In 2 1/2 years, sales at the extrusion manufacturer and fabricator tripled. That rapid growth left Smith, Anderson and their employees in a blur. Quality had dropped, morale was low and the partners were exasperated.
One day Smith and Anderson realized they barely recognized the company they had once been so proud of.
"With rapid growth," Smith says, "you spend most of your time filling orders. It's difficult to detach yourself and look at the big picture."
Two years ago, they did just that. The pair put a moratorium on growth and forced themselves to reclaim their business. Today ESI has 30 employees and nearly $5 million in annual sales. Smith is CEO; Anderson is president.
They don't pretend to be a model business yet, but Smith says, "I think we're a whole lot stronger now than we were six months or a year ago." Here are some of the ways they did it:
Create a sense of ownership
ESI designs, manufacturers and assembles some 100 pieces of custom equipment a year for the rubber and tire industries.
ESI had developed loyalty among manufacturers who wanted quality with a personal touch. On many jobs, it wasn't unusual to have nearly every employee involved at one point or another.
"A lot of the guys in the shop knew the customer when they walked in," Anderson says.
When quality began to suffer, they hired a quality technician to check the final product. But more importantly, they adopted a system that tags every job with a sign-off sheet: Each employee must sign off on his portion before sending it down the line.
"When people have to put their name on something, they take more pride in it, and they're going to make sure it's right," Smith says.
The system started in late 1997. Today a piece of equipment might contain anywhere from 10 to 25 different sets of initials. "They like the approach, but they had to get used to doing it," Anderson says.
Back that ownership with money and authority
It's one thing to expect your employees to take ownership; it's another to show them the feeling is mutual.
Two years ago the owners launched a 401(k) program with benefits paid based on profits. Their money became the employees' money.
In addition, Smith and Anderson tried to recreate the atmosphere that existed in the good old days. With only 10 employees, there were few formal meetings. When workers had ideas, they simply spoke up. If people thought the idea was good, it was rolled out the next day.
ESI drifted away from that, to the point where many didn't feel like they had input.
Today, Smith and Anderson frequently ask the 16 shop workers what can be done better on a given job or with a certain procedure. "Maybe it's something we hadn't thought of," Anderson says.
The owners jumped on the chance to get employee input when they moved three years ago into a new 25,000-square-foot facility off Home Avenue.
Employees were asked ways to make the layout of the new building better.
"If the employees feel they have more control over their work," Smith says, "they'll do a better job."
Don't forget to talk
ESI had few systems for communicating. It wasn't critical in a workplace where you could yell across the shop and everyone could hear you.
But as sales mounted and employment grew, that tin-can-and-string method broke down.
The engineering department overbooked projects, assuming the shop would want to work overtime. Or a shop worker would learn that a customer was upset about an order, but wouldn't tell the salesperson. Then the salesperson would walk in for a service call and get blindsided by the angry customer.
"We were always rushing and running so fast, the communication started getting less and less. We had to make sure we got it back, like it was when we had only 10 people," Anderson says.
Design meetings now include both the engineers and the shop workers. "Before, engineering would meet by themselves and then say to the shop, 'Here, build it,'" Anderson says. ESI has found that jobs can be completed better and faster when everyone involved in a job helps plan it.
Communication issues involving customers have been addressed through the hiring of a customer service liaison. All customer service issues come through that central source, and she distributes memos and information to everyone.
Smith still shakes his head remembering times when two people who sat next to each other didn't always pass along information. They just assumed the other knew. "It isn't just a big company problem," Smith says.
Realize employees work to live
Three years ago, many ESI shop employees were working 50 to 60 hours a week and salaried employees were topping 70 hours. Smith and Anderson, meanwhile, were working what they called "unproductive" 80-hour weeks.
While some shop workers enjoyed the fat paychecks, the harried atmosphere affected morale and efficiency, Smith says.
"You burn people out that way," he says. "Some people quit, and we had the potential for losing people we didn't want to lose."
Smith and Anderson say they had no choice but to nearly double the shop positions, and today they keep shop workers' weeks at about 45 hours. In addition, they allow each worker to set his own starting and quitting times, as long as it's the same every day. This allows workers to accommodate personal or family needs.
As for Smith and Anderson, their work weeks have slimmed to 55 to 60 hours, almost on their own. Anderson says much of their time was spent handling problems and unexpected phone calls. As the management of their company improved, the demands on their time have dropped.
You must spend money to save money
Smith and Anderson wrestled with creating new positions for various reasons.
The sales department has expanded from one to four as ESI has stopped its reliance on manufacturers' reps. On the engineering side, the company had two engineers five years ago. Last year it had four. Now it has eight. Smith and Anderson hope that translates into higher sales, because they believe ESI will be doing such a better job on design and quality.
"It was one of those decisions," Anderson says. "'Which comes first-the chicken or the egg?' We just said, 'This year we've got to bite the bullet.' Now the pressure is on."
The workload on the engineers before might have led to some of ESI's quality problems, he says. Now the engineers have a longer and more relaxed concept-and-design phase, and they're not pressured to spit out designs on impossible deadlines.
"If you don't have time to do something right on the front end, you'll have to take care of it on the back end," Anderson says.
"Sometimes before we would just make the same mistake over and over again, and that would cost money ... These positions are well justified."
Good customer service is proactive
ESI historically had few written procedures or systems for documentation. That wasn't a problem when ESI had only 15 regular clients. The details were easy to remember.
"We were a little bit loose before because everybody knew how to do things, or at least we thought that," Anderson says.
In addition to the new customer service position that feeds communication through a single source, ESI now keeps a central filing system on each customer with information such as service calls and warranties. "It's just better documentation and relying less on memory," Smith says.
Part of the documentation is a structured customer service follow-up procedure, including calls the day of delivery and a week after delivery to ensure everything was received, to check whether the equipment works well and to answer any questions. ESI also asks for feedback on the design.
"We had an erratic follow-up system before," Anderson deadpans. "If you remembered, you called them."
This new process helps the custome r and ESI. "You learn from what you did right. You learn from what you did wrong," he says.
Adds Smith: "We're finding out some things we might not find out otherwise."
And everything is documented. A suggestion now might help with another job next month or even with a job still in the shop.
Smith and Anderson can't help but look ahead as their potential market grows beyond its North American core. They hope to expand international sales from 15 percent to 20 to 25 percent next year. Overall sales could double again five years from now.
But the partners have a bigger goal. "One of the things we want to make sure we do now-that we didn't do before-is control that growth," Anderson says.
"Improvement is a continuous effort," he adds. "We've made more steps forward than backward, so we're OK.
Youve heard of the paperless office. How about the officeless company?
Data Now Corp., founded six years ago by Karen Brown, employs 13 people, working from either residential offices or client locations across Northeast Ohio, and it has no physical office.
The company doesnt need a storefront. It doesnt need a receptionist. Though it does have a post office box, nearly all communication takes place via e-mail, and for that, you dont need to spend $15 per square foot.
Data Now, which projects $2 million to $3 million in sales this year, provides Lotus Notes/Domino and middleware solutions to clients ranging from small, local businesses to multinational corporations. Lotus Notes combines messaging, scheduling, groupware, the Internet and seamless Web access. Because of the technology the way it is, its the same working with the developer from England as it is the one in Youngstown, says Brown, who calls Akron home.
The officeless office operates under the same electronic work-flow solutions the company provides for customers. It runs on two integrated Lotus Domino servers and has several chat rooms for day-to-day interaction: the War Room for sales and strategic marketing information; the Board Room (accessible only by the six shareholders) for corporate information; and even the Water Cooler, for small talk. The employees also rely occasionally on digital pagers and cell phones.
Besides saving on expenses, Data Now benefits from its virtual office because the electronic work-flow arrangement serves as a showcase of what it sells to others. The companys motto: Data Nowwhere the floor space is measured in megabytes.
Data Now purchases a new computer for each employee. Most have one already, but if it wasnt bought this year, its outdated. The employees already have the only other tool they need: an Internet connection.
Everything weve saved by not having an office, weve dumped into the infrastructure, Brown says. She notes that her appreciation for technology dates back 24 years ago, when she got her first computer. She was just 12.
Brown runs Data Now with Mary Morlan of Barberton, who is vice president of operations, and Mary Lou Kula of Parma, who is vice president of technology. The three together own 92 percent of Data Nows stock; Brown has allowed three other employees to purchase small interests as a retention tactic. The nature of this business is to steal everyones people. So what I did was offer stock to the key people in my company. We havent had any turnover in these key positions.
For the rest of the employees, Brown says they enjoy the flexibility and freedom of a virtual company. Everyone works really well on their own.
So even though they have the online Water Cooler, how do they overcome issues of real, live camaraderie?
The principals meet in person every two weeks, and companywide meetings occur every month or two. Because they have no office, meetings generally are held at a restaurant. In between, we do a lot of talking on the phone. And most of our work back and forth is done online. So when we get together in person, I already know what Mary Lou thinks and what John thinks, Brown says. So our meetings are just as much social as they are business.
The formula appears to be working. Sales grew 1,000 percent in 1997 and are expected to increase 400 percent this year. Notably, Data Now this year won an e-business Development for the Growing Enterprises Fund award, sponsored by IBM, Lotus and the National Federation of Independent Business. Because of the flood of clients, Brown expects to double employment by years end.
She wont rule out a real office someday, but doesnt see a need in the immediate future. Its just fun right now because were building something different.
The practice of being most things to most people teeters between being a nice fool and a savvy marketer.
The real trick is gauging which customers youll shower with extras.
For the Wilsons, the main criteria are whether customers pay on time, use high- vs. low-margin services, and whether their demands make them too expensive to serve.
The best extras, Don concedes, are reserved for the customers who make themselves the most desirable. Obviously its an economic decision, Don says.
Dan says theyve learned the hard way that going overboard for a slow-paying customer, for example, is just thatgoing overboard. Why would we want to go to bat for them if theyre not going to pay? That would be foolish. Been there, done that, he says. You learn.
CasChem is big enough now that the brothers arent shy about letting people know they arent desperate for revenue. They keep track, for example, of companies that consistently use CasChem only for the low-margin inorganic tests.
Well say, Hey, you guys are only using us for the metals tests. Why arent we getting the other tests? Ill tell them, Im not going to give you these favorable prices anymore. If theres no money in it, I can spend my time doing something else, Dan says.
Their decisions, while not spreadsheet perfect, must be working well enough. CasChems profit margin has increased 11 percentage points in the last four yearsan enviable statistic in their industry.
Weve become more mature and educated about not getting walked on, Dan says.
Flexibility and communication are the keys. If some guy does $50,000 a year with you and once in a while wants some off-the-wall test thats hardly worth it, oh sure well do it, Dan says.
Now we look at where we can build business relationships, not just giving, with CasChem giving all one way.
Jim Kent overhauled TechniDrill Systems Inc. by addressing issues that all good companies face at one time or another. But because of the accident, he had to fix everything at once.
"It's horrible to say it's good I got clobbered. It wasn't good," Jim Kent reflects four years after his accident. "But it made me, and the business, more successful."
Friend vs. employee
Kent's four engineers in 1994-old pals from Firestone-"were good rubber engineers, they just didn't understand machine tools and that hurt me.
"So instead of a part taking 30 minutes to grind, it would take four hours, and the contractor would charge me for it, and that was perfectly within his right."
Though he didn't want to do it, he replaced them.
TechniDrill had no methodology for estimating jobs and analyzing costs along the way. "It was just too much wild guessing. If we did a job like this last year, we'd just add a couple of percent."
Today, jobs are analyzed continuously. "The key to making money in this business isn't the overhead costs," says C.P.A. Bob Littman. "It's controlling costs on each machine."
Delegate or die
"It was easier just to do it himself than to take the time to train," says his wife Pat. "It was a vicious cycle."
But in the last two years, Kent has allowed his plant manager to develop into a true No. 2 executive by handing off many of his former duties. He also hired a purchasing agent and has stopped looking over the shoulders of the engineers who design equipment.
"I can't be the only guy who was this dumb," Kent says. "There have got to be other people out there who don't trust their employees."
Build a management team
The shop foreman became the full-time manager of cost analysis and pricing. A new shop foreman was hired with more emphasis on personnel. The chief electrical engineer was added to the management team.
Collect cash at every opportunity
Despite jobs that cost hundreds of thousands of dollars and take months to complete, TechniDrill had rarely asked for deposits from customers.
Now, Kent requires a 30 percent deposit, 30 percent payment on delivery and the remaining 40 percent within 30 days.
Watch the money
Kent used to contract out to five area machine shops for most work without regular cost analysis. "We collect bids on almost everything now."
Kent also stopped using manufacturers' reps and hired a full-time salesman. In an industry with such little competition, he says, "with reps you're just giving your money away."
Plan for succession
Kent knows this will become an issue several years from now, but he hasn't yet decided how to approach the issue of his retirement.
There's a basic rule in business: the lower your unit price, the faster you ought to get paid. And it spells out one of the main challenges for Tom Shingleton, founder of WonderBake Inc. in Canton. How do you hang on a year for payment when you're in the business of producing $3.99 cookie sheets?
That's not what Shingleton was thinking about in 1992, when he left Ekco Housewares Inc. after 21 years to start his own company to make non-stick bakeware.
He was thinking about all the things that have gone right, such as building sales volume-which should reach $2 million this year-by landing contracts with high-volume retailers including Target and Wal*Mart.
Shingleton, who runs his 12-employee company with son Ted, has no delusions of surpassing his former employer, a $271-million-a-year housewares icon. But he does hope Ekco executives feel some heat in the kitchen as WonderBake products take over more and more of their shelf space.
"There appears to be enough room for all kinds of price points," says Perry Reynolds, spokesman for the Chicago-based National Housewares Manufacturers Association. "This is a David-and-Goliath story that bears telling."
But if WonderBake is going to hit its goal of capturing just 10 percent of the $200 million-a-year bakeware industry, Shingleton is going to have to overcome one big obstacle: the surprisingly seasonal nature of his business that means spending an entire year planning to do two-thirds of his business in the fourth quarter.
Tom Shingleton started at Ekco in 1964 as a manufacturing engineer. He left in 1973, but was asked to return seven years later as manager of the Canton plant. He went on to manage the Massillon facility. The sale of Ekco twice during the 1980s-and the accompanying upheaval-soured Shingleton's aim of retiring from the company.
Shingleton, who left Ekco in 1992, attracted eight investors to underwrite foray into the industry of discount silicon-coated bakeware. "I expected the first year to conquer the bakery world," he chuckles.
Shingleton's first challenge was finding a plant. He needed at least 20-foot ceilings and enough floor space to run an assembly line where bakeware is hanged then robotically coated and cured in 200-foot ovens. The North Canton complex he found offers 40,000 square feet.
WonderBake launched production on February 1995 with three cookie sheets and a pizza pan. Tom and Ted quickly secured appointments with six significant retailers: Acme, Dollar General Stores, Meijer Co., Federated Wholesale, Marc's and Wal*Mart.
"We sold three of those appointments," laughs Ted,. "We said, 'Hey, this is good.'"
Surely, business couldn't be this easy, they thought.
Wal*Mart's contract ended up being a one-time shot for a holiday shipment of cookie sheets.
"We were a promotional company the first two years, just like with Halloween candy and Valentine's cards," Tom says. "We'd disappear at Christmas and you'd still see the other company sitting on the shelf."
The father and son faced two major obstacles in landing new accounts. With only four products out of the 13 standard items that account for 95 percent of bakeware sales, they couldn't be a retailer's one-stop supplier.
"Customers would say, 'Why should I buy three from you and the rest from someone else?" Ted says.
The other issue was retailers' loyalty to suppliers such as Ekco and Newell. They were reluctant to squeeze shelf space and risk angering their longtime suppliers for an unfamiliar start-up.
In its first year, WonderBake generated a slim $300,000 in gross sales and ran production lines for only four months.
Costs were modest, however, because of the surprisingly low labor costs.
Tom designed the plant to follow a process he helped roll out at Ekco: hanging the product on conveyor lines by hand, then coating with robotic sprayers. The rest of the work, sorting, loading, unloading, labeling and boxing is handled today by seven plant workers.
The Shingletons limped through 1996-their second year of operation-with a continued dependence on seasonal orders. Sales reached $500,000.
Tom Shingleton started the business, knowing it would be seasonal. Relevant factors: college students' arrival in bare accommodations; an increase in baking resulting from cooler temperatures; and, of course, holiday goodies.
But to work toward full-time production and a year-round business, WonderBake had to expand its product line as quickly as possible, offering such standards as cake pans and muffin tins.
Cost was the obstacle: Creating a single stamping tool cost $60,000 to $80,000. Shingleton still managed to finance five new products in 1997 and three more in 1998.
This January, at the National Houseware Manufacturers Association show in Chicago, the Shingletons were proud to finally display all of the 13 basic bakeware items. "We got some credibility," Tom smiles. "We couldn't even get into that show before."
Though they now offer a full product line, the Shingletons are still fighting for shelf space and trying to give retailers a reason to buy from WonderBake.
In pitching Target in 1997, the Shingletons tossed out the idea of supplying the bakeware under Target's own successful private label, Trend Basics. Stores often have their own labels of clothing and household items. "We said, 'Why not bakeware?" Ted says. "They loved the idea."
Retailers use private labeling because it boosts their profit margin. "They can make 10 points more margin on our products than others," Ted says.
Reynolds, of the trade association, says: "Bakeware has traditionally been a branded product. [But] if a retailer wants to position opening price points, I suspect private label might be a good strategy."
Tom says WonderBake's cost of goods is roughly the same as Ekco's, for example. The difference is that WonderBake, for a variety of reasons, is willing to accept a lower margin.
"Customers at first would say, 'Wait a minute, I don't want to hurt my brand leader,'" Ted says. "But they like the private label. It didn't take us long to figure this out."
Tom maintains that WonderBake's non-stick coating process produces a pan that's better-or at least as good-as Ekco's. The spray-coating process was developed for WonderBake and is proprietary.
In any case, a handful of retailers, including West Coast giant Fred Meyer Inc., think enough of WonderBake's quality to sell it as private label-a market that now accounts for nearly half the revenue.
"That's our niche today," Ted says. "There's no doubt. Private label is the way to go."
While a broader product line and customer base are helping to cut the seasonality of the business, WonderBake still has to conquer the critical issues of projecting sales and managing cash flow.
Here's how big an issue it is: While WonderBake did $1 million in revenue in 1997, half of that wasn't collected until this year-more than a year after the Shingletons sat down to plan 1997 production.
On the front end, the raw materials come from overseas and must be ordered three to four months ahead of production.
The Shingletons start projecting for the year in December. Half the raw materials needed are ordered in January. Projections are revised in March, and a second shipment is ordered, even though the first shipment hasn't arrived yet.
"You know what they say: Projections are either lucky or wrong." Ted says.
Production begins in April for the fall season. The second metal shipment arrives in August. Heavy production runs from August through October.
Then there's the back-end problem: getting paid.
Most major retailers take two months. "Sixty days goes without saying," Ted shrugs. "They'll sometimes even ask for 2 percent/60 days."
On average, WonderBake gets paid 65 to 70 days after delivery, meaning raw materials that were purchased in December are received in March, stamped over the summer, delivered as finished product in September and paid for by the retailers in December-though the holiday rush often slows d own payment by retailers until after the start of the new year.
Tom says the only way he's been able to make it work is by securing extended terms of 60 days from his own suppliers for steel, coating and packaging.
He believes he's negotiated such favorable terms because of his own industry connections, as well as empathy from companies "because they know I'm a new business and they know I'm seasonal."
Tom says he's avoided a serious problem to date, in part, because he hasn't taken equipment loans or a line of credit. "I won't rule that out though."
Living within your means as a start-up is "very difficult," he says. "With capital expenses, I plan in the first half, purchase in the second half and pay for it the next year because that's when I know I'll definitely have money."
There's one other area of pressure that Shingleton feels from his customers: packaging.
Target, which has a dozen distribution centers and 800 stores, asks for boxes of six pans instead of the dozen that WonderBake used to pack into a single carton. That's how the retailer reduces the risk of excess inventory on shelves.
So WonderBake has to buy twice as many cartons for the same amount of sales. "What does that do to my costs?" Ted comments.
Managing WonderBake will become easier, Tom Shingleton believes, as it gains customers.
Target is by far WonderBake's largest customer, though Tom won't offer figures.
While Ted would like to increase sales to Target, he recognizes the danger. "All it would take is a new merchandise manager to come in and want to go upscale. We'd be out of there."
This year represents WonderBake's first year with its full product line, though production is at only running at one-sixth capacity, which is 6,000 pans a shift.
Tom expects to increase capacity in 1999 with another line of spraying guns. "Next year's going to be our milestone," he says.
The Shingletons can't help but fantasize about the future. And those dreams are a little easier to grasp on occasions when they stumble into a Target store, gravitate to the bakeware section and find their product-not Ekco's-on a coveted aisle end-cap.
"I always knew if we got beside their pans," Tom says, "we could compete."
"The key to our success," Ted adds, "is to have stuff on their shelves everyday, not just at the holiday."
"We go through these cycles," says Dick Nowak, a recruiter and trainer for OBM of Northeast Ohio. "The tax people determine whether people should buy or lease. These days, tax benefits are derived from leasing.
"This is a monthly-payment society," Nowak continues. "Almost everything we do in our life is paid by the month-your mortgage, your car payment. So why not your copier too?"
When you're shopping for that next copier, here are a few things you should remember:
Check your prospective vendor's track record for service. The vendor should service your copiers even when there's not a problem. You shouldn't just see your technician when there's a problem. "People fly in aircraft every day that are 20 to 30 years old," Nowak says. "That's because there's a commitment to service. When copiers become problems, what it really means is someone hasn't been servicing their equipment." And if your machine fails, you've got real problems if it runs your whole office. "Multifunctional machines are OK for small, home offices, but not for other businesses."
Check your prospective vendor's track record for service. The vendor should service your copiers even when there's not a problem. You shouldn't just see your technician when there's a problem.
"People fly in aircraft every day that are 20 to 30 years old," Nowak says. "That's because there's a commitment to service. When copiers become problems, what it really means is someone hasn't been servicing their equipment."
And if your machine fails, you've got real problems if it runs your whole office. "Multifunctional machines are OK for small, home offices, but not for other businesses."
It wasn't customer-friendly, critics said. Voice mail isn't efficient, they whined. Callers want to leave a message with a person, not a machine, they insisted.
Today, those recollections are laughable.
While the majority of companies today have some sort of voice mail, many don't maximize their systems. Other companies are shopping for a system for the first time.
What should you look for and do with your voice-mail system? Here are 10 tips:
- 1) If you're a service-based business, you should still have a receptionist and avoid having calls answered by an automatic attendant. "It can give someone a bad taste, like, 'Oh my gosh, is this how they treat their customers?' " says Rick Misanko, an account executive with Digital & Analog Design Corp., which is based in Brecksville and serves businesses across Northeast Ohio.
- 2) If you do have an automatic attendant, make sure callers can "opt out" and reach a live person. The same goes for selecting an employee's voice mail. Companies should make sure a caller can always reach another extension or a live voice.
"Any voice mail can put you in voice-mail jail if it's not set up right," says Chris McDonnell, sales trainer for Consolidated Communications Inc., a 19-year-old North Canton firm with 3,000 customers. "That's the reason many people resisted voice mail, because they fear that's how their callers would end up," she says. "It doesn't have to be that way, and shouldn't be that way."
- 3) Realize you get the best deal by buying a system according to storage capacity, not according to the number of users. A system, for example, might have 100 hours of storage with unlimited users. "The voice mail is limited only by the number of digits at your extensions, say up to 999," says Misanko.
If you're paying by the box, you're probably paying too much.
- 4) Don't get conned into buying too many "ports" or entry lines to your voice mail. Unless the phones are answered by an automatic attendant, most businesses with fewer than 100 employees can get by with four to eight ports. An organization such as a law firm, with heavy users and callers who leave long messages, might need more.
"Our normal is four ports," McDonnell says. "With 40 or 50 employees, four is more than adequate."
Misanko points to a 600-employee Cleveland firm with only 24 ports-a number that adequately meets its needs.
"If you go with more than you need, you're just wasting money," Misanko says.
- 5) Most companies make an investment ranging from $4,000 to $15,000 for their voice mail. Make sure you can upgrade it.
- 6) Buy your system from a knowledgeable provider. Misanko cautions businesses from buying voice mail from what are called "trunkers" in the industry, or firms that buy and resell switches but don't specialize in voice mail.
"You should look for a team concept that's serving you. You don't want one person who is the salesman and the programmer and the customer service representative," he says.
Also, you're wise to have your provider located within two hours of your office to guarantee prompt service.
- 7) Voice-mail systems can offer upscale features that can be beneficial to many businesses. Features such as pager notification and forwarding messages to co-workers are standard. You can also buy software to allow e-mail and faxes to be played on your voice mail, which can be great for executives or salespeople who travel.
"This is not Star Wars, this is here," Misanko says.
Other features include a screening mechanism that lets employees receive calls or direct those into voice mail once the callers are identified.
But the features can be pricey toys if they're not genuinely needed.
- 8) Dedicate one of your existing phone lines as a "back door" line to allow employees to access their voice mail off-site.
- 9) If you have an automatic attendant that allows callers to dial an extension by name, remember that callers might not know the spelling of an employee's last name. A good option, if your company isn't too large: program extensions by first name. McDonnell doesn't understand why more companies don't do this. "We're just creatures of habit," she says.
- 10) Finally, a couple of points of voice-mail etiquette: If your individual voice mail contains a long greeting with your daily schedule or other information, immediately tell callers how they can bypass the greeting to leave a message, usually by pressing 1 or *.
And when you're leaving a message, don't wait until the end of your message, which might be a minute or two, to leave your phone number. Remember that many people save their voice mails to return later and hate having to wade through the whole message again just to get your phone number.
Jerry Welty was enjoying a long overdue vacation in Florida to escape the pressures of running his nearly 50-year-old family business. He and his wife Emily were walking along a breezy beach when they struck up a conversation with a stranger-a business owner who had just retired. The stranger said his age had been sneaking up on him until his health demanded he retire suddenly. There was nobody to take over, so he closed the company.
That was seven years ago. Welty was 51 and had no partners, no relatives, no longtime associates in the construction company founded by his father. Returning to his Florida condo that afternoon, Welty felt like he'd had an ominous look in the mirror.
"I was trying to look around and see my options. I've seen many construction businesses where the owner gets up there in years and the company just closes its doors," Welty says. "I didn't want that to happen here."
Welty Building Co. has risen from a small, post-World War II era home builder to a top commercial contractor that enjoys stature in Akron's highest business circles. With a resume that includes Inventure Place, First National Bank Tower and the new BFGoodrich headquarters, it's hard to drive for more than a few minutes in any direction in Akron without passing a Welty project.
But if this legacy was to continue, Jerry Welty realized he'd have to scramble to find a successor. He chose perhaps the simplest solution: He paid somebody else to help with the chore.
Today, with a quietly produced succession plan in place, Jerry Welty is comfortable that he knows who is going to take over the company and when.
An industrial arts teacher at Central High School, Henry Welty founded Welty Building Co. in 1945 to fulfill his passion to design and build fine homes. Welty operated as a one-man show until Jerry, his middle child, became the first employee in 1966 and invested $5,000 in the company.
The two built a modest business, growing to $750,000 in sales by 1969. Homes were built by day; paperwork was done at night.
Henry retired in 1969 at age 66 and turned the company over to Jerry, asking his son to abide by two simple principles: pay the bills on time to maintain integrity and receive better prices and service; and do the job right-and if it's not right, tear it down and do it again.
The son agreed that those principles would form the foundation, but he wanted to take the company in a new direction. Homes would only take him so far, he decided. A short list of commercial credentials would create a future in larger, higher profile projects.
It took a full 10 years to break in, when Welty was recommended by executives at Myers Industries Inc. for the $3.5 million restoration of the old Post Office on Market Street into the new Akron Art Museum.
Not only did Welty complete the showcase project on time, but under budget. "We had $50,000 in contingency money left over and were able to give it back," Welty smiles.
Big jobs followed quickly from there as the five-employee company grew to a staff of 16, plus dozens of other regular subcontractors, during the 1980s.
Among the highlights: The $1.2 million Ronald McDonald House in 1984; the $7 million Akron YMCA renovation in 1985; and the $14 million First National Bank operations center (now FirstMerit Bank) in 1989.
By the time that Welty secured the $32 million Inventure Place contract in 1991, Jerry Welty should have felt on top of the world. But the project coincided with his reality check about the lack of a successor for his then $13 million-a-year company.
As in most family businesses, Welty's two children spent their share of summers working for Dad. Chad had worked in the field, Monica had worked in the office. But neither ever showed a serious interest in the business. Today, Monica is 25 and works in New York City. Chad served five years in the Army and, at 27, is an electronics student in Georgia. About five years ago, he told his dad, "I know you'd like me to come in the business because of Grandpa, but I've got my own path to travel."
Welty recalls: "I said, 'Well, I respect that. I don't want you to feel obligated. I want you to be happy.' "
But that left Welty with no obvious path to follow. "I realized I was having a lot of fun. This company was practically my whole life," Welty says. "If I sold it, I'm out. If I sold it, I wouldn't know what happened to the people or the name. "
It was the Inventure Place project in 1992 that forced Welty to bolster his management team. He had Bill Bennett, who'd joined the company in 1987 and had risen to executive vice president. Among Welty's new hires was a 31-year-old construction manager, Donzell Taylor, who started as a project manager and had seven years prior experience at Dunlop & Johnston Inc. in Cleveland.
In his few first weeks on the job, Taylor gained respect from his new boss by landing two contracts, one worth a few hundred thousand dollars and the other a $2 million facility for The Little Tikes Co.
The new kid, it appeared, was a rainmaker and a leader. Welty began to take notice of Taylor's interest in the business and ability to handle clients, co-workers and the scheduling headaches that are synonymous with construction.
Despite Taylor's early success, Welty still didn't know who, if anybody, could be readied to take over. In 1993, he enlisted help from Denver-based FMI Corp., a management consulting firm that focuses exclusively on the construction industry.
FMI consultants met with each Welty employee for 30 to 60 minutes to discuss each person's vision for the company and to tally "votes" whether there were any internal candidates for president.
Welty said he suspected Taylor's name would surface often, but felt it was worth the cost of several thousand dollars to have a third party figure it out.
"Your gut isn't always right. At the time I thought it was a lot of money, but it was money well spent."
FMI's report pointed to Taylor as the top executive and Bennett as a co-owner, indicating the two together had the qualities and support of the employees to take over.
"I had always thought I might end up being an owner," says Bennett, 49, "but I didn't know what Jerry's plans were."
If Taylor and Bennett took over, Welty decided, it would have to be a long-term transition to mold the pair into owners and align them with his own philosophies.
Welty held numerous meetings with his accountant and attorney to discuss a seven-year transition-a number that simply seemed to make sense to Welty considering his age and what the two prospects needed to learn. "My attorney Sam Goldman said, 'That's a long time,' and I said, 'I know, but I want to continue working.' "
Welty continued to bounce the idea around in his mind for nine months before he approached Taylor. "I was careful not to commit myself," he notes. "I said, 'Let's give it two years. Let's look at the chemistry. It's got to be compatible.' "
As Welty observed Taylor, he grew comfortable. "He had the entrepreneurial spirit that it takes to run an organization. That's very rare."
Welty wanted to announce the plan to the employees long before he was ready to retire to put employees-who have an average eight-year tenure-at ease. "We didn't want them to wonder what was going on and start looking for jobs if they thought we might close."
Taylor says it was also important so the company can continue to attract good new employees. "They need to understand the business is in it for the long term."
The succession plan was finished in October 1994 and launched in January 1995, when Taylor and Bennett each contributed earnest money. The plan called for Welty to gift 7 percent of the stock each year for seven years. How the 7 percent is divided each year between Taylor and Bennett is based on their performance, Welty says, although the plan calls for Taylor to own a majority of the 49 percent.
Welty plans to retire at the end of 2001, at age 63, still owning 51 percent. Taylor and Bennett then will continue buying Welty's shares at what ever pace profits will support. There is no time line.
While Welty will get equity from his business slowly, he says he's comfortable because he doesn't want to strangle the business into failure. He won't disclose the sale price but believes it's modest compared to what he might have been able to get on the open market. "We can't expect to get the last dollar out of this business. My goal is to see the business continue and thrive into the next century."
Welty Building is now halfway through the seven-year transition. The focus has been on grooming Taylor into the next chief executive as he builds relationships and learns every aspect of the business.
Welty says he's been introducing Taylor to clients and centers of influence and is helping him make headway with players in the banking, bonding and insurance industries.
"I'm working very hard to make sure they feel comfortable with me," Taylor says. "I'm still working on the marketing and sales side of things. I still feel that's an area I need to work on.
"Jerry's been the chief rainmaker for the company for a number of years, but I feel it's the president's responsibility to get to know the players and close those deals. I need to work on my salesmanship."
For his part, Taylor is working 65-hour weeks, often arriving to work at 4 a.m. like a student cramming for a final exam.
Welty is allowing Taylor to make more of his own decisions, even if that means watching him walk into mistakes.
"You knew that was going to happen, didn't you?" Taylor has said to Welty on such occasions. "And he'll say, 'Yeah.'"
Welty believes experience is the best educator. "I think he needs to be able to spread his own wings. He needs to have that ability to think on his own."
Welty knows that his company will change after Taylor takes over.
Already Taylor is introducing software to help calculate jobs (Welty acknowledges that such technology isn't his strength). Taylor is also building management systems, cost-control processes and communication procedures from project managers, Welty says. Taylor also focused on new safety programs, which has led to two years without a single day lost to an injury. Welty calls that remarkable in his industry. "Don is largely responsible for that."
"Like the old adage goes, the sure-fire way to fail is to continue doing what made you successful for just a little too long," Taylor says. "But I don't see that we're going to radically change direction. Those are big shoes to fill."
Today, Welty Building has 21 full-time employees to support its roster of regular contractors. The outfit has enjoyed 20 percent annual growth in each of the last few years. It recently has completed the Akron General Health and Wellness Center, the Main Street Gourmet plant, the Saltz, Shamis & Goldfarb accounting office and the new First United Methodist Church of Akron. The company has won two coveted Build Ohio awards from the Associated General Contractors of Ohio, for Inventure Place and the Wayne-Dalton Corp. headquarters.
With that momentum, Taylor's appointment as president last July caused rumors to circulate that Welty had suddenly retired. That's when Welty started talking about his succession process.
Though he still hears that such a long transition is unconventional, he believes it's the best approach.
"It's enjoyable and gratifying for me to see these two fellows taking over. And the business is growing. It's not stagnant. We've accomplished what we wanted to do.
"There isn't a week that goes by," he adds, "that someone doesn't tell me, 'Boy you've done it the right way. I wish I had done that.' "
As a senior in high school, he spent two weeks at Gerbig, a Columbus full-service marketing communications agency.
“I really got an opportunity to understand how an agency functions,” he says.
Later, he spent a summer during his college career interning at Gerbig.
Today, Walter takes the internship process very seriously.
“What we have tried to do is look at the program as a two-way opportunity,” he explains.
It’s an opportunity for the firm to get extra hands and bring vitality into the organization. For the interns, it’s a chance to gain insight into something that interests them something that correlates with their academic studies. In short, it’s a win-win situation.
According to Gerbig director of human resources Karen Artis, the firm handles 10 to 12 interns a year. That number is expected to rise when the company moves into its new Polaris headquarters later this year.
“This is next to being a perfect place for people who are trying to decide what they want to be when they grow up,” she says, “We try to give people a broad feel for some of the things they can do.”
A fine arts major who recently graduated from Ohio University and who had interned at Gerbig for two summers during college was looking for a design internship. After her first summer at Gerbig, the company eagerly looked forward to her return, even planning work for this highly talented individual.
Today, she is a full time Gerbig employee.
“Every now and then, you find some of those diamonds in the rough,” says Artis. “They may not have years of experience, but there’s something innate in them.”
Nuts and bolts
Most Gerbig interns are high school juniors and seniors who work summers, but at the college level, internships vary from two weeks to nine months. Because the type of internship varies, the level of expertise required is mixed as well.
“We are looking for a basic understanding, but we also consider that our job is to teach,” says Walter, emphasizing the importance of insuring a good fit when someone comes on board.
The level of necessary expertise has a lot to do with the area in which they will work, as well as the amount of their contribution.
Whether an intern is paid depends on the amount of investment both ways, as well as on what somebody is trying to accomplish. If someone has a couple years of college behind them and wants to spend a summer interning at Gerbig, they would be paid. A high school senior spending a couple weeks or a month, and making far less of a contribution, would not be paid.
Walter says he doesn’t look at the cost of an intern as important.
“I think the costs are insignificant if you can find somebody that is excited about what you are doing, particularly in this type of labor market,” he says. “Because we have learned a little bit about each other through the internship, that person may be able to join the firm down the road.”
Sandy Clary, principal at Clary Communications, a marketing communications firm, agrees.
“We can look at some of our more recent interns for possible positions. We know who is talented,” she says.
Julie Graham Price, Clary account supervisor, runs the company’s internship program.
“Often, we will go to our file of previous interns when we have a job opening. That intern is a known quantity,” she says.
Clary Communications has worked with hundreds of interns during its 16-year history. Some of its first associates were originally interns.
While Price agrees that everyone benefits in an internship relationship, she says time is the biggest cost. The employer wants to supervise closely, she says, and is acting as a mentor. But although it requires additional time, the benefits are well worth it.
“We are getting a student with high skills, and they are getting good experience,” she adds. Clary interns are paid $7 an hour.
At Clary, interns are primarily public relations students who intern for either a quarter or a semester, depending on the school. Generally, summer internships are full time, while those during the school year are part time. This company of 13 full-time employees has at least one intern at all times.
“I am seeing that many (college) programs are requiring students to have an internship,” says Price. “They will give college credit for it.”
It’s a chance for students to do a test run on a career, to see if they have an interest. In some cases, it’s something they hadn’t considered.
Finding good interns
“There’s as tight a market for interns as there is the rest of the market,” says Price.
To recruit good interns, she works with college advisers on a regular basis. She also posts fliers at schools with communications and public relations majors. In addition, the Central Ohio chapter of the Public Relations Society has a Web site at which companies can post internships. Word of mouth is also useful, with previous interns helping to recruit new ones.
At Gerbig, Walter emphasizes the importance of bringing the right person on board.
“It’s easy to bring people in,” he says, “The challenge is to provide a program that will accomplish the objectives.”
For this reason, the hiring of interns is really no different than the hiring of entry-level employees, and the application process is similar. At Clary, applicants are not only interviewed, but also screened with a writing test.
Both firms agree that it’s rare that an intern doesn’t work out, probably because applicants are screened so carefully. Walter also points out that interns in general are students who take their careers pretty seriously.
“There’s a lot of self screening and self selection,” he says. “They are actually quite motivated.”
Artis agrees that these are usually people who have a good idea of what they want to do.
“For them, it’s like a kid in a candy store. They get a taste of all areas of the business,” she says, adding that Gerbig interns get a broad feel for what they can do, because the agency is so complex and diverse in terms of what it does.
The issue of confidentiality arises when temporary workers enter a company, yet both companies say there are few problems. At Gerbig, a standard confidentiality agreement is used, mainly to show respect to the firm’s clients. Walter suggests that close supervision is necessary, along with good judgment about when and how much to include an intern.
In Gerbig’s case, the company seeks the permission of the client before bringing an intern into a situation.
“It’s amazing how passionate people are about internship programs. Our clients have been very supportive,” says Walter.
Both companies strive to maintain communication throughout the internship period, and, in some cases, after the internship is completed. This helps each party understand the other’s objectives. At Gerbig, interns have somebody they can go to, perhaps to say, “I was hoping I might be getting more exposure to media,” for instance. At Clary, an exit interview reviews what was accomplished and makes sure interns have copies of everything for their portfolio, Price says. It’s also a time to talk about the high and low points of the experience.
To help celebrate the firm’s 15th anniversary, Clary Communications invited back all the interns it could find. Price says it’s fun to see how everybody turned out and catch up with what they’re doing. In some cases, the relationship has continued long after the initial internship period.
While Artis admits that the talent pool is getting smaller, internship programs remain a good way to attract individuals early, groom them, and perhaps utilize them later. Walter sees a trend in which individuals are trying to latch onto a career earlier in life. The pace moves faster and the process starts sooner, propelling the popularity of internship programs.
Clary is more than just a little enthusiastic about her company’s internship program. “It keeps us in touch with the young talent. It enables us to bolster our staff and interact with people with new skills.” she says.
“And it’s fun to watch them as they develop into professionals and see them go out and conquer the world.”
Lori Murray (Lori3204@aol.com) is a free-lance writer for SBN.
Most businesses only dream about getting national media coverage for their products and services
Fekete + Co., a marketing communications firm based in Columbus, hit the jackpot this past summer, however, when a product developed by President Sandy Fekete was featured in the well-read and very hip Fast Company magazine.
The two-page write-up netted Fekete about 450 inquiries from around the world. Fortunately, her nine-employee company was prepared.
In fact, for Fekete, the article became the push she needed to move forward with her "Companies Are People, Too" product, which profiles a company's personality.
"It was a vision. What this did was make it a reality," Fekete says. "It confirmed that there is demand, and it made me more comfortable with going forward."
"Companies Are People, Too" is a 74-question, software-based questionnaire that takes the principles of personality type that were developed by Carl Jung, Isabel Myers and Katherine Myers-Briggs for individuals, and applies them to organizations.
Although Fekete admits she first queried the magazine about her idea back in 1997, she soon realized she needed more data and examples of how her product works before she could get Fast Company's attention. Ironically, the eventual decision to run an article on the product came a couple years later as the result of a conversation between one of Fekete's customers, Dixon Schwabl Advertising, and Fast Company.
"It came through a much more credible channel -- somebody who had experienced the product," Fekete says.
After being contacted for the article, Fekete had about 60 days before it hit newsstands -- and the businesses and homes of more than 500,000 readers nationwide. Not sure what to expect, Fekete positioned herself optimistically, redesigning her company's Web site to include a contact form.
This enabled her to respond via blanket e-mails, a concept she is grateful for today. That's because, even two months after the Fast Company article appeared, Fekete still had scores of e-mails in her in-box -- and that was only part of the response.
The first inquiries arrived about two weeks before the July issue of the magazine hit newsstands, after the online version became available. Inquiries came via e-mail from far-off places like Sweden, Venezuela, New Zealand and Australia.
From that point forward, the inquiries continued to stream in, mostly via the contact form on the Web site. The result: 14 organizations have signed on to use the product, numerous others are in the dialogue stage, two people have contacted Fekete about writing a book, and several consultants want to use the product as a tool when working with organizations.
While grabbing national media attention isn't easy, here's some advice from Fekete to get started:
- Make sure when you're ready to seek publicity that you start small, if you can. Test the waters locally first.
- Don't underestimate the power of national publicity. You can look very foolish if you get a tremendous response and you're not ready.
- Be choosy about the medium you pursue, making sure it targets your market. Fast Company is cutting edge and the people who read it can relate to what Fekete is doing.
- Maximize the power the Internet offers for responding to inquiries and capturing data that comes in with an inquiry. Include a contact form on your Web site to help mine such data.
While national media attention is great for a company, it may not be something you should try to do on your own, cautions Roger Morris, president of the Columbus/Franklin County News Bureau.
"Local firms starting out have no concept of media relations," he says. "They need outside help from a public relations firm."
But if you choose to attempt it alone, here's his advice:
- Use the Internet and resources such as PR Newswire to see how other news releases are being shaped and formed.
- It's not likely the Wall Street Journal will show immediate interest, so instead, send a release or pitch to a trade publication in your field.
- Establish a good Web site to promote your product or idea to the media.
- Be able to explain your business in layman's terms. Be concise when explaining what you do and what it means to the average consumer or interested party.
Lori Murray (Lori3204@aol.com) is a free-lance writer for SBN.