Todd Shryock

Monday, 22 July 2002 10:05

Critical mass

Being overweight is one of the most common health problems in America. With its associated costs in health care, productivity loss and absences, creating a voluntary employee weight-loss program might seem logical. But sometimes there are limits to how much help an employer can lend.

"When I initially started my position, I had all the zest and enthusiasm to make these type of programs successful, and they all failed," says Frayne Rosenfield, administrator of corporate health promotions for Kaiser-Permanente California, and a 15-year veteran of the industry. "The environment of the worksite is not conducive to behavior modification on an ongoing basis."

Rosenfield tried everything from simple support groups to intensive weight-control programs lasting six to eight weeks. One of her key findings was that for group weight control to work, people need to share their experiences. People also had to be ready to commit to the program.

"At the worksite, you find people that are in various stages of readiness," notes Rosenfield. "The people also had to see each other outside of the meeting, and it was difficult for a supervisor and a subordinate to share their loss of control or the fact that sometimes they got so angry they resort to eating candy. There is a certain face we put on when we go to work. We don't let down to people we work with."

Another element contributing to the failure of the programs is the challenge of the vending machine. Row upon row of candy, chips and munchies-all packed with calories and fat.

"I wish more corporations and small businesses would take out the trash that's in the vending machines," says Michele Trankina, a San Antonio-based nutritional consultant and a professor at St. Mary's University.

Companies can help employees make good choices by providing lists of calories, fat, cholesterol and sodium of each of the foods available in the machine. This will help them base their decisions more on health rather than cost.

"People may be best served by having the employer provide information directing them on where they can find services and support outside the workplace," says Rosenfield. "The employer should create an environment that is conducive to change."

See if discounts can be secured at a restaurant with a salad bar to encourage healthy choices at lunch.

"Help them avoid fast-food places," says Trankina. "There should be a room with a microwave and a refrigerator, so employees can bring their own healthy food. Encourage them to eat breakfast. Otherwise, by the time they get to lunch, they're stark raving hungry and will overeat."

The majority of people will change their behaviors only when they're ready. Only 5 percent seek out group support.

"They all need information though," says Rosenfield. "They need to know how to get where they want to go. Put that information in pamphlets, posters or a bulletin board. If possible, allow them flex time so they can exercise at whatever point in the day [it] works best for them."

Basic starting points.

For people starting to change their eating habits, weight should not be the primary emphasis.

"People can put a lot of pressure on themselves to lose 10 pounds," says Trankina. "But if they are exercising, they aren't going to lose much weight. They may lose inches, because the body composition will change."

You should weigh yourself no more than once per week. It should be at the same time, on the same scale, while you're wearing the same amount of clothing.

"Don't weigh yourself two to three times a day to see what is happening," warns Trankina. "That tends to have a dropout effect."

If you need a starting point for a diet, start by watching fat intake. Rather than counting calories or doing other calculations, try to limit yourself to no more than 50 grams of fat per day.

"You don't want zero, because you'll be hungry all the time and your body needs some," says Trankina. "You might be amazed at the results" of limiting the fat intake.

The biggest meals of the day should be breakfast and lunch, not dinner. You should also not eat within two hours of going to bed because your body does not have enough time to metabolize the food. Food that isn't metabolized is quickly transferred to fat.

"People have to realize most diets don't work because people have certain ideals or expectations of them self," says Rosenfield. "Most have a history of former failed diets. Diets in and of themselves don't work. A balanced eating plan does because it's something you live with. You have to sell that idea to yourself."

Monday, 22 July 2002 10:04

Other people's money

Lower interest rates have led to a flurry of loan refinancing in both the personal and business markets. Banks are offering highly competitive deals, and now might be the time to re-examine loan terms.

"It's not just the level interest rates, it's the aggressiveness of the banks that makes now a good time to do any sort of financing," says W. David Tull, chair man of Troy, Mich.-based Crestmark Bank. "Banks are very competitive not just in rates, but in terms. You can get a longer amortization schedule and you can borrow more against the same amount of assets than before."

Established businesses with a consistent earning pattern may be able to negotiate a deal a half percentage point under the prime lending rate. The heavy competition has brought rates to around 8 3/4 per cent for five- to seven-year loans.

"This is a good time if you want to re-leverage equipment," says Tull. "You can do it at a low rate, get the cash and amortize it over five to seven years. You could also pay down your working capital line with it and set yourself up for the next go around of expanding the business."

Even a non-established business can usually get a better deal.

"A newer business may not be able to get a fixed rate, but it may be able to drop to prime from prime plus 1 or 2 percent," says John Foster, a managing director for American Express Tax and Business Services. "Many businesses have a line of credit at a higher rate than prime. These are much like credit- card loans. When the rates drop, see if you can roll the credit line into a term line and amortize it over a 60- to 120-month period to help your cash flow management."

There are three points to consider when considering refinancing:

  • Rate. Generally, if you see a percentage point drop in rates, it's time to start looking at refinancing.

  • Costs. Always be aware of how much the loan is going to cost in processing fees or points. For example, if you refinance a $10,000 loan and save $500 in interest costs over the life of the loan, any closing costs must be less than $500 to make the transaction worthwhile. "A lot of banks are advertising no-cost loans," says Foster. "There might not be a loan-origination fee or points, there can be title costs or escrow fees if property is involved."

  • Term. This is how long the loan is financed. Typically, the longer the loan term, the easier it is to make up any fees or closing costs to justify refinancing. Term also affects monthly cash flow. The longer the term, the lower the monthly payment will be, thus the more cash you will have on hand. Sometimes a credit line is better than a term loan.

"If you're financing major equipment, then more than likely you should get a term loan, with a fixed five- or six- year payment period," says Foster. "If the business is seasonal, and you need the money to supplement your cash flow, then go with a line of credit. You can draw it down as necessary, and when the cash comes in, you can pay it partially or completely."

Too much debt?

The aggressive nature of banks means loans that previously would have been denied are being made. Don't assume that because your bank is willing to give you the money that it's the best move for the business.

If you're borrowing to pay for the day-to-day operations, it's a sure sign of trouble. Many owners wait too long before asking for help from a banker or accountant, leaving the experts little time to do anything about the problem.

"Sometime a bank is not doing you a favor if they give you too much money," says Tull. "You need to watch your cash flows carefully. A pattern of fast growth financed with debt is a dangerous way to finance your business. Reassess your financing. What happens if there is a 10 percent decline in your business? Make sure you can survive in a different economy. There are a whole series of companies out there that were born in this boom economy and have never seen bad times."

Monday, 22 July 2002 10:03

Free calling

When Bill Bradford and his partners at RBJ Manufacturing Co. Inc. started out in late 1996, they were like a lot of small start-ups: They didn't have a lot of money for marketing or advertising, but had a product that they thought would be a big seller.

"Not having the big dollar signs behind us, we really had to step out and try to get the product out there," says Bradford, who serves as vice president of operations. "We went to a lot of trade shows and depended on a lot of free publicity."

Because of the unique nature of the product - the Johnny-Light, a small device that illuminates the toilet whenever the seat is up-many newspapers and local morning shows took an interest. A key part of this strategy was having the toll-free number in place.

"I think it says to the customer that we are willing to pay for them to get more information about our product," says Bradford. "The number also gave the business an image of a much larger, established business."

With all of the company's early sales-the product has since been picked up by the Lowe's home-improvement chain-dependent on free publicity, it was important to have a toll-free number that people could remember as it was flashed on the TV screen or announced on the radio. While the 800 number that spells J-O-N-L-I-T-E was taken, the new 888 version was not, which led to at least one problem.

With the 888 series of toll-free numbers being relatively new, many people mistakenly say or write down 800 instead. A morning host was quite embarrassed after giving out the company's number using 800 instead of 888, only to find out that the 800 version was owned by a phone-sex company.

"It's what can happen because we had only the 800 number for so many years," says Bradford, who received quite a few calls after the host corrected the number the next day. "People giving out the toll-free number has really kept us afloat, and that's key when you're a small business and can't get a forum with any of the major retail stores. I think the three keys to our success have been our product design, the packaging and the toll-free number."

Gary Andresen, vice president of marketing for Altigen, originally established that company's toll-free number for employees working in the field and certain dealers of their telecom servers.

"It was originally not used in our advertising literature at all," says Andresen. "We just used our regular number."

As the company grew, they realized that the target market of small business was very cost-conscious, and listing the toll-free number for their use to learn more about the products was smart business. Before the change, the toll-free number represented about 11 percent of Altigen's total long-distance bill, and now represents about 25 percent. Andresen estimates that 75 percent of all the users of the toll-free number are interested in obtaining more information about products.

"Our number has definitely helped our image," says Andresen. "Image is so important, and were a younger company. It gives us the image of a well-established business."

Like RBJ Manufacturing, the 800 version of the vanity number that spells A-L-T-I-G-E-N was taken, but the 888 version was available.

"It really doesn't cost that much," says Andresen. "The rates are very competitive, and I think if a business doesn't have one, they are at a real disadvantage. When people are looking through a magazine or a phone book, they are always going to make the free call first."

Getting a toll-free number set up is a simple process. Call your current long-distance carrier to get started. If you want a vanity number, the phone company will have to perform a search to see if that number is taken in either the 800 or 888 series. Bradford says his number was set up and ready in three to five days from his initial phone call.

Once a number is assigned, you may switch long-distance carriers without having to sacrifice the number. Costs vary, but there typically is a monthly charge along with a per-minute usage rate.

Like any new service, shop around to find out who has the most competitive prices. Even if you don't want to switch, you can often use the information from a competing carrier to get your current phone company to match the offer.

Monday, 22 July 2002 10:02

Road rage

A recent study by the American Automobile Association showed that 45 million people engage in some form of aggressive driving. How many of them work for you?

With the ever-growing risk of legal liability for the actions of your employees, can you afford to have reckless drivers weaving and speeding through traffic in a vehicle that has the name of your business on it?

"Our 21st century technology has outpaced our biological evolution," says John Garrison, director of stress management programs at the Lahey Clinic in Burlington, Mass. "We are equipped as a caveman, with a fight or flight response, and there's no place for that at the end of the century. Our body is a poor fit for high-stress driving. Someone will be driving on a major highway at rush hour and have to be at work in 20 minutes. There will be a fairly smooth flow of traffic, then they'll suddenly come across an accident that has traffic blocked."

The stress builds as the person perceives the situation as threatening; it's keeping them from doing something they feel is important.

"Their physiology has no outlet," says Garrison. "An age-old response can be stimulated just by how they perceive the situation. When they experience a stress response with no outlet, they are tempted to do something less than rationale."

Everyone has seen or read about some of the more irrational responses-excessive speeds, weaving through traffic, cutting off other drivers and even physical attacks.

"People need to learn they can't change events; you can't get out of the traffic jam," notes Garrison. "They can change their perception. They need to practice a relaxation technique to reduce their fight-or-flight response."

Simply taking a deep breath, holding it, then exhaling slowly will help.

"You can't be relaxed and angry at the same time," says Garrison. "Your body is reacting to high-stress events in a way that prepares to kill somebody, and that's where road rage comes in. A deep sigh is a very powerful technique because most people when they are angry are taking short breaths and their muscles are braced for combat."

Studies have shown that the levels of stress hormones in the bloodstream of people driving in heavy traffic can reach similar levels to those who have just come out of combat. To the body, there is little difference.

"People see the body of their auto as an extension of their own body," says Garrison. "When someone cuts them off, the person is performing a combat maneuver. The deeper part of you interprets that as an attack, and your response is to retaliate."

By providing drivers some stress management techniques, a business can not only reduce its potential for accidents and lawsuits, but can also reduce the amount of medical plan utilization and turnover.

"There are some simple things you can do: Make sure the driver is comfortable in the vehicle, have music or a book on tape to listen to, practice a relaxation strategy and think realistically," notes Garrison. "Is driving somewhere worth dying for? What's the worse thing that can possibly happen if you're late? Don't personalize someone cutting you off."

After all, the person is exhibiting irrational behavior. If you saw someone in a store acting irrationally, you would probably keep a wary eye on them and avoid them if possible. Do the same thing on the highway. Don't challenge them, give them space and let them go.

The AAA report on aggressive driving shows the number of reported incidents rising more than 8 percent per year, so stress management behind the wheel will most likely grow in importance. Many of the more violent incidents were the result of trivial matters: arguments over parking spaces, cutting another motorist off or refusing to allow passing, obscene gestures, tailgating, failure to use a turn signal and slow driving.

AAA recommends the following:

  • Never underestimate the other driver's capacity for mayhem.

  • Do not make obscene gestures.

  • Use your horn sparingly.

  • Don't switch lanes without signaling.

  • Avoid blocking the right-hand turn lane.

  • Do not allow your door to hit the car parked next to you.

  • Do not tailgate

  • Don't let the car phone distract you.

  • Assume other drivers' mistakes are not personal.

  • Be polite and courteous, even if the other driver isn't.

  • Avoid all conflict if possible. If another driver challenges you, take a deep breath and get out of the way.

Many otherwise peaceful motorists become enraged road warriors when they get behind the wheel. If you're one of them, be advised that: (a) cars are not bulletproof; (b) a truly aggressive driver will follow you home; (c) you've got to get out of the car eventually.

If you are tempted to participate in a driving duel, ask yourself: "Is it worth being paralyzed or killed? Is it worth a jail sentence?" An impulsive action could ruin the rest of your life.

Monday, 22 July 2002 10:02

Money to burn

Your company just burned to the ground.

Are you prepared to deal with the aftermath? The building and contents were probably insured, but it will take a year to rebuild. What's going to happen to your customers who need product tomorrow? How will you make payroll?

Unfortunately, for many businesses, these questions are not asked until after the fact. Some are lucky and able to set up temporary operations elsewhere until they recover, while others have to close permanently.

Business interruption insurance is one tool that may help your business survive in the face of disaster. Business interruption policies are intended to reimburse policyholders for profits they would have earned if not for an event such as a fire. They are typically issued as an endorsement to property policies or can be bought separately.

When looking at a policy, examine the details carefully. Will your business be covered if you only have to operate at reduced capacity rather than shutting down entirely? Will you be reimbursed if the company is operating at a loss at the time of the disaster?

"Policyholders and insurance companies often interpret policy terms and conditions differently," says Clarissa Weiant, an attorney with the Washington D.C. law firm of McKenna & Cuneo.

Most business interruption policies require a policyholder:

  • Incur a necessary suspension of business income operations. A necessary suspension may also include a slowdown in some circumstances. One company successfully argued that even though it resumed operations in a new location within one day of a fire, the new location had fewer phones and was thus costing it business. Most policies also require the business to begin operations as soon as possible after a loss.

  • Suffer direct physical loss of or damage to property at the the premises. Covered losses are usually limited to fire, lightning, explosion, windstorm, hail, smoke, riot, vandalism, sprinkler leakage, sinkhole collapse, volcanic action, breakage of glass, falling objects, weight of snow, ice, aircraft or vehicles and water damage. Weiant says if a business operation is suspended as a result of both a covered and an uncovered peril, insurance companies often argue that no coverage exists because policies sometimes require that the business income loss be "solely by" a covered peril.

  • Suffer an actual loss of business income. Business income is sometimes defined as "net income that would have been earned or incurred, and continuing normal operating expenses incurred, including payroll." The problem is determining how much a company would have earned, and what happens when the company was operating at a loss.

"A company should safely store the records they need to prove what their inventory and revenues were," says Weiant. "The big problem is when the building burns down with the records in it. That's why they should be kept off site."

Otherwise, an estimate will have to be determined from vendors, bank accounts and other receipts that may be able to be tracked down.

If your business has a seasonal increase in sales, be ready to prove it with yearly records. Also, fast-growth companies may have sales that won't accurately be reflected in last year's reports. Any suspension in business will likely hurt a small, growing company more than an established one. Weiant recommends that growing companies keep track of market trends, their growth potential and the manner in which a business interruption may have an impact on their future business. A business operating at a loss usually only receives operating expenses, and any additional revenue needed must be taken from that.

Beware of exclusions in the policy. Losses from governmental actions, including those from the Food and Drug Administration or Securities and Exchange Commission, may not be covered. Losses occurring off premises may not be covered either.

For companies that heavily rely on information, be very careful in understanding how computers will be replaced. Some policies will only cover the loss of the computers, or income lost until the computers are replaced. There may be no allotment for the actual data on the computers. If your business is selling databases, or is heavily information based, the loss of the data is far more significant than the loss of the computers and any policy should reflect that fact.

Policyholders have certain duties under business interruption policies. Weiant recommends the following in the event of a loss:

  • Notify the police if a law may have been broken.

  • Give the insurance company prompt notice of the direct physical loss or damage. Include a description of the property involved.

  • As soon as possible, give the insurance company a description of how, when, and where the direct physical loss or damage occurred.

  • Take all reasonable steps to protect the covered property from further damage by a covered cause of loss. If feasible, set the damaged property aside and in the best possible order for examination. Also keep a record of your expenses for emergency and temporary repairs for consideration in the settlement of the claim.

  • As often as may be reasonably required, allow the insurance company to inspect the property proving the loss or damage and examine your books and records.

  • Send the insurance company a signed, sworn, proof of loss containing information the insurance company requests to investigate this claim. You must do this within 60 days of the insurance company's request. The insurance company will provide you with the necessary forms.

  • Cooperate with the insurance company in the investigation or settlement of the claim.

  • If you intend to continue your business, you must resume all or part of your operations as quickly as possible.

Monday, 22 July 2002 10:01

Direct route

Technology has become almost invisible. Microchips and interconnectivity have been incorporated into so many different products that most people don't even think twice about it.

One exception is on the roadways. Your car may be able to create climate control for both the driver and passenger or tell you the back left door isn't all the way shut, but when it comes to navigation, there's a lot left to be desired. Sure, some high-end models now have satellite navigation systems that help you find your way, but the majority of people are still looking for a sign nailed to a post that tells them where to go. And even on-board navigation can't tell you there's a wreck ahead that has traffic stopped. Not yet, anyway.

That's where Intelligent Transportation Systems come into play. These technologies, which run the gamut from the mundane to extreme high tech, are making transportation networks more efficient.

"ITS is people using technology in transportation to save lives, save time and save money," says John Collins, president and CEO of the Intelligent Transportation Society of America, a public-private partnership dedicated to fostering the use of advanced technologies in transportation systems. "There are two perspectives that apply to small businesses: What opportunities do they have to be vendors in the ITS world, and what opportunities do they have as potential consumers to differentiate themselves from competitors."

Smart selling

The selling opportunities in ITS are many for small businesses. Creative entrepreneurs don't even need to make the actual products.

One small business in Virginia simply integrated three existing technologies to sell as an integrated product. It took an electronic message board, a road sensor and cellular technology and packaged it together to produce a state-of-the-art traffic device. When the sensor detects slow or stopped traffic, a message is relayed to the police department and back to the message board, which displays a warning message to other motorists.

"The company doesn't make signs or cell phones, they just stitched the three parts together to create an integrated system," notes Collins.

Another company incorporated the use of light emitting diodes into traffic lights. LEDs are more reliable and have a higher light output than traditional bulbs.

"That's the lower end of high technology, but they took an existing product and found a new application for it," says Collins. "There is an immense opportunity out there for people who take applications that are well understood and apply them in new ways."

Smart buying

ITS also provides ways to gain an advantage over the competition, or at the very least, improve your efficiency.

Several cities are developing sophisticated congestion reporting systems that are accessible to the public.

"The idea is, someone in the courier business who knew this was out there, could more efficiently dispatch their vehicles," says Collins.

The concept of routing vehicles along the quickest route as they travel is known as "dynamic scheduling," and can vary from city to city, depending on how the technology is set up. Some allow for pagers to be tied into a particular traffic route, with messages being issued when that route is congested, while more advanced concepts go even further. One example is a sort of mini-computer like a PalmPilot that not only shows a map of the area, but notes construction and current traffic backups.

Transportation technology has been most evident in vehicles themselves, and will continue to become more prominent. General Motors is introducing night vision that allows you to see beyond what the headlights illuminate. Common technologies such as cruise control are also being improved.

"If you set cruise control for 60 miles per hour, it will drive you 60 miles per hour into an accident," says Collins. "Freightliner right now offers an adaption of cruise control that ties in with radar that slows down as you approach traffic."

Trucks are also available with side-looking radar. Because of their size, trucks have large blind spots. The radar gives a warning if a vehicle is in one of the blind spots.

Public transit is also taking advantage of technology. Buses in Seattle have their exact locations shown on the transit system's Web page. Someone taking the bus could check the Web site in the morning to find out how far away the bus is before going out to stand in the rain or snow.

Some buses in Pittsburgh were having problems with vehicles running into the back of them. A radar unit tied into a small warning sign has been installed in some buses. When a car approaches the rear of a stopped bus, a stop sign begins to flash. If it continues to approach, a warning horn sounds.

"The message is to look at real problems in transportation, look at where someone is losing money and efficiency, and see if there is technology that will fix the problem," says Collins.

What is ITS?

Intelligent Transportation Systems make use of technology to improve the movement of people and goods in America. The goal is safer, quicker travel. Benefits that are available now include:

  • Better travel information. Information centers provide up-to-date, real-time details on bus, transit and train arrivals and other travel information through cable television in the home, kiosks in the workplace and electronic messages at the bus stop.

  • Quicker emergency response. Electronic accident detection allows trained operators to locate and judge the nature of an accident so they can quickly dispatch and guide the right emergency personnel and equipment to the site.

  • Easier, safer travel. Navigation systems in cars and trucks tell drivers exactly how to get to their destination. Intelligent cruise control will automatically adjust a vehicle's speed when in traffic, reducing rear-end collisions and lowering vehicle emissions. "Mayday" systems inside vehicles which automatically alert police, fire and other emergency personnel of an accident will become widely available.

  • Improved traffic flow. Drivers with a toll debit card attached to their vehicles can travel through toll plazas without stopping. Toll charges are deducted automatically from a prepaid account. Other travel fare collection systems, such as smart cards, allow subway fares, transfers and other fees to be charged to one card.

  • Fewer traffic jams. Traffic management centers reduce traffic jams and speed travel by continuously monitoring current conditions and adjusting speed limits, traffic signals and roadway ramp access.

  • Improved fleet management. Bus, freight and emergency vehicle tracking systems allow supervisors to track vehicles and to communicate directly with drivers.

  • Faster freight deliveries. ITS provides for electronic weighing and inspection of commercial vehicles while in motion, electronic issuing and monitoring of transportation permits and automatic tracking of containers.

Innovations both inside and outside the vehicle will improve safety by checking a driver's vision and motor skills, providing on-board road sign and vision enhancements, warning of vehicles and other obstacles in a blind spot and preventing vehicles from hitting other objects on the road through vehicle control and warning systems.

  • Improved safety. ITS technologies warn drivers they are too close to a car in the next lane or are in danger of running off the edge of the road.

New traffic control systems can reduce the number of vehicle stops, minimize changes in vehicle speeds and improve traffic flow-all of which reduce accidents.

Monday, 22 July 2002 10:00

Taking stock

Mutual funds have become one of the most popular investment tools available, and have contributed to the upsurge in the stock market. But is your conglomeration of stocks really maximizing your investment potential? Bill Staton, chairman of The Staton Institute, an investment training company, says no.

“The average money manager has been in the business for three and a half years,” says Staton. “They were all in high school during the crash of ’87. They haven’t seen the market in bad times. When I talk about 1973 and 1974, their eyes roll back and look at me like ‘what’s this old geezer talking about?’ Those were the worst two years since 1930.”

Staton recalls losing 75 percent of his portfolio value as stocks nosedived. McDonalds lost 89 percent of its value and companies such as Avon and Eastman Kodak never recovered all of their losses. The lack of bull market experience, along with results showing most mutual funds lagging behind the market even in good times, is why Staton recommends buying certain stocks outright, rather than shares in a mutual fund.

During the last 35 years, only 23 percent of stock mutual funds have equaled or beaten the market.

“Your odds of getting a fund that beats the market are less than one out of four,” says Staton. “Your next stumbling block is with more than 9,000 funds out there, how do you pick the best one? It’s intensely interesting that when mutual funds advertise, they rarely compare their record to a benchmark index—not because it’s illegal, but because their record isn’t as good.”

The hot mutual fund in one investing guide may be next month’s goat. The roles may reverse several times over the course of a few months. When you take a fund’s return, subtract management fees and expenses along with taxes, it has probably under performed the market by a fair margin.

“By looking at what stocks make up the Dow, you could create your own index fund,” says Staton. “Diversification through a mutual fund is a myth. You only own one security. Why do you need 200 companies when you really only need 10 good ones?”

Following his losses in the crash of ’73-’74, Staton started a massive research project to find which companies consistently outperformed the others on an annual basis.

“I wanted to come up with a universe of companies so good, it would be like having a team of Michael Jordans,” says Staton. “We isolated the companies that showed 10 years of higher dividends and/or earnings per share and called the group ‘America’s Finest Companies.’”

Today, out of 16,000 public companies in the United States, only 397 are listed in that group.

“My investing methodology is simple: Pick five companies in different industries off the list, and put the same dollar amount into each one. You end up with companies like Coca-Cola, Anheuser-Busch, Merck—but not AT&T.”

Before dumping your mutual funds and investing directly in stocks, Staton recommends examining the tax consequences carefully. If the tax hit would be excessive, stay in mutual funds and divert any new money directly into stocks. As many as half of all 401(k) plans now allow for the direct purchase of stocks rather than shares of a mutual fund, so that may be another option.

“Unless you have no other choice, forget about mutual funds and invest directly in stocks,” advises Staton. “I’ve never been in anything except U.S. stocks and you can make a lot of money.”

For more information, go to or call (800) 779-7175.

Monday, 22 July 2002 10:00

Outsourcing dilemma

Just about every business magazine and industry consultant has mentioned the benefits of outsourcing. On the surface, it makes a lot of sense: your expertise is in making widgets, not administering benefits or fixing computer networks. The people that do those things cost a lot of money, you’re a small company, and it’s important to keep the payroll as lean as possible.

Like most areas in business, there is efficiency in numbers. Outsourcing companies combine many jobs from businesses and handle them in bulk, doing it cheaper and more efficiently than you could do it yourself—or at least that’s the way it’s supposed to work.

“Outsourcing can be a valuable tool if it is done properly,” says Greg Hackett, president of The Hackett Group, a benchmarking and research firm based in Hudson, Ohio. “Companies oftentimes want to focus on other things, so they take some transaction and throw it to an outside agency. You have to keep in mind that those people are in business to make lots of money, and some of them have figured out ways to take you to the cleaners.”

The biggest motivator in sending work out is usually the lure of cost savings. Why pay a human resources person $40,000 a year in salary and benefits when you can let a third-party administrator do the same work for only part of that cost? But many companies have found that outsourcing actually costs them more.

Studies by The Hackett Group show that it is not uncommon for costs to rise 7 percent through outsourcing.

“Before you give a task to a third-party administrator, be in a position where all interfaces with them are simple,” notes Hackett.

Companies can be lured in with a transaction cost of $1 or less, but then nickel and dime themselves to death with additional demands and by generating additional work for the administrator. A few additional calls requesting additional information might turn that $1 transaction into a $10 transaction. The savings you obtained through outsourcing have just vanished.

“To make it work, make sure your practices and policies are very simple, and you have to make sure—and we see this all the time—that you are not a pain in the ass,” says Hackett.

The more hoops you make them jump through, the higher your fees will be. Many of their efficiencies are achieved with a one-size-fits-all philosophy, not tailoring each program to each business, so they have to charge for the extra work. Hackett saw one larger employer that had $37 million in “penalties” for basically being a pain in the rear end.

If you are not willing to abide by their policies, you are probably better off keeping the functions in house, saving you both time and money in the long term. For some smaller companies, outsourcing can really be a catalyst to growth. Outsourced functions such as payroll, accounts receivable, benefits administration and other complicated tasks can free up time and money to invest in other areas more critical to the success of the business.

“Just think before you jump in,” says Hackett. “Don’t think, ‘Let’s just dump this so we can concentrate on something else,’ because it’s much more complicated than that. You can really cause yourself a lot of problems. Don’t do it unless you have to.”

For more information, go

In or out?

Business leaders outsource tasks such as human resources or information systems for a variety of reasons, including:

  • Lowering operating costs

  • Increasing service quality

  • Reducing business risk

  • Finding a source of scarce skills

  • Refocusing management

But many have discovered that:

  • Most world-class companies outperform outsourcers in costs and productivity.

  • Early projected savings vaporize as exceptions, special requests and increased volumes arise.

  • Much of the front-end and back-end work remains with the company—not the outsourcer.

  • Service levels are highly variable.

Source: The Hackett Group

Monday, 22 July 2002 10:00

Motivating factors

While there may be as many different approaches to work as there are working Americans, a recent poll suggests most of the country’s work force can be grouped into six categories: fulfillment seekers, high achievers, clock punchers, risk takers, ladder climbers and paycheck cashers.

These are among the major findings of the first Shell Poll, a new quarterly opinion survey of Americans conducted for Shell Oil Co. by Peter D. Hart Research Associates.

Each group represents about one-sixth of the work force. Workers were grouped as follows:

  • Fulfillment seekers: A large majority (87 percent) believe a good job is one that “allows me to use my talents and make a difference” rather than one that provides a good income and benefits. Fully 88 percent say they have a career as opposed to a job, while eight in 10 prefer both working in a small business and a stable income, even if there is little chance of great financial success. They are mostly white (83 percent) and married (59 percent), though they are almost equally male (49 percent) and female (51 percent). Most (68 percent) are satisfied with their jobs, and a substantial majority (72 percent) say they are team players rather than leaders.

  • High achievers: This is the highest income group, with nearly a quarter earning more than $75,000, and the group with the highest educational achievement (53 percent have a four-year degree or more). A large majority (90 percent) of high achievers say they have followed a career plan since a young age. Most (81 percent) are leaders who take initiative, and most (86 percent) believe they have a career rather than a job. A majority hold managerial positions (54 percent) and are male (58 percent). Further, a substantial number (47 percent) expect to work for four or fewer employers during their career, and 80 percent say they prefer the stability of one employer.

  • Clock punchers: These are the least career-oriented of any group surveyed, with 95 percent saying they have a job rather than a career. Further, 96 percent say they ended up in their jobs largely by chance, and nearly three-quarters say they would make different career choices if they could do it all over again. This group is by far the least satisfied of any, with just 35 percent saying they are completely or mainly satisfied. Clock punchers are predominately female (59 percent), have the lowest household income (35 percent below $30,000) and are the least educated—only 18 percent have four-year college degrees, while half have a high school diploma or less.

  • Risk takers: Members of this group are far more willing than others to take risks for the opportunity for great financial success (84 percent). They are also the only group that likes to move from employer to employer in search of the best job (76 percent) and most (54 percent) believe the trend toward people holding many different jobs is a good thing rather than a bad thing. This group is young (45 percent are under the age of 35) and largely male (60 percent). They are fairly well educated, with 43 percent holding college degrees, and have good incomes (41 percent have household incomes of more than $50,000).

  • Ladder climbers: These workers are “company people,” with 93 percent saying they prefer the stability of staying with one employer for a long time. A substantial majority (78 percent) prefer a stable income over the chance of great financial success; consider themselves to be leaders (86 percent) rather than team players; and say they are inclined to stand up to the boss rather than avoid conflict (94 percent). Four in nine say they would change cities to stay with their current employer, and half are baby boomers (age 35 to 49). A majority (53 percent) are women and most have significant incomes (48 percent more than $50,000), even though they have modest educational backgrounds (just 27 percent are college graduates)—the reverse of fulfillment seekers.

  • Paycheck cashers. Most members of this group (62 percent) prefer jobs that provide good income and benefits over ones that allow them to use their talents and make a difference. Although 62 percent say they will take risks for a chance at achieving great financial success, 94 percent want the security of staying with one employer for a long time, and 73 percent are team players rather than leaders—the opposite of risk takers. This group is young (46 percent are under 35) and male (61 percent). Most (70 percent) do not have a college degree, work in blue collar (39 percent) or nonprofessional white collar jobs (34 percent) and prefer working in a large company or agency (64 percent).

Monday, 22 July 2002 09:59

The magic box

In an effort to stay competitive, many companies have given their sales forces laptop computers as a powerful tool to make selling easier. But some of those same companies have neglected to train their people how to use the laptop, effectively investing several thousand dollars in something that will probably never show a return.

"Don't fall into the trap of believing that because they've had computers and are technically good at using them, that they know how to use them on a sales call," says Dick Elder, president of TEAM Marketing Group, an Englewood, Colo.-based sales consulting firm. The key is knowing not just how to use a computer, but how to use it on a sales call.

Laptops can help break down many of the barriers between salesperson and prospect, including the physical "wall" of the desk. In a traditional sales call, the salesperson hands literature across the desk or table and reads upside down as he or she highlights the benefits of the product or service.

"With a laptop, the opportunity is different," says Elder. "You are able to get around the desk and get shoulder to shoulder and go through the presentation together. It's a different selling environment. People are excited about looking at something new and different and it really says something about your business. It shows that you are in tune with the speed of business."

A laptop also helps your company give a consistent message, because every salesperson is working off the same presentation. While the elite salesperson may have excellent communication skills and be able to paint a picture with words, the lower group of your sales force probably doesn't have that ability. The laptop presentation can strengthen your sales force by allowing the computer to make up for their deficiencies. With the proper training, a company can start seeing a return on laptop investment in a few months.

"I think the small business owner is always working to compete with large corporations," notes Elder. "The laptop levels the playing field. It's an investment they can afford and it puts them on par with larger competitors immediately."

Product spotlight

TEAM Marketing, a sales consulting firm, sells "Shoulder-to-Shoulder Selling," an interactive training program that explains how to use a laptop to present your products and services, answer questions and overcome objections.

Each $199 kit comes with a video, CD-ROM and reference book. The training can be self-study or done by a trainer.

Sales calls are broken down from preparing for the sales call to ending it. A few points from the program:

  • The presentation should be ready to run when the laptop is opened. The salesperson should boot up the machine and load the presentation before beginning the call, then put it in suspend mode until it's needed.

  • Learn when to close the lid of the laptop to keep the attention focused on the message and not the technology.

    For more information, call (800) 262-6992, or go to

Why issue laptops?

Laptops can make your sales force more effective by:

  • Demonstrating complex or nontransportable products or services through the use of multimedia presentations.

  • Allowing a more personal feeling by bringing the prospect out from behind the "wall" of the desk to sit beside the salesperson.

  • Standing out from the crowd with a presentation that is far more exciting than printed literature would be.

  • Sending the message that your business is in tune with the fast pace of business today.

  • Increasing the ability of the less-talented salesperson to communicate complex ideas.

But sales training must include the use of a laptop during a call or you may have purchased a $4,000 paperweight.