Joan Wall

Monday, 22 July 2002 11:44

Tom McAulliffe

One of Tom McAuliffe's biggest personal challenges involves keeping his family on the same page of a situation rife with human issues.

His parents are both 81 and suffering from Alzheimer's. His task: "Trying to orchestrate six siblings and myself to help them navigate the process and all stay friendly and loving to each other," he says, noting his parents live in Chicago and his siblings are scattered geographically. "It's been very successful so far.

"Relationship issues are always the hardest because they're the most important."

It's a philosophy McAuliffe also advocates with his clients at Commerce National Bank, a niche bank catering exclusively to business customers.

McAuliffe's idea for the bank stems from his experience growing up in Chicago, where he says bank branches are the exception to the rule of neighborhood and niche banks.

"They knew all their customers," he says. "Ultimately it led to, I thought, good banking."

The consolidation of banks in Central Ohio in the late '80s and early '90s, McAuliffe figures, left the community ready for his niche bank. He was ready, too; he didn't enjoy the fact that his job as president of Fifth Third Bank, Central Ohio, kept him away from customers.

He thought business customers would be able to relate better to an independent bank.

"I think people that run their own businesses are unique. They take great pride in what they do and put their heart and soul into what they do," McAuliffe says. "They have a hard time relating to the big banks."

"This bank was started when other banks were starting to go into a tailspin," says Mark Corna, president of Corna/Kokosing Construction Co. and a member of McAuliffe's board.

"Savings and loans were going out of business. This was definitely a case of swimming upstream, or so it appeared at the time," he says, pointing out Commerce National Bank has tripled the return of the original investors in its growth to 500 customers, 75 employees and more than $3 million in earnings since its 1991 opening. In December 2000, the bank crossed the $250 million line in assets.

McAuliffe's skills at relationship building have paid off; all of his business comes through personal contacts and customer referrals. To maintain those relationships, he uses the $200,000 he would have spent annually on advertising to invest in educating his clients through seminars and presentations by such business authors as Harry Beckwith, who wrote "Selling the Invisible: A Field Guide to Modern Marketing."

Even through his sons, McAuliffe practices the importance of relationship building; as a soccer coach, he got to know some of their classmates -- who later gave him their business.

"Some of the kids I coached with my first son now own businesses and are customers," he says, joking about the oddity: "You're the guy I used to bench for swearing all the time and now I'm lending you money?"

McAuliffe surrounds himself with positives. Take, for example, the Wrigley Field photo directly across from his desk, which reminds him of Ernie Banks, a shortstop, first baseman and coach for the Chicago Cubs known for saying, "What a great day for baseball. Let's play two!"

"I admire people who have great attitudes," McAuliffe says, "instead of being at the mercy of their lives."

Thomas C. Sawyer, chair of the Greater Columbus Chamber of Commerce's Small Business Council, where McAuliffe is chairman for small business advocacy, has seen McAuliffe's positive attitude at work.

"He's very focused, very intense in the good sense of the word and, I thought initially, very, very serious about everything -- both his business and the council work," says Sawyer, who is also president of Opinion Strategies Inc. "But I soon realized he had a wonderful sense of humor."

Still, McAuliffe is reserved in many ways. The 1993 Emerging Business Entrepreneur Of The Year makes it his first job every day to fill the bird feeder outside his office. He listens to classical music, and his office is a makeshift gallery where art by his wife, Andrea, and three sons -- ages 24, 19 and 12 -- adorns shelves and walls right alongside works from the Columbus Museum of Art.

McAuliffe is active in his parish, Our Lady of Peace Catholic Church, where he runs the finance committee and his wife of 28 years runs a religious education program. He's also a member of the finance committee of the Catholic Diocese of Columbus.

"I think faith-based elements in your life are very important," he says.

"So much of life is just luck. Everybody has great plans, great theories, great schedules for their lives, but you know what? There's a greater power in life." How to reach: Tom McAuliffe, 848-8700 or Tom.McAuliffe@cnbcbank.com

Joan Slattery Wall (jwall@sbnnet.com) is associate editor of SBN Magazine in Columbus.

Monday, 22 July 2002 10:10

They've found a calling

They've found a calling

From 15 employees in a small front office space in 1996, CallTech Communications Inc. has grown to fill 18,000 square feet with a staff of almost 500-anticipating revenues of $12 million this year. The four partners who run the company have managed to keep it all in check, even though the growth shows no sign of slowing.

By Joan Slattery Wall

It's not just a network of phone lines and computers that keeps CallTech Communications Inc. together. A partnership of owners and contacts has helped form and grow this Columbus-based company to more than $5.6 million and nearly 500 employees in less than three years.

Looking back, CallTech President C.J. Petitti says he never doubted the company's potential for success, but he credits the firm's partners for his unwavering confidence.

"I thought the chemistry we had here was not bound for not being successful," he says. "However, I would say the growth we had in the last year and a half-I never dreamed it would grow that fast."

Petitti first partnered with Todd Price, a friend and fellow business owner, in April 1995 to form local Internet service provider Netwalk, but the two saw the opportunity to start another technology-based business, one that would provide customer support using client brand names.

Price brought technology knowledge to the table; Petitti had the business savvy gained through Chaney & Petitti Insurance Services Agency Inc., where he is vice president. They were soon joined by Kent Bowen, whose work for Cincinnati's Provident Financial Group Inc. [formerly Provident Bank] added banking and business contacts to the mix.

About a year and a half after the company's founding came the big coup. Bob Massey, who had just left his position as president and CEO of CompuServe Inc., joined the partnership as executive vice president of business development.

In addition to sharing their talents, the four-along with Petitti's brother, Phil, who does not work for the company-pooled $20,000 each to grow the company.

And grow it has. Already, CallTech expects $12 million in revenues this year-10 times that of its first year in business, and more than double that of last year's sales.

But with growth come challenges. The CallTech partners had to quickly accommodate large new accounts and learn how to manage hundreds of employees.


Growing the business

Price and Petitti knew technology advances would increase the number of users needing help, which is why they decided to form a call center that would answer customer-support calls for clients.

To find CallTech's first client, Petitti in October 1995 approached Massey at CompuServe. Massey referred him to the member services department, which was looking to expand outsourced projects. Talks with CompuServe officials continued until February 1996, when they agreed to let CallTech run a 90-day pilot program providing customer-support services to the CompuServe Interactive division.

"By mid-May, they liked what we were doing, so they signed off on the pilot," Petitti says.

The growth that followed was fast. CompuServe Interactive generated a call volume of 5,000 the first month, Petitti says, but seven months later, CallTech was answering nearly 140,000 monthly calls. It was enough to give the start-up its first profits-and a need for more capital. CallTech secured a $250,000 line of credit through Bank One to finance receivables and equipment.

Through CompuServe, Petitti met CallTech's second client, CUC International Inc. [now Cendant Corp. in Stamford, Conn.], which brought 20,000 inbound marketing calls the first month.

The CompuServe connection paid off again for Price and Petitti in February 1997, with Massey's decision to join CallTech.

"All of a sudden, that gave us a major boost because Bob was not just tied locally. He could call anybody," Petitti says, noting that Massey recruited CallTech clients BellSouth.net, a division of BellSouth Corp. in Atlanta, and Priceline, an online buying service out of Connecticut.

CallTech's client base, which brings in 425,000 calls a month, also includes the Ohio Department of Development's Division of Travel and Tourism, for which CallTech answers calls to the 1-800-BUCKEYE line and to Cleveland's Rock & Roll Hall of Fame and Museum, and Spry Inc., for which CallTech answers customer service and technical support calls.

Some of the clients are seasonally busy, allowing CallTech to shift responsibilities and keep its staff going year-round.

That flexibility is a plus for some clients, such as CompuServe, because CallTech can bring new products up to speed and fluctuate staffing with little notice, says Chris Miller, CompuServe's member services project manager, who handles the company's outsourcing.

"Besides the flexibility, they also seem to have a pretty good feel of the business that they're in-and not just at the upper level. It seems to disseminate to the agents on the phone," he says.

An uncertain time for CallTech came with the announcement in fall of 1997 of the CompuServe/AOL/WorldCom Inc. transaction. Petitti feared that move would result in the loss of the CompuServe account, which was bringing in 48 percent of his business.

"I did not want to take a step backwards, so I had some real concerns when that merger was announced," Petitti says. But CallTech ended up gaining all of CompuServe's technical support. Miller says the start-up's flexibility sealed the deal.


Managing the growth

Such a fast-growing customer base meant one sure thing to the CallTech partners: They'd have to find some employees-fast.

"We don't have a product out there. It's people based," Petitti points out.

When the start-up sought CompuServe, Price and Petitti were among the 15 employees answering phones. Now, the staff is approaching 500.

Unlike many other Central Ohio businesses, CallTech has not struggled to fill its job openings.

"The reason, I believe, is [in] the generation we're hiring, there are a lot of people who are into online rather than flipping hamburgers," Petitti says.

In addition, Petitti networked in the right circles. Netwalk, which remains a separate company, once created an Internet access package for students at DeVry Institute of Technology and Franklin University. Petitti used these contacts to find employees with a working knowledge of computers. Current CallTech employees also help with recruiting since CallTech pays a $100 bonus once a candidate referred by an employee has been with the company for 90 days.

Learning to manage employees, Petitti says, has come through trial and error, although the partners have brought knowledge from their previous businesses.

One of their first major flubs, for example, was having supervisors on duty who oversaw the entire call center but didn't really get to know the employees, whose shifts span CallTech's seven-day, 24-hour operations.

"That did not work at all," Petitti says. Productivity, which decreased 15 to 20 percent under that system, has now increased more than 25 percent with the use of a team-leader concept in which managers work with 15 to 20 employees.

Petitti acknowledges that with so many employees at CallTech, the partners can no longer manage people hands on.

"Actually knowing who works here-that's a challenge," he says. Computers help.

"Employees can e-mail suggestions to the partners and project managers," Petitti says. To encourage those suggestions, CallTech pays $50 to $200 for new and creative ideas. Participation varies, but the partners receive as many as 10 suggestions each month. One suggestion, in fact, led to the implementation of the team-leader concept.

Computers also document calls, breaks, hours, payroll records, performance records and even photos of employees. The tight reins, which Petitti says went into effect within three months of CallTech's operations, allow the company to monitor productivity and work quality.

"We cannot afford to be rude to [customers]," he points out, explaining tha t doing so or being absent from work without calling in are grounds for immediate termination.

Another challenge: the physical space needed to hold all those employees.

CallTech occupied just a 1,500-square-foot front office on Marconi Boulevard in January 1996, but 13 months later the company's employees required 10,000 square feet of the building. This spring, the company moved to an 18,000-square-foot space in Hilliard, for which CallTech secured a $250,000 term loan through Bank One. Plans are in place to have additional offices in German Village with 10,000 square feet by the end of the year.

Petitti says the two locations will give CallTech an advantage of redundancy in case power goes out, as it has more than once since the company started. Petitti forecasts a third location-out of state, possibly in Pennsylvania-in 1999.

CallTech's ability to see the big picture is, in fact, one of the reasons that CompuServe has stayed with them, Miller notes.

"In my position, I work with multiple vendors, not just CallTech, and [CallTech] always ends up being more flexible," he says. "They're always there in my hip pocket, so to speak, when I need something."

Monday, 22 July 2002 10:10

Sales & Marketing

Warming up cold calls

By Joan Slattery Wall

Gloria Long, owner of Midwest Title Agency in Powell, says she'd rather stick a needle in her eye than make cold calls for her 16-month-old business.

But making cold calls is something she has to do to find potential new customers, so to ease the process, she takes along promotional products. They break the ice.

"When I walk in there with these items, it somehow lessens the pressure for me," she says.

The tall, thin coffee cups she brings are conversation openers, and she's found that her mortgage broker and real estate agent clients are often golfers who are fond of the golf balls or golf towels.

"Fifteen minutes into the conversation, you feel like you know them, so you can really start selling yourself," she says.

Before she chose the mugs, pens, pads of paper, candy jars and golf trinkets that she has emblazoned with her agency's name and phone number, Long asked her clients what items they like. She also found out what promotional products her competitors use, and she one-upped them by choosing similar items of better quality.

Since she started her business, Long has spent more than $7,000 on promotional products for her agency, but it only takes seven orders for title service to pay for that investment.

"In my business, [the clients] have to feel that they know me and trust me, and I've got to be in their face every two weeks," she says. She uses the excuse to bring new products or refill candy jars she's left previously to keep contact going.

"In today's business environment, people more than anything want to keep their name out there in front of their clients as well as market to new potential clients," says Jean Loehnis, owner of The Corporate Gifters in Clintonville, where Long buys her promotional items. "[The clients] automatically think of that business when they have a need for whatever it is that that business provides."

Monday, 22 July 2002 10:08

Not just a drop in the bucket

Brian Gibson, owner of the three Gibby's restaurants in Columbus, says he's probably like most bar and restaurant owners who understand they may lose a little of the profits they could be taking in. Spillage, theft, mistakes and poor records, after all, can be part of day-to-day business.

So although he was skeptical, about four years ago, Gibson let Chuck Deibel, owner of a local Bevinco franchise, audit the bar operations at the Grandview Gibby's. Using electronic scales, a notebook computer and a software program, Deibel conducted a one-week audit that showed figures Gibson says he never would have suspected.

"It was $2,500 to $2,700 worth of actual dollars that I was losing from the customer," Gibson says of the Grandview restaurant audit. The loss equaled 8 percent to 10 percent of the week's business.

Gibson knew he'd have to take those numbers and do something with them.

"To get this information doesn't mean anything if you don't act on it and tell people what's going on," he says, referring to his employees.

With Deibel's help, Gibson has corrected problems to a point that now he's losing less than 2 percent at the Grandview location, and he's instituting measures to prevent loss problems at his newest Gibby's on Riverside Drive. His German Village restaurant has also been audited to reduce losses.

"A bar can make or break you in this business," Gibson says. "The bar end is where you can make a lot of money and pay your bills."


A better measure

Gibson previously took inventory the way most people in the business do: counting bottles, lifting kegs to estimate whether they were half or three-quarters full, and eyeballing liquor bottles to determine how many tenths were left.

Deibel's method, on the other hand, was much more precise. He uses scales to weigh every keg, accurate to within 3 ounces, and each liquor bottle, accurate to within one-hundredth of an ounce. A computer analysis shows the exact amount of product that should have been used and compares that to the product recorded in Gibby's register. Deibel's computer program also converts those figures into dollars.

Audits typically take two to three hours to complete at a cost of $50 per hour.

In his four years of owning the Bevinco master franchise for Ohio and Indiana, Deibel has himself been shocked by the results he's seen after audits of his 40-some clients, which include the Bogey Inn, Buckeye Hall of Fame Cafe, Damon's and Spagio. When he first started the franchise, he thought he would uncover $400 to $500 in weekly losses rather than the thousands of dollars he sees in some audits.

"They'd pay us $100, $150. From a business standpoint, that's a pretty good return," says Deibel, a certified public accountant and business partner with experience in the restaurant industry. His parents owned the former Deibel's in German Village.

Yet even before he conducts an audit, Deibel is often met with skepticism.

"They think I'm scamming them," he says. "People have this mentality that if they haven't heard of it, it must be a scam. Everything new goes through that stage."

Gibson also was skeptical, but because Deibel's wife was a high-school classmate, he trusted Deibel and tried the program.


Stopping the leak

Gibson started his quest to reduce his losses by sharing Deibel's audit information with his staff.

"I've never told my staff you can't ever give anything away or overpour. If something happens and we screw something up, as long as we write something down, that's my biggest thing right now," he says of efforts to keep better inventory.

"There was a combination of staff giving it away and some of them walking out the back door-bartenders, waitresses being able to smuggle a beer or two to their friends," he says.

As soon as his staff knew about the Bevinco audits, the problems subsided. He also moved product from where it had been stored near the back door so that it wouldn't be so easy to steal.

Gibson saw improvements within the first two months of Deibel's work.

For Gibson, the primary benefit of Bevinco's ongoing audits has been a sense of security. He splits his time between his three establishments, and now he can hold his managers and bartenders accountable for results in his absence.

"I can't be here all the time," Gibson says. "It's a great way for me to look at this and go to my managers and say, 'This isn't good. This doesn't make sense.'"

Deibel says that the first few audits took about four hours each week or every other week; now he does two audits a month at two to three hours each at Gibby's Grandview.

Daily audits also are possible, and if Gibson requests it, Deibel also could personally monitor individual bartenders' actions. So far, Gibson has never requested this because he's had success with simply letting his staff know about the audits.

Because of variables in the food portion of his business and because liquor sales vary so much, Gibson says he can't directly attribute to Bevinco any profit gains at the Grandview Gibby's, which he expects to bring in $1.3 million in net revenues this year.

"All I know is I'm not losing as much as I was," he says, "and on a biweekly basis, I can control that.

Monday, 22 July 2002 10:07

Playing catch-up

Michael Patton, president and CEO of Corporate Strategic Services Inc., says he blundered when he founded his purchasing-consulting company in October 1996: He did it without a sales and marketing expert to develop new business. Now, he’s pedaling fast to catch up.

By Joan Slattery Wall

There was never much question that Michael Patton would be an entrepreneur. It began with a paper route and sales of produce from his family farm, where he learned good work ethics. Then came his college days, when he peddled dictionaries door to door. So it was a natural step when—after building experience and contacts through purchasing positions at six big corporations, including Shell Oil Co., Baxter Healthcare Corp. and The Huntington National Bank—he decided to start his own company.

“I always had an inherent self-belief that I could do it better,” says the president and CEO of Corporate Strategic Services Inc. in Dublin, which provides consulting, outsourcing and software products for the purchasing industry.

During his final year as vice president of purchasing and administrative services at Huntington, he contacted associates he’d met during his career to seek potential partners. His business plan, which he wrote with input from suppliers and peers as well as with industry research, included such details as quotes for furniture and office space, a complete staffing plan and cash-flow projections for the first five years of business.

As his business grew, however, he realized he’d omitted a crucial point—one that probably cost him business and prevented him from being able to follow the plan to the letter.

“We should have hired a sales and marketing manager the first day we were open,” Patton says. “In retrospect, it was our biggest technical error.”

Nearly two years later, he’s making moves to catch up on business development.


False hopes

Corporate Strategic Services got off to a booming start.

The timing was right for Patton because his wife, Sandra, had just sold her own business, Sunset Cemetery, giving the couple working capital. Sandra is treasurer of Patton’s company.

Patton recruited three industry peers—all from Huntington’s purchasing department. Daniel Henderson, Phyllis Massie and Mark Triguba worked with Patton for 12 months researching and revising his business-plan draft and deciding whether the business could succeed. Triguba has since left the company because of its extensive travel demands, and Patton this spring recruited another industry peer, Phil Haury, who was sourcing manager at Raytheon Co., based in Lexington, Mass.

Although his management team had high expectations that their combined 100 years of purchasing experience would make them successful, the principals knew the road could be rough.

“Purchasing is always the low end of the totem pole,” Patton says. “You never make money in purchasing. You’re not a profit center [for a business]. So we always had to demonstrate the value we brought to the table.”

High expectations, however, proved correct when, just three weeks after incorporating in October 1996, the foursome landed a huge client. The Bank of Scotland hired them to assess the bank’s business and implement plans for improvement. It was an account that grossed approximately $350,000 over six months. Weeks later came the second client: Bank of America [now Nations Bank], a $30,000 lump-sum contract job during which CSS analyzed and reorganized the accounts-payable department in two months or so.

Another sign of success: two trade shows, the National Association of Purchasing Management international conference and the Bank Administration Institute purchasing management conference, where they met hundreds of contacts—most of whom expressed interest in their services or products.

“We sat here and said, ‘Gee, if we knew this was going to be this easy, we would have done this earlier,’” Patton remembers.

It turned out to be beginner’s luck.

The two conferences, after a year’s time, netted only five clients.

“A lot of the people we talked to weren’t in [a position of] power to execute,” Patton says.

Then came another glitch. With all the firm’s principals in Scotland or flying to San Francisco for the Bank of America project, business development at home halted.

“We had planned to do business development ourselves,” Patton says. “We didn’t plan on being out of the country for six months.”

They also didn’t plan on delays in developing their software product, AESOP, which was generating positive response before its release. AESOP—which allows all employees at a company to control the purchasing process by ordering products and electronically sending the order to suppliers, other employees within the business or CSS—has been the company’s biggest start-up investment. It absorbed $450,000 of the initial $600,000 put up by the Pattons from the sale of the cemetery business and other funds, such as stocks and capital investments.

Because the software took longer than expected to release and the partners still were struggling with the lack of time for business development, the firm’s client list stalled at two until July 1997, when American Pacific State Bank, of Sherman Oaks, Calif., hired CSS.

That dry spell prompted Patton and his partners to spend the past year figuring out ways to jump-start their business development efforts.


Backtracking

Based on past success, one of the first moves the firm made toward improving its marketing was to form strategic alliances.

One was already in the works and had, in fact, led CSS to its first two clients.

Representatives of Walker International, a software developer in San Francisco, knew about Patton from his speaking engagements and professional documents. When they got wind that Patton was starting his own business, they contacted him to help with two of their clients, Bank of Scotland and Bank of America.

Since then, CSS has worked with other Walker clients, such as ConAgra Inc., a food processing company in Omaha, Neb., and Princeton, N.J.’s Summit Bank. In return, CSS looks for opportunities for Walker to become involved with some its clients, which now number more than a dozen.

A second strategic alliance was formed when the CSS partners sought advice on their marketing-and-business development predicament.

In October and November 1997, the principals sat down for a status check, asking each other, “Where are we going wrong?”

They brought in Huntington Bank’s Mike Paton, vice president of private banking and Patton’s own banker, and Richard Simonton, vice president of investments and private banking. The two validated the partners’ own suspicions. They needed to halt the cycle of bringing on big clients, then being too busy to look for more.

That, of course, would require money, and CSS wasn’t a good loan prospect for Huntington because the consulting business had no assets. So Huntington recommended another strategic alliance—this time with Coopers & Lybrand.

Don Bush, a senior partner at Coopers & Lybrand’s Cincinnati office, stepped in to help CSS develop a new business plan, which Patton now is using to share information about his company with potential investors. He hopes to bring in $1.3 million to hire additional staff to handle business development and marketing for the consulting business and AESOP product as well as a new product, the Electronic Mall, an online catalog that allows members to obtain prenegotiated volume discounts.

The relationship with Coopers & Lybrand didn’t stop there.

Coopers & Lybrand representatives introduced CSS to some of its own clients.

“It’s an added service they can provide through us,” Patton says of the consulting he provides. In turn, Patton teams up with Co opers & Lybrand experts to provide additional benefits for some of his clients.

This spring, CSS started a third strategic alliance by consulting for clients of Solutions With Technologies, a New York company that specializes in telecommunications.

Another step the partners took was to hire Neil Brown, former regional marketing director with Huntington, as the start-up’s marketing manager this spring. Brown will focus on sending out direct mail or seeking prospective clients through trade shows or Internet news groups and then filling the gap long overlooked by CSS—follow-up contact.

“There’s no real magic,” Brown says of business development. “It comes down to doing it and doing it every day, every week, every month.”

These changes have brought in about 75 percent of CSS’s new clients, Patton says, six of which came in a two-month time period, including John Deere’s Augusta, Ga., facility and Northwestern University.

Naturally, that has helped the company’s financial situation, too.

In the red until May of this year, CSS made a profit of $40,000 that month and in the one that followed. The company also billed just short of $250,000 in the first half of the year—more than all of last year.

Now, Patton and his principals await word from investors, realizing they could soon reach a crucial decision: How much will they have to give up to get the funding they need? Their goal: minimum loss of ownership.

That won’t come without a struggle, he knows. In fact, Walker and Solutions With Technologies already have offered to buy the company.

“We thought about it, but there was really never a question,” Patton says. “That’s not what we got in business ourselves for.”

Monday, 22 July 2002 10:06

Deep roots

First of three articles on family business dynamics

When Richard DiPaolo Sr. enters the conference room at his North Columbus company, RDP Foodservice, there is not a rustle or a word.

His sons, Dick and Paul DiPaolo, and grandson, Mark Mizer, all vice presidents at the company, lean back in their chairs, almost as if to make more room for any words the elder DiPaolo is about to speak.

Yet the air is not so thick that the younger generations feel prohibited from adding their own thoughts-even if it means interrupting the family patriarch.

It's a delicate balance for the family business: respecting the founder without stifling the dreams of the new generation.

Family employees of Johnstown's Tech International-with three active generations-must walk that line every day, too, at home and at work.

"It's difficult, but it's the way I want it," CEO Pauline Chambers Yost says of having no separation between work and family.

In fact, the line is so blurred that if you ask family members at Tech what their titles are, you may find them searching for an answer.

"Uncle Mike, grandson Mike, those are the real titles," says Michael Chambers, the company's executive vice president.

His point is clear. Family businesses are like no other. Their roots run deep, tracing a history of family leadership along with company growth. When challenges surface-as they inevitably will-the stakes are higher, too, because in a family business every decision is personal.

This is the first of a three-part series taking a close look at the dynamics of these two Central Ohio families and how the three generations in each manage to work it all out: bringing new blood into the business, working together and making plans to grow the companies for their respective descendants.


A firm foundation

When Richard DiPaolo Sr., 80, was growing up, children were expected to join a family business.

There was no question that he would help his mother and father, Luisa and Paolo, run their grocery store. When his mother died, it was even more imperative that he join with his father.

"I wanted to be fair with him. He had some tough times. To me it's family, OK?" he says, leaning forward in his chair. "It's family."

Soon, though, DiPaolo Sr. wanted to try his hand at owning a business, so he founded DiPaolo Food Distributors next door to the grocery store.

It was no surprise to him that his sons would join him, first working part-time in their youth and eventually becoming full-time vice presidents. He admits he would have let them follow their own goals, but from his generation's standpoint, joining the family business was the expected move.

"I didn't realize my grandsons would be involved down the road," he admits.

The way a family member enters a business-whether willingly or through family persuasion-could have an effect on the business down the line, says Thomas Davidow, a nationally recognized family business expert and co-founder of Genus Resources Inc., a consulting firm in Needham, Mass. Davidow also helped set up the Family Business Center at Franklin University.

"If there was a self-sacrifice in entering the business, there's a level of expectation that there's going to be a level of appreciation for that. The reality is never going to meet the expectation," he says. "On the other hand, if you choose to enter the family business, you take responsibility for your choice. And if you're not getting what you want, you can address it by seeking evaluations or having some sense of appreciation of what you're doing in some explicit way-but you're not going to have this excess need of appreciation that comes with self-sacrifice."

"I think one of the hardest decisions that capable second- or third-generation folks have to make is: Do I want to do this? Do I want to put up with all of these family entanglements?" echoes Edward Hertenstein, an attorney with Kegler, Brown, Hill & Ritter and board member of the new Family Business Solutions program at The Ohio State University's College of Business.

Paul DiPaolo was 20 when his father's business was starting to blossom, and he chose to join it after first attending college, at his father's encouragement, and spending time in the service.

His brother, Dick DiPaolo, started working part time for the company after college. Then, after interviewing with such heavy-hitters as Firestone and J.C. Penney he decided the money was better and the loyalty too strong for him to turn down an opportunity to join the family business full-time.

The brothers made their decisions by looking ahead: Paul wanted to help grow the business so he could turn it over to the next generation; Dick decided the family business could provide the best future for him.

At Tech International, Yost seems to have had more of a hand in controlling whether the generations to follow would join the company.

Yost, like her mother before her and daughter after her, initially owned a beauty shop. After 10 years, though, she decided to help her parents with their growing business. When her father died in a boating accident, she and her husband Frank Chambers bought the company from her mother. Frank ran the company until his passing in 1972, when Pauline took over. Her current husband, Walter Yost, serves on the company board.

Pauline never had any question that her son, Gary, who died about four years ago; her daughter, Cheryl; and the grandchildren would join the company.

"I started training them at a very young age the importance of Tech, and I never for one minute expected anything but every member of my family to come into the business," Yost says matter-of-factly.

If they weren't interested, she'd let them try their own thing, but eventually all returned.

Michael Chambers, Yost's grandson and heir apparent, is one of them.

"I had some hidden aspirations of things I wanted to do in life, but really when it's a family business you're born into, your whole life has been primed to work in the family business," he says.

He's purchased a large personal property so he can fulfill his wishes of working with nature-he once thought he might pursue a career in that area, perhaps with the national park system. He even left the family business from 1989 until 1992 to run his own tire-recycling company, which he eventually sold to a Florida business. Then he was drawn back to Tech.

Working elsewhere before joining a family business is wise, Davidow says.

"If you are only in the family business and that's your only point of reference, you have no notion of how a business operates and you can have expectations that are unrealistic," he explains. "In addition to that, if you've succeeded in the outside world, you're going to have a level of confidence that you're going to bring to the family business that you would not otherwise have."

Any experience gained outside a family business will count later inside, too, adds J. Richard Emens, a lawyer with Chester, Willcox & Saxbe LLP and founding director of Franklin's Family Business Center.

"Rather than just being the boss's kid given the favored job, they chose to come back into the business, and the boss urged them to come back in and the people in the business respect them more," he says.

To come to agreement on family issues that relate to the business, Yost and her family say they have sought the counsel of Davidow and Emens, who along with Hertenstein, declined to directly comment on Tech and RDP. In general, however, these experts say one way to address such issues is to form a family council, which could include family members working in the business or holding shares of it, as well as relatives who work elsewhere but could be affected by the family business. For example, a family council could set requirements for how each generation must enter the business.

"It also takes the pressure off running the business if you do have a separate council to handle issues that are part family, part business," Hertenstein says. "It lets business meetings be business meetings."

Tech International has a family council, but it also relies on flexibility to open doors for family members interested in joining the business.

"Not everyone likes to do the same thing, so we have diversified to fill all of my family members' best assets and love of work," Yost says.

Her daughter, Cheryl Poulton, for example, heads up a subsidiary, Technical Rubber Co. Investment Corp., which enables her to develop properties-a longtime interest of hers.

"All in all there's no greater reward than working for yourself or working for your family's business," adds Michael Chambers. "Even when the times are tough, it's still your times, it's still your stress vs. working for an outsider [where] you can't control your destiny. You can't manage your future the way you can if it's your own family business."


No line to draw

Family roles carry over into the business hierarchy at RDP and Tech, with elder family members playing the part of boss and the younger generations worrying about letting down their parents Those relationships and the constant contact make the line between work and personal life almost nonexistent.

"It's pretty hard to be mother, grandmother and boss," Yost says, "because you have to separate your feelings. You lead by your heart with your family, but you lead with your head in your business. We find it very challenging because they look upon me as mother and grandmother, and then when I put on my boss hat I'm a totally different person."

The younger generations, should they make a mistake, are not only under scrutiny of their boss but also in danger of disappointing their elders. Talk about pressure.

"It would be tough growing up in this world if you were [Hall of Fame quarterback] Bart Starr's son and you wanted to play football," Michael Chambers says, explaining how "without a question" he worries about letting his grandmother down.

He deals with it by communicating openly and honestly with her.

"I am willing to make mistakes as long as she is willing to accept that they were with good intentions," he says. That type of communication is key, but hard to develop, especially in multigenerational family businesses.

"The older generation either lived through the Depression of the '30s or shortly after it through World War II, raised at a time when parents told their children what to do and didn't communicate," Emens says. "It makes it much more difficult to be willing to sit down and talk about these things because it isn't the way they were raised. You need families to get there, and typically the family businesses in third and fourth generations have overcome this lack of communication."

Another challenge: defining the line between work and personal life.

"Basically when I leave here in the evening I try not to even think about this place," says Paul DiPaolo. "Even though it's with you 24 hours a day, seven days a week, you try not to think about it."

Dick DiPaolo, on the other hand, doesn't mind some commingling.

"I don't distinguish so much between home and work and vacation," he says, adding that it doesn't bother him to make phone calls or do company work on a laptop while he's out of the office. "I enjoy being here just as I enjoy being at home, so I don't draw a line between the two."

"It's very difficult not to be consumed by the family business," Davidow says. "It's your life, it's your source of relationships, and it's also your source of income."

To prevent overwhelming anyone, set rules so family members know when they can or cannot discuss the business, and plan some time when family members are not together, Davidow suggests.

Yost says she prefers constant contact because it allows family members to attack a Tech business problem immediately to keep it from festering.

"To me there is nothing as important as a family and strong family relationships and ties," Yost says. "To me that is the ultimate [goal]. To have each member of the family happy and succeeding means more to me than all of the businesses that I own."


Next month: Making operational decisions among three generations.

Monday, 22 July 2002 10:06

Building a better employee

When Jerry Wolf, president and CEO of Delaware's Midwest Acoust-A-Fiber Inc., realized some of his employees needed remedial math and reading classes, he could empathize.

In 1963, when he decided to go to college, he learned he had not taken the necessary classes in high school.

"At age 19, I went back to a ninth-grade algebra class where they moved an extra desk in," he says, adding that later he also had to take high school geometry, trigonometry and chemistry. "I realized the embarrassment of that many, many years ago and didn't want that embarrassment for my employees."

That's why Acoust-A-Fiber's employees received training on-site.

The classes were required because Acoust-A-Fiber was seeking QS-9000 and ISO-9001 certification, a requirement for the industry to show that the Delaware-based thermal and acoustical products company met certain quality standards. To qualify for certification, more than 90 percent of Wolf's employees needed to have acceptable reading, comprehension and math skills. One-third of them didn't.

Wolf credits the human resources department, where his wife, Linda, serves as human-resources manager, for identifying the problem and finding a solution.

When Linda Wolf and her staff prepared to train employees on the quality-control processes, they found that many were having difficulty reading and understanding work instructions. In addition, math errors on labor tickets and incorrect measurements in work tasks created problems for the company, which was focused on quality and prompt service.

That was more than five years ago. Today, more than 90 percent of the company's employees have acceptable skills, which means not only has Acoust-A-Fiber earned its quality certification, but also its workers read work orders more readily and measure materials, parts and gauges correctly.

The learning program has also been expanded in the past few years to include personal and professional-development classes, and Wolf says all of the education has led to a general improvement in the employees' self-confidence levels.

"I associate it with planting an acorn and ending up with an oak tree," he says.


Back to basics

Linda Wolf worked with Delaware Joint Vocational Schools to set up a personalized version of the statewide Adult Basic and Literacy Education program, nicknamed ABLE, for Acoust-A-Fiber employees who displayed deficiencies in reading or math.

First, ABLE instructors evaluated employees to determine their skill levels. Then Linda Wolf worked with ABLE representatives to develop a program for Acoust-A-Fiber's specific needs. Even though the General Educational Development, math and reading classes that resulted were voluntary, she was eventually able to encourage enough employees to participate so that the company could meet its ISO certification mandates.

"The school concept scared most of them to death," Linda Wolf says. After some employees accomplished their goals, however, others were more apt to try.

"It was a slow start, but now it's like one huge snowball," she adds. "Everybody wants to be in these classes."

The ABLE program, which receives federal and state funding, is free to adult learners. Acoust-A-Fiber pays $25 per instructional hour plus one hour of preparation time for each class offered on-site. For example, it costs $1,500 for the company to host a two-hour class held twice a week for 10 weeks, including preparation time. Class size is limited to eight.

Acoust-A-Fiber, which is employee-owned, allows workers to attend courses during business hours without losing any pay.

"It can get hairy sometimes," Linda Wolf says of the scheduling arrangements. Although some production was lost at first, the company has adjusted, and supervisors make sure work is covered while employees attend class.

While those classes were a necessity for the company, the personal and professional-development programs-offered by Columbus consultant Lou Cummins, president of The Achievement Group-had a completely different start.

"My CFO dragged me by the hair," Jerry Wolf says of the first time he attended one of the classes about six years ago, "and my comment was 'Why? I don't have time. Why am I doing this?' After one year of Lou's courses, we made it a corporate policy that all management would go through these courses."

Of Acoust-A-Fiber's 165 employees, at least 75 percent have participated in either the remedial classes or the personal-development courses. In any given week, as many as 30 employees may be attending various classes.

Linda Wolf notes that Acoust-A-Fiber's annual training and development budget is about $100,000. About 75 percent of that goes to the classes. Acoust-A-Fiber also pays for 50 percent of the educational fees and materials for outside job-related training and seminars as well as time off for employees to attend such programs.


Applied knowledge

On the production floor of Midwest Acoust-A-Fiber sits a locked box to which only Linda Wolf has the key.

The "communication box" did not exist until Cummins taught company executives how to solicit constructive input from employees.

"It gets everyone thinking of 'we the team,' not the individual," Jerry Wolf says.

The box is just one example of how Acoust-A-Fiber has changed, he says, as a direct result of the company's emphasis on education.

"We all have a paradigm that we're so busy we can't do something new," he says. "Lou Cummins' courses are to enlighten us that we can have a paradigm shift. A paradigm shift has occurred at Acoust-A-Fiber from the top management down to the person that sweeps the floor."

Cummins teaches eight leadership-development programs at the company, with topics including personal productivity, supervisory management and communication.

"I feel the greatest value that comes out of my programs is people discovering something about themselves," says Cummins, who for 30 years has offered the programs through his company as a franchise of Leadership Management Inc. in Waco, Texas.

Wolf learned, for example, that he was not good at delegating work.

"I was always the individual that thought they had to be involved in all decisions. And Lou's courses teach you that you will effectively increase your management ability through others by mastering delegation," he says.

In another of Cummins' classes, a group of employees came up with the idea of using walkie-talkies to communicate throughout the plant, thus reducing time and inefficiencies.

The development programs cost approximately $1,000 per person for two hours a week during an average of 10 weeks. Acoust-A-Fiber picks up the entire cost for these classes.

Cummins' programs work hand in hand with the remedial classes.

"One blends the other," Jerry Wolf says. "You have to get [employees] past the remedial stage of competence in reading, writing and math and then get them in the comprehensive stage of goal setting and creative management."

He says the classes have enabled the company to retain employees and promote from within, too. In the past five years, eight employees have been promoted from the production floor-at least in part due to the courses-into departments overseeing production, purchasing, accounting, engineering and customer service.

In addition, three employees who completed the remedial classes have gone on to complete two-year degrees in engineering technology, gaining technical skills that Acoust-A-Fiber can use.

The program's success hasn't gone unnoticed by outsiders. This past spring, Acoust-A-Fiber earned a Governor's Workforce Excellence Award, honoring the company for equipping employees to handle changing technology and operations on the job.

"There are two sins," Jerry Wolf says. "One is not to train an employee and to keep them. The other one is to train the employee and lose them."

Monday, 22 July 2002 10:03

Tax relief

Even though tax season is no time for accountants to take a vacation, the Columbus staff at Schneider Downs & Co. Inc. spent a day at the beach last March.

Well, not exactly at the beach, but at a beach-themed party the firm hosted for employees and their families to help break the stress of working 10, 12 or 14 hours, six days a week.

Nearly all of the office's 30 members attended, even though they were swamped with work, says Bill Apple, the shareholder who heads the tax department.

"We usually can twist people's arms to get them out," he says. "We want them to be conscientious about their work, but they need to have a good balance there."

Also during tax season, Schneider Downs tries to keep Fridays fun by providing bagels or pizza-or hosting an ugly tie contest. In addition, staff members can nominate each other for awards to keep motivation high. At the end of tax season, an April 15 blowout awaits at a local party house with hors d'oeuvres, beer, wine-and taxis for rides home.

Such stress breaks are carried beyond tax season, too. Apple occasionally provides pizza for his staff during a late night of work.

"I think you just have to realize that you need to look for a balance," Apple says, "and just do little things to try to make them feel like they're being appreciated. It doesn't always have to be something big that you do for everyone."

Sunday, 21 July 2002 20:00

Checks and balances

During the first two years of operating Red Maple Veterinary Clinic in East Columbus, Dr. Marian Burns juggled business and medical duties.

Her time was taxed, she didn't know what laws pertained to new business owners, and her accounting system consisted of pages in legal pads.

A friend advised her to seek help from Sue Schnitz, a certified public accountant who runs Perfect Balance, a Bexley business.

For about $200 a month, Schnitz handles Burns' bill paying, prepares materials for her tax accountant, makes year-to-year comparisons and helps Burns with payroll and business development issues.

Schnitz has found that business owners whose expertise lies in their field rather than in running a business often keep inaccurate records and don't reconcile their accounts. She nags them to get their bills to her promptly so she can manage their billing cycles, increase cash flow and update them monthly.

Burns says the gross revenues of her practice have grown more than 200 percent since she started working with Schnitz in 1991.

"The time that I do put into the business," Burns says, "is what I can do to move the practice forward."

Monday, 22 July 2002 10:02

Trial by fire

At age 59, Art Lassa was in a position he'd never before been in-he was out of work.

He'd risen through the ranks in management at RCA Service Co. and was later hired by an independent dealer, Tipton Appliance Co. in St. Louis, to set up a service department.

After 14 years there, he and his wife left four grown children, away at college, for Columbus, where Lassa would set up an appliance repair service-contract program for Sun Television & Appliances. He had managed the program for nearly nine years-even hiring a staff to help-when, during a restructuring, Sun executives outsourced his department. He lost his job on his birthday in 1996.

What developed, out of necessity, was the launch of a business-and a crash course in entrepreneurship.

Almost a year and a half later, Lassa's Serv Pro Marketing has its own office space in East Columbus, eight employees, $750,000 in service contract sales-and double-digit profits.

Still, with just one client, Lassa knows it's not necessarily smooth sailing ahead.


Ready or not

Lassa's interest in entrepreneurship started as early as sixth grade, when he and a buddy bought 16 mm films and charged admission every Friday night for the Frank Buck adventure flicks, complete with popcorn, Kool-Aid and music via an old Victrola.

"We even took it one step further and offered reserved seats for the guys who wanted to sit next to their girlfriends," he says.

Then there was his high school home TV repair shop, and the time he put acoustical tile, rugs and a couch in a van so he could offer a carpool service. He also used his own stereo system to provide music for high school parties and events.

At age 59, however, Lassa thought he was beyond those enterprising undertakings.

"I wasn't looking to start my own company. I wanted to do what I did at Sun," he says, referring to his consulting relationship where he sold aftermarket contracts to customers whose warranties or previous service contracts had expired.

He was collecting unemployment-from himself, ironically, since, to gain tax advantages and liability protection, he had incorporated as Arthur G. Lassa Inc. a year before he lost his job at Sun.

When he sent out direct mail pieces to try to find an arrangement similar to the one he had at Sun, however, he found out that was not what the market wanted.

"I received a number of responses, but all more or less said, 'We'd like for you to do our marketing, but we don't want to do it in-house. If you had your own company, we'd consider it,'" Lassa says.

So he answered the call and started a trial run with his first client, Boscov's Department Stores, a privately held retail company based in Reading, Pa.

"I called people who had lost their jobs at Sun," he says, "and working out of my house and their houses, we called Boscov's customers to see what we could do to generate service customers."

The trial was successful. Lassa hired those six former Sun employees to work the account, which included stores in Maryland, Delaware, New Jersey, New York and Pennsylvania.

Doug Brice, director of service at Boscov's, says his business grew 46 percent in 1997, the first year he gave Lassa the contract. By the fall of 1998, it had increased nearly another 90 percent.

In addition, Brice says he knows Lassa's employees are treating clients right, because Boscov's customers don't complain or ask him why they're getting calls.

"When we don't get those issues coming back to us, we know the people talking to our customers are doing a good job and being very thorough," Brice says.


Learning on the fly

Although he found success with one client, Lassa quickly realized that to continue his business, he'd need some outside expertise.

He had taken an $18,000 loan from a life insurance policy to buy a computer system and office equipment and pay the first couple months' rent for office space. But within a month, he had accounts receivable problems.

"The normal response time in retail is 30 to 60 days, and I didn't realize that," he says.

Although he had some money set aside for unexpected problems, Lassa found it wasn't enough. He used his entire $4,000 emergency fund, borrowed another $5,000, and laid off three people for a week. Then he talked to Boscov's about the problem, and executives agreed to help.

"They realize we're a small company and we don't have the deep pockets that the big guys do, and they were willing to make our bills priority. They pay within two to three weeks. In that industry, that's not the norm," he says.

Lassa's also learned to focus on his strength-marketing the contracts-and entrust other parts of his business to experts. He hired a computer consultant to write software programs, an accounting firm to handle payroll and tax reports, his former secretary at Sun to be his office manager, and another employee to supervise the telemarketers.

"That frees me up to make the business grow and find new clients," he says.

That, in fact, is his most pressing task at hand.


Seeking a comfort level

Lassa's counting on what he sees as a niche in the business to put his company on solid footing.

He markets appliance repair contracts to customers of small companies that provide their own service. Some of his competitors, in contrast, are national companies such as VAC Service Corp. in Middletown, N.Y., and Independent Dealer Services in St. Louis who provide the whole ball of wax, including the servicing.

To find his own client base, he sent direct mail pieces to the top 100 television and appliance retailers across the country. He's received about a dozen inquiries-but only the one customer.

"That's scary," Lassa says of putting all his eggs in Boscov's basket. "It would make me feel much more relaxed to have two or three clients of that size."

He knows he'd have "a mad scramble" if he lost Boscov's, since that's his only customer. And it's not just his company and his employees at risk; he subleases space to Westerville's Truform Graphics Inc. for its direct mail business.

Lassa has done some test marketing for a company in North Carolina he declines to name, as well as for Philips Magnavox, but he's still awaiting their responses.

Lassa has also attracted interest from an unexpected prospect: Sun TV, which is again in the midst of a major reorganization.

Meanwhile, he's planning phone follow-ups to his top prospect list and considering additional mailings to companies beyond the 100 he already targeted.

Once Serv Pro generates contract sales of $2 million to $3 million-more than three times his company's current level-he'll look at jumping other hurdles.

For example, he's not yet able to offer employee benefits. To compensate, he's incorporated a profit sharing program for telemarketers.

For now, he'll be content if he can net one or two more clients and grow his company to 20 employees.

"I really don't want to get much larger than that," he says. "And three, four, five years from now, depending on how the company is going, I most likely would relocate it back to St. Louis, so I could be with family and grandkids. But not now."

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