Morgan Lewis Jr.

Tuesday, 26 August 2003 13:07

United front

It was three years ago this month when Thomas A. Waltermire, the newly-crowned CEO of the world's largest polymer services company, PolyOne Corp., rang the bell to signal the start of trading at the New York Stock Exchange.

PolyOne's stock launched at $9 a share and peaked at $13.40 in May 2002. Since then, the stock price -- as well as the polymer giant's sales -- have weakened due to a prolonged recession and struggling manufacturing industry. Last month, PolyOne's stock slipped to around $4 a share on news that its earnings would not meet estimates for the second quarter of 2003.

"The slow demand we observed in our North American sales for April continued into May and June, when we normally experience seasonal pickup,'' Waltermire told investors in July. "... [T]he U.S. Industrial Production Index (less the high-tech component) is below the trough level we experienced in the fourth quarter of 2002.''

Today, Waltermire is faced with his company's first major crisis since it was born as the result of a merger between Avon Lake-based Geon Co. and Cleveland's M.A. Hanna Corp. But it is at these times that innovation is so critical.

"Our challenge is to bring this company back to profitability," PolyOne CFO W. David Wilson told analysts in the company's most recent quarterly report. "We're not seeing the economy improve; we're not seeing market conditions favorable ... [W]e have to take aggressive, decisive steps."

Waltermire and his executive team have already taken aggressive action to return the $2.5 billion company to profitability in the face of a still-uncertain economy. Those actions include several plant closings and employee cuts -- common with a merger of two major corporations -- but PolyOne has also streamlined its operations, made acquisitions and formed partnerships in high-growth areas.

Cost-cutting alone will not lead to growth.

Last year, PolyOne consolidated and modernized its vinyl compound, color, and additives and engineered materials businesses, which the company reported would save $50 million annually. But it was more than a cost-cutting move; PolyOne invested $45 million to streamline the facilities to create a more efficient and more profitable manufacturing base.

This year, it extended its global IT system into its facilities in Singapore, Thailand and Spain to speed sourcing, logistics and production planning, and to provide consistent and real-time customer data and financial information.

Responding to its continued sales growth in its international operations, PolyOne grew its Asian business by expanding four plants and opening a customer support laboratory and sales office in southern China. In another move to strengthen its international business, PolyOne acquired a color concentrates producer in northern Spain to increase its product base in the growing region.

Stateside, PolyOne and Bayer Polymers LLC announced in April the formation of a joint venture to develop and market polyurethane systems. The new enterprise, BayOne Urethane Systems LLC, began operating in June from headquarters at a PolyOne facility in St. Louis.

The joint venture will focus primarily on markets in the United States and Canada for carpet backing and related applications, nonautomotive flexible molded foam, footwear, instrument panels and filters.

PolyOne's distribution business, which makes up 20 percent of the company's sales, added a vinyl compound to its product offering, which prompted a 12 percent increase in sales over the previous year. It also opened its first raw material distribution warehouse, which will allow it to more cost-effectively purchase smaller quantities of materials such as pigments.

Within the last two years, PolyOne invested $150 million in companywide infrastructure improvements, a major part of that to upgrade its U.S. manufacturing assets. With those improvements complete, Waltermire expects a 3 percent to 5 percent growth in sales by the end of this year, assuming a flat economy.

"We are confident that we are maintaining our share of targeted markets in an intensely competitive environment," Waltermire told investors in the company's second quarter statement.

"Each of our business units and functional areas has prepared a second-half business plan outlining specific, measurable improvement actions. We will implement individual actions as quickly as possible." How to reach: PolyOne Corp., (216) 589-4000

Tuesday, 26 August 2003 11:59

Dream home

Gary Habeeb, CEO of United Mortgage Group, not only makes people's dreams of home ownership come true, he's making his own dreams come true by building a 10,800-square-foot luxury home nestled on two-and-a-half acres in the woods of Hinckley.

"Even if I won the lottery tomorrow, I wouldn't change a thing about this house," says Habeeb, in his black wingtips, carefully negotiating the gravel and mud of the construction site. "We got everything we wanted."

Construction on the $1.5 million home began in May, so when Habeeb visited the site in late July with Smart Business, only the foundation and about half of the exterior walls were built. The rest of the home was still a dream.

The lot

Gary and his wife started planning for a new home five years ago when they began to outgrow the 3,100-square-foot Colonial in Strongsville where they live with their four children. Originally, the Habeebs thought they would move into an existing home.

"We looked and looked," Habeeb says. "We wanted to buy something, certainly it was a good market, but we couldn't find anything that met our needs."

When the house hunt came up dry, the Habeebs decided to buy a lot and build their dream home. Two years ago, Habeeb found and bought the lot in a new development in Hinckley on the site of a former Christmas tree farm. Finding the lot, however, was no easy task.

"We both wanted country," Habeeb says. "I wanted land, and my wife wanted development. I would find a nice property on Ridge Road, but she didn't want to be on a main road. She would find something in a development, but I didn't want to be that close to the neighbors. This lot really complemented what we wanted. We're in the country, yet so close to the city."

The builder

Once they found the site, the Habeebs drew a rough outline of what their dream home would look like.

"I had her draw her floor plan, and I drew mine," Habeeb says. "It's amazing how similar they were. We had been in so many houses, and we watched a lot of HGTV, and we got a lot of ideas that way. Believe it or not, we have not argued over anything -- not one thing because we have very similar styles."

Part of United Mortgage Group's business is construction loans, so Habeeb knows the major home builders in the area. He first met with Tony DiBenedetto of DiBenedetto Fine Homes to discuss the project.

"I wanted a builder with a proven track record, and DiBenedetto Fine Homes has 50 years experience in custom homes," Habeeb says. "There's a difference, too, when you're building a home that's already been (designed). It's basically the same plan for every house and people do some tweaks. This is a truly custom home. There won't be another one like it unless I sell my plans."

DiBenedetto recommended residential designer Daniel Margulies of Daniel Margulies Co. Inc. in Rocky River to design the home.

"He's incredible," Habeeb says. "He was with us the whole way. He knew exactly what we liked. He knew the changes. The builder would say one thing and he recognized it wasn't what we wanted. He remembered who the client was. He knew what we were looking for and he gave it to us."

Before the blueprints were drawn, Margulies gave the Habeebs a virtual walk-through of their home using an architecture software program. This was critical for the Habeebs during the planning stages.

"As important as it is to have the outside appealing, the inside is what's really important," Habeeb says. "You determine the inside first, and that determines what the outside looks like. We got the best of both worlds because we got the inside, and we really love the way the outside looks."

The home

The Habeebs' six-bedroom, seven-bathroom home is scheduled to be completed in June 2004. Habeeb has memorized all its dizzying features and can rattle them off at a moment's notice. Here is a brief summary.

The exterior will be stone with stucco accents done in a French country style, with a Mediterranean decor on the inside. Inside the main double doors, handcrafted out of eight feet of solid mahogany, there will be a two-story foyer and an adjacent two-story parlor. The main suspended curving staircase is one of three that will extend from the basement to the second-floor bedrooms.

The great room will be 53-by-26 and will feature a 10-foot-wide, 24-foot-high limestone fireplace, and a 73-inch TV built into a cabinet. Next to the larger TV will be two smaller cabinets with 27-inch TVs inside.

In the basement, a mud room will feature metal lockers and one of two laundry rooms. Next to that will be a home theater with a 110-inch TV with state-of-the art theater surround sound. For the true theater feel, there will be a candy counter, fountain drinks and popcorn machine.

The master bedroom will have a 14-by-17 walk-in closet with a center island, three angled mirrors, and a personal dry cleaning machine called a Mini-Valet. The master bath will be equipped with a 5-by-7 walk-in shower, a pedestal whirlpool with nine Jacuzzi jets, and a fireplace -- one of seven in the home.

For landscaping, Habeeb will plant hybrid poplar trees every 30 feet on the southwest side of his home, which faces the neighbors, creating a natural wall. A long stone wall will surround the 83-foot long patio.

Be patient

Habeeb is eager to move into his dream home, but he's seen many construction projects ruined by a lack of patience and poor planning.

"You have to do your homework," he says. "We had everything picked out. There's not one thing we don't have picked out besides the furniture. We did it all in advance, which is kind of backwards, but it makes the process easier.

"Being in the mortgage business, you always hear about the nightmares of building. So far, we've had no nightmares because there have been no surprises, and if there's a tweak here or a change there, it's nothing drastic." How to reach: United Mortgage Group, (440) 260-2390 or www.umgloans.com; Daniel Margulies Co. Inc., (440) 356-0888 and DiBenedetto Fine Homes, (440) 734-3434

Tuesday, 26 August 2003 10:49

Dream home

Gary Habeeb, CEO of United Mortgage Group, not only makes people's dreams of home ownership come true, he's making his own dreams come true by building a 10,800-square-foot luxury home nestled on two-and-a-half acres in the woods of Hinckley.

"Even if I won the lottery tomorrow, I wouldn't change a thing about this house," says Habeeb, in his black wingtips, carefully negotiating the gravel and mud of the construction site. "We got everything we wanted."

Construction on the $1.5 million home began in May, so when Habeeb visited the site in late July with Smart Business, only the foundation and about half of the exterior walls were built. The rest of the home was still a dream.

The lot

Gary and his wife started planning for a new home five years ago when they began to outgrow the 3,100-square-foot Colonial in Strongsville where they live with their four children. Originally, the Habeebs thought they would move into an existing home.

"We looked and looked," Habeeb says. "We wanted to buy something, certainly it was a good market, but we couldn't find anything that met our needs."

When the house hunt came up dry, the Habeebs decided to buy a lot and build their dream home. Two years ago, Habeeb found and bought the lot in a new development in Hinckley on the site of a former Christmas tree farm. Finding the lot, however, was no easy task.

"We both wanted country," Habeeb says. "I wanted land, and my wife wanted development. I would find a nice property on Ridge Road, but she didn't want to be on a main road. She would find something in a development, but I didn't want to be that close to the neighbors. This lot really complemented what we wanted. We're in the country, yet so close to the city."

The builder

Once they found the site, the Habeebs drew a rough outline of what their dream home would look like.

"I had her draw her floor plan, and I drew mine," Habeeb says. "It's amazing how similar they were. We had been in so many houses, and we watched a lot of HGTV, and we got a lot of ideas that way. Believe it or not, we have not argued over anything -- not one thing because we have very similar styles."

Part of United Mortgage Group's business is construction loans, so Habeeb knows the major home builders in the area. He first met with Tony DiBenedetto of DiBenedetto Fine Homes to discuss the project.

"I wanted a builder with a proven track record, and DiBenedetto Fine Homes has 50 years experience in custom homes," Habeeb says. "There's a difference, too, when you're building a home that's already been (designed). It's basically the same plan for every house and people do some tweaks. This is a truly custom home. There won't be another one like it unless I sell my plans."

DiBenedetto recommended architect Daniel Margulies of Daniel Margulies Co. Inc. in Rocky River to design the home.

"He's incredible," Habeeb says. "He was with us the whole way. He knew exactly what we liked. He knew the changes. The builder would say one thing and he recognized it wasn't what we wanted. He remembered who the client was. He knew what we were looking for and he gave it to us."

Before the blueprints were drawn, Margulies gave the Habeebs a virtual walk-through of their home using an architecture software program. This was critical for the Habeebs during the planning stages.

"As important as it is to have the outside appealing, the inside is what's really important," Habeeb says. "You determine the inside first, and that determines what the outside looks like. We got the best of both worlds because we got the inside, and we really love the way the outside looks."

The home

The Habeebs' six-bedroom, seven-bathroom home is scheduled to be completed in June 2004. Habeeb has memorized all its dizzying features and can rattle them off at a moment's notice. Here is a brief summary.

The exterior will be stone with stucco accents done in a French country style, with a Mediterranean decor on the inside. Inside the main double doors, handcrafted out of eight feet of solid mahogany, there will be a two-story foyer and an adjacent two-story parlor. The main suspended curving staircase is one of three that will extend from the basement to the second-floor bedrooms.

The great room will be 53-by-26 and will feature a 10-foot-wide, 24-foot-high limestone fireplace, and a 73-inch TV built into a cabinet. Next to the larger TV will be two smaller cabinets with 27-inch TVs inside.

In the basement, a mud room will feature metal lockers and one of two laundry rooms. Next to that will be a home theater with a 110-inch TV with state-of-the art theater surround sound. For the true theater feel, there will be a candy counter, fountain drinks and popcorn machine.

The master bedroom will have a 14-by-17 walk-in closet with a center island, three angled mirrors, and a personal dry cleaning machine called a Mini-Valet. The master bath will be equipped with a 5-by-7 walk-in shower, a pedestal whirlpool with nine Jacuzzi jets, and a fireplace -- one of seven in the home.

For landscaping, Habeeb will plant hybrid poplar trees every 30 feet on the southwest side of his home, which faces the neighbors, creating a natural wall. A long stone wall will surround the 83-foot long patio.

Be patient

Habeeb is eager to move into his dream home, but he's seen many construction projects ruined by a lack of patience and poor planning.

"You have to do your homework," he says. "We had everything picked out. There's not one thing we don't have picked out besides the furniture. We did it all in advance, which is kind of backwards, but it makes the process easier.

"Being in the mortgage business, you always hear about the nightmares of building. So far, we've had no nightmares because there have been no surprises, and if there's a tweak here or a change there, it's nothing drastic." How to reach: United Mortgage Group, (440) 260-2390 or www.umgloans.com; Daniel Margulies Co. Inc., (440) 356-0888 and DiBenedetto Fine Homes, (440) 734-3434

Monday, 28 July 2003 06:39

Born again

After a merger with Acero fell apart in December 2001, Len Pagon Jr., CEO of IT consulting firm Brulant Inc., used the opportunity to remake the company.

"We called it Brulant 2.0," Pagon says. "The theme was to become the undisputed leader in this region, which, if we're not already there, we're on our way to becoming the leader of this region in digital strategy and solutions."

The result of the restructuring was an 85 percent increase in sales over the year before and a near-doubling of the size of the firm to 70 employees.

"Our job is client satisfaction and leveraging relationships into new clients," Pagon says. "If we're doing a really good job for one client, we're able to maintain and expand those relationships."

Its clients include Eaton Corp., Charter One Bank, Cole National Corp., Avery Dennison Corp. and The Cleveland Foundation.

Here's how Pagon reinvented Brulant.

Management team

The first step toward restructuring Brulant was to create a new management team through promotion of current employees and new hires. Part of this was out of necessity, as several top managers at Brulant went to Acero after the merger fell apart.

Pagon hired a new chief financial officer, a senior vice president of operations, a marketing director and a vice president.

"We wanted to be positioned well so when the market picked up, we could capitalize on that," Pagon says. "We expected things to come back gradually, but they ended up coming back dramatically for us. In part, that's because of the beefed-up management team."

Industry focus

Prior to the restructuring, 50 percent to 60 percent of Brulant's business came from industrial manufacturing companies. Pagon says he didn't intentionally target the industry; those companies just happened to be the ones that hired Brulant for projects.

When the economy dried up, so did work from the industrial manufacturing sector. Pagon, as part of the restructuring, set out to target new industries.

"I call it the Willie Sutton strategy," Pagon quips. "Why do you rob banks? Because that's where the money is. Why do you focus on those industries? Because there's opportunity there -- they're still doing things."

Today, about 40 percent of Brulant's work comes from the retail/consumer goods industry, 30 percent from financial services and about 15 percent from the health care industry. Less than 10 percent of its clients are industrial manufacturers.

Internal structure

Pagon reorganized the internal structure of the company into clearly defined divisions or practice areas, which cover areas like management consulting, Web development, data management, business intelligence and customer service.

"We always had these defined as solution areas, but the difference is we didn't have the management structure aligned to those," Pagon says. "Now we have owners for those [practice areas]. ... Now we have objectives for those and management reporting, and profitability and revenue reporting."

Pagon says the new structure allows Brulant to offer services to clients that might have been overlooked in the past.

Brand awareness

Pagon didn't take the traditional route when he set out to market the revamped Brulant. Instead, he uses events like monthly executive roundtable discussions, a twice-annual CIO conference and direct e-mail newsletters.

"What we've done is create a relationship-building machine, building our brand awareness through a much more direct approach," Pagon says. "Our brand is knowledge leadership and thought leadership, so we build that with the roundtables and events by giving away a lot of free knowledge to help create that brand experience." How to reach: Brulant Inc., (216) 518-7900 or www.brulant.com.


Starting over

Len Pagon, president and CEO of IT consulting firm Brulant Inc., learned a lot about restructuring a company when he revamped his own following a failed merger with Acero in December 2001.

Here's what he recommends to other company leaders planning such a mission.

1. Find your sweet spot.

"Take stock in your strengths and weaknesses and look at your current and future revenue," Pagon says. "You'll spend a lot of time looking at your existing clients and existing sales, and looking at what your sweet spot is and where your growth opportunities are, and getting you down to focus.

"Most organizations, especially smaller companies, tend to want to be everything to everyone."

2. Take small steps.

"Figure out where you're going to focus, and try to get there hitting a lot of singles -- using a baseball metaphor -- a lot of singles and doubles, don't try to hit a grand slam."

3. Create an experience.

"You have to be obsessive about delivering extreme customer service and extreme value all the time and trying to extend your products into an experience, and that experience translates into what your brand is."

4. Reduce risk.

"We didn't go out and hire a bunch of people that we couldn't live within our means. You have to live within your means, but it's a matter of creativity and guerrilla marketing and working hard to get the stuff done."

Monday, 28 July 2003 06:35

Punch out

A bill introduced in the U.S. House in March may ease the burden for 33.7 million two-income households by offering comp time instead of cash for overtime worked.

But some employers say it will increase their burden because workers won't be around when they're needed.

The Family Time Flexibility Act (H.R. 1119), introduced by Rep. Judy Biggert (R-Ill.), amends The Fair Labor Standards Act, enacted in 1938, which prohibits private sector employers from offering employees the choice of paid time off as compensation for working overtime hours. Public sector employees, by the way, have long enjoyed this flexibility.

"Increasingly, employees want time off instead of overtime," says Merritt Bumpass, partner at Frantz Ward LLP in Cleveland. "That's the theory behind this."

Provisions of the bill, which as of press time was still in committee, include:

* An employee opting to take paid comp time receives paid time off at a rate of one-and-one-half hours of comp time per hour of overtime pay earned. For example, an employee working 48 hours in a week would receive either eight hours of pay at time-and-a-half or twelve hours of paid time off.

* As with cash overtime pay, compensatory time accrues at one-and-one-half times the employee's regular rate of pay for each hour worked over 40 in a seven-day period, according to the bill.

* Employees could accrue up to 160 hours of comp time each year. An employer would be required to pay or "cash out" any accrued, unused compensatory time at the end of each year.

* The employee can always opt for cash for overtime worked.

This bill, if passed in its current form, will most likely have an impact in Northeast Ohio, according to the Smart Business/Employers Resource Council Workplace Practices Survey. Less than half -- 48 percent -- of the 239 Northeast Ohio employers who responded to the survey reported offering flexible time schedules for their employees.

"This is going to increase time away from the job," Bumpass says. "Employers really struggle with things like the Family Medical Leave Act because people are gone. I have on my desk right now plenty of issues with how much time off employees deserve, whether it's under the Family Medical Leave Act or under the Americans with Disabilities Act.

"Those two pieces of legislation have complicated enormously employers' ability to control how much time an employee is at the job and away from the job." How to reach: Frantz Ward LLP, (216) 515-1660

Monday, 28 July 2003 05:43

Blocked call

By July 1, more than 15 million people had added their names and phone numbers to the Federal Trade Commission's national do-not-call list. The free service blocks telemarketers from calling registered numbers; if they call anyway, they will be faced with a maximum fine of $11,000 for each violation.

The legislation was celebrated by consumers. When the list opened June 27, as many as 158 phone numbers per second flooded the FTC's system. The list is expected to reach 60 million numbers in the first year, which leaves the remaining 100-plus million registered U.S. phone numbers potentially under siege.

The legislation has some loopholes. Calls from charities, nonprofits and political organizations are exempt. Calls from banks, telephone companies, insurance providers and airline companies are also not affected by the legislation due to the FTC's limited jurisdiction, but that loophole quickly disappeared when the Federal Communications Commission unanimously endorsed the do-not-call list the day before it launched.

No one has watched this legislation with greater interest than Gary Taylor, president and CEO of Akron-based telemarketing firm InfoCision Management Corp. While he supports the idea of a national do-not-call list, he says the FTC's rules behind the list are unfair to his industry and could devastate his business.

"Our philosophy has always been, we don't want to call people who don't want to be called," Taylor says. "We don't want to waste their time or our time."

Regulation

Taylor's firm, which he started alone in 1982, has grown into the eighth largest outbound teleservice"company in the country, with 3,000 employees located in 21 call centers in Ohio, West Virginia and Pennsylvania. he began with one client and $1 million in sales and has grown his company to dozens of clients across several industries, racking up $130 million in sales.

Taylor says InfoCision has always maintained its own do-not-call list and added its list to those of the two dozen states which have their own do-not-call lists. But the FTC's Telemarketing Sales Rule, which includes the national do-not-call registry, goes too far, he says.

"They didn't pay attention to the input the industry gave," claims Taylor, who sent his senior vice president of corporate affairs, Steve Brubaker, to Washington, D.C., to lobby for changes to the Telemarketing Sales Rule legislation. "Everyone I've talked to doesn't know how they're going to comply with it."

Taylor's main concern is the mandate for "abandon rates" included in the new rules. An abandon or hang-up happens when a telemarketer has more people connected to phone lines than it has operators to serve them. If that happens, the person on the phone usually gets a dial tone when they answer.

In the new rules, the FTC requires all telemarketing firms to reduce abandon rates to a 3 percent maximum per telephone campaign. That means only 3 percent of the calls per campaign can be hang-ups. InfoCision performs about 130 to 150 campaigns per day, and has about a 5 percent abandon rate per day.

"The (Direct Marketing Association) standard is 5 percent per day," Taylor says. "It took us quite a while to comply with that because we had to improve our productivity by 18 percent. We had to get more efficient to meet a very difficult, stringent standard. Three percent is an impossible standard in and of itself on a daily basis, let alone per campaign."

One way to circumvent the 3 percent rule is to play a recorded message instead of hanging up, which states the name of the company, the reason for the call and an 800 number.

"If anything, that will create more criticism," Taylor says. "It's one thing to pick up the phone and have nobody there, but it would be far more annoying for me to call you and say, 'I'm calling for Bank One and our 800 number is this.' People are not going to be very responsive to that kind of intrusiveness."

The FTC disagrees. In the Telemarketing Sales Rule's Statement of Basis and Purpose, the FTC claims that abandon calls " ... frighten consumers, invade their privacy and cause some of them to struggle to answer the phone, only to be hung up on."

"The whole dialer issue was the subject of a lot of discussion in forums," says FTC staff attorney Katie Harrington-McBride. "The 3 percent amount was based on comments from all sides."

Taylor's other main gripe with the legislation is that telemarketers will not be permitted to call customers unless they have done business with the company in the last 18 months.

"That's ridiculous," Taylor says. "If you buy a car from Ford today, I can't call you up in three years or four years when your warranty expires -- even though you own a Ford product, and spent thousands of dollars for it -- and offer you a Ford warranty. It would be illegal because you haven't done business with me in the last [18] months."

The FTC claims that calls placed two years after a transaction would conflict with a consumer's expectations. The legislation reads, " ... [A] company should be able to claim the exemption only if there has been a relatively recent transaction between the customer and the seller ... The Commission believes that 18 months is an appropriate time because it strikes a balance between industry's needs and consumers' privacy rights and reasonable expectations about who may call them and when."

InfoCision, however, is somewhat protected from the new Telemarketing Sales Rule. About 80 percent of its business comes from charitable and nonprofit companies like the Salvation Army, the American Heart Association, the American Cancer Society, the American Red Cross, UNICEF and several Christian ministry organizations. All of those are exempt from the new regulations.

Taylor predicts the remaining 20 percent of InfoCision's business, its commercial division, will suffer.

"Our big growth opportunity is the commercial area," Taylor says. "That's why this FTC legislation is very concerning to us. Our growth opportunities in the nonprofit marketplace are a lot more limited than they are in the commercial marketplace."

Fund-raiser

Taylor started his career as a director of marketing for evangelist Rex Humbard's television ministry. He left Humbard in 1982 to start his own marketing consulting company, only to find himself traveling all over the world to clients' offices, which quickly grew tiresome.

"I focused on the telemarketing fairly early on because it was a way you could earn money without having to travel every single time," Taylor says. "We started off strictly raising money for Christian organizations because of my background working with Rex Humbard and I knew most of the television ministry marketing people."

Taylor's three-year plan from 1982 to 1985 was to become the leading fund-raiser for Christian organizations to establish his credibility, and then expand to other nonprofit organizations. The plan almost never made it past year one.

"There's nothing quite so motivating to find new business as when you have just enough in the checkbook to cover the next house payment," says Taylor, who can now laugh about his start-up days. "I've found the key to breaking any new market is having two credible clients."

The two-client rule proved out for InfoCision. From there, Taylor was able to add staff and expand his business beyond Christian organizations and nonprofits. InfoCision's largest commercial client is Bank One and its credit card subsidiary FirstUSA. Internet service providers Earthlink and Microsoft MSN are also big names on InfoCision's commercial roster.

Eventually, InfoCision grew to the size where Taylor had to delegate more responsibility to his staff and trust their judgment on more decisions. It was a gradual process, he says, but crucial to the development of the company.

"I used to have a very autocratic style because I knew everything that was going on and I felt like I knew more about it than anybody else," Taylor says. "You have to defer to the people's opinions that are closer to the situation than you. It's something I've done pretty successfully."

Taylor's role is now often one of devil's advocate.

"My job has become trying to poke holes in their thinking," Taylor says. "If I have a gut impression -- and my gut instincts are pretty good -- I will push and I will question and I will make the person explain why they came to this conclusion and try and poke holes in their argument.

"If I can't poke holes in their argument, then I know it's the right decision and I go with it."

Bad reputation

Taylor bristles at the overriding public perception of his industry as a fly-by-night, boiler room operation looking to rip people off.

"It makes me very angry," he says. "Every telemarketing scam you ever see on TV is how our industry is portrayed."

Taylor continues, "The hilarious thing is we enact all these laws when 99 plus percent of problems come from illegitimate operators who aren't complying with any law whatsoever."

That's why he has carefully branded his company as the antithesis of the stereotypical telemarketing firm.

The company's stately Akron headquarters, which opened in 1988, could pass for the offices of a large, upscale accounting or law firm, with a glass and brick exterior, plush green carpeting, rich hardwood desks, leather furniture and carefully placed ferns, flowers and potted plants. The main office's 340 employees dress only in business attire.

"We're not into wasting money," Taylor says. "But we've found by having a nice environment to work in, people don't mind working the long hours as much and pour their hearts into it and feel that it's a sound, real company."

Taylor is working with the University of Akron to create an institute for direct response marketing, a degreed program modeled after the university's Fisher Institute for Professional Selling, which trains students for a career in sales management.

"The idea is to -- not to just provide a degree program -- but to educate students that it is a legitimate and worthwhile career opportunity and to elevate the image of telemarketing," Taylor says.

Changes

It's not uncommon for CEOs to downplay a crisis facing their industry or company. Former WorldCom chief John Sidgmore spun his company's largest-ever Chapter 11 bankruptcy filing by saying, "We still haven't lost any substantial customers," adding that the filing would allow the company "a better chance to get our message across."

Less than four months later, Sidgmore resigned.

Taylor isn't quite so chipper about the looming Telemarketing Sales Rule, which the FTC and FCC will begin to enforce Oct. 1.

"It's going to be a severe challenge," he says. "No, I am not confident. We have got to dramatically expand our inbound opportunities because I think this will cripple the outbound. For commercial applications, it could destroy the industry, literally. It's that onerous."

He is focusing on landing more inbound telephone services as the way to expand InfoCision's commercial growth. Two new contracts, the U.S. Golf Association and St. Jude's Hospital, are primarily for inbound work, and InfoCision handles several inbound projects for Alltel Corp.

"Customer care for Fortune 1000 companies is what we really want to focus on," Taylor says. "We would handle their inbound questions. Ideally, we would like to work with clients where we're online with their database and are their partner long-term."

It's clear he isn't wasting any time to save his company from losing 20 percent of its business. After all, his may be one of the few remaining outbound telemarketing companies by this time next year.

"This industry is responsible for almost $700 billion in sales," says Taylor, quoting statistics from the Direct Marketing Association. "The outbound industry alone employs 6 million people and accounts for more of the Gross Domestic Product at 7 percent than the restaurant industry at 6 percent. If somebody instituted legislation that put an end to 50 percent of restaurants, don't you think there would be some backlash to that law?" How to reach: InfoCision Management Corp., (330) 668-1400 or www.infocision.com

Monday, 30 June 2003 07:21

The perfect blend

There's a rule for all manufacturers: Make your product unique, or it will end up in a price war with the competition.

John Barnard, president and CEO of high-end blender maker Vita-Mix, knows this rule, and he plastered it on every wall of the North Olmsted-based manufacturer when he returned in 1981 to run the company his grandfather started 44 years earlier.

"Just about everything in the world is trying to turn your product into a commodity," Barnard says. "You have to maintain the fact that it's better in whatever way. If it's not just the product, then it's the customer service, the whole package the customer buys."

The irony is that Vita-Mix has never had any serious competition, so a major reinvention was never necessary. But Barnard still saw room for improvement and new markets Vita-Mix could dominate.

Until the early 1980s, Vita-Mix was a household product sold in the United States and Canada, which left untapped the growing commercial and international markets.

"We went back and leap-frogged ourselves," Barnard says. "We looked at everything that people thought of as inefficiencies, or would like to see better, and we added a few things of our own which would expand it into new marketplaces."

In 1986, Vita-Mix released its first exclusively commercial food service product, now called the Mix'n Machine. Restaurant chains including McDonald's, Chi-Chi's, Starbucks and Baskin-Robbins have since snapped up versions of Vita-Mix's commercial drink machines for their kitchens nationwide.

"The new markets have created stability," Barnard says. "If you look at our growth curve, and the fact that we've had pretty steady growth, it's primarily because of the fact that we've broadened our base and found new areas to be successful in."

Vita-Mix's sales grew from $44 million in 2000 to $50 million last year, despite an economic downturn.

"Last year, we wouldn't have been as prosperous if we had been dependent on just the markets we used to have," Barnard says. "Every one of our profit centers didn't grow. Some of them were running slow, but the others were growing enough to pick up the difference." How to reach: Vita-Mix, (440) 235-4840 or www.vitamix.com

Monday, 30 June 2003 06:42

Fast track

Coltene/Whaledent Inc. CEO Jerry Sullivan is busy packing up his office in his company's former headquarters in Mahwah, N.J.

"There are boxes everywhere," he gripes. "As we sit here, about 75 percent of our production is up and running there now, the next 25 percent will be operational by July 3. I and my entourage will be there by July 7."

The "there" Sullivan refers to is a $8.8 million, 185,000-square-foot building that sits on nearly 18 acres in Akron's Ascot Park. Coltene/Whaledent, which manufactures dental instruments and lab tools, has been working out of its new global headquarters since April 1, only nine months after the foundation for the building was set.

If that seems quick to you, you're right. Coltene and its builder, Welty Building Co. Ltd., were only able to meet the April move-in deadline thanks to detailed planning, swift decision-making by Sullivan and cooperation with the city of Akron.

"You have to have the right builder and the right architect," Sullivan says. "You put those two together and you have a successful project. It's that simple."

Plan ahead

Before a shovel hit the dirt last June, Don Taylor, president of Welty Building, Sullivan and the building's architect met to discuss the detailed deadlines facing the project and what decisions each party would have to make and when.

"This wasn't a reactive thing," Taylor says. " ... We said here's where we're going to be in November and here are the kinds of decisions that you will have to make then."

These preliminary meetings, which Taylor calls partnering meetings, were helpful to Sullivan, who, because he was still in New Jersey, couldn't be at the construction site every day for updates.

"Welty had this better organized than I'd ever experienced," Sullivan says. "These partnering meetings made the one thing happen that's critical to everybody, and that's communication. If there's a key to any relocation project, it's communication.

"Everybody in the project, we were all conscious of this, and we went out of our way to make sure that communication was really optimized."

Reduce red tape

Work on the new Coltene/Whaledent headquarters was fast-tracked by the city of Akron, with city planners approving the project with a limited outline of how the building was going to look. Likewise, Taylor's work crews had only basic design information but knew enough to set the building's foundation.

"We were able to buy the structural steel at that time because we knew it was going to be 185,000 square feet and what the configurations were going to be," Taylor says. "We had not worked out exactly how the departments were going to work, how the lighting was going to work, where the walls needed to be. We just knew this was how big it's going to be, and all those decisions had to fall within this box."

As final drawings were completed, Taylor returned to city planners for updates and approvals.

Act fast

Due to the time crunch, Sullivan was required to make significant decisions affecting the building in a short timeframe. He says the extensive planning helped make some of those problem-solving decisions easier, but others required a quick yes or no without much consultation.

"You're going to encounter some obstacles, and you really have to be prepared to make decisions -- and sometimes extensive decisions -- faster than you'd like to," Sullivan says. "In other words, you can't do it by committee. Somebody has got to take the responsibility, and that was me, in this case." How to reach: Coltene/Whaledent Inc. (330) 916-8923 or www.coltene.com; Welty Building Co., (330) 867-2400 or www.weltybldg.com

Thursday, 19 June 2003 13:38

Renewed strength

It was a matter of too much at once, says Alan Rosskamm, president and CEO of fabric and craft retailer Jo-Ann Stores Inc.

From 1998 to 2001, Rosskamm opened 70 superstores, implemented a $33 million retail inventory control system by German conglomerate SAP AG and opened the chain's second distribution center, in Visalia, Calif.

The three major initiatives required a major investment and left the company with $245 million in debt by 2001. Profits were down 153 percent from the previous year and its stock was trading at less than half its value from the previous year.

In March 2001, Rosskamm laid out a three-year goal for the company's turnaround. Two years later, it appears as if he is nearing the finish line. Logistics are running smoothly, debt has been reduced by $180 million, 148 underperforming stores have been closed and more than $50 million of the least productive inventory was eliminated, all of which freed up more than $80 million in cash.

"It really became a matter of editing and getting down to core," Rosskamm says. "Editing out the redundant product and the nonproductive products, editing out the nonproductive stores."

With most of the "editing" completed, Rosskamm has turned his sights on Jo-Ann Stores' next growth phase, with 35,000-square-foot big box stores located in class A retail locations.

The larger stores, more than twice the size of Jo-Ann's traditional 14,000-square-foot stores, generate $50 more of sales per square foot than traditional stores in the first year, and mature with $60 to $70 more in sales per square foot.

"As we look toward the future, we're not wasting time patting ourselves on the back," Rosskamm says. "We're very proud of what we did, but all the things we have apparently done right in the past two years have been helped and made a lot easier by the fact that our industry has been much in favor with the nation's consumers." How to reach: Jo-Ann Stores Inc., (330) 656-2000 or www.joann.com

Tuesday, 03 June 2003 09:37

Demand to expand

The first thing that strikes you about Nancy Diller-Shively is her energy.

She greets you at the Akron headquarters of Cambridge Home Health Care with a vigorous handshake and a wide smile -- a genuine smile. She's not faking. She really is this happy.

"I love what I do, can you tell?" she laughs. "We have plenty of challenges, don't get me wrong. But I really believe in what we're doing. To be able to keep somebody in their home, it really is rewarding."

Diller-Shively has reason to be happy. Despite the uncertainty facing the health care industry, Cambridge Home Health Care is booming.

In February, Cambridge opened its 18th location in Ohio since its launch in 1994. The family-owned company serves 1,850 patients a week in their homes, helping them prepare meals, grocery shop, run errands and do laundry, and offers nursing services as well.

Diller-Shively, a registered nurse, was working in the intensive care ward at an Akron hospital when she received a call from a colleague who needed a nurse to supervise home health aides. She wasn't sure that was what she wanted to do, but she decided to give it a try.

"I walked into the first home and I knew it was my destiny," Diller-Shively says.

She stayed with that home health care company, which was later sold to a national firm based out of New Jersey. Diller-Shively was put in charge of acquisitions by the new owners, but after eight years, she became discouraged by the company's hunger for growth and indifference to its employees.

"That's when I decided I wanted to start a company where we don't lose sight of the people," she says.

Diller-Shively picked up a phone book and started calling brokers looking to sell a company. From there, she found a husband and wife team in Medina County who wanted to sell their home health care company and were willing to finance the sale.

Cambridge Home Health Care was born.

Smart Business talked with Diller-Shively about her expansion strategy and the challenges facing her industry.

How do you choose your locations?

Before getting to that point, I'll let you know before I got into business, (expansion) was not the intent. I had no game plan to be a statewide provider or really anything other than being a company people enjoyed working at.

We began to grow, basically on reputation, and the word got out that we provided a good service, and we would have agencies from different locations call us and ask if we would be willing to open in their cities. When someone's asking for something like that, I certainly have a difficult time telling them we can't help them out. So, the majority of our growth has been by invitation.

Part of that strategy involves getting the staff to buy into it. I'm a firm believer that if we don't have the whole team, especially the team that's directly involved with that new location comfortable with that, then we should not move forward. So far, no one has said no.

My former boss at one point criticized me and told me I led by committee. He used to bang his fist a lot, 'You have to stop leading by committee.'

I feel there are certain things where a leader does have to make the decision on their own, but things that involve the organization and individuals having a bigger work load, I really believe you have to have buy-in, or else your setting up the organization for failure.

Generally what happens, either we'd get a phone call from someone needing our care in a community where we did not have a location, I'd bring it back to the team meeting, throw it out to the team, from the finance department to the individuals who would have the operational management piece, to quality assurance director. I would say, 'We've been asked to open up here, how do you feel about it? Do you think we can do this without having a negative impact on our current business?'

I've been blessed with a group of go-getters, and they have readily bought into the big picture, and that's really how we've grown the operation.

I've had one acquisition along the way, and that's interesting, too, in that, I wasn't pursuing it. I received a phone call. It was a friendly competitor of ours, who for medical reasons wanted to exit the business.

Some of the locations were in our current cities, and I think there were three offices that were not where we were currently located. So I told them, 'No, I'm not interested. We're growing fine without an acquisition.' They told me what they were asking for the company, and I still said, 'No, I don't think so.'

Several months later, they called back, cut the price in half, and said they would hold the note interest free. I said, 'Well, let me get together with the team to see if they would be interested in this.' It was a decent size acquisition.

I took it back to the team, 'This is really interesting, we've been asked to buy this company, and now they've come back and lowered the price.' It made sense from a pricing standpoint. It was valued at much less than what the going rate was at the time, so it was very hard to say no.

They all bought into it, and they said, "Yeah, let's do it!"

We've never done a market research study or anything like that. The growth rate has been pretty phenomenal. Columbus came about very similar to the rest of them. It was really more the staff wanting to move into that area.

We really didn't have a call from a provider requesting our services because there are probably 50 or 60 in the Greater Columbus area. But we had a staff member who felt we would do well in the marketplace, and that's why we decided to open up there.

Who's on your team?

We used to have three district managers and we just added a fourth. Then I have my husband on the team. He's really been a Godsend in that he has brought to the organization efficiencies. He's very good with the computers.

We've been able to maintain our overhead at the support office and not had to add any new personnel for billing or payroll or anything. That's the secret: Economy of scale. If you can increase in size and keep your overhead low, that's a no-brainer.

How do you create an environment that nurtures go-getters?

I've just been blessed with a group that loves their job and loves to work for the company. I had worked at a company that lost sight of what the product was, and that's people.

That was my mission. I wanted to have an organization where people really enjoyed coming to work. We spend so much of our life here. I knew we could accomplish that and still be successful, and that's what I set out to do.

The team has really made it happen. I'm the risk-taker; they've really made the growth happen.

Why is the team buy-in so important to you?

Part of it has to with my history. The 10 years before I had my own business, I was with a company that did not believe that. I saw from that experience what happens to the morale of the individuals, and from a business perspective, it didn't work.

Knowing that, I realized I've got to do this differently. To have them buy into the major plan, whatever we're doing, is extremely important. Disgruntled staff equals disgruntled patients or customers. It's pretty simple, but it's working here, at least.

How has the national nursing shortage affected you?

It's our biggest challenge. Not only the nurses, but the home health aides. It's difficult to have enough workers for the amount of cases we have.

We did a three-month analysis, and if we were able to have enough staff to cover everything we have requested in terms of the cases that come in, our business would have increased 20 percent.

That's just one company. So, you know there are a lot of individuals who need care who aren't able to get it because staffing is so crucial. We're pushing 1,000 employees now. About 35 percent are either RN or LPN, and there would be about 10 percent that would be considered the office, and the remaining would be home health aides.

People are living longer. The technology that used to only be provided in a skilled facility, such as a hospital or a nursing home, that same technology is available to patients in their home. People can receive dialysis at home, a ventilator, all kinds of different treatments.

People, for the most part, want to be in their home, so I just see this industry continuing to grow by leaps and bounds, but the challenge is attracting and keeping employees.

How have you managed to make a profit when so many other health care providers are struggling?

It has to do with administrative overhead. We don't compromise at all in terms of the individuals providing the care, but the secret is to do what we can administratively, as the number of patients grows, and the number of field staff employees grows.

We have the same overhead here to be able to produce all of what goes with it, in terms of the payroll and so on. Again, I have to credit my husband with being able to bring his expertise here and maximize the efficiencies.

We have the same gal doing payroll that we've always had. Now, I tease her, 'What were you doing eight years ago?' When we started, our employees were probably 70, now we have 1,000, and we still have one person doing our payroll.

Some companies error on that. They look at the numbers and think, 'We have this many more patients, therefore we need another person to do the billing.' There are other ways to have that accomplished if you stay on top of the technology, and that's what we've been able to do. How to reach: Cambridge Home Health Care, (330) 668-1922, or www.cambridgehomehealthcare.com