Carolyn LaWell

Friday, 25 September 2009 20:00

Space exploration

Savvy CEOs are taking advantage of the slumping commercial real estate market by evaluating whether their space meets their needs while the cost to buy or lease is low.

Commercial real estate prices fell again in the second quarter, showing an 18 percent national decrease compared to the previous quarter, according to Massachusetts Institute of Technology Center for Real Estate’s index. The drop placed the price index 39.2 percent below its 2007 second quarter peak.

Clearly, the market is experiencing volatility, but opportunities are presenting themselves.

“Because of the economic downturn and the challenges that are out there, this is frankly an excellent time to buy or even lease almost any kind of real estate,” says Pete Davisson, founding partner, Jackson Cross Partners LLC.

Whether you’re searching for a new property or hoping to reconfigure space for efficiency’s sake, cost savings can be yours. The first course of action is to connect with an experienced commercial real estate broker to weigh your options because there are plenty of them.

Debate to buy versus lease

The decision to buy or lease property has less to do with the current state of the market and more to do with each company’s individual circumstances.

Think about your industry, your strategic plan, your company culture and what those will look like five or 10 years from now; then add the amount of capital you have for discretionary spending. Most companies lease to stay adaptable.

“There’s not that many office buildings for sale, so I would say it’s a better opportunity to lease today,” Scott Mertz, vice president and principal of NAI Mertz says about the southern New Jersey market. “The reason I’d say that is again because owners want to keep their properties leased.

“You really can play one landlord off the other landlord to try to capture the best deal.”

One of the bigger challenges facing the market today is that the capital markets are at a standstill, leaving few lending opportunities for those looking to buy. The loan-to-value ratio has changed dramatically. Once, you were putting 10 percent to 30 percent down for a loan; today it might be as much as 50 percent.

“If you can buy, it’s a good time because the values are down a little bit,” says Tom Skiffington, president and CEO of RE/MAX 440. “Your interest rates are favorable while you still get the tax advantages.”

It’s important to work with your broker to analyze your options and ensure the best deal, especially because prices and volatility vary by market and even within markets. Renting sublease space may even be the way to go because it’s cheap, but be sure to investigate the leaser’s financial standing before signing anything.

No matter what your decision, you’ll more than likely see savings because sales prices have fallen and landlords are becoming more and more creative with incentives to retain and attract tenants.

Renegotiate your lease

If your lease has been tucked away, dust it off and read the fine print. Renegotiating your lease can lead to immediate savings and even allow you to get better use out of your space. Again, the returns may vary based on your landlord’s willingness to bargain, but your market insight can be used as leverage.

Before you go to your landlord, there are a few questions to ask yourself. First, how much time do you have left on your lease?

“We believe it’s best if there’s two years or more left — it works a little better for you because there’s enough period of time there for you to get a reduction in your current rent, which makes it worth while,” Davisson says.

Second, how much time do you commit? If you discuss the popular blend and extend deal, where you sign a lease extension in exchange for reduced rent, you have to think about whether the space will continue to meet your needs for that length of time.

Third, can you give back or add space? If you’re cash-strapped or your company has reconfigured its employee base, maybe you can work the renegotiation in a way that better uses your space, such as adding or subtracting square footage.

Fourth, use your broker to research your landlord’s financial position, such as insight on how large the mortgage is and whether your landlord has good credit. The information can be insight on how your landlord is weathering the economy.

Fifth, research your options in the marketplace. Even if staying makes the most sense, at least you can present your landlord with the possibilities that wait should you leave. Some landlords are offering free rent, moving allowances and increased tenant improvement dollars.

“There are two ingredients to make it work,” Davisson says about renegotiating. “It has to be something that is a win-win situation — win for you the tenant and win for the landlord the owner of the building. But before you even get to that point, you must evaluate what you have and where you are, and you must like where you are.”

Consider more than just costs

Before you sign next to the X, take into consideration more than just the monthly dollar amount you’ll be paying. The general checklist for picking property once emphasized location, employee driving time and amenities. Those concerns remain important, but the current state of the economy has also brought to light the need for efficiency, flexibility and sound deals.

Working with a broker will allow you to receive the best bang for your buck, meaning fair market value, tax breaks, relocation incentives, landlord concessions and operational costs, while making sure it’s a strong deal.

The real estate crisis has left landlords hurting. Work with your broker to determine whether your landlord is currently facing or could face financial distress and how that affects the tenant improvements or possible free rent he or she promised.

Nonetheless, you should take the time to work agreements into your lease that protect your rights as a tenant if your landlord forecloses on the property and the lender takes over. Time and savings might also be found in the long run with contraction, addition and termination agreements for flexibility.

“A lot of the tenants have been asking to go into landlords that have multiple spaces in case they outgrow their space they have the ability to grow into another space,” Mertz says.

Flexibility is key for surviving this economy — and that includes your real estate. Your broker will have a space planner who can help you efficiently design the space you’re in or determine which space best suits your company. Companies are saving money by going to open floor plans, narrowing cubical sizes and hoteling, which supports employees working outside the office and sharing desk space.

Whether you’re planning to buy, lease, move or stay, make sure you give yourself ample time — at least a year but probably longer depending on size — to ensure you’ve settled on the best choice for your company.

“There’s a lot of things to look at before the fact, before you start making decisions on what building to go with and whether you should buy it or lease it,” Davisson says.

Special Report

Philadelphia

Sunday, 26 July 2009 20:00

Customer comments

When the Casino Queen moved locations in 2007, it quickly became apparent to General Manager Tom Monaghan that some customers weren’t happy with the new space. And so, a $2.1 million entertainment venue will soon open to feed customer satisfaction.

But getting from Point A to Point B isn’t quite that easy. Step one and step two — realizing there’s a problem and talking with customers to understand its root — boil down to communication. And multiple forms at that.

To really communicate and understand your customers’ needs, you have to reach out to them in multiple ways, Monaghan says. Casino Queen, which brought in revenue of $160 million in 2008, uses three forms of focus groups and reaches customers through mail and strategically placed feedback boxes.

Listening is just the beginning, though. The most important aspect is the follow up, Monaghan says.

Smart Business spoke with Monaghan about how to effectively communicate with customers.

Make sure you’re gathering information from a range of customers. (The best way to communicate is) by being engaged with them. We do focus groups on an ongoing basis.

You get a group of people together, (let’s say about) 30, and you let them express their thoughts, their concerns verbally in the sense that you have controlled questions: What are your likes; what are your dislikes?

But you limit it to a smaller amount of questions that pertain to the company overall, and you give them the opportunity to speak.

When I’m doing it, if I’m doing it myself, I usually have somebody with me that’s recording their response.

A lot of the times you will secure the groups within your best players for their input because obviously they’re the most important to you.

That’s one format. The other way we’ve approached it here is by using an outside firm, (which) was randomly selecting groups of people off the floor in larger amounts, as much as 50, and direct questions would be answered and asked. The way they did this, it was a lot easier to compile the information. You would give them grading of excellent, poor, good, and they would only respond to the question in that format. There was not a verbal update, and … this was a computerized version so all the grading on the property or the product was instantaneous.

Maintain strong one-on-one communication with customers. One of the most important things is when you’re on your floor, you’re engaged with your customers, you’re talking to your customers.

When we talk about me being on the floor, indirectly that is a focus group because you’re listening to your guests on a one-on-one basis. I don’t necessarily solicit them with a list of questions; it’s usually just a, ‘Hi, how are you? How is everything going? Are they treating you right?’ And the guests will immediately take that opportunity to either (say) everything is fine, or if there’s some other things on their mind, they’ll share it with me.

You can call it whatever you want, you can call it quality time, sometimes it’s just as simple as your recognition to them as a regular customer. It’s really not that they’re giving you information a lot of times; a lot of times it’s just that you’re recognizing them.

Provide options for feedback. In our direct mail pieces that go out to our rated players, there is a direct e-mail address to me that is inclusive of it. So if you’re one of our players and you get the direct mail piece and you either want to compliment about something that went on or you have a complaint about something that went on, they have a direct contact to me.

It works very well for me in the sense that if there is some customer dissatisfaction, and I don’t care if it involves multiple departments, I can follow up on it immediately. And usually it’s less than a 24-hour time frame, I’m getting back to my guests letting them know what I found out about the problem, how we’re correcting the problem and resolving any issues they may have.

Follow up. Communication is the key but, more importantly, the follow up. So if someone expresses they had a wonderful experience, you have to be sure you go back and thank the employees that were named in part of making that experience great, or if there’s a problem, you find out what created the problem, communicate back with the guest and inform them of the changes that will take place in the future that will prevent it from happening to them again.

It really doesn’t matter if it’s the employees and/or the customers, the communication part of it is a lot of times people make many suggestions, but for one reason or another, it’s something that you can’t accomplish, you can’t just let it go. You have to explain to the employee and or the guest. Like all of this input that we got on the showroom, if for some reason, financially, we were unable to do it, it’s my responsibility to explain to them why, but that it’s not something we’re going to give up on, and we’ll proceed with it if we can.

And so there’s always follow-up. We have direct mail pieces that go out monthly. So anything new that’s going on, on the property, it can be updated to the guests monthly besides internal signage.

A good example (of follow up) is when we start construction on this new room, as the construction walls go up before the demo starts, our marketing team will wrap the outside of the drywall so our guests will know what this new room is going to look like from an exterior elevation as well as a blueprint or footprint of what the room will look like internally. It’s kind of like you asked for it, you got it, here it is.

How to reach: Casino Queen, (800) 777-0777 or www.casinoqueen.com

Sunday, 26 July 2009 20:00

Balance of power

You’ve probably met with your executive team and members of your staff to devise ways to weather this economic cycle on sound financial footing. But you may have forgotten to invite a key player to the table: your banker.

Whether you’re seeing red or thriving during this volatile time, it’s always helpful to ask for input from an outsider. Now is the time you should be thinking beyond just the products your bank offers and see your banker in the role that he or she aspires to be — your trusted adviser.

“A good business banker should be a key financial adviser and a strategic partner for a business, someone who really understands the day-to-day operations and future company goals,” says John Miller, senior vice president, market executive for the Orange County/Long Beach market, Bank of America.

Many businesses don’t think to communicate with their bank on a regular basis, which means missing out on a valuable, free resource, according to industry experts. Think of your bank for ideas and solutions for efficiency, especially now when you’re probably looking for answers.

To take advantage of your bank’s true role as a consultant, you must start by forming and maintaining a strong relationship around trust and communication.

Introduce yourself and your business

The first step in using your banker as an adviser is allowing time for him or her to get to know you and your business. Even if you’ve been partners for decades, invite your banker to your office or place of operation for a meeting.

While it’s important for the bank to learn about your operations, over time, it’s necessary for you to return the favor. A good relationship banker will introduce you to managers and key decision-makers in the bank, but if the introductions aren’t offered, take the initiative and ask for a meeting. The more people you know at the bank, the more likely your company will become a household name, the more likely you’ll know who makes the decisions and how they’re made and the more likely a smooth transition will occur if your contact leaves or is promoted.

“They should know more than just their relationship manager in their bank,” says Patrick Davern, senior vice president and regional manager for Orange County, California Bank & Trust. “They should have a relationship with their cash management officer. It might be appropriate to know the regional manager or even the CEO of the bank is important. And it’s also important for the bank to know more than one or two people in every company really for the relationship to be successful.”

Once the initial contacts are made, work to maintain those relationships with open and candid communication. Ask your banker how often he or she wants to hear from you. Is it once a month or once a quarter?

If issues arise in the meantime, don’t be afraid or intimidated to call your banker. One thing all bankers will tell you is that they hate surprises — both good and bad. The more they understand your financials, strategic plan and any changes in the company’s overall operations, the better they’ll be able to provide products and solutions to keep you on the right track.

“The key is when things are not going well is to communicate and communicate early,” says Scott Connella, market president for commercial banking, Southern California, Union Bank. “When we see a management team (saying), ‘Here’s the issues that are coming up, and here’s our plan,’ that gives a lot of credibility to that management team. Not only are they identifying issues that are coming, but they also have a plan to deal with them.”

Use your bank for regular counsel

Like your lawyer or accountant, use your banker as a true consultant. Whether you’re trying to stay afloat or even rapidly growing, your bank can help in navigating through this economic downturn and in planning for the future.

Once you’ve established a relationship and your banker understands your business and your industry, ask him or her to review your business plan. It’s one of the best ways to utilize your bank’s resources. And if you don’t have a plan, create one.

Your banker has a true advantage of having a national, regional and industry-specific perspective on economics.

“I think it’s important for the owners of the company and the bank to have an understanding as they’re looking forward, what is the bank going to be able to do to provide support, and then what support is the company going to be able to provide itself in terms of equity that’s being contributed,” Connella says about devising a strong business plan. “To me, those discussions are very important to have early on and have an understanding.

“(Secondly), there needs to be an understanding of the industry and what can the bank bring to the table, because we may have other clients or relationships that can assist that customer because of their industry expertise.”

There are a number of questions about your plan that you should be able to bounce off of your banker. Are the assumptions of your business plan reasonable for the current economic environment? How does it compare with other companies in the same industry? How can the plan be improved? What type of contingency plan should be in place? And finally, what products and solutions can the bank offer to help meet your company’s needs?

Take advantage of products and services

At least once a year, you should sit down with your banker to review the products you’re using. Perhaps you’re paying fees for a product you rarely use or technology has advanced and greater efficiency can be had.

“We sit down with our business clients frequently to review their current financial picture, their immediate goals and long-term goals and, as part of the process, review what products and services the client is currently using and what makes sense,” Davern says.

A relationship review with your bank can help you tackle ways to save money and save time.

One of the main priorities right now is maximizing cash flow. Among popular products today are rapid deposit solutions, a desktop scanner that allows you to automatically deposit checks into your account.

While you might be thinking short term, ask your banker about options that will help you now and in the future. Interest rates have dropped — perhaps you can capitalize on a new loan or refinance. Discuss with your bank how long you’ll need to borrow on a loan and how much money you’ll need to borrow to structure a plan and lock in fixed interest rates while they’re low.

But once again, banks seek to be an adviser. Some banks offer seminars and informational Web sites as additional resources to finding efficiency. If you have a responsible banker, he or she will be proactive and committed to seeing you achieve success.

“When your banker’s regarded as an integral part of the company’s extended management team, this allows them to leverage the bank’s full breadth of products and services, and most importantly, we’re able to tailor these products to the actual client and business needs,” Miller says.

Sunday, 26 July 2009 20:00

Balance of power

You’ve probably met with your executive team and members of your staff to devise ways to weather this economic cycle on sound financial footing. But you may have forgotten to invite a key player to the table: your banker.

Whether you’re seeing red or thriving during this volatile time, it’s always helpful to ask for input from an outsider. Now is the time you should be thinking beyond just the products your bank offers and see your banker in the role that he or she aspires to be — your trusted adviser.

“What we should be for that business customer is a part business consultant, part business partner, but we should be there to provide sound advice as to how to get through a tough economy,” says John Pelizzari, president and CEO, Fifth Third Bank, Central Indiana. “We don’t know the business as well as the owner, of course, but we do see a large sampling of businesses throughout our footprints wherever we operate, and we may have unique knowledge of the local economy that may be helpful to that business owner.”

Many businesses don’t think to communicate with their bank on a regular basis, which means missing out on a valuable, free resource, according to industry experts. Think of your bank for ideas and solutions for efficiency, especially now when you’re probably looking for answers.

To take advantage of your bank’s true role as a consultant, you must start by forming and maintaining a strong relationship around trust and communication.

Introduce yourself and your business

The first step in using your banker as an adviser is allowing time for him or her to get to know you and your business.

An important element of building a strong relationship is educating your banker on your business and your industry. That may be through multiple conversations or even swapping articles relative to the company and industry, says Randy Reichmann, president of the Indianapolis region for Old National Bank.

“The other thing, and it’s the most important thing, you’ve got to get people out to your place of business,” Reichmann says. “You’ve got to let them see what it is you do and how you do it and the challenges you face.”

While it’s important for the bank to learn about your operations, over time, it’s necessary for you to return the favor. A good relationship banker will introduce you to managers and key decision-makers in the bank, but if the introductions aren’t offered, take the initiative and ask for a meeting. The more people you know at the bank, the more likely your company will become a household name, the more likely you’ll know who makes the decisions and how they’re made and the more likely a smooth transition will occur if your contact leaves or is promoted.

Once the initial contacts are made, work to maintain those relationships with open and candid communication. Ask your banker how often he or she wants to hear from you. Is it once a month or once a quarter?

If issues arise in the meantime, don’t be afraid or intimidated to call your banker. One thing all bankers will tell you is that they hate surprises — both good and bad. The more they understand your financials, strategic plan and any changes in the company’s overall operations, the better they’ll be able to provide products and solutions to keep you on the right track.

“Nobody likes surprises, so being able to consistently let the bank know what’s going on with your company, what you expect to happen and having those very open, candid conversations is by far the best way [to maintain a relationship], ” says Gary Hentschel, president, KeyBank Central Indiana District.

Use your bank for regular counsel

Like your lawyer or accountant, use your banker as a true consultant. Whether you’re trying to stay afloat or even rapidly growing, your bank can help in navigating through this economic downturn and in planning for the future.

Once you’ve established a relationship and your banker understands your business and your industry, ask him or her to review your business plan. It’s one of the best ways to utilize your bank’s resources. And if you don’t have a plan, create one.

Your banker has a true advantage of having a national, regional and industry-specific perspective on economics.

“I think the thing that the bank might have that maybe (businesses) don’t have is the experience of working with a wide variety of companies,” Reichmann says. “And so if (the) company is coming to the bank and they’re saying, ‘Hey, we’re trying. We want to obviously be successful in this difficult economy,’ what can we do is the question they’re asking us.”

There are a number of questions about your plan that you should be able to bounce off of your banker. Are the assumptions of your business plan reasonable for the current economic environment? How does it compare with other companies in the same industry? How can the plan be improved? What type of contingency plan should be in place? And finally, what products and solutions can the bank offer to help meet your company’s needs?

The conversation with your banker should end with clear and feasible outcomes.

“Both should be looking at each other saying, ‘Here’s our current situation; here’s where we want to get to in the future. How do I get there?’” Pelizzari says. “It’s going to be a melting of ideas between the bank and the business owner.”

Take advantage of products and services

At least once a year, you should sit down with your banker to review the products you’re using. Perhaps you’re paying fees for a product you rarely use or technology has advanced and greater efficiency can be had.

A relationship review with your bank can help you tackle ways to save money and save time.

One of the main priorities right now is maximizing cash flow. Among popular products today are rapid deposit solutions, a desktop scanner that allows you to automatically deposit checks into your account. Another concern to hedge against is fraud.

While you might be thinking short term, ask your banker about options that will help you now and in the future. Interest rates have dropped — perhaps you can capitalize on a new loan or refinance. Discuss with your bank how long you’ll need to borrow on a loan and how much money you’ll need to borrow to structure a plan and lock in fixed interest rates while they’re low.

But once again, banks seek to be an adviser. Some banks offer seminars and informational Web sites as additional resources to finding efficiency. And many banks, if you’ve maintained honest communication with them, will honor your need for them to be flexible.

“Its incumbent for the bank to understand their clients’ business,” Hentschel says. “It’s incumbent upon the business to try to communicate everything that is going on, as well. If you have that type of open conversation and discussion with your bank, that’s going to yield opportunities for the bank to provide resources [and] some options and advise them on some things that could be positive for them as they work through a down economy.”

Sunday, 26 July 2009 20:00

Balance of power

You’ve probably met with your executive team and members of your staff to devise ways to weather this economic cycle on sound financial footing. But you may have forgotten to invite a key player to the table: your banker.

Whether you’re seeing red or thriving during this volatile time, it’s always helpful to ask for input from an outsider. Now is the time you should be thinking beyond just the products your bank offers and see your banker in the role that he or she aspires to be — your trusted adviser.

“Banks can be a sounding board and trusted adviser to help commercial customers understand and be aware of relevant trends that can impact their business,” says Alan Zang, senior vice president, middle market executive, KeyBank’s Cleveland district. “In volatile times, information becomes more valuable.”

Many businesses don’t think to communicate with their bank on a regular basis, which means missing out on a valuable, free resource, according to industry experts. Think of your bank for ideas and solutions for efficiency, especially now when you’re probably looking for answers.

To take advantage of your bank’s true role as a consultant, you must start by forming and maintaining a strong relationship around trust and communication.

Introduce yourself and your business

The first step in using your banker as an adviser is allowing time for him or her to get to know you and your business. Even if you’ve been partners for decades, invite your banker to your office or place of operation for a meeting.

“It’s all tied to really connecting the two organizations at a number of levels,” Nancy Huber, market president, Fifth Third Bank Northeastern Ohio, says about building the relationship. “When we bring a new customer on, I will very often be asked to go out and meet my counterpart in the new business, and we’ll bring out folks from all over the bank so that you’ve got many touch points, not just a single person.”

While it’s important for the bank to learn about your operations, over time, it’s necessary for you to return the favor. A good relationship banker will introduce you to managers and key decision-makers in the bank, but if the introductions aren’t offered, take the initiative and ask for a meeting. The more people you know at the bank, the more likely your company will become a household name, the more likely you’ll know who makes the decisions and how they’re made and the more likely a smooth transition will occur if your contact leaves or is promoted.

“I sense in the current environment, it’s really important for companies to keep in mind, especially if they feel like they’re facing challenges in terms of financial situations, (it’s) important for bank clients to know the decision-makers at their bank,” says Jerry Kelsheimer, president of the Greater Cleveland region, The Huntington National Bank.

Once the initial contacts are made, work to maintain those relationships with open and candid communication. Ask your banker how often he or she wants to hear from you. Is it once a month or once a quarter?

If issues arise in the meantime, don’t be afraid or intimidated to call your banker. One thing all bankers will tell you is that they hate surprises — both good and bad. The more they understand your financials, strategic plan and any changes in the company’s overall operations, the better they’ll be able to provide products and solutions to keep you on the right track.

Use your bank for regular counsel

Like your lawyer or accountant, use your banker as a true consultant. Whether you’re trying to stay afloat or even rapidly growing, your bank can help in navigating through this economic downturn and in planning for the future.

Once you’ve established a relationship and your banker understands your business and your industry, ask him or her to review your business plan. It’s one of the best ways to utilize your bank’s resources. And if you don’t have a plan, create one.

“Companies should ask banks to review bank statements and financial plans with a critical eye and not just provide the information to the bank for review but also ask for feedback,” Kelsheimer says. “It’s important to take the feedback seriously. Whether one agrees or disagrees with the banker’s opinion, it’s always good to get good objective information on what a bank might see in the marketplace relative to experience of the actions taken by other companies.”

Your banker has a true advantage of having a national, regional and industry-specific perspective on economics.

“One strategy is to sit down with their banker and ask for input as to what execution risks the bank sees in the financial plan,” Zang says. “If a company is able to adequately respond to the what-if scenarios that the banker may pose and it can still achieve its plan, then it is probably well crafted and well thought out. Another strategy is to sensitize the plan by testing the numbers under various outcomes.”

There are a number of questions about your plan that you should be able to bounce off of your banker. Are the assumptions of your business plan reasonable for the current economic environment? How does it compare with other companies in the same industry? How can the plan be improved? What type of contingency plan should be in place? And finally, what products and solutions can the bank offer to help meet your company’s needs?

Take advantage of products and services

At least once a year, you should sit down with your banker to review the products you’re using. Perhaps you’re paying fees for a product you rarely use or technology has advanced and greater efficiency can be had.

“I suggest that the banks should periodically be engaging with the business, not just to review financial situations or understanding of the business but also to review products and services that are needed and are being used by a client,” Kelsheimer says. “It’s typically in that setting that we’ll often find opportunities for cost savings or cash flow improvement.”

One of the main priorities right now is maximizing cash flow. Among popular products today are rapid deposit solutions, a desktop scanner that allows you to automatically deposit checks into your account.

While you might be thinking short term, ask your banker about options that will help you now and in the future. Interest rates have dropped — perhaps you can capitalize on a new loan or refinance. Discuss with your bank how long you’ll need to borrow on a loan and how much money you’ll need to borrow to structure a plan and lock in fixed interest rates while they’re low.

But once again, banks seek to be an adviser. Some banks offer seminars and informational Web sites as additional resources to finding efficiency. And many banks, if you’ve maintained honest communication with them, will honor your need for them to be flexible.

“You want a bank that has a broad spectrum of products and services,” Huber says. “Because a business is one thing today doesn’t mean it won’t change or grow into the future. I think it’s good to assume your bank can grow with you.”

Cleveland

Special Report

Sunday, 26 July 2009 20:00

Continuing momentum

Growth can be seductive and entrancing, says Steven A. Maxim, and sometimes the only way to continue to improve is to step back, let go of your successes and decide where the future really lies.

So to help him plan for future growth and surpass the $9.9 million the property preservation company posted in 2008 revenue, Maxim, president and CEO of Maxim Enterprises Inc., put a system in place to measure everything from accounts receivable to employee productivity.

Smart Business spoke with Maxim about how to monitor your growth to ensure future success.

Q. What are the keys to growing a company?

We’ve grown our company in a vertical manner, meaning that we’ve grown it very quickly. However, what we’ve seen is we haven’t really grown our company horizontally, and the approach that we’re taking now is growing horizontally, where we’re diversifying and going into some different areas.

We’ve taken a few steps backward to really build our infrastructure better.

This is a tough thing. When you’re growing so fast, you almost don’t realize where you’re at. Growth can be seductive, and it can be almost like a sleeping pill, but you get accustomed to all of this growth and everything is going well.

The important thing to remember is to be present, in the sense of seeing where you’re at and taking a few moments to step back from that growth and looking at, ‘All right, if I’m here and I want to keep that growth going forward, what do I have to do?’

Q. How do you make sure you stay present in the moment?

One way of doing that is looking at a continual monitoring of progress. Even though you have the growth, if you have really fast growth, you need to make sure you’re measuring everything.

In a fast-growing company, it’s not always possible, and that can actually hurt you in the long run. Measure almost everything; that way that growth is probably sustainable. And it will help the team achieve those longer goals and maintain that growth because then the team knows where they stand.

What we’ve seen in our growth business — and what was very difficult to try to measure at times — is how fast is our growth going and are we measuring the key indicators to maintain that growth?

Q. What are the key indicators a company should measure?

A key factor is measuring individual performance. The individual measurements of them meeting their goals, and them improving constantly, is a key factor to us.

Because we are in what I would consider data processing, we measure performance on efficiency, meaning how quickly can jobs get done and what are the time frames that they’re completing those work orders in.

We’ve set up a system where we measure everything that they do, inputting on a client’s Web site information, the time it takes to do that, from the time it takes for our processor to put our information on our Web site.

We create a total efficiency score and then, we look at, ‘Is this employee generating a profit center for us?’ because we try to treat each employee as a profit center. They have to be making us money; otherwise, we need to review why aren’t they making money and what are the improvements we need to make for them.

Q. How do you decide what to measure?

It’s been challenging. It’s taken some time to really get a grasp on what we’ve had to do. Internally, these are some of the things we needed to measure, how much time is a job taking to process.

We always tested them for at least a 30- to 60-day period, because in anything, if you lay down the law and say, ‘This is what we’re going to do,’ and someone doesn’t perform well, you have to make sure that that measurement is working properly for you.

We’ve usually given either a 30- or 60-day time period before we’ve said we’re watching this live. We start it off with a few individuals maybe the first two weeks, and then we roll it out to a few more individuals, so we do it in gradual progressions.

Definitely test it out. Have your employees understand so that they understand what’s being measured. That’s a key factor right there, so that they know what they’re being graded on. Because if they don’t know what they’re being graded on, then the measurement isn’t really going to stand up.

Q. How do the measurements connect to the overall growth of a company?

What this does is it really raises the level of our performance internally. It really engages employees to participate in an active role in the company, that they’re just not coming in for a job. They get to see that they make the difference in the company.

How to reach: Maxim Enterprises Inc., (330) 499-9289 or www.maximent.com

Wednesday, 08 July 2009 20:00

Discussing performance

Larry Gilbert firmly believes that what gets measured gets results.

By breaking down segments of your business into specific measurements, you can create a list of best practices to ultimately improve your company.

Gilbert, co-founder, president and CEO of Event Network Inc. attributes the company’s growth to employees sharing best practices. The operator of gift shops at museums and cultural attractions posted revenue of $92 million in 2008.

When it comes to making best practices work, it’s about collaboration. You must determine what to measure and how to break down the measurements. You should involve all of your employees in the discussion and be detailed when outlining changes.

After implementing and measuring the best practice, you start the process all over again, Gilbert says.

“It’s just a never-ending process,” Gilbert says. “It’s not something you get to a certain point and you say, ‘OK, we’re there.’ You’re always looking to do better, and best practices are a large part of doing that.”

Smart Business spoke with Gilbert about how to use best practices.

Create a timeline to determine what you should be discussing and when. We, as a company, have a best practices calendar, so we identified all of the areas where we want to be sure that we are operating as effectively as we can and where about we want to use best practices to ensure the highest level of quality or the highest level of standards.

Like in most businesses, you’re doing different things during different times of the year. So we put together a calendar whereby we’re talking about in our business, we’re talking about getting ready for field trips and school groups in our stores in the early part of the spring. 

The challenge is trying to not do everything at once, but for now, we’re going to focus on X because implementation is critical and you can only implement so many things at one time without overwhelming the organization. 

That’s why I say we look at a calendar; we look at a plan with the expressed purpose of not doing too much too soon.


Determine the measurements you want to study. You want to identify areas where you have people performing tasks that are somewhat similar but the results perhaps aren’t. 

In some cases, as I was saying, the numbers are fairly straightforward. For us, we might have four stores performing at X and one store performing at three times X in terms of maybe selling an item that we’re featuring or guest service scores or any measurable result.

So the idea being, ‘Well, what is that person doing that everyone else can benefit from?’ Those specific and tangible opportunities are pretty easy to measure. The trickier ones are things where there may not be as clear a means of measurement. In other words, customer satisfaction or, in us, how happy are the museums we work with. Those are harder to measure but you still have to come up with some means of sharing best practices even if there aren’t very specific measuring tools.

For us, we’ve identified things that we acknowledge they’re imperfect. We’ll say, ‘Hey, this is not a perfect measurement, but it’s a good measurement and it’s a good enough means of keeping track so that we can at least have best practices discussions.’

An example would be how satisfied are the museums or zoos or aquariums we work with, where our stores are. How happy are they with our performance? We’ve come up with seven or eight subjective criterion and we marry them all together and we come up with something that we acknowledge is not perfect, but it at least gives us a means of talking about best practices as imperfect as it might be. You have to be a little more creative about identifying how you’re going to measure.

We just brainstorm things that we can’t easily put a number to. Sometimes you look to things that are softer. You look to feedback ... and how many comments you might receive. You’re still measuring things, but you’re measuring things that are admittedly a little less objective.

Involve everyone in the conversation. Ideally, you want input from all of the stakeholders. You want input from everyone that is involved in the process because if you’re getting input from them, they’re going to be more vested and more interested in the output and getting it right and sharing the best practices.

It depends on the business and how the business is organized as to what the most effective means are, but I would always say dialogue is better than e-mailing or Web conferencing or other means of electronic communication.

We have weekly round-table discussions around best practices, so we’ll have conference calls if it’s with people that are spread out throughout the country. The communication is around, ‘Hey, here’s what we’re talking about, here’s who is doing it very well, here are some other opportunities to implement things that other people are doing very well.

The idea is that you arrive at a place where you’re talking to not just your best performer, but everyone else is building upon that. The more people that contribute to the discussion, the better off you’re going to be because you’re going to have results that are a product of everyone’s input, but also you’re going to have buy-in because everyone is going to feel like they have a vested stake in the result.

Simply communicate the end results of the discussion for good implementation. Once you hopefully get buy-in from everybody involved and once you have that, in order to successfully implement, you have to communicate clearly what the objectives are. And I would say simply.

We’ve found that simplicity is a really good thing. The more simplistic the communication can be, the better. We try to boil everything down to as few number of bullet points as possible when we’re communicating.

Then, you need to clarify what you’re measuring, what the expectations are. If everybody understands that, in most cases you may not get all the way there, but you’re going to get pretty close. <<

How to reach: Event Network Inc., (858) 488-7507 or www.eventnetwork.com

Thursday, 25 June 2009 20:00

Multiple choice

Let’s face it, when you’re in a budget crunch you’re looking to slash any line item that doesn’t show an immediate return. In today’s recession, training is becoming that item more and more.

The U.S. corporate training market shrunk from $58.5 billion in 2007 to $56.2 billion in 2008, according to research firm Bersin & Associates. The average training expenditures per employee fell 11 percent from 2007 to 2008, and small and midsize businesses were hit the hardest, averaging 33 percent fewer training hours per employee.

You may think trimming or even axing training is justifiable — training takes time and money and doesn’t usually have an immediate return on investment. But educators say now is a prime time to enhance your employees’ skills, whether it’s taking advantage of slower business to cross train employees or supporting your employees in the additional responsibilities that they took on following company layoffs.

“Training, research and development are always the first to be trimmed during an economic downturn,” says James Connolly, corporate training director at St. Petersburg College. “In many situations individuals are doing more with less. An individual, properly trained, can make a significant impact, which helps the bottom line immediately and can sustain an organization over the long term. Technology and software are continuously changing; thus, a trained work force is (a) more productive work force and a strong reason to continue the training and educational process.”

Eliminating your training or education budget can be detrimental. But there are ways to maintain productivity with fewer dollars, and it starts and ends with efficiency.

Track your spending and its returns

One place to start is looking at the training or education you’ve done in years past. Did you see results that directly improved your bottom line? If not, look closely at what you’ve spent money on. Maybe you’re paying for employees to get advanced degrees that are useless to your company or maybe you lack the resources needed for your staff members to fully implement what they learned in training.

There are multiple ways to track training, the most popular being pretesting and post-testing to grasp the change in employee knowledge. Whether or not you measured your employees’ change in skills, a follow-up assessment to gauge retention and whether more training is needed can provide positive feedback. Questions to think about are: Did they learn something from the training? If they learned something, can they apply it on the job? If they can apply what they learned on the job, did it have a positive financial effect on the company?

“There are a variety of ways to assess whether training is working,” says Richard Byham, senior director, Continuing Education and Corporate College at the University of South Florida. “It really does start with the clear definition of what skills and knowledge you expect a person to get from a training situation. It starts with a discussion, typically with a supervisor or a manager, to make sure there’s clarity about why this is valuable to the company, why the company is spending money and what is expected in terms of changed behavior or demonstration of that knowledge once you’ve completed the training.”

If you haven’t seen the results you were hoping for, don’t continue to throw the same training program at the problem and hope for a different outcome. It’s important to remember that training isn’t always the solution and that people learn in different ways. The best thing to do is either sit down with a training provider or internally spend time evaluating the best solutions moving forward.

Find solutions now, while planning for the future

Effective training that gets to the core of the problem starts with an analysis of what the issue is and having a sense of what you want to accomplish through training. A common mistake is assembling training for a particular reason but never defining the why and a quantifiable outcome.

An internal training department can outline the company’s objective, but you can always look to the experts at consulting firms, colleges and universities to do a needs assessment and align an educational plan with the results.

External providers can offer objective advice to what your company’s priorities should be when it comes to training and carryout implementation. And while you may be thinking short term in this economy, a long-term plan is essential to be a step ahead of your competition and execute successful training.

The best ways to assure you’re meeting your company’s needs and spending your money wisely are to link training to your strategic plan and your performance management system — each job description and employee annual review. That guarantees a regular evaluation of your training program and your employees’ skills, and if you’re working with a provider, it keeps them abreast of your company’s future plans, which can lead to identifying problems and solutions earlier and faster.

Forming a successful training regimen means performance planning.

“This would include establishing goals and accountability functions by both the employer and employee,” Connolly says. “When an organization has a clear vision and strategic goals, it must have employees with the knowledge, skills and abilities to implement organizational objectives. Performance planning ties employee performance directly to those knowledge, skills and abilities.”


Determine training that suits you and your budget

There’s a plethora of external sources to partner with, whether it be sending administrators to pursue master’s degrees or training employees on communication techniques. Colleges and universities tend to be the best bang for the buck, offering a one-stop shop with consulting, full implementation and a broad range of courses.

When it comes to training, the costs that add up are flying in topic experts, sending employees to out-of-town conferences or even holding training off-site. If you’re hoping to trim your training budget, then think locally. Look at the office training and online services offered by local community colleges and universities.

Tough times call for creativity. Think about internal and external resources that lend themselves to free training. Check professional associations for round tables and seminars. Survey your employees on their areas of expertise and hold brown-bag lunches on those topics. If you’re bringing training in-house, just make sure you’re using a variety of techniques to meet each employee’s learning styles.

And look for funding sources — federal, state and local organizations offer training grants, whether it’s the U.S. Department of Labor or one of your local economic development corporations.

“It’s a very valuable resource,” Byham says. “I encourage people to talk with your local county; (that’s) probably the starting point.”

If you’re thinking about dramatically cutting your budget, first think about why you have training in the first place: to improve your retention, customer satisfaction, corporate culture and the overall growth of the company.

“Developing talent in your people will help your bottom line,” Byham says. “It’s an investment, not a cost. It’s one of those items that companies can be perhaps shortsighted and view it as a cost.

“But those that are using it strategically, truly view it as an investment. They understand it helps impact employee morale, and again, it improves skill levels.” ;

Thursday, 25 June 2009 20:00

Trusting power

Ed Cloues is a former mergers and acquisitions lawyer surrounded by engineers, and he knows something about giving employees a say on things they’re well versed in.

“My goal would be to be surrounded by several people that are more capable than I am because the stronger the group is that you have around you — that I have around me, and the stronger the group my managers have around them — the more successful they’re going to be,” says Cloues, chairman and CEO of K-Tron International Inc., a provider of bulk solids material handling equipment and systems.

Cloues attributes his company’s revenue growth — from $71.8 million in 2001 to $243 million in 2008 — to the differing views of his employees and their ability to run with delegated responsibilities.

To empower employees, you have to set expectations by telling them you trust them, showing you trust their decisions and keeping an eye on their performance while steering clear of micromanaging.

Smart Business spoke with Cloues about how to empower employees to harness their abilities to grow your company.

Tell employees that you trust them. Once you get the right people in the right positions, then empower them to go do their jobs and basically stay out of their way. Hope that they’re right more than they’re wrong and that they make more good decisions than bad decisions.

But recognize that if you were doing that job — if I had these different jobs — I’d be less qualified for many of them than the people I have in them and would have no reason to think that I would do a better job on those tasks than they do.

We keep score on how people are doing, but we tell them, ‘This is your job. This is yours to do; somebody else isn’t going to be doing it for you. We’re putting you in a position because we think you’re a good fit for this job, we trust you to do it right. You’ll make mistakes; we understand that. That’s how you learn.’

Lead by example to communicate expectations. You can tell people things, but that doesn’t mean that they believe it. Over time, it’s by example.

They can see that, in the company, people aren’t going to get punished because they do five things right and two things wrong. Now, if you do everything wrong, we may have made a mistake on the person that we picked. It doesn’t mean that you have free rein to keep making mistakes.

What we strive for — what we have in the senior management group and what we strive for at other levels of the company — is to have people have enough trust in the people that they work with that they’re not afraid of saying things. They’re not afraid of feeling foolish because they throw out some idea that, once you start thinking about it, may not turn out to be such a good idea.

You have to set the example yourself. If your feeling is your employees don’t trust you as the CEO, then you’ve got to think about how you present yourself to employees. Do you solve all of their problems? Are you quick to criticize if they don’t do things the way that you would do them? Do you let them know that you wouldn’t do it that way, which makes them reluctant to do it their way?

There are often several different ways to get to the same end, any one of which is better than having a confused way to get there. And my way may be no better or worse than the next person’s way. It may be different, but it may be no better or worse.

So if people always think that you’re going to make the decision anyway, or if they don’t do it the way they think you would do it and they’re always worried about that, then you’re not going to be able to develop this kind of atmosphere of trust, cooperative management, good communication because people are always going to be looking to do it the way you think you’d do it or would please you.

If you’re having trouble with your group doing this, I think you have to look pretty hard at how you are conducting yourself, how you are seen by your employee group, and work on that. Convey to them that you are one of a number of people, [that] there is only so much you can do, that most of the work is going to be done by them and that the company is only going to be as successful as they are successful.

Keep tabs on your employees without interjecting your own ideas. We keep score, but we don’t try to substitute in, day to day, our judgment for their judgment. We sit down and talk to them periodically, and it may just be a matter of going out to lunch, seeing how things are going.

I would rather do it in a more informal way than a formal way, where somebody may not even realize that we’re having a conversation about how they’re doing.

I encourage other people, don’t wait until a review process; take any opportunity that you have if there’s a message you want to convey to somebody that you’re working with. Is there anything you want to talk about? Take them out to lunch, sit down with them and talk about it in a nonthreatening way.

Don’t wait six months and say, ‘Oh yeah, I think your approach to this was wrong.’ Sit down and understand why it is they have the approach they have.

How to reach: K-Tron International Inc., (856) 589-0500 or www.ktroninternational.com

Thursday, 25 June 2009 20:00

Conveying change

After working behind closed doors on a company merger that meant a new name and brand, John Selinsky wanted the announcement to be an exciting event to get employee buy-in.

There were hats and shirts, and even the company’s trucks were stamped with the new name — Selinsky FORCE — in time for the announcement.

But making a smooth transition really comes down to communication, says Selinsky, president and CEO of the industrial services company. When telling your employees and customers about major changes, you must thoroughly communicate, be open to answering questions and ask for feedback.

“By being completely prepared, going through the whole strategic plan and putting everything together, we were able to answer all of the questions that they could come up with,” Selinsky says. “It made them feel very confident that a lot of work was done and there had been a lot of thought put into the process.”

Selinsky FORCE has 250 year-round employees and about 500 during its busy season.

Smart Business spoke with Selinsky about how to communicate that your company is merging, rebranding or doing both.

Communicate the changes to your employees first. Once you get your game plan together and your strategy together on how you’re going to do it, you need to make an announcement to all of your employees at once.

I don’t think you want to announce it to just a few employees, and then they’re telling the next employee and they’re telling the next employee. Then they don’t get the right message or the whole message. We felt it was important to have a kickoff meeting where everybody was there and make the announcement.

We had a meeting with our employees — before we announced it to the public and to the marketplace and our customers — and we communicated to them, ‘Here’s what’s happening.’

Meet with customers face to face. With a lot of our larger companies, we made personal calls to them. We sat down with them, explained what was happening, what we were doing, why we were doing it and what the advantages were to them.

We did a lot of that in-person contact so that they would feel comfortable with it and they would understand completely what we were doing, and we were able to answer their questions, too.

When you do something like this, it creates a lot of questions. We wanted to give them an opportunity to sit face to face with us and ask us questions and be able to give them the answers so they felt comfortable with what we did.

Make sure you’re seen and accessible. The biggest key is making sure you’re visible and available to your customers and your employees. If they see this come out and they have questions and they want to get answers, make sure you’re available to take care of those questions.

In other words, if our employees have questions, we let them know that I have an open-door policy. [If] you have a question, you can get in to see me, and I’m going to answer your question to the best of my ability, and so will the other people in the organization, as far as our vice presidents and anybody who is in a supervisory capacity. And, of course, when our customers call, we’re going to make ourselves available, and we’re going to make sure that they get the answers that they want.

The quicker you do that, the more communication you have with all of those people, the smoother it goes and the quicker the transition is.

Ask for feedback. There are people that said, ‘Oh jeez, how is this going to happen, how is that going to happen?’ And they may have some feedback to help you change things that maybe you just didn’t realize in your process.

But you’ve got to be open with that, especially with your customers but also with your employees. They, oftentimes, after they’ve seen something, come up with some really good ideas that help to make that transition a lot easier.

We gather feedback from just talking to the employees: ‘Hey, what do you think about this? What do you think about the new logo? What do you think about the whole merger?’ and getting their impression of it.

In the group setting, we did ask them if there were any questions or concerns that they had and had a question-and-answer period for them. As time has gone on here, as we see different employees, we just ask them, ‘OK, it’s been awhile, it’s been two or three months now, what do you think about what we did? Are you seeing any feedback from the customers? Is there anything that concerns you about what we did?’ It’s an ongoing thing.

Go to your customers, and when you present it to them and when you talk about it with them, just ask them. When you’re done presenting everything, you have to ask the questions: ‘What do you think? How does this strike you?’

If you don’t ask the question, sometimes you’re not going to get the feedback. We ask the questions. We want to get the feedback, so if there’s something we’re not seeing, we can see what they’re thinking and hopefully take actions to make sure whatever we need to do to make that clearer to our customers or our employees, we do it.