years ago, two high school students approached Dicker and his co-owner sister Leah, and put their store on the Internet. Back then, people could preview auction items but couldn’t bid on them. As events evolved, people could watch and listen in real time, but again, they were unable to bid.

That all changed a few months ago. In August, at Dicker & Dicker’s most recent auction, they combined a live event with Internet bidding. The site received upwards of 1,000 individual hits each day leading up to the auction, Dicker says.

People previewed and placed bids on items for weeks before the live event. A week before the sale, nearly two-thirds of the pieces had bids on them. Then, beginning at 10 a.m., and every two minutes after that, bidding closed on each of the items.

The first item, a ladies 18K-gold wedding band, with an estimated value of $380, sold for $172. Many items were offered without reserve, meaning the opening bid was $1.

But the auction does far more than just sell estate pieces.

“The auction brings thousands of people to our Net site,” Dicker says. “And as they come in, just the same way they’re coming into the store, they’ve got to walk through and see the regular jewelry. On our Net site, the first thing they see is the new jewelry. Then they’ve got to click over if they want to go to the auction. So it sells a lot of the primary jewelry that we have.

“We never had (much of) a national profile until the auction came along,” he says. “You’ve heard the book “The Mouse That Roared?” This is the jewelry store that roared: a jewelry store in the 25th largest city in this country that is doing business with places in London, South America, Germany, Yugoslavia. The phones are going nuts. We’ve got people calling regularly from California, from Florida, from coast to coast. It’s wonderful.”

There is another reason to go online, Dicker says: Necessity.

“With the Internet, you can’t sit back, buy goods in New York and bring them to your store in Cleveland and put up a sign and sell them. The ones that it’s still working for, their days are numbered.”

While the popularity of his online auction is growing, Dicker knows he needs to give his customers something else. So several jewelry experts were brought in to discuss a variety of topics, as well as answer basic questions about jewelry.

“For us, it’s a new avenue to make added value, where we’re going to be able to sell advertising, both on our Web catalog and in our Web radio show,” Dicker says.

Auctions are scheduled one a month for the rest of the year, and at least one a month next year. The goal is to turn the auction into a regular program. By the time the Internet turns broadband and people are able to watch television on their computers, Dicker would like to turn this into an auction that runs 24 hours a day, seven days a week.

But for now, he’s satisfied setting the pace for the jewelry industry.

How to reach: Dicker & Dicker Jewelers (216) 464-0400, or www.dickeranddicker.com

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor at SBN.


By the numbers

389 — total number of pieces sold

$25,000 — highest price paid for an item (an 8-carat platinum heart shaped diamond solitaire ring; estimated value: $70,645)

$114,785 — estimated value of most expensive item in the auction, a 14kt YG, 13.80-carat diamond ring

$129,000 — highest price ever paid for piece at a D&D auction

$350,000 — estimated total value of the pieces sold at the most recent auction

Monday, 22 July 2002 09:48

The employee friendly office

As your company has grown, your cubicles have gotten smaller. The IT team has laid down so much new wire you could serve as a back-up should the nation’s electric grid shut down at midnight Jan. 1.

And that chair, you know, the one with the fabric tear where the padding fell out so many times it was finally replaced with a couple of T-shirts and someone’s dirty sweat socks? It’s seen more rear ends than a proctologist.

The bottom line: It’s time to relocate and to refurnish the office.

You’re not a start-up anymore, and that desk you got after cousin Ned’s accounting firm closed down just won’t cut it anymore. You need new furniture. You adopted a business plan to get you this far, so this is no time to throw up your hands and rush into something without examining it closely.

As with the other aspects of your business, you need to plan your new space and what will go into it, says Joe Westfall, director of integrated Interiors Group, a division of Ohio Desk. According to Westfall, there are four steps to consider before taking the leap into a new space:

Document your needs

How many desks, chairs and computers to get only addresses your company’s surface needs.

About 91 percent of companies’ costs are in salaries, benefits and technology investments. The other 9 percent goes toward of occupancy costs, equipment and everything else.

Most managers don’t consider how the 9 percent affects the 91 percent, Westfall says. They often view their space as the box in which the work is done.

“The only opportunity to improve the environment, the culture, the ability to attract and retain high quality employees, will go on with whatever is done inside that box,” he says. “The goal is to show a customer how to worry about space and that what goes into that space can truly affect the quality of the people that you attract and retain.”

Consider growth needs

As companies change size, many owners simply wedge employees into different space.

“(We) ask a customer, ‘What was your head count three years ago, what is it today, and what is it going to be three years from now?’” Westfall says. “If you see a dramatic opportunity for growth or shrinkage, then everything that you have in the way of assets needs to be movable and flexible.

“If you’re very stable and you’re not growing a lot, and you don’t anticipate growing a lot, you can afford a much more rigid solution.”

Understand your culture

The traditional approach to business puts the CEO in the corner office and gives the top executives window offices. It’s based on prestige. But the CEO is often rarely in the office.

“If you take status out of the equation of decision making, it’s a very bad decision,” Westfall says. “So some of the stark realities now in all industries are saying, ‘That’s a bad use of our real estate.’ So senior officers are going to open plan stations. They’re becoming equal with the staff.”

Westfall says it’s important to keep all your drywall to the inside of your space.

“That would be strategy number one: Minimize permanent offices and keep all the space on the outside as open as possible. Minimize your rigidity and maximize your ability to react.”

Know your technology needs

Architects and office designers are working together more often to redesign the traditional office. Some offices may never entirely rid themselves of cubicles, but the style of and approach to their use must be considered.

“The concept is decoupling of the business furniture system from the infrastructure system — the electrical and the low voltage voice/data systems.”

Some companies have gone as far as distributing the electrical, communication and HVAC equipment beneath a raised floor. That allows for complete flexibility in terms of furniture, Westfall says.

Once you’ve completed these steps, you’re able to plan the space you want and find the appropriate site in the market.

“Once you document what the needs are, you can begin to experiment with the ‘what if?’ scenario. The pragmatic questions are, ‘How are you really using your space?’ and ‘How are you measuring its use?’’”

How to reach: Integrated Interiors Group, (800) 326-0601

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor at SBN.