When Phillip Carter was 25 years old, he spotted a dilapidated house that at one time had obviously been a beautiful home, and he decided to see if it was for sale.

When he asked the man at the bank if he could buy it, he challenged Carter to make him an offer. Carter said $8,000, and the man said, “Sold.” Carter immediately knew he had paid too much, and it became evident that he had no idea what he was doing in the process of actually buying it.

Despite that, he got a home improvement loan for $10,000 and fixed the place up, and two months later, he sold it for $58,000 — a $40,000 profit.

That’s when he knew he was on to something.

What started as one house is now a $20 million business called Texas Cash Cow Investments, where he serves as president.

Smart Business spoke to Carter about how he’s grown his business over the years.

What have been the keys to your success over the years?

My grandfather told me a long time ago that customer service is the best product you’ll ever have. I can’t tell you how true that is. There’s going to be competition in the marketplace for everything. But it comes down to treating your customers well. Customer service is a dying breed. We’ve built our whole company off of customer service. It takes a little bit longer to build your business that way, but you have customers for life. We have customers who buy with us over and over.

The market changes all the time. It’s providing customer service and owning all the businesses, quite frankly that’s why I own the investment company, the construction company, the property management company, the warranty company, because I can control my customers’ experience throughout the whole process. If we outsource any part of that, I couldn’t control their experience.

What’s the most important thing you have to do to have good customer service?

Communication is a big part. I talk to my customers often, and I form personal relationships with them and I meet with them and shake their hand. No matter how good the product is, [you have to] form that relationship with the customer, communicating with them and educating them. There’s a huge void of quality information out there in real estate right now.

When communicating, what questions do you ask to understand them better?

One of the first things we do is I have a conversation with them about what their goals are. Are they getting close to retirement? Are they young? We have several different types of products — long-term retirement or sell-it-in-a-couple-years to make a bunch of money. Get to know what their goals are. 

What advice can you give other leaders to understand what their customers’ goals are?

Probably getting to know the customers and asking the questions. That goes back to the customer service, as well. Developing a personal relationship with your customers — that’s your future. You might have the best product right now at the time but there’s always competition and there’s always going to be stuff coming out. People will look at your product and people will try to duplicate it, but having that personal relationship and your customers’ best interest at heart and being honest and open with them, you’re going to retain that customer for a long period of time. They’re not going to go anywhere.

If another product does come out and you don’t have that bond with those customers or know them well, you’ll probably lose that customer. We strive to ensure that we keep in communication with them. It’s not just always about sales. We get to know them personally. Quite frankly, that’s where all of our business comes from is from referrals. We’ve never advertised. We’ve grown this to a $20 million company, and we’ve never advertised. It’s all through word-of-mouth. We’ve gone global, and it’s all through word-of-mouth.

How to reach: Texas Cash Cow Investments, (214) 683-0984 or www.texascashcowinvestments.info

Published in Dallas

Ted Teele left his job as CEO of one of the largest sales organizations in the gift and home décor industry for an opportunity he saw as new and different. He saw the growth and potential of social media and how that platform could be used in the industry. His idea formed a company called SnapRetail LLC, a 55-employee wholesale supplier of marketing solutions.

“We were looking around and we could see how social media was in an uptick,” says Teele, CEO. “We saw this big opportunity because in our market were these 100,000 independent retailers selling gift products and furniture and home accent products and they all know marketing was changing but they needed somebody to help get them there.”

Teele capitalized on discovering an opportunity in his industry and began to focus on helping independent retailers evolve and adapt to new marketing strategies.

Smart Business spoke to Teele about how to recognize and grow new opportunities.

How do you form partnerships?

When you are working on a partnership arrangement, it’s very important to be able to model the arrangement financially from the perspective of the partner; what is the benefit to them? The way you do that is you ask really good questions and understand what the partner needs.

You should come up with a list of at least five companies that you most want to partner with and then come up with a value proposition. The first meeting should be all about understanding them. You may have some ideas about the value you can provide and you should talk about them, but you’re probably not going to have a complete proposal. You don’t want to come to somebody with a complete proposal when it comes to partnerships because you don’t understand what they need. Once you understand what a partner needs then you can come back to them with some ideas on how you could help meet those needs. If you are able to show value, then they will look at you as an equal.

How do you find the right partnerships for your company?

You have to learn who would be the best partners and who would get value. The first thing is to identify who the companies are that you want to go after. You have to be important to them too. You have to find people that have similar goals. Part of it is just asking. Partnerships allow you to build a brand, extend yourself broader, and get more information.

What are some keys to finding new opportunities?

We’re living in a world that is changing very quickly. If you’re running a company and you’re looking around, whatever your specialty was 10 years ago is now vanilla. You have to create a new special sauce and that’s true for individuals and it’s true for companies. So many companies just hold on to their old business model and they hold on for dear life. You have to be willing to make transformational decisions. You have to be able to adapt to the changing world and you have to be solving a problem that needs to be solved.

How do you find the right people to help grow the company?

There are two parts of hiring any person. There’s the buying and the selling. The buying is finding somebody that is right for the job and selling is having that person want to work for your company. Some CEOs spend too much time on the selling and some CEOs spend too much time on the buying. You’ve got to find the proper balance.

You need to find people that have the right skills, know what they’re doing and don’t need to be told what to do. The second thing you need are people that fit the culture. They have plenty of options and you want them to want this option. You have to be relevant. If you’re not relevant you’re not going to be able to hire great people. People want to solve big problems.

HOW TO REACH: SnapRetail LLC, (877) 459-7627 or www.snapretail.com

Published in Pittsburgh

Ken Weisbacher, president and owner of KW Flooring is no stranger to adversity and overcoming obstacles in his business. The company owns and operates seven different flooring brands such as Carpetland Carpet One, Big Bob’s Flooring Outlet and Buddy’s Flooring America. The 150-employee, $42 million company finds ways to take advantage of its niche markets in carpet, hardwood, tile and concrete flooring.

“The keys to our success generally have been our ability to market to different niches of floor coverings,” Weisbacher says. “We have many different models that we operate that makes us unique. We don’t just have one company that sells to everybody.”

It’s that attitude and constant industry awareness that has allowed KW Flooring to push past tough times and continue to offer various specialty flooring brands.

Smart Business spoke to Weisbacher about how he overcomes obstacles and creates niche markets.

What have been some of your toughest challenges lately?

The biggest challenge recently has been the decline in demand for flooring both residentially as well as commercially. With 22 locations selling flooring, when things are good, we have 22 locations that do very well. When things are bad and you’ve got 22 locations, it becomes a big challenge. We’ve had to downsize. Because there is not as much demand we’ve had to right-size to the market. We’ve had to figure out avenues that we’re involved in that will be successful going forward and which are best to get away from. Over the last three years those have been the types of decisions that have been most difficult.

Most business owners open up a store or get into a type of business and that becomes like a child to you. You want to see it grow and succeed and prosper so it’s very difficult to pull the plug and say, ‘Get out of this or I get in deeper.’ You have to be willing to close your failures and promote your successes. Too many people waste their assets and their energy on trying to turn around their failures and their time and money would be better spent promoting their successes.

How do you grow your successful businesses?

We created half a dozen different companies that specialize in a particular area of flooring. We focus on that and are able to provide a level of service for people that they’re not likely to find in a store that has a more general outlook.

You have to identify a niche that is ignored by other people or underserved by other people or that is really fast growing. The first step is to identify the niche and then determine what you can do to differentiate yourself from others who are trying to serve that niche. You’ve got to do it better than anybody who’s out there doing it now.

What have been some challenges of growth in your company?

The progress has been three steps forward and one step back. It has not been a continual improvement, but things are getting better and I am optimistic about the future. One challenge has been ignoring the impulse to be too quick to hire back a number of employees. Personally I believe you should hire back more slowly because you’ll be more profitable as business ramps back up.

You have to hold back the impulse to bring more people in as you see business pick up. You have to make sure that the people you have can manage the growth by doing a little bit more business than they’re currently doing now. If people are paid on commission and are money motivated, they will appreciate that and it works out well for both sides.

What are the keys to finding a new area of business?

A new area for us is concrete grinding and polishing. There again we saw a niche that was underserved. A lot of retail space is now polished concrete and finished floor as opposed to carpet or tile. So we decided that rather than try to compete against that we would learn how to do it ourselves and get into that market. It is an opportunity that traditional flooring has lost to polished concrete. As we saw more and more of that, we realized we were missing out on it.

You have to be open-minded and flexible enough to say what I did for the last 20 years may not be what I need to do for the next 20. It’s not easy to do because everybody gets into a comfort zone. We all want to keep doing what we’ve been successful at, but there comes a time when you have to say it’s not the same as it used to be, therefore my actions and activities have to change.

HOW TO REACH: KW Flooring, (513) 771-2345 or www.carpetlandcincinnati.com

Published in Cincinnati
Sunday, 02 October 2011 20:11

Risky business

For two hours, Tom Reilly sat with Secretary Janet Napolitano, head of the Department of Homeland Security, to discuss the importance of cyber security and how to protect citizens from cyber attack. Today, the threat of cyber attack is an issue that affects more than just big business and government entities, but everyone.

“You read every week about another breach in the industry, whether it’s enemy nation states attacking our power grid, it’s a bank undergoing cyber fraud, credit cards getting stolen or identities,” says Reilly, who is the former CEO of the $181.4 million security and compliance solutions company ArcSight LLC, which was acquired by technology giant HP in 2010. “It’s happening. Clearly the traditional approach to solving security has not worked.”

In light of more high-profile security breaches at companies such as Google and Sony, it is also a problem for which new solutions are plainly needed.

“I talk to a lot of customers who have been investing in security technology for 20 years, spending a lot of money, and yet they still don’t feel secure,” Reilly says.

With technology advancing and changing exponentially, it’s important for companies of all sizes to reevaluate the security measures that they are using to protect their most valuable information, data and possessions.

“What’s interesting is cyber criminals do not distinguish between company sizes,” Reilly says. “They don’t distinguish between industry and they don’t distinguish between countries or public and private sector. They go after the softest target.”

Smart Business spoke with Reilly about how the security landscape is changing for the next decade and what business leaders can do to defend their companies from imminent cyber threats.

For companies that don’t have a risk management strategy, what is the first step in creating one?

I think the first thing is to know, based on your business, what is critical to protect. So if you are a healthcare provider, it’s patient records. If you are utility, it’s keeping up the power grid or protecting customer records. If you are a bank, it’s definitely protecting accounts from account takeover. So you need to identify what is critical to your business that you need to protect. Don’t take just a generic position ? let’s protect everything equally. Protect your crown jewels. Understand where that data, those systems reside and make sure that that data or those systems are well-protected, much more than the rest of your organization needs to be protected.

Which industries are at high risk for cyber crime?

The opportunity in cyber security is a global opportunity, affects companies that are small right up to the largest and it touches many verticals. In every vertical, I can tell you what it is that they want to protect, whether it be intellectual property, it could be financials, it could be customer data, it could be health records or it could be services like the power grids that have to keep power up and phone companies that want to keep phones working.

What are biggest cyber threats?

The most serious risk and the one that can have the most significant impact is one that is called ‘the insider threat.’ And the insider threat is not an attack from outside but it’s an employee in your organization who for one reason or another is a disgruntled employee. Yet you’ve trusted that employee with access to systems and sensitive data. The employee could be disgruntled because they are a poor performer and then they get fired. They could be compromised because somebody is bribing them externally for data, which we come across a lot. Or they could be getting blackmailed, which is also quite common. The insider threat is not only that they have access to the most sensitive information and they can do the most damage, but they are the hardest to detect.

The second area is the theft of intellectual property, and a lot of this is sponsored by enemy nation states who are trying to access intellectual property within companies that have leadership. By stealing intellectual property, you can gain a competitive advantage effectively. Intellectual property could be the designs of a new electric vehicle. It could be the designs of a new plant that’s being built. It could be the spreadsheets that rationalize a bid for a big mining project.

What can companies do to prepare employees for cyber risks?

Continual education is always needed. The reason it’s continual education is cyber criminals are always evolving. They are always introducing new techniques and new capabilities, and they are very, very patient. So they may take six months to a year targeting a specific company to penetrate that company’s network, to get code on there and to have basically sweeper agents that are monitoring what’s happening within a company.

When you start understanding some of these sophisticated things, you suddenly realize that you have to have continual training around what our security policies are, how you provision people to access systems, how you de-provision people when they leave the business. You have to have good rigor in enforcing those policies. You are only as secure as your weakest link. Unfortunately, now the weakest link is not technologies or computers, it’s employees often making inadvertent mistakes and bringing in malicious code into the environment.

How do risk management tools identify cyber security threats differently for businesses than other approaches?

It allows them to measure the amount of risk that they are taking or that they have in their IT environment. And once you can measure risk, you can invest money wisely to reduce or mitigate risk. So we’re changing the discussion from ‘Are you secure?’ to ‘What’s your risk posture?’ You can now look to a chief security officer and say, ‘What’s your risk posture? What’s your risk policy?’ and they can answer that concretely rather than ‘Are you secure?’ which is usually a yes or no. So risk deals with the gray.

What about security intelligence?

One of the assumptions you have to make to really effectively use security intelligence tools is you have to assume that you have been breached and that your network has malicious code or malicious users on it. Your job is to go discover them.

So if you assume that your perimeter has been breached and that either you have a malicious user inside or you have malicious code on your network and you say now I have to go find it, then that’s how you use security intelligence tools. You start listening and monitoring network activity. You start modeling how users use the system for the normal course of business, so that when anomalous use is occurring, it stands out.

How to reach: HP Enteprise Security, (888) 415-2778 or www.hpenterprisesecurity.com

Published in Northern California

Michael Zavoina has never agreed that you should change your company depending on the business climate. He subscribes to doing things right the first time and making sure the organization continues that consistency. That’s how The Gateway Engineers Inc., an engineering firm, has remained an industry leader.

“People talk about a difficult business climate,” says Zavoina, CEO of the 128-employee company. “That’s not something I’m a fan of, because it suggests we should do something different in these times than we do in other times and when the economy is good and when the economy is bad. I’m more in favor of the status quo. If you set something up right in the first place, let’s keep going with that.”

The company’s drive to remain consistent and efficient has been paying off and has led to growth.

Smart Business spoke to Zavoina about how he makes efficiency and consistency the company’s top priority.

What are some of the ways you keep the company consistent?

We look at efficiency statistics, and we do benchmarking just like anybody else comparing ourselves to other similar firms. It seems like a lot of companies tend to look at absolute stats, and we tend to look at either relative stats or efficiency stats. Instead of looking at things like pure revenue, we look at the efficiency of revenue, like profitability as opposed to profit. We’ve always tried to continuously improve and get better at the efficiency side as opposed to, ‘Times are good right now; let’s raise prices. Or times are bad right now; let’s lower prices.’ We didn’t do any of that because we’ve always focused on the efficiency side. So when good times come we just do that over a broader volume. When bad times come and everyone’s saying, ‘We need to get more efficient in these bad times.’ Well, we always were efficient. That’s what has always bugged me about operating differently. You should have been thinking about operating efficiently all along.

How do you get the company to focus on efficiency?

The key is trying to get everyone involved with that. We do a lot with focus, and I think focus and efficiency go together. One of the things we say is we focus the project people on projects and the support people on support. A lot of companies have the project guys doing support functions. You could say it doesn’t matter, but then their focus is not there. It’s not just me being efficient. It’s all of us doing those things. You have to find the value in everything and everybody. If you need accounting, then you need accounting. If you need IT, then you need IT. Every one of those plays an important piece and can actually help you.

How do you turn that efficiency and consistency into growth?

We broke ourselves up into nine different market segments, and we have leaders of those that focus purely from a business development standpoint. There isn’t just one person marketing or one person developing business. We set it up to broaden that out a bit and they always have their ears to the [ground], they’re well attended at the industry conferences and well read.

We were successful through the recession, and there is something to be said for being the opposite of complacent. We could have stopped there and not looked for more work and said, ‘We’re good. We’re fat and happy.’ We could have done that, but we just kept doing our gig and developing business and spreading it to different segments and keeping our ears to the ground. Certain things pop up and you have to take advantage of those things and be nimble.

That’s a benefit of being relatively small. We’re not bogged down in structure. We can move quickly and did that on the Marcellus stuff and got in early with some of the pre-eminent companies that are doing business here.

What are the keys to finding new opportunities like the Marcellus Shale?

Try not to prejudge things too much. Try to keep an open mind. You could hide your head like an ostrich in the sand, but then you’re not out there. If you do that, then you’re not out at industry conferences, you’re not reading, and you don’t know what’s going on. You have to remain in tune with what’s going on.

You have to try to be consistent. Don’t only develop business during bad times. Try to keep up your business development efforts even during good times. Don’t just say that. You have to develop goals.

Do the same with relationship building and networking type things. You want to stay in touch with partners even when there is no work. You know at some point it’s going to turn around and you want them to say, ‘Hey, who do we go to?’ They will be thinking of you.

HOW TO REACH: The Gateway Engineers Inc., (412) 921-4030 or www.gatewayengineers.com

Published in Pittsburgh
Friday, 30 September 2011 20:01

How Tom Oakley established rapport at ChanTest

When Tom Oakley started as president and CEO at ChanTest Corp. last year,

 he quickly recognized his biggest challenge.

“I’ve followed founders before, but this is the first time I’ve come in to a company where the founder was hanging around,” Oakley says. “He’s a great guy — he’s a rock star in this space. He’s an incredibly bright scientific mind, so my challenge has been to come in here and establish this role, which is a new role for the company and forge this relationship with the founder while making substantive changes to how we do things around here.”

He had to make changes at the 75-employee company, a developer of ion channel services and products, while also respecting what had already been accomplished.

Smart Business spoke with Oakley about how he did that.

How do you lead change while also respecting the past?

You have to respect the past but have a vision for the future. But don’t be afraid to make changes. You have to respect what’s been accomplished. They didn’t get where they are for no reason, so it makes a lot of sense to understand what the best parts are and keep those and leverage those strengths. You have to get a feel for the company and the people in the company and understand what motivates them and then pull them in and make them understand what’s in it for them so we’re all rowing in the same direction.

I’m a finance guy, but I’ve run organizations that were over 500 people. When you come into a scientific organization, they really look at business guys and sales and marketing guys as lower life forms — ‘The science is science, and it’s special,’ or, ‘We have a great reputation, and we don’t need you guys because people just call us.’

The key has been to ask a lot of questions and listen to what the founder has to say and listen to what the scientists have to say and understand what they’re doing and what motivates them and work with them to communicate how what you think your vision is will help them get to that place.

It’s really about communication and building relationships and respecting what’s been accomplished thus far and finding a way to craft a message that ties together their internalized objectives with the objectives of the company, where you want to go.

How do you communicate in those situations?

I’ve spent a lot of time talking and a lot of time selling. You’re always selling, even if you’re not in the sales job, just helping to establish what we need to do to accomplish the objectives we have for the company.

Being a business guy without a scientific background — I’ve been in scientific industries a long time — these are really smart people, and I certainly don’t understand the depth. I understand generally what they’re doing, but I don’t understand the depth.

I’ll start out with, ‘What do you do? Tell me what are you working on and how does that relate? What do clients use this for?’ It’s just generally having a conversation about what’s going on, how does it work. I also like to ask things like, ‘What are three things that you do that you think are stupid and you would stop doing tomorrow if you thought that you could?’ It’s a variant of the ‘What can we do better question?’ If you’re looking at how can I make your job better, how can I make it easier, what are your challenges, it’s a lot of the same questions you ask.

You have to listen and understand, then obviously you need to take action. … Understand what the issues are. Try to incorporate their input into the solution. If you get a solution that’s team-based, you’re going to get a much better solution and you’re going to get much better buy-in.

How do you determine what things you can act on and what things you can’t?

I think it’s a question of balancing resources and understanding the biggest impact we have. Another way to prioritize is if you have a vision for the company and you have a plan … you need to follow your plan. It’s not rocket science, so if you have a vision and you have a plan, then the plan can act as the filter against those ideas. Anything that helps get you to those objectives, you figure out how you do. Anything that doesn’t quite get you there, that’s something you save for later.

How to reach: ChanTest Corp., (877) 828-1777 or www.chantest.com

Published in Cleveland
Friday, 30 September 2011 20:01

How Bill Conner refocused Entrust

Bill Conner was constantly busy as the president and CEO of a publicly traded company.

In leading the security solutions company Entrust Inc., he and his team had so much to keep up with, and it was exhausting. So he decided to take the company back to being privately held about two years ago. It freed up his and a lot of other people’s time.

But the decision wasn’t just good from a time management perspective; it also gave them a new opportunity to really focus on new capabilities and customers and transform the business, which had more than $100 million in revenue last year.

Smart Business spoke with Conner about how he led the changes in his organization.

What’s the key to leading a transition in your organization?

Understand if your corporate strategy fits the environment you’re in. There are a lot of discussions about how big do you need to be to be public these days. I think that’s a real question.

We were certainly not big enough and simple enough to be a public company. Our products are very complex. Our customer base is 45, 50 percent government contracts. That’s hard to get predictability for an average investor or even a sophisticated investor, so understanding how your corporate capability and vision and industry fits and in what kind of market was the first thing we had to really look at in terms of assessing that and we did that.

Then really understand your customer and how you differentiate to that customer. Is it customer service or technical support, or is it your product or your sales and marketing and how you get your product to your customer?

How can you assess your business to know if you’re in the right environment?

The first thing is a good dose of reality. It’s always hard to look at yourself in the mirror and say, ‘Yeah, I’m getting a few years older — the gray is showing.’ But you really have to have the ability to look at it and say, ‘What’s working and what’s not?’ and not take it personally, and take the personal action to get it out and see if the team agrees or disagrees with that.

What tips can you give for leaders to be brutally honest?

Always start with data and the numbers — good old GAAP. Some people think you can take them out, but they’re pretty good numbers. If your competition is doing better than you by the numbers, nine times out of 10, it’s not that they don’t have integrity and they’re faking their books — it’s they’re doing something different.

What we did here was look at the revenue line to see if maintenance was going the way it should, was product revenue going the way it should, and was professional service going the way it should. We measured all of those and then we looked at all our products and how they were doing. How are they competitive with the products out there? What were customers telling us about them? Then we looked at the cost side. Be brutally honest. Were we spending too much in sales? Was our sales force making their quotas? Who was the best? Who was not the best? Did they have a plan or were we going to get rid of them? R&D — is it working or are they just putting more features and functionality on there and it’s taking it longer?

Most people, if they’re honest in that first stage and do the analytics around that stage, the numbers aren’t going to lie. The only thing that’s going to lie is your own team, and that starts with you not lying about what you think is good and bad and communicating that, and them not lying to themselves or being conflict avoiders to avoid it.

How do you avoid lying to yourself?

It’s easy to do. It’s kind of like sand — you squeeze it in your hand, and the harder you squeeze it, the less it’s there. We try to say, ‘OK, our hands are pretty full of sand, let’s mold it and not try to squeeze it just because we’re stressed.’ We just try to control it. You have to control it but you have to control it in a different model, in a different framework.  

How to reach: Entrust Inc., (888) 690-2424 or www.entrust.com

Published in Dallas
Friday, 30 September 2011 20:29

Paper trail

Tom Fricke’s resale cartridge business is part of a multibillion-dollar global printing industry.

Fricke, who has been CEO of Cartridge World Inc. since 2008, has helped his company expand as the largest global dedicated retailer of ink and toner cartridges by taking advantage of the industry’s tremendous growth to build out franchises in new and existing global markets. Operating in 65 countries and growing, Cartridge World generated 2010 revenues of more than $160 million under Fricke’s leadership.

Smart Business spoke with Fricke about how to sustain long-term corporate growth by finding the right business partners and having a responsive leadership style.

What is the challenge of finding good partners in a fluctuating industry?

Our business is changing, the challenges we face are changing, and that change is consistent with the vendors, as well. I think that the biggest pitfall is you find vendors that are right today but aren’t going to be right in a year or two years from now as the evolution of the industry continues. So the biggest thing we’ve looked for is finding those kinds of vendors who are going to be able to change with us. There are some vendors who may have been great today but just weren’t going to be right for tomorrow. I think you are constantly trying to look for those who have the same mindset and the same approach to the future as much as today.

How do you decide who will be the best partners for growth?

The best way to do it is to spend a lot of time with them. I like to get out and meet with as many of my partners as I can. I like to be as open and forthright with them of the challenges we face and the challenges that we’re considering as we go forward. I think that kind of dialogue and that kind of personal relationship is critical as you really start working through your suppliers.

We like to be demanding of our vendors. We like to be fair. We want to make sure that they’re the right kind of partner that has similar strategies that we do. We like to them to be technically very capable. We like them to be very responsive, and we want partners who are going to be as supportive and focused on the franchise network as we are. The best way for us to make all those assessments is to be as interactive with them as we can. So if it’s not me, it’s the local, regional teams or management teams. We like to spend as much time with our partners as we can to make sure that we understand them and they understand us.

How can a leader facilitate a culture that is responsive to change?

To me the secret is you always try to find the balance. … You do what you have to do in order to operate in a new environment, but you also have to be patient. You are struggling between being demanding and being patient. You need to be a perfectionist, but you also need to let people know that it’s OK for them to try new things and make mistakes in the process of making it.

The capabilities of a leader really have to be a function of the environment in which they are operating in, the challenges that they have in front of them, the nature of the system they are dealing with and the business that they are in. I think if anything the leader needs to be multifaceted, because you really need to try and get a feel for all of that. Your style needs to flex and change. It’s really that ability to get in and sense what the business needs, what the people need and provide whatever leadership is needed.

How to reach: Cartridge World Inc., (510) 594-9900 or www.cartridgeworld.com

Published in Northern California

John Rost realizes that employees show up to work each day for a paycheck. But he also knows that most employees — and the managers who listen to them — will tell you they seek something more from their place of employment.

They want a sense that their work contributes to a greater goal, a sense that they are valued by the company, a sense that their input on the company’s policies and directions has meaning and will be seriously considered by management.

But in order to have that, the tone has to be set at the top level. That’s why Rost — the founder, president and CEO of Fiesta Insurance Franchise Corp. — strives to get out among his employees at his company, which generated $36 million in 2010 sales under its brand name, Fiesta Auto Insurance.

Smart Business spoke with Rost about how a good set of ears and good set of walking shoes paves the way for an engaged, loyal work force.

How do you involve employees and franchisees in shaping the company’s future?

We are always chatting with our franchise owners to see if they have a different perspective, if they know of things that are working or not working. They might have some particular challenges or successes out there. We recently had three of our superstar franchise owners who were down here from northern California visiting with us. It was an opportunity to spend some time talking about their operations.

I can also think of some accounting challenges recently that came from our front-line clerical staff. With that, and discussing some of the potential solutions, we were able to create some software programming where the programming can be done more efficiently.

To implement something like this, having other people involved is key to a good working environment, whether it’s staff members or franchise members. If they feel there is not an opportunity to be heard in the organization, that is not going to help the success of the organization itself. In the leadership position, as the CEO or top manager, you have to spend a certain amount of time out in the field, making sure that you’re available to shake hands, chat with people and ask them for their input.

When you’re talking with your employees and franchisees, what do you want them to tell you?

Sometimes you’ll find in those situations, people will tell you about the good things, but you’ll need to ask them about the challenges they’re facing. You can talk about two things that are good things, but let’s also discuss the five things that are challenges. Without those discussions, you might not find out about that operational crisis that you’re not yet aware of or whatever it might be that they’re facing in their various capacities.

From there, the next step is to ask them about potential solutions for each one of those challenges. Most of the time, people that are dealing with whatever challenge exists have it in their mind how they would have dealt with the issue in the first place. That is how you begin to generate great ideas from the people on your staff who are dealing with those challenges on a daily basis.

What qualities does a truly engaged employee possess?

From a personality standpoint, it’s going to be someone who is very persistent, somebody who is not going to give up easily in the face of some challenging times. Nothing is perfect out there, so in order to be successful, you have to have that attitude of never giving up. So our franchise owners, if they come in, grab a hold of the concept in training, and go out and execute the plan we’ve laid out, they have an opportunity to be very successful. Every once in a while, we’ll have someone who goes out and tries to buy an orange and turn it into a banana, and it doesn’t work too well.

Ultimately, what do you see as the leader’s role in engaging employees?

As the leader, you have to have that vision to get people involved. You have to make sure everybody understands what the vision is and hold everybody accountable to stick with it. It’s something that is changing. It’s always zigzagging across as you’re headed in a certain direction. But you have to make sure everybody is staying on that path by motivating and inspiring people to achieve the goals of the organization.

How to reach: Fiesta Insurance Franchise Corp., (877) 905-3437 or www.fiestafranchise.com

Published in Orange County

When Ted Karkus became the chairman and CEO of ProPhase Labs Inc. in 2009, he knew he had a flagship product that could carry the company. Cold-EEZE lozenges had been the face of the company for 15 years, but with several straight years of declining revenue, Karkus knew some changes were in order.

Consumer feedback pointed to the taste as the primary product deficiency. With that information, Karkus decided to form a plan aimed at improving the taste and redesigning the packaging in an effort to inject new life into consumers’ perception of Cold-EEZE — and by extension, ProPhase Labs, which generated $14.5 million in 2010 net sales. Karkus says the company is anticipating an uptick in revenue in 2011 after four years of declining numbers.

Smart Business spoke with Karkus about how he revitalized the Cold-EEZE brand and how he got everyone in his company on board with the change.

What was the impetus for expanding your brand and improving your flagship product?

That was my COO’s idea. He wanted to include an insert in every package of Cold-EEZE as a way of communicating with our consumers. In that insert, on one side we had a testimonial. On the other side was a message from me that included a personal e-mail address, where any consumer could provide me with their thoughts and comments about Cold-EEZE. I personally read and respond to every one of those comments, and it was based on those comments that we came to the conclusion that it was time to improve the product.

We have loyal consumers that go back 15 years, but our consumers didn’t love the zinc aftertaste caused by the active ingredient going to work. So we listened to our consumers, and that motivated us to improve the taste. There are new flavor technologies available that didn’t exist 15 years ago, and that has helped us to improve the taste and, in turn, the overall product.

With regard to improving our packaging, we did an extensive amount of research. It was our consumers that helped us create the package, which we then tested in field studies comparing our new package to our old package.

How did you begin to roll out the plan and bring the improved product to market?

That requires careful reviews of our vendors and consultants, in much the same way we do a careful analysis of every employee we hire. Every vendor and consultant we hire goes through a careful interview process that includes meeting with several other vendors or consultants in the same category, and it requires an enormous amount of very careful thought.

How do you connect your employees to the plan?

I found the best way is through direct contact and communication and by involving the employees in the crafting of the communication. I don’t sit in a room by myself and make all the decisions while isolated from the employees of our company. Our employees work very hard, and they’re also very knowledgeable about our products, so I’m happy to include them in all steps of the decision-making process regarding our company’s future.  At the end of the day, I have to sift through all of the ideas of all of our employees, as well as our vendors and consultants and come up with an optimal strategy for the future. But by including the employees, they’re informed.

How do you continue to ensure that the plan stays on track once it has been rolled out?

It is not an easy process. Where it starts is with creating a strategic vision for the future, and then analyzing ideas that either fit or do not fit into that vision. For example, our short-term goal was to decrease overhead, improve our relationships with retailers, and improve our flagship Cold-EEZE brand. We improved the relationships with retailers by travelling around the country as a senior management team. We met with all the major retailers who sell our product and came up with a plan to turn around the Cold-EEZE brand through changing the packaging, as well as improving the flavor.

We accomplished those goals. The next set of goals is to leverage the brand by introducing extensions of the Cold-EEZE brand, such as an oral spray. Moving forward, we plan to leverage our distribution platform by introducing products outside of our current category. The key is that it’s a multitiered approach combining short-term and longer-term goals.

How to reach: ProPhase Labs Inc., (215) 345-0919 or www.coldeeze.com

Published in Philadelphia