Joan Wall

Tuesday, 23 October 2001 10:49

Picture the profit

Perhaps like many business owners, Jeff Burt's biggest challenge in the six years since he founded Eclipse Studios has been keeping up with technology.

It's especially important to Burt, however, considering he started the commercial photography studio with a distinct vision of having a cutting edge reputation.

Indeed, technology is what Burt credits for the Northwest Columbus company's fast growth, averaging more than 40 percent annually and expecting to surpass the $1 million mark this year. It hasn't been without cost: Burt has spent as much as 50 percent of his annual budget on technology advances.

"Whenever I buy anything with new technology or new equipment," he says, "I have to be sure it's something I can turn a profit on within the first year or two. If not, it's going to become obsolete."

That's a change he's seen since the mid-'80s.

"Photography used to be, buy cameras and lights and you're done for 20 years," he says. "Today, you have to invest and invest and invest."

So far, he says, he's been lucky. He's made some purchases that haven't turned the profit he expected, but the equipment still was of use so he considers it a break-even investment.

One of his most successful investments, on the other hand, was digital backs -- attachments to the camera that allow digital photography instead of film processing.

"The back alone is almost $60,000," he says.

However, last year he landed a job because of the digital capabilities and took in nearly $30,000 for that project alone.

"When we purchased (the backs), it took us to a completely different level because it enabled us to get the client the same quality of photograph at a quicker rate and saved them a lot of money on developing," Burt says.

Here's how he keeps up with the technology that runs his business.

  • Start with the homework.

    Burt visits many industry trade shows and subscribes to trade magazines.

    "Trade shows are the biggest because you can see it working in action," he says. "As much as we keep purchasing, we take our time with it. We don't just fly into it real fast."

    He also asks clients what they want and tries to find equipment to fill those needs.

  • Know your budget.

    "I get my wish list together -- all the things I want to have," he says. "Then I do a reality check."

    He decides what will be the most profitable right away for the company, then decides where he wants his sales-to-expenses ratio to be for the year.

    "Some years we make the conscious decision this will be a growth year," he says. "When we do that, sometimes the profit margin drops a little bit, but hopefully the next year it's going to come back to us."

  • Look at all the options.

    Buying new technology isn't always the answer.

    In addition to a purchase, Burt also considers a continual lease or a lease-to-purchase option for items such as printers.

    "I do it with a dollar buyout so it's basically almost like a loan. I can upgrade a continual lease or I can purchase it for a dollar amount," he says.

    Because digital photography is changing so much from year to year, he does a 10 percent buyout so he can upgrade the lease to get new equipment.

    "Instead of spending $60,000 in that year's budget, you're only spending so much per month on that equipment," he says.

    On the other hand, he typically purchases computers.

    "A lot of computers I won't lease because, although they are expensive, if I lease I'm going to pay a lot more over the years than what they're worth," he says.

  • Take a test drive.

    Burt also practices the try it before you buy it philosophy -- even if someone else is trying it for him.

    Before he bought his first large-format plotter -- an ink-jet printer that can make prints up to 59 inches wide and any length desired -- he started telling clients he could take such photographs for trade shows displays or banners. Then he farmed out the work to another company that has that capability.

    "I saw we were getting sales in this even though we were not printing it," he says. "We would make more profit doing it in-house and saved clients money because we didn't have to do mark-ups, and they got a better quality because we controlled it."

  • Don't forget the basics.

    Sure, you've invested in the cutting edge. But can your employees use it?

    "When we buy the stuff, we get training right away as part of the deal," he says.

    Plus, he takes some of his eight employees to trade shows with him.

    In the end, though, he has to make sure his employees have the basic skills for the job, not just the technological savvy.

    Digital photography, for example, allows a photographer to take certain shortcuts -- something he doesn't want his employees doing.

    "You can get people fresh out of school who learned strictly digital. Anybody we hire I want to have the traditional background," he says. "If they have both, great. If not, we train them on the digital side."

Overall, Burt advises, look at your industry and how the technology is changing.

"I would say research heavily," he says. "But at the same time, you can't be afraid of doing it. Somebody else is going to get the business. When I say research, research quickly." How to reach: Jeff Burt, Eclipse Studios, 457-2025 or www.eclipse-studio.com

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

Tuesday, 23 October 2001 10:49

Making dollars out of sense

Her income had been cut by 80 percent.

Yet her expenses remained largely unchanged.

Suddenly single after her divorce in 1988, Angie Hollerich knew she had to make ends meet -- without sacrificing the quality of life for her children, ages 10 and 12.

She found a two-bedroom condominium for $485 a month and decided to take it, despite the fact that she'd already figured she could only afford $395. She had to; she and her ex-husband had agreed neither would move from the Westerville area, where their children had been attending school. Somehow, she'd make the rent payments.

But considering that her $17,500 salary as a YMCA aerobics instructor was just a fraction of the income she had grown accustomed to during her marriage, she was in a predicament.

"After I signed the lease, I went home and cried and thought there was no way I could afford it," she says.

She allotted the bedrooms to her children, and she set up residency in the family room, using laundry baskets as a makeshift dresser for three years.

"Sometimes I was pretty scared," she remembers. "I always wondered how I got my bills paid and didn't have bad credit."

She's come a long way since those days, having become -- of all things -- an investment adviser managing more than $30 million for clients. In fact, she was so successful in the investment arena that after 10 years, she sold her asset management business for a six-figure amount in June 2000 to embark full time upon a speaking and writing career. She's calling her new company Brass Ring Productions Ltd.

Here's how she made the turnaround.

Finding security

Hollerich's first move was to get a handle on her money situation.

"I never balanced the checkbook," she says of her money management during her marriage. "I just always got a balance when I went to the bank."

After the divorce, however, the cushion that had always been in the bank account was gone; she had to put herself on a budget -- and learn to manage her finances -- quickly.

"I was scared, but I always thought, 'That's not going to get me anywhere,'" Hollerich says. "I felt I had the ability to do anything I wanted to do as long as I worked at it."

"A lot of my motivation was seeing how other people struggled, and I didn't want to have to rely on my family. I wanted to take responsibility for myself," she says.

She sought the help of financial planner Tom Harrington, who she knew through her work at the Y.

"Tom educated me and told me why it was important to put money away: You should put money away because you're not going to want to work forever," she says.

Therefore, even though money was extremely tight at the time, she used 40 percent of her cash settlement from the divorce to pay off credit card debt -- and invested the rest. She deposited some in a money market account for emergencies, bought some life insurance, started an IRA to decrease her taxes and invested in a mutual fund.

She wanted, as Harrington had explained, to have her money work for her.

Meanwhile, she scrimped.

She was open with her children about the lack of money. They would sit down with her to make choices about whether they wanted, for example, to eat macaroni and cheese for a while to have money for other things. Already they knew the reality of the sacrifice; they had to leave their Catholic schools to attend public school because the tuition costs were simply beyond their new budget.

"There would be some times when I'd do my budgeting and I'd have $129 and I hadn't done my food shopping for the month," Hollerich says.

But somehow, the money always stretched to cover the necessities.

Hollerich says her credit report never showed a late payment. She also managed to teach her children the same skills. They saved 50 percent of whatever money they made after they started working at about age 14; both bought their own first cars.

Realizing she had a knack for sales -- and that living within her means would be easier if the dollar figure on the top line of her budget were a bit larger -- Hollerich took a job selling Tradecard, which boosted her pay by more than 40 percent.

Harrington, however, recognized Hollerich's skills could take her even further and that her contacts from the YMCA would serve her well; he advised her to get into the investment business. She started her own asset management company in 1990, becoming an independent contractor with Harrington Asset Management.

"I went from the Y at $17,500, to $25,000 selling Tradecard, to $10,000 my first year in this business," she says, describing the ups and downs of her salaries. "But I stuck with it. I'm very bullheaded."

That same year, she moved into a new home. Even though the timing was bad, she didn't want to miss the opportunity. So she bit the bullet and borrowed $5,000 from her parents as a down payment and leased the house with an option to buy it.

"I didn't like the idea of having to borrow money from my parents, but it was the catch-22," she says.

The belt tightening she learned during her first three years after the divorce served her well. She went to cosmetic counters to look for free make-up samples instead of buying her own supply. She always went to the store with coupons -- and a list that she stuck to so she wouldn't override her budget. Even now, she continues the habit she developed of shopping at clearance racks and thrift stores.

"It's amazing what you can do if you have to," she says. "We have so much stuff in our lives that we forget it's OK if you don't wear mascara."

Keeping the safety net

In 1994, Hollerich remarried.

"There were two reasons we married. The first motivation was we were in love. The second was his pension and his health insurance," she says, noting her husband takes lightly her jokes that she married him for money.

In reality, however, her remarriage did improve her finances, as her husband paid half the rent, electric, food and gas bills. They kept their money separate, considering her business and her obligation to her children.

Meanwhile, Hollerich's business -- and therefore her income -- continued to grow every year; in 10 years, it increased from $10,000 to the six-figure range.

Still, her experience made her cautious. She kept her emergency fund and she continued to have money taken out of her paycheck every month to invest toward retirement. She started a simplified employee pension plan, purchased additional life insurance because her liabilities had increased as a business owner, and opened an annuity for tax-deferred growth.

She also made moves to enhance her expertise, obtaining an insurance license and more accreditations in the financial realm.

Because of her experience, Hollerich often has been called upon to speak about financial topics to businesses and organizations including Columbia Gas, Cardinal Health, the City of Columbus and the Center for New Directions.

In 1995, she wrote her first book, "Grab the Brass Ring of Financial Security," so she could help people who couldn't afford to pay financial planners. By March 2000, she'd published her second book, "The Weight & Wealth Factors," to show the parallels between weight management and financial fitness.

She enjoyed the speaking engagements and book promotions so much, in fact, that she decided to make them her full-time job.

"I could've -- unethically -- stayed in the (investment) business and spent less and less time on my clients' portfolios," she says. "I felt I wasn't doing them justice."

When she sold the business to her associates, her money management came into play again. She arranged to have the money paid to her over three years so she could use it until her speaking career got off the ground.

Essentially, she's starting over with very little income, but knowing how to take control of her finances leaves her without the fears she had after her divorce.

"I'm going to be successful again," Hollerich says. "I'm building the foundation now for a business I can take into retirement and work as often as I want." How to reach: Angie Hollerich, Brass Ring Productions Ltd., 337-2204 or www.brassringpro.com

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

Tuesday, 23 October 2001 10:48

Right to your door

Frank Ciotola, owner of Da Vinci Ristorante in Columbus, has a message for his peers.

"I always tell other small business owners that we manage so many aspects of our business like payroll or accounts payable, and managing the legislative issues and taking time to do that is every bit as important as managing those other aspects of your business," he says. "I feel government is definitely in our business, and if we don't stay involved and tuned in to what's going on, it inevitably affects our bottom line."

The National Federation of Independent Business/Ohio is making an effort to help by coordinating Area Action Councils -- groups of small business owners who will meet regularly to learn more about legislative and legal issues and to contact legislators about ongoing issues.

"Essentially, we want to educate our members the best we can about small business issues. They're limited because they can't give up a whole day to come here," says Chad Wilson, the local NFIB's new assistant state director for member activism.

The whole idea, he says, is to educate the organization's 36,000 members and encourage them to be more active in promoting a small business agenda.

Wilson and state director Roger Geiger are traveling throughout Ohio to set up the councils. Members are expected to invest their time and money in the group; they pay $250 through NFIB membership dues, political fund-raising contributions or membership development.

Ciotola is chair of the Columbus Area Action Council, which in April discussed concerns such as tax issues and Ohio Supreme Court rulings.

Andy Thompson, chair of the Marietta Area Action Council and owner of Bird Watchers Digest, says since small businesses typically don't have a legal department, it's hard to understand legal and legislative actions.

"Sometimes we feel like, on the legislative and certainly on the legal front, small business owners have two and maybe three hands tied around their backs," Thompson says. "Through the effective efforts of NFIB at both the state and federal level, we can see to it that a positive environment -- or at least a tolerable environment -- exists for small businesses who are, in fact, the engine for job growth for the entire country."

How to reach: Chad Wilson, NFIB/Ohio, (614) 221-4107; Frank Ciotola, owner of Da Vinci Ristorante, (614) 451-5147; Andy Thompson, Bird Watchers Digest, (740) 373-5285

Cut your online time

If you've tried surfing the Web to find out about state taxes, licensing or other business-related information, you know you practically have to be an expert in government to stumble upon what you needed.

Now, the state's making it easier with a new front page, www.ohio.gov. Instead of having to know exactly which state agency has the answers you need, you can start at www.ohio.gov and search by topic.

Choose the business link, then drill down into different categories: doing business with the state, e-commerce, employer laws and regulations, licensing and permits, starting a business, and taxes and fees. In a few clicks, you'll find the information you need and a connection with the appropriate state agency. Joan Slattery Wall (jwall@sbnnet.com) is an associate editor and statehouse correspondent for SBN Magazine.

Tuesday, 23 October 2001 10:48

Michael Dell in person

The story of Michael Dell's decision to drop out of college to start a business that has grown into a worldwide industry leader has fascinated many, but the chairman and CEO of Dell Computer Corp. readily admits his company's ascent to sales of $32 billion wasn't entirely smooth.

And he's not just talking about having to cut approximately 10 percent of his work force to keep operating expenses in line during the recent tech slowdown.

There was the time, for example, when Dell ventured into the retail channel instead of selling direct to consumers.

"That turned out to be a pretty big mistake," he says.

Another mistake: growing too fast. In one year, company revenue skyrocketed from $890 million to $2.1 billion.

"It's said that when you reach $1 billion in sales, everything sort of falls apart, but we just kept on going and went to $2 billion," he says.

The fast growth taught him the value of planning, the importance of growing a team and the necessity of saying "no" sometimes.

"One of the most important things we learned was (that) to try to do everything, to try to be in all businesses at all times, was really a mistake," he says.

Dell shared these lessons with SBN Magazine, the business community and MBA students at The Ohio State University's Max M. Fisher College of Business during a recent visit to Columbus. Here's more of what he said during and after "Connectivity 2001: The TechPartners Forum for Ohio Leaders."

Q: What were you involved in during your youth that influenced the start of your career?

A. Dell's path of entrepreneurship started long before he used $1,000 to begin building his direct marketing computer company in 1984.

"My first business -- if you call it that -- was a stamp auction when I was 12 years old," he says, adding that he made "a couple thousand dollars" from the venture.

His philosophy behind direct marketing is often retold by the story of another experience he had -- this one as a 16-year-old.

He was selling newspaper subscriptions by telephone and figured out that the people who were most likely to buy were those who had recently married or moved. He got lists of those people through marriage license filings and companies that track people who have just obtained mortgages.

"I hired a bunch of my buddies from high school and went to a 16-county area and sold several thousand newspaper subscriptions and made $18,000 in high school -- from my Saturday job," he says.

Although he spent a year at the University of Texas working toward a biology degree -- it was an expectation of his family that he'd enter a medical career -- he decided instead he was really interested in computers.

Q: What was the most important medium for getting your name and product concept into the market so quickly when your company first started?

A: "We were basically appealing to enthusiasts and what I'll call 'lunatic fringe users,'" Dell says, referring to the newness of computers when he founded the company 17 years ago.

For that reason, he advertised in trade magazines that appealed to those types of people.

He also made efforts to win awards from those magazines in hopes that having those awards would create an "expert mentality" and give people more reason to refer others to Dell.

"Capturing the mind share of the enthusiast was key," he says. "We also went out of our way to be somewhat bold and sometimes even obnoxious in our advertising."

He talks about ads Dell ran comparing its product and service to competitors such as Compaq, using such tactics as "laptop vs. lapdog."

"It made the phones ring," he says. "Compaq even sued us, which was a stupid thing to do because it brought more attention to our ads and to our company. Word of mouth was a huge, huge impact."

Q: Why did you decide to sell directly to customers instead of through retail outlets?

A: "When the business was conceived, I had seen an increase in inefficiencies in the dealer channel," Dell says. As a customer himself, he saw the price markups and the slowness of the distribution chain.

Dell Computers, on the other hand, had in its latest quarter less than $350 million in inventory -- just five days' worth, Dell says.

"That's good for a 5 to 10 percent cost advantage right off the top," he says regarding storage.

"At our factory, you don't see any raw material and you don't see any finished goods. You only see the work in progress," he says. "Production time is a matter of hours."

Q: What is your secret to sustaining the long-term, incredible growth of Dell Computer?

A: "In any business, you've got to find something valuable and unique that delivers a product that you can be uniquely good at," he says. "Then communicate the value of that. We went to great lengths to explain what we're doing and why it's valuable."

Dell also attributes the success of his company to "centering on a winning strategy" by following a business model of efficiency, service, low pricing and productivity.

"We've strayed from that from time to time," he says, but each time it came back to bite the company.

Q: Do you foresee problems with people copying your distribution process?

A: Some competitors, such as Compaq Direct, IBM Direct and Apple Direct, already have been copying Dell's process for the better part of 10 years, he says, but they haven't succeeded in the same way.

"The difficulty is that if you look inside these companies, they tend to not really understand what we do and they treat it as a niche, when really it's an entire market," he says.

One measure of efficiency, he explains, is the cash conversion cycle, or the number of days between your purchase of raw materials and the time you receive payment for your finished product.

"Last year our cash conversion cycle was negative 24 days," Dell says smugly. "Put that in your spreadsheet."

Q: Why hasn't Dell entered the handheld market?

A: Dell is applying the lesson of saying "no" in this case.

"First of all, it's not a particularly huge market," he says. Second, he says, the market hasn't settled down enough among the current operating systems to show a clear winner. He'll stay clear until it's resolved.

"If it was, I could guarantee Dell would definitely be in that business. We like to enter markets where we can leverage our business model," he says, referring on Dell's reliance on industry standards.

"When a product became an industry standard, we could ride the commoditization wave better than any company. Dell goes after profit pools -- not revenue pools or product pools. We wait until there's a profit opportunity, then we show up."

Q: How difficult was it for you to go online, and how did you brand it?

A: The Internet, Dell says, was just another method of selling directly to the customer.

"For a brief period, 60 to 90 days, the sales force said, 'This is going to take away jobs.' But then they saw their new quotas and realized there was no way they could reach those quotas without the Internet," he says.

"We said, 'We want Dell.com to be at the center of everything -- whenever you see Dell, you see Dell.com.' We wanted that to be the first point of contact for any customer to go online."

In Japan, for example, Dell launched products that were available only through Internet purchase for a brief period.

Dell says the Internet's arrival turbocharged his company's growth beginning in 1995.

"We were able to use it to significantly enhance communication with customers," he says, adding that 90 percent of the company's interaction with suppliers is done electronically, resulting in a return on invested capital that has increased from 30 percent to more than 300 percent.

Many businesses have built-in costs that could be reduced by the use of e-commerce, he adds.

"The first thing you have to do is look at the cost structure of the business and see how it can be changed," he says. "Are there areas where e-business can make a difference? E-business is not one-size-fits-all."

Q: What are your thoughts on the current economic and technology industry slowdown?

A: Dell describes changes in the economy, particularly in the technology realm, as waves that undulate within boundaries rather than hills and valleys that have no limits.

"Remember, technology has been the most important fulcrum in the economy that we've ever seen," he points out.

In the technology industry, the slump is simply a weeding out of dot-coms that were overcapitalized from the start, he says.

"It would be a bad time to underestimate the long-term potential for any technology," he notes.

In fact, he expects the next big buying cycle to begin around the middle of next year, giving the tech industry a welcome boost.

Computer buying last peaked in the United States in the second quarter of 1999, he says, at a 36 percent growth rate.

"Two years isn't when you replace something; three years is when you replace something," he says. "We believe next year around the second quarter -- it will build up and not be all in one quarter -- that there will be a pretty active replacement cycle."

In addition, new technology coming out, such as the Pentium 4, wireless networking and broadband will improve industry growth, he says.

Q: What is your vision of the computer industry in the next few years?

A: "The industry has a history of companies that cooperate together but compete together," he says. "I don't see that changing. The trend seems to be deverticalization."

He also forecasts more machine-to-machine communication, such as Web sites that accept electronic payment. If two small companies want to link together, it has been generally hard to do and too expensive, he says, but he predicts that will begin to improve.

"As it increases, it will bring the whole system up," he says.

Q: What inspires you now that you've built up a successful company?

A: "My kids."

Q: How has Dell's relationship with the University of Texas and other universities developed over time?

A: "Early on it was quite beneficial that I went to a larger university because if I didn't show up for class, nobody would notice," he joked.

"It became more important as we started growing," he says, particularly in the early '90s, when Dell Computer started recruiting more of its talent directly from universities.

"The old tactic of stealing them from other companies became somewhat impractical."

Q: What criteria do you use in Dell Ventures when you're deciding whether to invest in various companies?

A: Dell Ventures makes investments in areas that could specifically benefit Dell Computer's future. Wireless, security, storage and e-commerce companies, for example, are good targets, he says. As any investment company does, Dell Ventures looks for companies with good business models and good leadership. It does not tend to do early stage investing.

When asked what makes a company attractive to Dell Ventures, his response is simple: "Customers and profits."

Q: What is your strategy to promote customer loyalty?

A: "Loyalty is a big focus for us," Dell says. "At the center of it, we have what we call the customer experience."

That means Dell has to support customers all the way through their computer ownership, from the purchase and use to the technical support and disposal, he explains.

"Ultimately, the real measure is: Did that customer buy it from you the next time?" he says. "If they're happy but didn't buy it from you (the next time), it's really a mess. That's a satisfied customer, not a loyal customer." How to reach: Dell Computer Corp., T.R. Reid, senior manager of public relations, (512) 778-7977 or tr_reid@dell.com; TechPartners, (614) 292-8258 or techpartners.osu.edu/tp_home.html

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

Tuesday, 23 October 2001 10:47

Reference desk

Colleges & Universities

Ashland University offers a master of business administration degree in executive management through a two-year program designed for middle- and top-management individuals, who are generally company sponsored. Classes are offered at a Columbus location. How to reach: www.ashland.edu/colleges/business/mba/mbahome.html or (888) 622-2527

Capital University's Graduate School of Administration delivers an MBA program for managers and other professionals and prepares graduates to effectively manage the financial, human, informational, physical and technological resources of the organization. How to reach: www.capital.edu/acad/mba/index.html or 236-6679

Central Michigan University's master of science in administration degree is geared toward managers, administrators and supervisors. Concentrations offered in Columbus are in general, public, health services, human resources and software engineering administration, as well as information resource management. How to reach: www.cel.cmich.edu/programs/degrees.html or 235-1645

Columbus State Community College created a Business and Industry Training Department to assist local businesses with on-site or on-campus consulting services and training programs. Management development programs include accounting and finance, coaching and counseling, customer service and ISO standards. The department also will design programs specifically for you and your business. How to reach: www.cscc.edu/docs/workforce/bandi.htm or 287-5000

Franklin University's Center for Organizational and Human Development works with organizations to design and deliver programs, seminars, workshops and courses that meet various needs. Topic areas include supervisory development, team building, Myers-Briggs type indicator, managing and resolving conflict, competing in a global market, marketing and sales enhancement and human resource management.

How to reach: www.franklin.edu/busrelations/buscenterorg.html or 341-6263

Keller Graduate School of Management, a division of DeVry Inc., offers master's degree programs in business administration and accounting and financial, human resource, information systems, project and telecommunications management, with an emphasis on teaching and service to working adults. How to reach:

www.keller.edu or 251-6969

The Ohio State University Fisher College of Business Executive Education Programs highlight areas such as accounting and finance, logistics and distribution, marketing and sales, family business and e-business, as well as customized programs for companies and trade associations. The college also offers an MBA program designed specifically for executives, as well as the Center for Excellence in Manufacturing Management, which features professional development workshops and conferences specifically for that industry. How to reach: fisher.osu.edu/exec or 292-9300

Ohio University's Executive MBA program, offered at the Lancaster campus, is designed for individuals with a minimum of seven years of professional or managerial experience. The program is structured so executives can complete academic requirements within two years while continuing to handle their professional responsibilities full time. Also at the Lancaster campus, the Center for Adult Learning features university credit, career services, certificate and proficiency and independent study programs, as well as business and industry training -- custom-designed courses in quality enhancement, technical training, human resources and computer applications. How to reach: Executive MBA: www.cob.ohiou.edu/~emba or (740) 593-2028; Center for Adult Learning: cougar.lancaster.ohiou.edu/ce or (740) 654-6711, ext. 290

Education & Training Programs

The Industry & Technology Council and Ohio State's Fisher College of Business have created the Executive Interchange Series, a leadership trend series tailored exclusively to top-level executives. The next half-day sessions, which begin in September, cover topics including "Gaining and Sustaining Competitive Advantage," "Corporate Financial Analysis" and "New Products and New Ideas in Finance." How to reach: www.ind-tech.org/interchange.html; or 225-6907

The Development Institute, offered by Leadership Development Group, features programs for employees, such as "Dealing with Burnout" and "Fostering Innovation and Creativity;" for supervisors and managers, including "Enhancing Supervisory Skills" and "Quality Management Systems;" and for senior management, such as "Mergers and Acquisitions" and "Managing the Media." How to reach: 410-5323

Lee Esposito Associates presents a Publicity Coaching Boot Camp for executives who want to increase their company's visibility and improve their media relations track record. This one- or two-day program is designed for corporate communications professionals who have limited experience working with reporters and for executives who have been given the job of generating positive news stories about their organization. How to reach: www.newsangle.com or 421-2701

The Ohio Foundation for Entrepreneurial Education is a nonprofit entity featuring courses for people who want to start a business and entrepreneurs who need to plan for growth within their companies. A coalition of successful local entrepreneurs and entrepreneurial service providers serve as members of the foundation's board of trustees and financial supporters and share their expertise in the classroom.

How to reach: www.ofee.org or 487-3675

The Columbus AIDS Task Force this year began offering a new training program, The Positive Workplace: Managing HIV at Work, to demonstrate how to maintain productivity and develop a nondiscriminatory workplace. How to reach: 299-2437, ext. 101

RHS Solutions, a risk management consulting firm in Dublin, this year introduced the Online Education Center for Internet-based training in occupational safety and health, environmental compliance, transportation safety, emergency response and management and human resources. How to reach: www.rhseducation.com or 210-2699

The ePolicy Institute, founded by Nancy Flynn, president of Nancy Flynn Public Relations, is an online source of books, articles, kits and training tools to help employers limit risks associated with the use of e-mail, the Internet and software in their companies. How to reach: www.epolicyinstitute.com or 451-3200

New Albany-based Tashjian & Co. presents "Developing Executive Women," a seminar to help high-potential women deal with a changing and complex corporate environment. How to reach: www.learningoutcomes.com or 939-9679

Through Reputation Management Associates, Bill Patterson, who has nearly 40 years experience as a broadcast journalist, trainer and public speaker, offers workshops including Presentation Skills, Crisis Management, Media Awareness Training, Reporting to Analysts and Writing with Power. How to reach: www.media-relations.com or 486-5000

The Family Business Center of Central Ohio, a membership organization bringing together those who own, operate and serve family businesses in Central Ohio, offers programs with nationally known speakers, panel discussions and opportunities for small groups of members to share experiences. How to reach:

www.familybusinesscenter.com or 334-8916

Languages Unlimited provides foreign language and cultural training for companies that conduct business internationally and employ non-English speaking employees. How to reach: 228-3336

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

Tuesday, 23 October 2001 10:47

Who pays the bill?

The so-called deep pockets of business should be more fairly accessed under a tort reform proposal in Ohio's Legislature.

Already successful on his own side of the Statehouse, Sen. Bruce Johnson, R-Westerville, now must convince the House that Ohio's joint and several liability concept is an injustice.

Johnson wants to change civil case procedure that under current law permits defendants to be held liable for the entire judgment in a tort action even though they may hold only a small share of the fault for someone's injury, death or loss of property.

The system, he says, results in businesses being unfairly brought into lawsuits simply because they're assumed to have the money to pay when other defendants don't.

"The deep pockets are always brought in," says Johnson, an attorney. "They're always categorized as doing something wrong no matter how ridiculous it might be."

Johnson's proposal, S.B. 120, addresses two types of damages: economic, which would include measurable losses such as medical care or loss of wages, and noneconomic, such as pain and suffering.

Juries would be required to determine a percentage of fault for all damages for each responsible party -- even those not named in the lawsuit or those who settled before trial.

"From my perspective, business owners want to be treated fairly, and the vast majority of them are willing to be held responsible for their own actions," Johnson says. "This bill will improve the justice system by holding defendants responsible for their own actions but not necessarily responsible for everybody else's actions."

For noneconomic damages, joint and several liability would be abolished; defendants would only have to pay their responsible share. To illustrate, Johnson imagines a lawsuit in which a drunk driver crossed the center line and struck a van head-on. Because the latch on the van doors was defective, passengers fell out and were injured.

The drunk driver and the van manufacturers, then, would share the blame for the injured parties and, thus, share responsibility for paying the damages. In contrast, under current law, both the drunk driver and the manufacturer could each be held liable for the total damages.

In the case of economic damages, joint and several liability would be maintained, but only for defendants found more than 50 percent responsible. A lower percent liability would be assigned a proportionate share of the damages.

"It's a compromise, really," says Johnson, who has the support of organizations such as the Ohio Chamber of Commerce and the Ohio State Medical Association.

"The benefit we see is that basically defendants who are pulled into these lawsuits are going to only have to pay their fair share of what they're liable for," says Tony Fiore, the Ohio Chamber's director of labor and human resources policy. "Basically, when any defendant is pulled into a lawsuit, the way the current law operates now, you could be 5, 10, 15 percent liable and have to pay the full amount. That could wipe out a small business, is the bottom line."

Still, the bill has drawn opposition from Ohio Citizen Action and the Ohio Academy of Trial Lawyers.

"First, in many cases it will mean that some Ohioans will not be compensated for their out-of-pocket expenses for medical bills and lost wages even when they are completely innocent," says Richard Mason, executive director of the Ohio Academy of Trial Lawyers.

This is because some defendants will not be able to pay for their share of the liability.

"Second, there's absolutely no reason for the state of Ohio to make this change," Mason adds. "This bill does not solve a crisis. It simply takes money out of the pockets of needy victims and gives it primarily to greedy corporations."

He says the purpose of the justice system is twofold: to discourage negligent behavior and to make the victim whole.

"This bill definitely does not make the victim whole," he says.

S.B. 120 must go through approval in a House committee before it receives a vote on the House floor. To follow the bill's status, visit the 124th General Assembly's Web site at www.legislature.state.oh.us and enter the bill number in the space provided. How to reach: Sen. Bruce Johnson, (614) 466-8064; Tony Fiore, Ohio Chamber of Commerce, (614) 228-4201 or afiore@ohiochamber.com; Richard Mason, Ohio Academy of Trial Lawyers, (614) 341-6800

Joan Slattery Wall (jwall@sbnnet.com) is an associate editor and statehouse correspondent for SBN Magazine.

Tuesday, 23 October 2001 10:47

His bread and butter

When Kevin Johnson had a job in a grocery store in high school, the owner never let the employees keep any products in the back room.

"He said, 'If it's in the back room, how are we going to sell it? Nobody can see it,'" Johnson recalls.

He remembered the lesson, and uses it now as owner of two Columbus area Music Go Round franchises.

"If it's in my back room, it's either on layaway or it's a case to something that's out here that you can see," he says. "It's part of the turning -- getting stuff out to sell."

Johnson had never run a store or owned a business before he decided to leave his 15-year stint in the grocery industry, where he started as a stock boy and then worked in the corporate realm, selling products to grocery stores for Nabisco, Quaker Oats and Smucker's.

He had a goal to start his own business when he was 40, but at age 31, he found himself out of work. So he took the plunge and responded to a Music Go Round business opportunities ad.

Training from the company sent him on his way to success. He was profitable within two years of the 1996 opening of his Bethel Road store, where he sells used and new musical instruments and accessories. Business practices he learned from the grocery industry have served him well in the franchise. In 1999 and 2000, in fact, the store's gross sales, margin and improvement over the previous years made Johnson's franchise the most successful in the Music Go Round system, which includes 75 locations in 29 states.

Last November, he opened a second store in Gahanna, and he and his 13 employees grossed $1.3 million in 2000 for both stores combined.

Here's what the grocery industry taught him about retailing:

* Use upfront pricing.

When you go into a grocery store, you know what everything costs.

"You walk down the aisle and they've got stickers on everything," he says.

It's not the same in the music industry, however, where prices often are negotiable. The practice was not something Johnson wanted any part of, so he decided to put price tags on all of his merchandise -- in plain view of the customer.

"Make it so the customer doesn't have to think," he says.

* Shake things up.

Johnson noticed that every so often, grocery stores would move their products to different areas of the store.

"You go to Aisle 3 for deodorant, and they'd changed that to baby food. So now you go to the grocery store for deodorant and they hope you find two other things to buy on the way," he says.

In his stores, he tries to move things around every so often just to change the traffic flow to force customers to see different things.

"I just move things across the aisle and people will say, 'When did you get that in?' Well, it's been here two and half months," Johnson says. "It's not trying to be tricky -- it's just trying to sell things."

* Manage your inventory.

When Johnson was selling dog food or Rice-A-Roni to grocers, for example, they'd set him straight on how much business they'd give him.

"They said, 'I sell 10 of those a week. I'm not going to buy 50 from you,'" he remembers.

Just-in-time delivery helps.

"I don't need to have 15 of something. If I sell one a week, I can have three on the wall, and if I get a run on them, I can get them quickly," he says of some of the new products he sells.

His biggest challenge, a deviation from the grocery industry, is getting used products to fill his shelves. He's always looking for used instruments to buy.

"I can't call up and order 40 used clarinets," he points out. "I don't know what I'm going to have in from day to day."

He's turned to grass roots marketing in this area, keeping in touch with customers who come in, placing ads in newspapers and the Tradin' Times magazine and even putting signs at intersections. He goes to auctions and garage sales to find products, too.

* Keep it moving.

A well-run grocery store turns its inventory 12 to 13 times a year, but the music industry standard is 1 to 1.2 times a year, Johnson says. Using what he's learned, he's got his annual turn rate up to four.

"If something is here three months, that's too long because that's my four turns a year," he says. "We have a 'Tired of Looking at It' sale."

It's another grocery lesson learned from the practice of putting sale items in a "reduced cart" in the stores.

He'll keep marking things down until they sell -- or, if enough time passes, he'll put it in a basket labeled "Free."

"I don't care if I take a loss," he says, adding that he'd have to pay property tax on the product anyway, and it's taking up space where he could have an item someone might want to buy.

"The retail mentality is, 'This is worth $400.' If this is in here six months and it's not selling, it's not worth $400. Sell it for whatever you can, and get something else you can make a profit on," he says.

Through his entrepreneurial experience, Johnson has learned another lesson: Stick to your guns.

When his stores opened, musicians would come in wanting to negotiate prices like they could in other stores, but he'd tell them they'd have to buy at the sticker price or he'd simply sell the item to somebody else.

They'd leave, think about it, and return in a few days or weeks to find the item gone.

"Now they'll become regulars because they know we're for real and the prices are right," Johnson says. "I wanted to give everybody the same deal." How to reach: Kevin Johnson, Music Go Round, 457-9328 or 473-0100

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

Monday, 22 July 2002 10:10

Personnel

A novel use of technology

By Joan Slattery Wall

They have no fax machine, no photocopier, no cash register and only one phone line.

Yet technology brings in more than 50 percent of the business for Bryan Saums and Jane Landwehr, husband-and-wife co-owners of Fireside Book Co. in German Village.

The shop of rare and used books has customers all over the world who order by e-mail through Fireside's Website, http://www.infinet.com/~fireside, which averages 30 hits a day.

Saums, who created the Website, and Landwehr together answer about 400 e-mails a month. They also use the Internet for book searches, to share information with peers in the business, and to buy and sell from individuals and dealers.

"You have great days and then days that you almost cease to exist," Landwehr says of the retail business. "What being on the Internet and getting mail orders has done is balance that out."

It's also eliminated geographical boundaries.

World travelers who have checked Fireside's inventory on the Website often stop into the shop when they're in Columbus. Local customers visit the Website to participate in contests Landwehr devises and to read Fireside Chat, a short, twice-a-month essay on Saums and Landwehr's lives as booksellers. In addition, the site allows former Fireside regulars to remain customers after a move.

"It's the cheapest advertising you're going to get," says Landwehr, noting that a recent visitor to the shop told her he had been directed there by a friend in Germany who saw the Web page.

In addition to their shop, the Internet gives Saums and Landwehr four points of sale: the Website, a dealer-to-dealer network and two database sites. All that for $135 a month.

Asks Saums, "Can you say 'retailer's dream'?"

Monday, 22 July 2002 10:08

Destination unknown

Letters on the glass entrance to The Creative Spot, a start-up advertising agency, read "Thinking hours: 8 a.m.-8 a.m., Monday-Sunday."

For the three co-owners of the downtown business, the words hold true but belie the underlying struggles they face.

How do they strike a balance between the structure necessary to run a business and the creativity essential to their expertise? It's a question whose answer is apt to chart the company's future success.

When Mitch Greenwald, Mike Flegle and Chris Rankin joined forces in 1997, they made a decision to grow methodically.

"We want to develop ourselves like we do a client," Greenwald says.

The biggest challenge, however, has been to meet that goal. The three are so busy servicing more than 35 clients and keeping their time flexible to promote creativity that they haven't developed a growth strategy of their own.

"We still haven't really focused on the way we wanted The Creative Spot to be perceived," Greenwald admits.

The time to do that has come.


A firm foundation

The Creative Spot idea began in 1986, when Flegle and Greenwald met in an advertising class at The Ohio State University and talked about how they'd like to own their own agency one day.

Their paths parted until May 1994, when together they launched The Creative Spot, a marketing business, as a C corporation out of Flegle's home.

Their struggle with structure versus creativity started from the very beginning.

"I had always worn a suit to work," Greenwald says. "The day before we started, I called Mike and said, 'What are you wearing tomorrow?' We both started laughing. We sat in his house and we both had sport coats and ties on and started making phone calls."

Those calls were intended to add structure. The two methodically sought advice from people they admired in the advertising field and business owners they respected-such as Shelly Berman, founder of SBC Advertising, and Carroll Conklin, executive vice president and director of strategic services at Lord, Sullivan & Yoder Inc.

Then Greenwald and Flegle developed a business plan. They each put in $5,000 for start-up costs and opened "with zero clients," Flegle recalls. It wasn't long, however, before those networking calls and meetings spread the word that they were in business, and clients came calling.

Their business continued to grow until, again, structure clashed with creativity.

"Because Mitch and I did the marketing and concepting and writing part of the business, we needed someone on the art side," Flegle says.

That's how Rankin got involved. During this time, Rankin had graduated from The Columbus College of Art and Design and launched his own business, Graphic Visions, using a computer his parents bought him, freelance money he had saved during college and $700 that his grandparents had saved for him.

Rankin can trace every one of his clients back to one business card he placed on a bulletin board at Long's Book Store. That card was picked up by Jenean VanBreene of Fun-n-nuf Inc., a 10-year-old bookmark design and manufacturing firm in Columbus, who was pleased with his work and recommended him to other people. It snowballed from there, but Rankin says his business, a sole proprietorship, was limiting.

"I was doing design work, taking things given to me and making them look good. It wasn't a marketing campaign," he says.

When he began working on a promotion for Ebner Properties' loft/condo complex on East Rich Street, he realized he needed more than his design skills. He needed advertising help.

He consulted his girlfriend (now his wife) who worked at a graphic design firm. Her company had used The Creative Spot, and she suggested he call Greenwald and Flegle for help.

While working on the project, Flegle and Greenwald invited Rankin to partner in their business. Rankin set aside his independent business aspirations to join the partnership. The three decided to keep the name The Creative Spot for the new company, which after input from financial advisers, they re-established as an S corporation.


Building the partnership

Structure reared its head again when the three partners decided to purchase office space in the Rich Street Lofts building a month after founding the new company.

On advice from attorneys and financial advisers, they formed a limited liability company, Hangnail Ventures (the name chosen from a James Taylor song, since all three are fans), to buy the space. They each contributed $8,500 toward the down payment, which they've repaid to themselves as The Creative Spot brought in profits. The Creative Spot makes lease payments to Hangnail Ventures for the space.

They purchased not only the 1,300 square feet they use but another 1,600 square feet, which they lease to The Rich Blend coffee shop. The additional space provides an extra source of income while giving them room to expand, or a potentially better asking price if they decide to sell later.

Operating under the same roof increased productivity. They try to limit their office hours to 8 a.m. to 7 p.m. to maintain a life outside the business-all three have married since starting their businesses, and two recently purchased homes.

It's there that the structure stops.

Rankin, Greenwald and Flegle have no titles-they're all equal partners in the business. They use no time cards for themselves or their two employees, Jason Schmall, a copywriter hired in January, and Mike Hempfling, senior art director, who joined the company in May.

Their office space is not divided into sections or cubicles. In fact, a Ping-Pong table, which they use as a tool for brainstorming sessions, sits in the middle of the wide-open space.

So far, that lack of structure hasn't hindered the company.

Last year's revenues reached $600,000, and the partners have made a profit and taken salaries since the 1997 reincorporation. The company's only debt is the $102,500 mortgage on the Rich Street space.

Their client base, which includes Doctors Hospital, Sterling Commerce, The Longaberger Co., Banc One Corp., Park Medical Center and Westerville Athletic Club, has come from past contacts of the two previously separate start-up companies.

"Every single client that's walked in the door has come to us," Greenwald says. "And that's all by design. What I mean by that is, we wanted to first develop that good reputation before we go out and announce ourselves to the world."


All dressed up and don't know where to go

Rankin, Greenwald and Flegle enthusiastically share their philosophies and history regarding The Creative Spot. In fact, only one question is met with silence: "Where do you go from here?"

Flegle says the biggest challenge they've faced in starting the business is growth. They haven't even had a chance to update the business plan that Greenwald and Flegle first developed.

"We're so busy doing everybody else's work," Flegle says. "It's mentally draining."

"We're slowly but surely defining those areas we want to attack and trying to set aside time when we can slowly develop a plan and attack those areas one by one," Greenwald says. "We're trying to decide who we want to be when we grow up."

One area in need of attack, for example, is developing a system of how jobs flow through the agency.

Again, the balance must be struck: With little structure, the three can be more creative and keep their competitive edge, Greenwald says. But without enough structure, work could fall through the cracks or deadlines could be missed.

Another area needing work: figuring out a way to educate clients about the importance of marketing services.

"We're in such a subjective business," Flegle says. "It makes more business sense if a client can understand what the value of marketing and advertising is."

They also want to take time to better define the value they offer and prices they charge.

Jim Fette, a senior manager for Qwest Communications International (formerly LCI International), which is one of The Creative Spot's largest clients, says the partners are price-competitive almost to a fault.

"They're so much under what other people are charging that they're almost undershooting based on the value that they're providing," he says.

"We really love what we do, and sometimes that hampers your judgment," says Greenwald, noting that one of his biggest rewards is having a client call after an advertising campaign to say that his or her company had its most successful weekend ever.

Until they determine how they want to grow, the partners are running the business according to their primary goals-to be creative and have a company where employees enjoy working.

"Work's gotta be fun," Rankin says.

"We want to have a place where clients look forward to meeting with us or dealing with us and they would tell anybody about us," Greenwald adds.

So how do The Creative Spot owners answer the question about their future plans?

"That's the blank canvas," Greenwald says. "It's what we are stressed about, but also ultra-excited about-to develop this company that we're proud of."



Outside interests

Creativity and fun.

For now, those goals are keeping The Creative Spot successful, but without a plan for the future, the company could hit some rough spots, say outsiders who have watched the company grow.

"They have to deal with these issues. They cannot just sweep them under the carpet, or it would be disastrous," says Shelly Berman, founder of SBC Advertising and chairman of Xtreem Creative Inc. in German Village. "They have to develop a long-range plan and work as hard at executing their own plans as they do for their clients."

Two of the Creative Spot partners, Mitch Greenwald and Mike Flegle, contacted Berman for advice when they started the precursor of the company in 1994. Since then, Berman has used them and their new partner, Chris Rankin, for projects of his own.

"I can say that all three were terrifically creative," Berman says. "They really represent themselves well with creative work that would make you step back and say, 'Wow.'"

The Creative Spot's lack of direction doesn't bother Jim Fette, a senior manager for Qwest Communications International Inc. (formerly LCI International), one of the company's largest clients.

Fette appreciates the partners' rapid response rate, which is crucial in his competitive industry, and he likes their writing style.

"I know that with the established relationship we will continue to work with them and use their ideas," he says, noting that The Creative Spot co-owners have mentioned to him that they don't have time to plan for the agency's future. "I think it's something they need to determine, whether they want to be full-service or continue to do project-type work. They're good with the creative juices they've got flowing."

"Probably the first impression I got from them, and it's probably the correct one, is it's just a fun place, a fun group of guys," says Jonathan Kelley, president of a Mentor start-up called The Pizza Market. The Creative Spot has developed a logo, an ad campaign and a theme for the company, which makes pizzas with fresh toppings and wraps them so customers can bake them at home.

"What they did for us was take our ideas, our thoughts, our marketing philosophy and put it into an organized, focused program that we could build upon," says Dave Kelley, Jonathan's father and vice president of The Pizza Market.

Berman, however, reiterates that in order to continue their success, the three partners need to begin by making time to develop a plan for where they want to be five and 10 years from now. One way to start that process, he suggests, is to contact the American Association of Advertising Agencies, a trade association that helps agencies in The Creative Spot's position. He also suggests investing in employees to run the business side, such as a CFO, to create an infrastructure for growth.

"Another thing they need to do is create a board of directors, a small group of business people who will monitor the business and make suggestions and demand that the company is accountable," Berman adds. "When you form a board of directors, that forces you to be responsible to yourself and not just to your clients.

Monday, 22 July 2002 10:07

Outside interests

Michael Patton isn’t alone in his dilemma of balancing marketing and business development with the work of his new company, Corporate Strategic Services Inc.

In fact, Don Bush, a partner with Coopers & Lybrand LLP, with whom Patton has formed a strategic alliance, calls Patton’s the “classic entrepreneurial situation.”

“It’s a common malady,” Bush says. “With small enterprises, typically the CEO and the senior management team are going to wear many hats, and therefore the demands on their time are far greater than their capacity.” And while the senior management team delivers services, no one is prospecting new clients.

Patton’s efforts to find investors and to hire marketing staff are on target, Bush says, to solve the problem.

“It is a vicious cycle until they get to a sufficient level of profitability or have capital reserves to hire more staff and begin to build a full-fledged management team,” Bush says.

The CSS principals’ efforts to refine their services and products also are good steps for the start-up, he says.

“Beyond that, it’s partnering up with companies and individuals that can help you leverage and grow your business either through their contacts or through introduction to potential customers and suppliers and the like,” Bush says. “Mike is doing that very well because he is a very personable individual, and is also an expert in his field and has instant credibility. That’s helping him get in the door faster and be more successful.”

Those traits are especially important to Cindy Morrell, vice president/purchasing and facilities manager for American Pacific State Bank in Sherman Oaks, Calif., a CSS client.

Morrell says Patton and his business partners supported her when she had to suspend part of CSS’s bankwide expenditure-analysis project because of changes at American Pacific.

“Since they have real-world experience and they have come from organizations and understand the sensitivities involved in projects like this, they were really able to work with me and make the project successful,” Morrell says.

She also uses the start-up’s AESOP software, which she says, “allows the staff to concentrate on tasks that contribute to the company’s bottom line. We are able to monitor and analyze how we’re spending our money as opposed to processing low-value paper.”

Bush adds that because CSS’s cash flow has not grown to a point sufficient for a bank to provide financing, Patton should continue to concentrate on finding capital through angel investors or venture funds targeting early-stage companies.

“He still needs equity or investment to get him up over the hump,” Bush says.