It happens all the time. Just when you find that perfect restaurant, little-known bar, great shop or favorite beer, the company goes out of business.
That's what happened to C. David Snyder, former owner of Realogic and now chairman and CEO of Snyder International Brewing Group LLC.
"I saw that Crooked River (Brewing Co.) was in bankruptcy," he says. "It happened to be the beer I drank. So, it seemed natural to help."
Consider it a dramatic change of direction for Snyder, who had spent his career working as a consultant with some of the top firms in the nation, including Arthur Andersen and Cooper & Lybrand. After that, he founded and sold two companies, and in the early '90s, launched Realogic, a local IT consulting firm.
Two weeks before Realogic was scheduled to go public, Snyder and his partners received a phone call that set in motion the changes.
"We got an offer, one of those offers you couldn't refuse," he says. "And it was time to sell."
The sale was supposed to allow Snyder time to relax, but instead, he found himself with too much time and some extra money in his pocket -- a dangerous combination for a man who had no plans to truly slow down, let alone retire.
"I'm one of those guys that will probably do something until the bitter end," he says.
Snyder may be wishing for that end to come sooner rather than later on Feb. 18, when he'll be the guest of honor at "An Evening of Good Sport Networking," a roast to raise funds for Junior Achievement.
Snyder agreed to the roast, presented by the Cleveland Crunch and sponsored by SBN Magazine because, "It's a worthy cause and it sounds like fun."
The event begins with a 3:05 p.m. Crunch game, followed by a cocktail hour from 6 to 7 p.m., then dinner and the roast at 7 p.m. Tickets are $250 a plate, $2,000 for a table of 10.
Snyder admits there's a difference between beer brewing and IT consulting.
"It is a different part of the brain," he says. "It is business-to-consumer and is different because now you have wholesalers and retailers that are selling your beer -- you don't control all of your revenue."
When Snyder assumed the reins of the faltering brewery, he brought with him time-tested business principles to turn it around. He retained most of the brew staff, but developed a new marketing plan and orchestrated a long-range plan for consolidation within the industry.
"You can't be a $1 million to $2 million brewery today and make any money," Snyder says. "It costs too much to run an ad or invest in infrastructure. That's why you are seeing a tremendous amount of consolidation. I had no idea at the time that we were going to get into the beer business. I saw what was happening with the consolidation and I thought it would be good for a roll-up strategy."
Over the past two-and-a-half years, Snyder's been in acquiring mode, snapping up Cincinnati's Hudephol/Schoenling Brewing -- maker of Little King's beer -- and buying a 51 percent stake in the Fredrick, Md.-based Fredrick Brewing Company, a public company known for brewing beer using hemp seeds.
But beer alone isn't enough to satisfy Snyder.
"I'm not a 40-hour-a-week guy," he says. "I could probably hold down a couple of jobs."
And that he does, but on his own terms. Snyder has invested in a number of technology firms nationwide, including Digital Atoms, which is headquartered in the Washington, D.C., area.
"With the exception of beer, it (technology and consulting) is really all I have done," he says. "I have developed a reputation for it, and there were a lot of people who were asking me to get back in. I had a lot of people twisting my arm."
Snyder's arm was twisted enough that he founded a technology consulting firm in Cleveland called Brulant, which means "hot" or "scorching" in French.
To Snyder, business is business, even when it involves the fast-moving world of technology.
"In some ways, it's changed a lot. But in some ways, it hasn't changed at all. It is still about relationships. Technology changes, but you still have to have good people running it."
Snyder says he's enjoying himself now more than he ever has, and he's become an integral part of the Crooked River creative team.
"I came up with Expansion Draft (beer), and it was a great seller for us," he says.
And, Snyder's helped draft slogans like the ones seen at Crunch games, where the side boards read: "Expiration date, born-on date, how about get a date?"
For Snyder, much like frequent product tastings, it's all part of the business.
"We have fun with it," he says. "It's only beer; you can't be too serious about it."
Beer and sports obviously go hand-in hand. Crooked River is involved with most major sporting events in Cleveland.
"People who like sporting events like beer," he says. "There is a lot of statistical evidence out there that says effectively (sporting events) are just a big bar. If you go to the baseball game, you will see people standing in line to get our beer while there is nobody in line to get the other beer."
Beer and sports may go together, but what about a Cleveland-owned beer company that has a stake in a Maryland company, and its relationship to a certain Baltimore football team?
When faced with the question of whether to sell Crooked River beer at the Baltimore Ravens' stadium, Snyder had to make a crucial decision.
"We had an opportunity to sell our beer at Ravens' field and we turned it down," he says. "That should tell you something. We did a deal with the Washington Redskins to sell beer. We sell a lot of beer at Camden Yards, and we were written up in the New York Times about that. But with the Ravens, I just can't do it."
So at least one thing is certain -- on Feb. 18, Snyder won't take any flack about selling out to the minions of Art Modell. How to reach: Snyder International Brewing, (216) 619-7424; Cleveland Crunch, (216) 896-1140
Kim Palmer (firstname.lastname@example.org) is managing editor of SBN Magazine.
You need to increase your slumping sales record, so you invest in recruiting new employees with tremendous records at their previous companies.
However, when they join your firm, not only do sales decrease, but the new employees reveal discipline and performance problems. Worse, you've invested more money in this initiative than in any other in your company's history.
Welcome to the Cleveland Cavaliers Inc.
New Cavs General Manager Jim Paxson watched the team's meager ticket sales rise 4 percent from the previous season, but the numbers were still the second lowest in the franchise's 20-plus year history. He watched discipline problems occurring on the team, low employee morale and a fickle customer base.
It was the last factor that disturbed him most -- fans were more than content with the local football and baseball teams and weren't entertainment-starved enough to shell out $30 or more to watch a struggling basketball team.
It was clear the Cleveland Cavs' work force needed another major restructuring effort, not only to deliver more wins -- which is what brings in sales -- but also to improve public relations with the community, which helps sell tickets even if the team may not be that hot.
"Sitting in the general manager's chair for one year and facing the kind of season we did last year, (head coach) Randy (Wittman) and I felt we needed to try and make some significant changes," Paxson told a group of sports writers at a recent luncheon. "I think what really helped us in the start that we are having is changing the chemistry and getting some veterans with some leadership ability on this team. Chemistry is so important in a team game."
Here's what the Cavs have done in the past year to revamp a team -- and a business -- that was on the decline.
In the off-season, the Cavs released $96-million discipline problem Shawn Kemp, who, despite leading the team in scoring, led the entire league in personal fouls and disqualifications. After trading Kemp, Paxson brought in veteran leaders Clarence Weatherspoon and Chris Gatling, and forwards Robert Traylor, Matt Harpring and J.R. Reid (recently waived) and guard Bimbo Coles.
Getting eager new team players on the roster resulted in improved morale for the Cavs. And as most company owners and managers know, better employee morale means better productivity, and better productivity translates into increased revenue (read: ticket sales).
Paxson says the new Cavs employees believe, as he does, that there isn't one player who shines above the rest, but rather, different players who excel on the court on different nights. There is not just one go-to guy, which is better if you want a unified team.
"What we have is a team; you win with a team and you need talent and need good players. We feel we have talent and we have good players," he says.
Develop leaders and mentors
Part of building a dedicated team is developing leadership through mentors who take younger employees under their wings. In the Cavs' case, the team sought new leaders who, while not superstars, had solid experience and were willing to serve as managers to younger players with tremendous potential.
One player who stands out is Weatherspoon, who's been in the league for eight years.
"Spoon, in my opinion, has been our MVP," Paxson says. "If we start to lose a lead, he's the one getting in the huddle and yelling at guys. He brings that energy and enthusiasm and he wants to win. For an undersized power forward, he's really set the tone for this group."
Paxson also lauds the veteran players, namely Coles, who's been playing since 1990, for their mentoring force on the new Cavs.
"Bimbo came in with the attitude that he wanted to be a part of this team, and he wanted to help Andre Miller grow as a player," Paxson says. "He wanted to be on a team that was committed to winning. From Day One in training camp, he's been a real key person for us."
Teach your younger staff members
Employers face this dilemma every year: They hire a kid fresh out of school who shows tremendous potential but has little real world experience.
Two players on the Cavs seem poised for All Star status, but need to learn leadership skills and discipline from strong management and co-workers who will prevent them from squandering their skills.
"(Harpring) brings an effort and energy that I think a lot of fans here remember in the teams from the late '80s, early '90s," Paxson says. "He brings a lot of effort and energy and hustle, which is contagious with the other players on the floor. And Robert Traylor has shown the potential that we all think that he has, and he also shows a high level of enthusiasm."
That type of lead-by-example attitude sparks a willingness to give extra effort -- something employers strive for in their work force.
Understand budget constraints
Employers would like to invest more in personnel to attract the best employees, but they are often limited by what their CFO says they can spend. In the NBA, however, the industry itself limits how much a team can spend on players through the use of a salary cap.
Even with the restriction, only two teams last year were under the cap. The Cavs were not one of those.
"Part of the thinking that went into the trades that we made was not only to change the chemistry and the environment, but also to change the flexibility in terms of the players we want to keep longer term," Paxson says. "We're looking at it in a way that we want to keep the core group of our guys together and have the financial ability to do that. We might have some cap room in the next two or three years."
The drastic changes have put a new face on the Cavaliers. They seem hungrier and more motivated. And, as is the goal of any good business owner who undertakes sweeping change in an effort to spark production of a better product, the public has stood up and noticed.
The only thing remaining is to drive revenue back up toward the basket. How to reach: The Cleveland Cavaliers, (216) 420-2000
Morgan Lewis Jr. (email@example.com) is a reporter at SBN Magazine.
The Internet has taken self-service to new heights.
It has proven a paradise for shoppers who don't want to be bothered by pushy salespeople. On the Internet, you can shop for cars, compare features, price and financing options, locate discounts and determine dealer invoice -- without ever being asked how much you are ready to spend by somebody trailing you around the parking lot.
You can order on the Web, complete with financing and insurance, without wondering who the sales guy really talks to in the back office. Here, you are the most important customer and can do things at your own pace.
Buying a car on the Web is still as unusual for some as was using ATMs when they first arrived. Today, most people swear by ATMs, preferring the 24/7 availability and convenience over lines at the bank. Few remember that banks introduced ATMs as a way to save money, to serve more customers with fewer clerks by moving nonvalue-added transactions (no fees) away from the counter.
On the Web, there really never was a choice -- unless the customer did the work, nobody could do it. Pure online businesses saw this from the beginning as bricks-and-mortar companies watched and wondered. Most companies are just starting to let customers help themselves -- allowing employees to focus on value-added services.
This is true for both B2C and B2B. Order-takers are now customer service representatives and add value by dealing with issues instead of simply interpreting customer input into a computer. Online merchants can devote resources to providing better selection, lower prices and, in some cases, free advice on the product your customers are investigating, as well as suggesting other products similar customers have ordered.
The 24/7 availability of the Internet allows on-line retailers to take orders on weekends, after normal business hours, worldwide, without a single order-taker to pay. And customers like it. They enjoy phenomenal selection, easy price comparison, low prices and easy access to information.
The number of customers insisting on dealing with people is rapidly decreasing. For example, a patient can investigate that embarrassing rash online without confronting the family doctor. Many also like the ability to sit at home in pajamas while planning a party and instructing their supermarket to choose the ingredients and have them ready for pick-up same afternoon.
Cleverly designed Web sites hide multisystem complexity. EAI (Enterprise Application Integration) allows a company's purchasing system to include a vendor's system in the workflow, effectively eliminating the manual process.
Many Web stores operate almost without employees, having vendors drop ship directly to customers. This also applies to multibillion dollar companies and distributors that interface directly with their customers' order-taking systems. A customer, perhaps a retailer, enters the order in his own system.
A distributor is selected based on availability and the purchase order for the distributor is automatically generated and mirrored with an order in the distributors system, all online, with no time-consuming manual ordering process.
But you don't have to look to the Internet to see that people are ready to do companies a favor by doing their work for them, and even pay for it. Just think about it the next time you pay to use an ATM.
Lately, however, business owners have found smart ways to make their customers do their work for them. Some grocery chains now allow customers to scan their own groceries and pay for them in a machine.
Airlines allow customers to plan their travel and buy tickets online. Not only does the airline get increased revenue from those who appreciate easy ordering, they avoid paying agents' fees while obtaining a direct relationship with their ultimate customers -- the travelers. Considering the benefits, it was surprising how long it took before they offered automated check-in kiosks and other do-it-yourself services.
There are still many opportunities, and so far, customers have been quite happy to do the work for free. One day, they may actually be paid for it. Henrik Risvang (firstname.lastname@example.org) is vice president of professional services for Fathom Interactive LLC, the oldest e-business solution provider in the Midwest. Fathom delivers world class e-business consulting, training, design and implementation solutions that integrate people, process and technology. Reach him at (216) 861-5951, ext. 236.
(Part two of a two-part series)
Last month, I proffered how a well-thought-out computer model can help you plan, budget and fund your business.
The model will have no value if you force the numbers to yield results you want instead of entering real data and letting the model generate valid results. Growth is driven by many things, but not by a number entered into a formula in an Excel spreadsheet.
If you really know your way around a spreadsheet, consider constructing your own model from scratch. It can be laborious but you will get a great feel for the economics of your business.
Use current revenue streams and account charts to reflect your business practices. If you are modeling a start-up company, develop your chart of accounts by picking the applicable ones from widely available sources.
Keep it simple
To a great degree, simple is better than detailed. I have seen expenses so detailed that travel was broken down into bus, train, airplane, breakfast, lunch, snack, dinner, etc.
No one should care what the total breakfast expense for the year is. Such detail makes understanding your model nearly impossible. If travel expense is an important component, then account for it carefully, but not to the point of tracking how much a glass of orange juice costs.
Justify the numbers
While I warn about using formulas that arbitrarily increment certain values, a model's ability to automate calculations is what makes it so powerful. If you know the cost of supporting a salesperson, use that cost in a formula to automatically calculate those costs as the number of salespeople changes.
The same concept applies to sales generated per salesperson. If you know that each salesperson will generate $100,000 per month in sales, put it in a formula. You can then calculate both total sales and total sales support cost by simply entering the number of salespeople.
But, don't fool yourself by arbitrarily starting with 1,000 salespeople to justify $100,000,000 of sales per month. The formula will certainly yield that number, but the formula doesn't know that you might have a total working capital of only $150,000 and no support staff, warehouse or office.
Formulas are great, but they have no knowledge on their own. You supply that.
Conditional formulas are linked to prior events and trigger further actions. They are a key feature of modeling. For example, in determining your rent cost, you might base your space needs at 250 square feet of office space per person.
Link the number of office workers into a formula that includes the cost per square foot for office space.
Keep in mind that unless this formula has a fixed starting point and a trigger conditional on when you would need to increase your office space, the formula would change your rent expense every time you increased or decreased staff.
In practice, rent expense does not vary month to month, so the formula must reflect your actual beginning rent expense and hold it constant until a condition triggers an increase. This condition should reflect when you would logically rent more space.
Account for the variables
Once these conditional formulas are constructed, they obviate your need to constantly adjust many variables. Merely changing the number of employees can recalculate sales, rent, payroll and anything else dependent on the number of employees.
Or, you might want the number of sales personnel to be dependent on the amount of sales. In that case, determine sales, and the formulas will calculate the number of salespeople, sales payroll, sales support costs and rent.
Adapt for your business needs
A commercial modeling program will do all the math correctly, but consider its applicability to your company. Adapt your company to its structure instead of adapting the model to your needs.
Commercial programs also almost always have automatic incrementing formulas, so when you disable that feature, make certain you are not crippling any other part of the model.
If you need a robust model but don't have the modeling skills or time to prepare your own, have your professionals prepare it to your needs. The model is for your benefit, so be involved in developing and using it.
Try out a variety of scenarios to see how they flow through the model to optimize your business and to determine your capital needs. Erwin Bruder (email@example.com) is president of The Gordian Organization, which provides business planning and structuring services to startup and growing companies. He can be reached at (216) 292-2271.
For most business leaders, setting out on the journey to find yourself leads to disillusionment.
The process is an inside journey which evolves over time. It is not an epiphany. You become yourself through conscious reflection, adjustment and self-directed shifts in your path.
That requires confidence in where you are now and faith that your life has a higher purpose that you are continually evolving to achieve. Identifying the challenging parts of becoming yourself is the easy part.
The key is, "What are you going to do about it?" Consider this five-step "run for your life" process.
Although you can look to others for guidance and inspiration to guide your run, ultimately, your life is a race against and for yourself. So how do you go about finding your purpose, passion and unique path?
Traveling inside begins by leaning into your life instead of waiting for the race to come to you. Bill Prior, CEO of Kinetico Corp., explains that you need to run the race of your life as if you are on fire. Your purpose must be driven by values and passions, which will light the fire.
For your race to be truly inspiring, consider how you would like to positively impact others and your community through your purpose.
Once you have traveled inside, you need to look outside to mesh your internal purpose and passion with the external world. Start asking how you can make a difference in the world. Who needs your skills and capabilities? As they say in real estate, "What is your highest and best use?"
Increase your view of the world by leaving your comfort zone. Try things you have never done before, read about new subjects and concepts and get to know people outside your traditional circles.
Once you determine your initial purpose and begin to think through how you are going to use it in the world, you are ready to start running toward your goals and objectives.
Write down the steps necessary to move forward. Then, utilize resources available to you, such as mentors and others who are interested in sharing your dream and its excitement. Let others benefit and add value to your dream.
Most important, stop entering every race. When you have the option of saying no, you start having time to say yes to your path. Identify what you can stop doing.
Look at the scoreboard and make adjustments
Are so busy "doing" that you have no time to consider how you are "being?" To become yourself requires time to reflect on your scoreboard.
Consider a walk, jog, retreat or a journal. You can't reflect during your daily activities. Reflection takes time to be quiet so you can hear your inner voice. Find quiet time (even if it's only in the car) to consider your thoughts and feelings about your daily circumstances and the adjustments that are needed. This allows you to ask yourself what you could have done better to improve a result.
Learn from relationships with teammates, but don't be made by them. Much of your learning happens through interaction with others. Work to understand your teammates and employees by asking open-ended questions.
But remember, you're the boss, and you have the right to a different perspective.
Get a coach. Sometimes no matter how hard we try, we are blind to ourselves. Consider an executive coach for business or a personal coach to provide an objective scoreboard of results and assist in opening up paths and removing real and perceived obstacles.
Celebrate victories, then start again
Once you've run a great race and finished with your personal best, enjoy the moment. Then, get back on the path for the next race. Mike Foti (firstname.lastname@example.org) is CEO of Cleveland Glass Block and president of Leadership Builders. He speaks, trains, facilitates, consults and provides executive coaching on leadership and strategic planning. Reach him at (216) 531-6085.
The bulk of our professional lives consists of the proverbial climb up the corporate ladder.
It takes considerable time and effort to reach the top, often requiring those who attempt it to forgo family vacations, children's Little League games and that all-too-precious commodity, sleep.
And what awaits those who reach the summit?
Often, it's prestige, compensation and stability. For most, this is enough. After several years at the top, it's on to retirement and enjoying the fruits of one's labors. But there are always those who buck the trend.
Call it an entrepreneurial spirit. Label it tenacity. Simply put, there are some business leaders who are not satisfied with standing still or even running in the same direction. For them, there is no greater challenge than starting over.
"If you're a born entrepreneurial spirit, you are in a hurry," explains Don Heestand, senior managing partner and chairman of E-merging Technologies Group. "You have to get it done. You have to get it out there before someone else does. It is a race and it's a rush."
Even so, why leave the prestige and stability associated with leading a large, successful business? For some, it's as simple as a much-needed change. For others, it's as important as a revolution.
New ventures are fraught with unexpected challenges and, of course, risks. Those who choose to take the gamble and start anew welcome the challenges and view the risks as extremely personal.
SBN sought out four entrepreneurs who made it to the top, then left their perches to sow the seeds of business again. We posed one simple question to each: "Why?"
Don Heestand was one of the founding partners and CTO of Realogic, a Cleveland-based computer software company that was sold to Computer Associates in 1996. He can talk for hours about numbers-driven businesses that grow too fast and develop what he calls "bureaucratic cholesterol."
"(Realogic) just grew so fast," he says. "I became disenchanted when I took an elevator to the 23rd floor and there were two strangers that got off (the elevator). One was a Realogic employee and was interviewing the second person. I didn't know either one of them."
Given the opportunity to chat with the energetic Heestand, it becomes vividly clear why bureaucratic cholesterol -- or any amount of slowing down -- would be unacceptable. His new venture, E-merging Technologies Group, is a professional services firm that specializes in advanced and emerging technology development and deployment. He is involved with everything from computers to welfare recipients to stage-three cancer treatment.
With capital in hand and notebooks filled with ideas, Heestand is a modern day Don Quixote. But instead of windmills, he tilts at conventional corporate structure. Heestand has tackled every issue of the traditional service structure with generous compensation packages, shares in the company and liberal time-off policies. The partners, or punks as he affectionately refers to them, are paid what they are contracted out for and return a percentage in the form of administrative costs or, if they choose, stock options.
What drove Heestand to start over and reinvent the wheel is a love of what he calls "bleeding edge technology." It is the fast and ever-changing world of technology that he could not always pursue at Realogic.
"At Realogic, we called them fastballs. You would chase so many fastballs, and after a while, you would realize that they weren't going to generate any revenue," he recalls. "What I'm allowed to do and what we do here is chase fastballs."
And Heestand chases fastballs with all the passion and urgency of a slugger looking to knock one out of the park.
Smaller is not always easier
Monotony can be mind-numbing, and sometimes it is just time for a change.
"I figured that I had had enough five years ago," explains Jack Bares, founder and CEO of Meritool. "It was getting very repetitive, and I thought it would be smart to have someone running the company that had a lot more energy than I did."
Back then, Bares was CEO of Milbar, a hand-tool manufacturer he founded in 1945. By the time he decided to sell the company, he had been manufacturing tools for companies around the world for half a century. One of the pioneers of successful succession planning, Bares eventually sold his company to one of his four children. The plan was simple and succinct: The company was for sale to any of his children who could buy it from him and the other three.
With his business sold and Bares "well past the age of retirement," as he puts it, the situation was perfect for spending a lot of time on his golf game. But, as he soon found out, people who are high energy and entrepreneurial have a difficult time standing still.
"I don't know how to retire," he says.
Bares immediately founded a smaller hand-tool manufacturer, Meritool, which didn't compete with Milbar. Meritool, he says, was just "something to keep him busy."
His plan was to produce a few simple hand tools that met the specific needs of some former clients. Bares says he thought that by making a product similar to what he was familiar with that running the company would be easy.
"I thought smaller meant simpler," he says. "It turned out to be the opposite."
Simplicity went out the door when a former client requested he work on a power tool that other manufacturers claimed could not be made.
"I didn't know it couldn't be made," Bares says, "so I made it."
Soon he found his small company staffed mostly with former Milbar employees, churning out complex tools for Fortune 500 clients. And, for one of the first times in years, he found himself losing sleep and money.
To boldly go where no one has gone before
Business can be exciting. But there are those who seek change because they find they have an overwhelming desire to do things right.
John Gorman was the program director for WMMS and the station's all-around visionary when the Buzzard was Rolling Stone's sweetheart and Cleveland was playing and bringing to town some of the biggest names in rock 'n' roll -- even before they were the biggest names. Gorman arrived at WMMS when the FM in radio stood for "find me."
But even as one of its foremost innovators, Gorman talks about the day when the FM he worked so hard to build may become obsolete or will at least have to share its now consolidated and commercial market with the up-and-coming -- and more independent -- Internet radio format. And like he was years before, Gorman will be there to help shape the industry. This time, however, it's with his own company, Radio Crow, an Internet radio portal.
By the 1980s, WMMS was the top-billing station in the market. But it wasn't easy. When he took over programming, Gorman had five months to turn the station around. And he had no budget to do so.
"You had to go to the 16th largest market to find a radio station that was billing more than we were (Cleveland was the 21st largest market)," Gorman says. "We were overachieving (in comparison to) our market size."
It was in 1986, when radio was being taken over by large corporations and multimergers. Like any good visionary who sees the end of an era, Gorman took his leave.
But while he was with WMMS, there wasn't an alliance that Gorman didn't make nor an opportunity he didn't take advantage of, and that is what made the station successful.
"It was always struggling," he recalls. "I thought that one of the keys to success was the fact that we had a young staff. For most of them, it was their first job in radio. We all had something to prove."
To Gorman, business, like music, should be progressive, always changing and ever evolving. That's why he took on FM in 1973, when you could only get AM in your car or on a transistor radio, and that's why he decided to leave radio as we know it and jump ship to the Internet.
It has been more than 10 years since Jim Biggar was the CEO of Stouffer's-Nestle, and he can still recite the ingredients and thought process that went into Stouffer's macaroni and cheese.
"The secret to mac and cheese is that the cheese we used was between 11 and 13 months aged," he says. "You don't get the full flavor before (that) and too much after. We specified the inside and the outside diameter of the macaroni, its length, the wheat germ that it was made from, and even the percentage of broken pieces."
Biggar retired from Stouffer's after 20 years of overseeing the quality of everything from macaroni and cheese to chocolate. Today, he is the founder and president of Glencairn Development, a small company taking on the rather large task of developing 390 acres of land bordering the Cuyahoga Valley. His development combines retail and residential homes marketed to empty nesters or anyone interested in smaller homes with a lot of detail.
One could argue there is a big difference between making French bread pizzas and developing 390 acres, but for Biggar -- who earned an engineering degree from Case Western Reserve University before taking a marketing job at Stouffer's -- it is all about the product.
"To be successful, I have to have a high quality product," he says. "I've changed businesses, but that fact hasn't changed. I'm a builder and I like to build things."
One walk through the Renaissance Hotel downtown and you begin to experience some of what Stouffer's, under the leadership of Biggar, did for a city that, at the time, was more interested in parking lots than renovation.
But what about the prestige of working for a large well-known company -- sitting on prestigious boards, flying aboard private planes, and knowing that every person you meet knows who you are and where you work?
"There is more imagined prestige than there is prestige," explains Biggar. "And if you think it is there, it really isn't."
In fact, he says, there is often a downside.
"If I would go to dinner in a Stouffer's hotel, the waitress would suddenly know that she was serving the CEO and she is more likely to spill soup on you than any other person," Biggar recalls.
Beyond that, success often carries a price. In Gorman's case, his once scrappy little station that catered to the baby boomers' demand for new music began dominating one of the most advantageous demographics. Because of that, the station was slowly becoming exactly what it was designed to compete with.
"The turning point was 1978," he says. "It was rapidly turning into a big business, with more responsibilities and more employees ... and it became a very different station. We were becoming all things to all people. Looking at it from a business perspective, we were too big. I told them (station executives) we were going to collapse under our own weight."
But while leaving a large and stable company may be cathartic and challenging, it is also fraught with risk, especially when the new venture involves the business owner and the business owner's family savings. One big loss during the start-up phase can be a devastating blow to the company and its owner.
"You do that one more check to make sure," says Bigger. "When you are 60 or older, you can't afford to make a big mistake in your career and recover from it."
Indeed, those chasing after a second career later in life often find themselves taking bigger risks with less of a margin for error. In most cases, these businesspeople aren't risking company money but rather family money. And when you are 30 or 40 years old, it's possible to absorb big mistakes. One simply changes jobs, suffers through a few lean years, then spends the next 20 to 30 years earning the money back.
"I have a much greater appreciation as to what is coming into today's mail," admits Heestand. "A greater appreciation of the collections process and the client management process. If people are unhappy, they don't send the checks,"
Such matters constituted a process of adjustment for Bares, who hasn't taken out a loan since the 1950s and for the first time experienced what it was like for a company to actually lose money.
"It wasn't fun, I can tell you that," he says.
In Biggar's mind, the risk was more substantial at his previous company because losses affected all 30,000 of his employees. He says that in a larger company, one false move or premature expansion can spell the end of thousands of jobs.
"Now, if you make (a mistake), then it's our family that feels it, and that's it."
One staggering difference between large, established firms and start-ups is the abundance of late hours and a lack of infrastructure.
"If something comes up, you are used to saying, 'Hey Joe, fix it.' Well, Joe is not there (in a small start-up)," Biggar says. "In fact, there is no Joe."
Bares says nearly every part of the business that he thought would be less hectic became more complicated with Meritool. But he likes that challenge.
"It refreshed my mind to see the tremendous amount of different things that happen in a company when it is very small," Bares says. "They all get up to the chairman. I find myself dealing with problems that I always had others take care of."
Still, it requires a lot of time to take care of the details, and Bares jokes with his friends that he will one day pare down to a 50-hour work week.
The reality of financial accountability can also be a real eye opener. For some, there is a whole new world of 401(k)s, profit sharing and accounts receivable that "Joe" is not around to deal with. As CTO of Realogic, Heestand didn't even know the company was $16 million in debt when negotiations with Computer Associates were underway.
"The big difference is that I actually understand the numbers," he says. "I'm actually very close to the checkbook, even though I'm not the CFO. But I'm very close ... and it is really exciting."
Then there is the learning curve.
"It is a different business, and obviously I had to learn the business from the bottom up again," Biggar admits. "I felt like a dummy in the beginning. But I've been a dummy before. Your ego gets shot regularly -- I have kids who can do that."
So why do it? Why climb to the top, then leap voluntarily to the bottom to start again?
"It is suddenly like I'm 23 all over again," Gorman says. "Everything that I'm doing today makes me feel like I'm reliving my early 20s."
The perceived challenge is even greater, Gorman says, as he tackles a new and untested industry.
"It is a wing and a prayer," he admits. "I'm also older and there is no guarantee of success. But there is a greater guarantee if you hire the right people and surround yourself with the right people and talent."
"I think the real difference between now and then is that I control my calendar," Biggar explains. "Before, somebody else controlled it. Now, I really do. It doesn't matter as much if I do it on Tuesday or Wednesday."
All four men agree on one issue -- the same traditional business practices they used to make them successful once still work today.
Granted, not all the aches and pains of a new company can be overcome with experience, but as Bares puts it, "a person who has been in business 50 years sees a company completely different. Those starting one for the first time don't know all the problems involved with raising money and financing the company, as well as being able to hire the proper people in the areas that they are not as talented in.
"If you've been in the business world, you came with all that knowledge."
Some of it may be the inherent optimism of knowing you're able to overcome any challenge -- you made it work before so you'll do it again.
"When you first become an entrepreneur, you expect all of the challenges and you know that it is going to be tough," Bares says. "But when you have done it for a while, it is not quite as difficult. You normally take on bigger challenges."
Then there is control. The larger a company, the less you control it. In reality, its infrastructure takes over. Smaller companies allow for a level of creativity and informality that largers ones don't.
"We take pride in the fact that our company has no policies, except for being honest," Biggar says. "Other than that, if we want to have a holiday, we have a holiday."
Biggar agrees and says he doesn't miss the policies and formality that go along with a large corporation.
"I would go stark raving mad if I had to write a manual," he says.
And with innovation comes creation. Gorman and Heestand are drawn to that.
"I'm stimulated by this and it reminds me so much of those old days -- the creative juices are constantly flowing," Gorman says.
The same lack of infrastructure provides Heestand with a sense of control.
"I fly the kite and actually feel the kite," he says. "That is exciting. Maybe the others at Realogic had that feeling, but I never had that feeling that I was actually flying the kite. I'm flying the kite now. It goes up and it goes down, and you have to put more tail on it. But I enjoy it."
In the end, it comes down to a specific type of personality that's needed to launch successful career after successful career. For those people, the game never stops.
"I think it is very important to have things to do to keep using your mind and have a reason to get up each morning," Biggar says. "I'm not patient enough for fishing and my golf is not that good. So I keep working."
Heestand admits he's never been a destination sort of person.
"I've always been a journey guy," he says. "The journey is what I cherish -- the excitement and the game itself."
For Heestand, the big issue is the pace of technology. And while he readily admits he is more driven at ETG than he was at Realogic, he realizes the clock is, indeed, ticking.
For Gorman, the question isn't why stay with what you know but why not find what's going to be in the future.
"If someone would ask me who would I want to align myself with -- the blacksmith or the combustible engine, even though there were a lot more horses back then, I'm going to say combustible engine. Ten years from now it may be a lot different."
Bares still wakes up thinking of business challenges and Biggar still sits on a few boards around the city, although not as many as he used to.
"As you get older, you get away from the strongest heartbeats of the city," he says.
But he has no regrets.
"Now, I don't get the soup spilled on me." Kim Palmer (email@example.com) is managing editor of SBN Magazine.
Which is worse -- death or taxes? Thomas M. Zaino says the latter doesn't have to be a hassle for business owners.
Appointed tax commissioner by Gov. Bob Taft in 1999, Zaino oversees 1,300 employees in 11 divisions with nine regional offices and collects $18 billion in state taxes. In his short tenure, the former partner with PricewaterhouseCoopers has helped revamp Ohio's estate tax administration and has been the champion of technology's integration in the Ohio Department of Taxation's filing and collection procedures.
Considering his organization benefits from the taxes Ohioans pay, Zaino's support of technology tax credits and the simplification of tax rules for the self-employed is very business friendly. SBN Magazine talked with him about new developments in Ohio estate tax processes and other issues that affect Ohio business owners.
What are the most common mistakes business owners make when filing taxes?
Math errors, failure to fully complete forms and appropriate schedules, failure to attach schedules, miscalculating apportionment factors, improper treatment of allocated income, using old or nonexistent account numbers and failure to make timely estimated payments of tax.
We have seen more and more tax changes for self-employed and part-time employees. Do you see this trend continuing?
Last year, the IRS reorganized itself into four business units, one of which is called the Small Business/Self Employed Operating Division. This shows the emphasis that the IRS places on this segment of the taxpaying public. Eventually, changes will be made in either the tax law itself or in how the IRS administers the tax law as it applies to self-employed individuals. I would guess that the changes will simplify compliance with the tax law, rather than the enactment of brand new tax benefits.
Recently, there have been a number of tax breaks directed toward the owners of small businesses. What will their effect be?
In late January, Sen. Chris Bond of Missouri introduced the Small Business Works Act of 2001. It contains a number of provisions designed to help small business. Those include an increase from 60 percent to 100 percent for the deduction for health insurance costs for self-employed individuals. There is also a repeal of the Alternative Minimum Tax (AMT) for individuals after 2004. Between 2001 and 2004, the AMT is reduced by 20 percent each year.
The AMT is a computational nightmare for corporations. In fact, three separate sets of depreciation schedules have to be kept by corporations just to comply. The bill would eliminate the corporate AMT for corporations with gross receipts of less than $7.5 million for the first three years of the computation period, and this amount increases to $10 million thereafter.
The bill would help small businesses stay competitive by making the research credit permanent. It would allow taxpayers with gross receipts of $5 million or less over a three-year computational period to avoid using the accrual method of accounting. Similarly, taxpayers with less than $5 million in gross receipts over the three-year computational period would be able to avoid using inventory accounting.
It also increases the amount of equipment purchases that small businesses may expense each year from the current $24,000 to $50,000, and increases the phase-out threshold from $200,000 to $400,000. And, the bill allows depreciation of computer equipment and computer software over just two years.
There have recently been changes in Ohio's estate tax law. How will they affect small business owners or family-owned businesses?
The bill affects estates dealing with a date of death on or after Jan. 1, 2001. After that date, as long as a business interest belonging to a descendant meets certain qualifications, the value of that business interest, up to a maximum of $675,000, can be deducted from the value of the descendant's gross estate for Ohio estate tax purposes. If a qualifying business is passing from generation to generation and the value of that business is under $675,000, that business passes Ohio estate tax free.
The bill also provided a major tax cut of almost $200 million for Ohio families over the next two years. For dates of death on or after Jan. 1, 2001, an estate with a gross value of $200,000 or less does not have to file an Ohio estate tax return and will not pay any Ohio estate tax (the previous threshold was $25,000). This amount increases to $338,000 for dates of death on or after Jan. 1, 2002.
The Alternative Minimum Tax hasn't been extremely popular. Why do you think that is?
When the individual Alternative Minimum Tax was originally enacted in l969, it was aimed at millionaires who paid no income taxes. Today, it is beginning to hit an unintended target: middle-class taxpayers. In testimony before the Senate Finance Committee on March 8, it was noted that in 2000, the AMT affected 1.3 million taxpayers. In the next decade, that number is expected to jump to 17 million taxpayers.
While the AMT currently targets high-income families, the number of middle-income taxpayers earning between $50,000 and $75,000 a year hit by the AMT would skyrocket from less that 1 percent in 2001 to a whopping 32 percent just 10 years later.
Why the increase in the number of taxpayers who will have to deal with the AMT? Because of the lack of indexing of the AMT rates and exemption amounts, as well as the expiration of temporary tax credits, all of which protect taxpayers from the AMT. Congress will have to do something about this, but the cost in potential lost revenue is quite high. How to reach: Ohio Department of Taxation: (888) 405-4039 or www.state.oh.us/taxKim Palmer (firstname.lastname@example.org) is managing editor of SBN Magazine.
There's no question anymore that technology must provide a return on investment.
The payback comes in the form of smart tech, a distant cousin to working smarter and a core competency of companies that are here today, here tomorrow.
Does that mean every chair is occupied in the IT department or that a partnership is built with an outsourcing firm? Not necessarily. Business leaders need to look within their company's own four walls for technology management.
One Ohio school manages its information systems like a business, a practice that saved it a quarter million dollars by putting "inside power" into practice.
Robert Agnew is director of Information Technology at Baldwin-Wallace University. He is responsible for more than 2,000 ports, 40 servers and all telecommunications on campus. Agnew says the number of IT jobs being created exceeds the number of people entering the market. The answer to the technology gap may lie with employees knowledgeable about the company and looking to add to their portfolio of skills.
Whether it is a secretary who steps forward or an engineer with very logical thought processes, many employees may be more successful with programs and systems than anyone can predict.
"Those are the people you want to encourage to get further training," Agnew says. "That's an untapped resource."
The Perry School District in Lake County looked in house for the installation of a new technology infrastructure. The Perry High School student-run company Perritech joins the big "T" with the 3 Rs, and students receive a nontraditional education that combines real-world technology with business experience and classroom training.
The student-run company was created in 1998 with a $100,000 grant from the state of Ohio. The original goals included providing practical experience with in-class instruction. The result has been not only surprising but lucrative -- a cost savings of $250,000 to the school district in three scant years.
Perritech employees assisted with the upgrade of the district's technology and act as the help desk for the 1,300 computers used by teachers, students and the administrative staff on campus. One-third of the student population is involved in some aspect of the technology program, and 15 students who have qualified in specific computer certification courses make up Perritech.
The thinking-outside-the-box mentality has Perritech reaching out to local businesses after school and on weekends. Students manage software installations and hardware repair and trouble-shoot systems problems, all at competitive rates, with revenue fed back into the company. How to reach: William Sarvis, (440) 259-9379 or email@example.com; Robert Agnew, (440) 826-2700 or firstname.lastname@example.org
Deborah Garofalo (email@example.com) is associate editor at SBN Magazine.
The economic slowdown is clearly upon us.
Middle managers are reacting to presidential mandates to cut expenses, while presidents scramble to hit the results they have promised. For those whose job it is to sell and market, the consequences have been clear -- prospects and customers are taking much longer to make and keep commitments.
And when they buy, they are most likely to buy only those products and services that reduce immediate and unavoidable pain.
Businesses are preoccupied with cutting back, saving money and preserving the status quo. Until the initial shock of the slowdown wears off (and for younger professionals, their first time may take longer), fewer buyers will have the will to invest in the future. While more aggressive and confident businesses are already seeing opportunities at the expense of their more timid competition, how do you sell to the anxious buyer or customer who is preoccupied with the present?
Simple. Repackage and reposition your product or service to deliver reduced costs and greater efficiency. Promote the cost savings and business preservation aspects of your business instead of promising increased sales.
Many businesses directly or indirectly help their target markets increase sales. They include e-businesses, direct marketing, printing and advertising firms; professional services including legal, training and accounting; transportation, distribution and wholesaling; and motivational and incentive products, programs and services.
If your business fits into one of those categories or is in another that helps businesses grow, it's time to take a look at how you go to market.
Preserve market share, stop revenue erosion
Just as owners and presidents are asking their staffs to cut costs, they are worried about protecting their own revenue forecasts. In spite of the contraction, it is harder to reduce a sales goal than it is to cut expenses. Every business has too much riding on hitting sales numbers. Results have been promised to partners, investors and bankers.
This represents an opportunity. Pull out the list of features, advantages and benefits you have developed for your product or service and revise it. Make your product or service more compelling.
Describe how practical its features are. Discuss how cost effective its advantages are. And promote how beneficial it is in retaining customers and revenue.
Refocus on customer retention
If all sales and marketing efforts are designed to find, keep or grow customers, now is the time to emphasize customer retention. Keeping the customers you and your clients have is essential, because they are more profitable and obtainable than new ones.
Your competitors may start aggressively targeting them. Above all, your reputation with them should translate into their loyalty.
If your customers agree that keeping existing business is paramount, modify and emphasize what you sell in terms of helping your them to:
- Streamline their reordering process
- Take cost out of how they serve existing customers
- Improve the buying experience of their current customers.
- Increase profit margins and sales to reordering customers.
- Construct barriers that reduce their customers' desires or ability to switch suppliers.
Now more than ever, your customers are focused on reducing risk. If you are in the business of helping companies to grow their sales, start by helping them to keep what they already have. As your customers feel more confident, they will become optimistic about growing their business.
Andy Birol (firstname.lastname@example.org) is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970 or at www.pacerassociates.com.
On his first undercover drug buy, Akron narcotics detective Timothy Dimoff forgot to do his due diligence.
He emerged from the drug dealer's house pumped up about the smooth, 45-minute buy. But when he returned to the undercover police van parked down the street, his superior officer told him the battery pack on the microphone hidden beneath Dimoff's clothes only lasts for 20 minutes. Several key moments of the transaction were lost.
"When I got out of there, somebody educated me," Dimoff says. "I didn't jump into an angel investment not knowing how long the batteries were going to last. You have to know what the timetable is. You have to know how fast you're going to do it.
"And if you don't do it right, you don't get the right information, then you don't do it. You don't take chances."
Dimoff retired from the Akron Police Department after 15 years. He spent 11 years in the narcotics department and was injured 13 times. He's been shot at, but never hit by a bullet. He was cut once by a knife, and suffered three back injuries and a smashed jaw. After a year of rehabilitation, he decided to apply his detective skills to a new career.
Dimoff is not only an angel investor, he's also president of SACS Consulting & Investigative Services Inc., based in Mogadore. Although no longer chasing bad guys, he incorporates the same skills he used as a detective. He also uses many of the same business practices drug dealers use to turn a profit, except with angel investing, the payoff is legal, and usually slower and much less profitable than the illegal drug trade.
"(Drug dealing) is the fastest turnover of all businesses in the world, including the types we're involved in," Dimoff told a captivated group of investors at a meeting of the International Angel Investors Institute - Ohio. "Last year, only one person made more money in the world than the illegal drug trade: Bill Gates, $74 billion. Illegal drug trade, $54 billion."
Here are a few of the business practices investors -- legal and illegal -- need to use, according to Dimoff.
Learn from the best
Just off the police force, Dimoff didn't know much about being an investor or an entrepreneur, so he bought a lot of people lunch. He found investors and learned from them, then asked who else he should talk to.
Did he ever make mistakes? Of course, but that's what you have to expect.
"I took my licks, took my bumps and learned the hard way, like we all did," he says. "I didn't get where I am by myself. I got here because a lot of great business people took the time to tell me how to get there."
Don't go it alone
As with drug dealing, starting your own business or investing in one is a team effort, Dimoff says. In both professions, you need financiers. You need people who will protect you, and those who will help prevent you from making mistakes.
In both trades, you need people to help you learn the market and break into that market. You need people who are going help you improve the product.
"Illegal drug dealers, they do the same thing," Dimoff says. "They get their money, they go down to Florida, New York, California, they get their drugs, they get the big payoff. We're both investors and we both take chances.
"The only difference is if they get caught, they go to jail. If I get caught I just lose my money. I like those odds better."
On the flip side, when Dimoff was busting drug dealers, he needed every bit of information about them that he could find. When he and the SWAT team busted a drug house, they'd have an informant map out the entire space -- where the drugs were, where the dealer kept any weapons, where they slept.
Everything down to the last closet was on paper before he and his officers stampeded through the doors.
"There was no second chance in that game," Dimoff says. "Angel investing, there's also no second chance. You can lose your money if you don't know what's behind the door."
Drug raids changed while Dimoff was on the force. It used to be him and a couple of officers would break down the door with sledgehammers and secure the home in a couple minutes. By the time he retired, two SWAT teams of 12 men broke down each door and secured the house in less than 12 seconds.
Dealers never had time to react. It's no different with an angel investment -- you can't waste time.
"Speed is of the essence," Dimoff says. "Once you get your investment, once you're moving, you need to grow that investment and get it to that second level. Amazing how two different trades, one legal, one illegal, have so much in common." How to reach: SACS Consulting, (330) 628-6393
Morgan Lewis Jr. (email@example.com) is a reporter at SBN Magazine.