Florida (1036)

Wednesday, 25 October 2006 20:00

Growth lessons

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 Years of experience have enabled Tony DeGeorge to make smart decisions, but one of his best was allowing his employees to make the decisions for him.

DeGeorge’s work force is made up of employees who have previously held jobs running hotels or motels. He hired them knowing they’d know exactly what to do in his absence, because they’ve all had experience being the boss of a small business themselves.

His strategy is working, as the hotel and motel broker anticipates 2006 revenue of between $30 million and $32 million, up from $25 million in 2005.

“To be successful, you have to know your business and love it,” says DeGeorge, president of Greene, Canfield, DeGeorge. “You’ll never be able to motivate the people around you if you don’t.”

Smart Business spoke with DeGeorge about how he’s handled the challenges of growing a business and communicating his vision to his employees.

How do you empower employees to make decisions?
It has to come from the background of the people we’re choosing, which are all former hotel owner-operators. They’re all part of small business, they started with small business, and they understand the nature of keeping a small business running. Anyone is able to do anything. They are very capable of making decisions.

There’s no punishment for making bad or wrong decisions. Any decision is a decision that we all look at, no matter who has made it. If there’s a problem, we go back and analyze it.

That way we all learn from it, and next time we can make sure a correct decision is made. But we see very few times there’s a decision in this office that was made that the others don’t agree with.

How does having employees who can make decisions benefit the company?
It takes a lot of pressure off of everyone. They think things through, go with the gut reaction, which is typically the best reaction. A lot of times, our decisions have to be made pretty quickly, and they’re able to at least not stall the process, and make a decision and go forward.

In today’s world, with fax and e-mail, people don’t want to — or understand why they have to — wait. It’s become an electronic world where things move very quickly, and people want to see the process continue. There shouldn’t be any delays in that process.

How do you know when it’s time to expand your work force?
There’s never a good way to know. There’s a time when you feel you just can’t handle the load. We’re struggling with that right now, when is it time to do an expansion rather than try to work everybody a bit harder?

But you don’t want to burn out anybody, so there’s always that struggle. You’ve got to watch the people and make sure they’re not overtaxed.

How do you guard against growing too fast?
Growing too fast could be a definite pitfall. Markets change, and there’s always surges, peaks and valleys in all the growth areas. Be aware of where you’re at and stay focused on where you want to go.

Having a long-term plan is a must. Just stay focused, see if you are meeting your goals.

Strategic planning is important for any business. There are a lot of people who don’t want to grow their business. It isn’t always about growth.

We have stifled ourselves because we don’t want to overgrow. Right now, at a peak, we don’t want to get into an overgrowth situation.

Are you concerned with revenue when you are growing?
As you grow, it’s part of it. As your goals move with that growth the revenue will follow. We try to have a team effort and stay focused on the client and stay focused on who we’re working for.

Service is so important. Most companies don’t understand the word service anymore. You take your car in for service and it says ‘Service’ above that door, but they don’t understand what the word means.

It’s amazing to me. The hospitality business is pushing people and standards, and that’s what we as a company are trying to do — just push that standard.

HOW TO REACH: Greene, Canfield, DeGeorge Ltd., (727) 447-8383 or www.gcdhotels.com

Wednesday, 20 September 2006 20:00

Hot spots?

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Relocating your business is a massive undertaking. A myriad of elements must seamlessly dovetail to lessen the impact on the bottom line. Moving day is not the time to discover that crucial features of the new location are unsuitable for your operation.

“Choosing the right location for your business is a major decision that requires time and expertise to achieve an optimal outcome,” says Patrick Duffy, president of Colliers Arnold.

“We assisted a financial institution when they needed a new ‘money center’ for the transfer of cash. The initial instructions we received were focused on cost of the real estate and proximity to highways, but after talking with their operational team, we learned that work force training and security issues were so intense, the primary driver was actually employee retention after the move. We identified a cost-efficient location with good access to the highway network, and most importantly, within an acceptable commute zone for their existing employees. Turnover after the move was minimal.”

Alternative location analysis involves a matrix of many factors. Every company is different, so their criteria will vary based on their unique set of requirements.

Smart Business asked Duffy to explain the key elements of a successful site assessment and why you should not sign a lease or purchase agreement without one.

How does geography impact site selection?
Determining if your business is driven more by proximity to your customer base, your employees, modes of transportation or perhaps other support facilities can be the primary driver for site analysis. For example, retailers are definitely more interested in locating near their customers; high-skilled labor-based companies tend to be more interested in being near their employees; manufacturing and distribution users need employees and need to keep transportation costs down by locating near convenient shipping routes such as interstates, rail, airports and seaports; doctors tend to congregate near hospitals; lawyers settle near courthouses.

What factors should be considered when selecting between several viable locations?
Assuming that you have multiple alternatives in your target geography, narrowing the list to the best option requires both a quantitative and qualitative approach. When deciding between alternatives, the base lease rate (cost per square foot of space leased) is not always the primary driver.

Total cost of occupancy includes all costs associated with leasing the space over the term of the lease. The base lease rate is the main cost. Other charges including taxes, insurance, maintenance, landscaping, management fees, after-hours a/c charges and parking fees differ from property to property and landlord to landlord. Escalation charges (rent increases over time) are also negotiable and can obviously have a significant impact on the total cost of occupancy over time.

When is bigger not necessarily better?
The efficiency of buildings and space can also vary greatly. In office space, the relationship between the floor space that a tenant can actually use (inside the walls) and the square footage he or she pays for (including the common area use like lobbies and common restrooms) is measured by an add-on or load factor. Load factors vary from city to city, ranging from approximately 15 percent to 23 percent. They have a real impact on the effective cost of occupancy. Calculating the cost per useable square foot as a base of comparison allows for a more appropriate benchmark based on cost per square foot.

Even within the determined useable space, the efficiencies of space vary. Odd-shaped buildings or buildings with narrow or overly wide floor plates can create inefficient areas within the tenant’s space. Many times, we use floor plans with desks, delineated to determine how many people can actually occupy the space, and use cost per person as a point of comparison. In industrial buildings, we may lay out rack systems with sufficient spacing for forklift equipment to determine the efficiency of the space for a particular user. Retailers typically have a set plan for product display that requires a certain number of aisles with specific spacing.

What additional features might help identify a superior location?
On the qualitative side, a building or space that is more aesthetically appealing may help attract and retain valuable employees or customers. Ease of access (ingress/egress) may make the location more convenient. Proximity to restaurants for efficient lunch breaks may be a decision point.

What is the typical timeline for a successful relocation?
In a relatively tight market, which exists in Tampa Bay today, you should start your relocation planning at least 12 months in advance of your planned move date. This will allow time to determine your criteria, search the market, negotiate a lease or purchase contract, and build out the space to meet your needs.

PATRICK DUFFY is president of Colliers Arnold. Reach him at (813) 221-2290 or PDuffy@colliersarnold.com.

Wednesday, 20 September 2006 20:00

Powerful growth

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 Like a bodybuilder searching for perfect six-pack abs, Geoff Dyer is never satisfied.

In addition to the 28 clubs his company, Lifestyle Family Fitness, operates in Florida, he has opened eight clubs in Ohio, with two more on the way. Dyer is also expanding in Florida and plans to double the company’s size in three years. It’s a daunting task, but the effort is paying off as the 2,100-employee company’s revenue grew from $34 million in 2003 to $53 million in 2004 and $85 million in 2005.

But Dyer, president and CEO, is not stopping there.

“Securing a position in Columbus, Ohio, opens up the states that are in close proximity to that, and gives us an opportunity to build a 30 to 50 club group in the Midwest,” he says.

Smart Business spoke with Dyer about the procedure behind his business’s phenomenal growth.

What skills does a CEO need to be successful?
The CEO has to be prepared to be surrounded by superstars. Some CEOs are reluctant to share the spotlight.

You can’t be an expert in all things, so to be an effective CEO, you’ve got to hire the best you can hire in all divisions of the business. So not being intimidated by being surrounded by great people is one important thing.

Also, a CEO has to be a charismatic leader. My job is to share the vision, identify the strategy and get people excited about the vision and mission of the company. What is the big, hairy, audacious goal, and how do we achieve it?

As the company gets bigger, the CEO has to maintain the culture, so the people always feel proud to be part of an organization that’s connected to its people.

What do you look for in your employees?
People often ask, ‘What keeps you up at night?’ The only thing that makes me lose sleep is losing someone who is a valuable employee. The human capital need is a never-ending challenge.

For anyone to be successful in business, they need to be passionate at what they do. So we find people who are passionate about fitness and teach them that if they listen and learn and have good role models, they can develop a permanent career in the fitness industry. That’s pretty exciting and appealing to someone who likes this business.

Our first job is to let them know that there is a career path and what it entails; our second objective is to train that person so they can grow. At the end of the day, passionate people are attracted to and stay with companies that are learning organizations, places that enable them to get ahead in that organization.

How do you make decisions?
When you’re approaching $100 million in revenue, it’s easy to lose sight of how important it is to watch the revenue and expense line of the business. Whenever it comes to a decision that needs to be made, I try to get the person making that decision to think as though they own the club themselves.

We don’t make decisions as a big business where money doesn’t mean anything. We’re trying to take things back to their most simplistic form.

At the end of the day, the thing that’s made us successful is listening to our members and responding to their needs, and paying attention to revenue and expenses. Other things are important but not as important as those four areas.

What pitfalls does a successful CEO avoid?
Losing focus. It’s easy to think you can be good at all things, but at the end of the day, you can only be good at one thing.

You’ve really got to stay focused at driving your core business forward. There are so many options to make your business different, to make it bigger, to make it smaller, but you should keep a consistent business model and stay true to it.

Also, you’ve got to be careful to grow properly. Don’t grow for the sake of growing. You’ve got to be continually realigning your growth strategy. Every business is evolving at such a fast pace, if you don’t continually rethink what your brand stands for and what makes it unique, you’re at risk of becoming stale.

Completely understanding how your brand differentiates you from your competitors is a big part of the role of the CEO. If you’re not different, eventually you can get overtaken by competition, so you have to continually develop ways to make you different from your competition. You’ve got to continually reinvent yourself because what you consider to be differentiators are really duplicable.

You can have the biggest facility, and then someone builds a bigger one. We all have the same equipment, but continually trying to understand what makes you different is an important role of the CEO.

HOW TO REACH: Lifestyle Family Fitness, (727) 456-3100 or www.lff.com

Wednesday, 30 August 2006 19:42

The fuel of business

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How many times have you heard, “Think outside the box”? Or, “Change is good”?

Innovation is the fuel of American business. It is built on the creativity of individuals and groups within an organization.

“Managers have been successful in their use of the creative process in efforts to bring new products or services to the marketplace,” says Bob Preziosi, a professor of management in the H. Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University. “Creativity is also an important element in business process improvement and other change efforts.”

Certainly, professionals and executives have the innate knowledge and skills to be creative and innovative — or they wouldn’t be where they are. But sometimes the status quo is easier to accept than moving forward in thought and action. Therefore, a natural resistance to change usually stands in the way of new ideas and concepts.

In most cases, sharpening or enhancing creativity skills can give astute managers the impetus they need to take their success to another level.

Smart Business spoke with Preziosi and came up with ways that organizations can spark creative and innovative power within their employees. Using Preziosi’s tips can help the fuel (and energy) of creativity and innovation flow.

How important are other people in seeking a level of creativity and innovation?
You have to be receptive not only to your own ideas, but to those of others. By listening to suggestions that are outside the normal train of thought, new possibilities arise. Avoid dismissing or negatively reacting to ideas that other people come up with.

You also have to expose yourself to other people’s creative products. One of the best ways to do this is to visit an art museum or wander around an art exhibition. It will allow you to see that there are many different perspectives to things you’ve only seen or imagined in a single way.

What effect does intuition have on creativity and innovation?
Avoid accepting your first ‘right’ idea. Always try to put the first idea on the back burner. For example, if you’re with a group of people deciding where to go for lunch, express appreciation for the first restaurant that someone suggests. Then solicit other possible restaurants before everyone makes a final, single choice.

Don’t be afraid to take calculated risks, either. Even a person who shoots from the hip has some idea how accurate the shot will be. Avoid the tendency to do the usual or normal without any thinking or analysis of what the outcome will be. Stretch the limits of your willingness to take risks.

What are the most common ways of discovering new ideas, approaches, products or services?
Many great products have been the result of combining two or more things that no one had thought of before. Examples include the clock radio or a cell phone that has photo, video and calculator capacities. It only takes being ready and willing to bring together things that were once separate (and believed to be best that way).

It helps if you see yourself as successful with your creative endeavor. The new double-decker commercial aircraft that can handle between 600 and 800 passengers is now a reality because people were able to visualize themselves with the knowledge and skill to be creative and innovative in their efforts.

Also, don’t hesitate to use part of your day stretching your creativity muscles. You can do this in fun ways by brainstorming a list of possible uses for something like a paper clip or plastic cup. Other ways to enhance your creativity include spending time with creative people and reading magazines that you don’t normally read. The art show idea works here, too.

Finally, flexibility, can keep the options developing. While it is probable that you travel the same route to work every day, you don’t eat the same thing for lunch every day. Going to work the same way every day is a set but efficient habit. The flexibility in eating is an example of considering options.

BOB PREZIOSI is a professor of management in the H .Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University. He has been delivering leadership training and education for more than 30 years. Reach him at preziosi@huizenga.nova.edu or through the school’s Web site at www.huizenga.nova.edu.

Wednesday, 30 August 2006 19:31

Don’t get roasted

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In the health care industry, the right kind of due diligence is critical.

“Health care providers are heavily regulated, both at the federal and state levels,” says Barbara Pankau, partner and senior health care lawyer with Shumaker, Loop & Kendrick LLP of Tampa. “Many lawyers conducting due diligence are not familiar with the ever-changing health care laws and the ramifications of not following them.”

The consequences of not following these laws mean more than just a slap on the wrist: it could mean criminal penalties and jail time, says Pankau.

Smart Business spoke with Pankau about the importance of conducting a proper due diligence with purchasing or entering into a joint venture with a health care provider, and the steps to take to ensure that all federal and state laws are being followed.

What makes due diligence in health care different than any other business?
The difference is the laws and regulations with criminal and/or civil fines against anyone that does not comply. Things that make perfect sense in other businesses — like arranging referrals — can have serious consequences in the health care industry.

Could you give a summary of some of the prominent federal and state (Florida) laws and regulations that need to be considered when conducting due diligence?
The penalties for not complying with these laws are severe.

The federal anti-fraud statute makes it a crime for anyone to pay, receive or arrange for a referral for Medicare business.

The so-called ‘Stark’ law, which applies only to physicians and certain designated health services (DHSs), says that a physician may not refer a patient for DHS to an entity with which he has a financial interest unless the transaction fits into one of the exceptions explained in the Stark Law and its accompanying regulations.

In Florida, the Patient Brokering Statute provides criminal penalties for activities similar to those covered by the federal anti-fraud statute. The Patient Self Referral Act applies to physicians, and is somewhat similar to the Stark Law, except that the Florida Act applies to any health care service and the Florida Act applies only to physician ownership interests.

Florida also has multiple prohibitions on ‘fee splitting’ with broad regulatory interpretations. For example, a management company that advertises for the health care provider (or otherwise assists in obtaining patients for the provider) engages in an illegal fee split if its fee is based on a percent of revenues of the provider.

Could you explain the unique steps that are necessary to conduct a thorough due diligence of a health care provider?
Some questions are unique to this industry.

Are the licenses current? Have the license holders ever been sanctioned?

When is the renewal date? What ‘change of ownership’ (‘CHOW’) procedures apply?

Do any current activities threaten the accreditation status? What are the backgrounds of the key employees? Have any employee ever been sanctioned under the applicable state or federal regulations?

What could run up a red flag?
Red flags include any current audits or regulatory investigations and any obligation to repay reimbursement overpayments that the business has received in the past. Also, any ‘clouds’ on the licensure of the current owners or key employees, such as limits on their licenses or certifications.

What are the consequences of not conducting due diligence?
The consequences are severe. Even if the investor does an asset purchase rather than a stock purchase, the investor may be subject to civil and criminal penalties if he or she participates in a health care business that violates the many applicable regulations. If the investor is a licensed health care provider, such as a physician, he may lose his license to practice medicine.

What are some of the other considerations when conducting proper due diligence on a health care company before acquisition?
It would be helpful, from a business standpoint, if the investor gained an understanding of the market. This would uncover nuances that might prove detrimental to business. For example, one current market trend is for specialty groups to invest in expensive equipment to provide services that, historically, hospitals have provided (such as diagnostic imaging like CAT Scans, MRIs, etc.). However, there also has been a trend to limit these activities, or there may be regulatory restrictions already imposed.

The Florida Patient Self Referral Act, for example, requires a group practice with ‘ancillary equipment’ — such as an MRI — to meet six conditions before the group can provide services to patients of other physicians.

BARBARA PANKAU is a partner and senior health care lawyer at Shumaker, Loop & Kendrick LLP of Tampa. Reach her at (813) 227-2321 or bpankau@slk-law.com.

Sunday, 30 July 2006 20:00

Keeping customers

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Given the opportunity, dissatisfied customers will tell 8 to 16 other people about the source of their service- or product-related frustrations. However, if you make a prompt effort to resolve the issue, 85 percent of those customers are likely to remain customers.

Why, then, do most companies spend a majority of their time, energy and resources chasing new business?

While it’s important to find new customers to replace lost business, to grow the enterprise and to expand into new markets, a smart company’s main objective should be to keep customers and enhance customer relationships. With the passage of time, it is getting easier, because newer and better computer software will help you track, sort and spit out data on all sorts of meaningful customer sales parameters.

“What is your current retention rate?” asks Art Weinstein, professor and chair of marketing in the Huizenga School at Nova Southeastern University. “What is the cost of a lost customer to your business? What percentage of your marketing budget is spent on customer retention activities? Do you develop retention programs for key target markets?”

These are all questions that must be addressed if you want to maximize your customer retentions and thus minimize the amount of money you have to spend on acquiring new customers.

Smart Business asked Weinstein the best ways for a company to develop an effective customer retention program.

How do you measure customer retention?
It is surprising how few companies know the percentage of customers that leave (defection rate) or stay (retention rate) annually. There are many ways to measure customer retention, including annual and targeted retention rates, weighted rates (accounts for usage differences); segmented indicators (subgroup analysis); share-of-customer; customer lifetime value; and recency, frequency and monetary value (RFM analysis).

Choosing appropriate measures provides a starting point for assessing a firm’s success in keeping customers. Harrah’s Casino knows that a 1 percent increase in retention is worth $2 million in net profits, and its Total Rewards program is the envy of the casino industry.

How do you keep customers from disappearing?
You have to analyze the defection problem. Buck Rodgers, former CEO of IBM, once said, ‘I behave as if every IBM customer were on the verge of leaving and that I’d do anything to keep them from bolting.’

Step two is a three-pronged attack. First, identify disloyal customers. Second, understand why they left — analyzing switching motives can be insightful. Third, develop strategies to overcome nonloyal purchase behavior.

Is it advisable to establish a new customer-retention objective?
Customer retention objectives should be based on organizational capabilities (strengths, weaknesses, resources, etc.); customer and competitive analyses; and benchmarking the industry/sector, comparable firms and high-performing units in your company.

Say that your company retains 75 percent of its customers. A realistic goal may be to increase client retention by 3 percent, bringing your company to 78 percent next year, and to aim to keep 85 percent of your clients within five years.

Should a company’s most valued customers be treated special?
You have to invest in targeted customer retention planning. The potential lifetime value of a single lost customer can be substantial. This is magnified when we realize the overall cost of lost business.

Consider the impact of a 25 percent defection rate for a hospital caring for 15,000 patients annually. A revenue loss of more than $9 million [assuming $2,500 average patient revenue and a 5 percent profit margin] results in a dive of nearly $500,000 on the bottom line.

A $100,000 investment in patient retention training and follow-up initiatives can dramatically improve profitability. Targeted retention means that organizations segment customers by relevant dimensions, such as geodemographics, psychographics/behavioral factors and usage patterns.

How does a company determine the success of its customer retention program?
Lexus and Subaru have the highest loyalty rates in the automotive industry by consistently providing superior ownership experiences.

The final phase in building a strong customer retention plan is to ensure that it is working. Careful scrutiny is required to assess the program’s impact on keeping existing customers and, where possible, upgrading current customer relationships. Gather information to determine if your customer retention rate improved. You may need to revisit benchmarks and probe isolated causes of defection.

Strategies and tactics over a three-year span should be closely monitored in order to assess which methods worked best and those with little or no impact on keeping customers.

ART WEINSTEIN, Ph.D., is professor and chair of marketing in the Huizenga School at Nova Southeastern University. He is the author of “Handbook of Market Segmentation” (Haworth Press, 2004) and co-author with William C. Johnson of “Superior Customer Value in the New Economy” (CRC Press, 2004). Reach him at (954) 262-5097 or art@huizenga.nova.edu.

Sunday, 30 July 2006 20:00

Builders and CGL policies

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Building contractors’ Commercial General Liability (CGL) insurance premiums keep going up. But what many contractors may not realize is that the hefty checks they write each month may not cover them for things that are written in their insurance contract. Contractors need to be extra careful about the completed operations coverage in their policies, which is supposed to cover them for damage to a completed project that is caused by faulty work of subcontractors.

“Most carriers deny coverage for such claims even though their policies clearly say this is covered,” says Steven Schember, senior litigation partner at Schumaker Loop & Kendrick law offices in Tampa Bay.

Smart Business spoke with Schember about builders’ CGL policies, the problems facing contractors trying to file claims for the faulty work of subcontractors, and what is being done about the problem in the state of Florida.

 

What is happening with CGL ‘completed operations’ policies at the moment?
Right now, by law, insurance companies must pay for any claim filed by a contractor for shoddy work done by a subcontractor who has already completed the job and has left — by going out of business or not being otherwise available.

This policy takes effect if, for example, a general contractor gets a roofer to install a roof. The roofer completes the job, the contractor pays the roofer, and then shortly thereafter the roofer goes out of business. Later, the roof leaks and the contractor must pay to repair the damage and install another roof. The CGL policy should cover this expense and reimburse the contractor.

The problem is that insurance companies — which were very vocal in the press a few years ago about providing this kind of insurance — are now denying the claims that are coming in for this kind of coverage.

Right now, it is law that these claims must be paid because of a ruling in a Tampa appeals court. However, this case is on appeal in the Florida Supreme Court. We are hoping that the decision will fall in the favor of the contractors. But this whole area is in a state of flux, and some states have gone in favor of the contractors, others in favor of the insurance companies. If the Supreme Court reverses the appeals court ruling, it certainly will be a huge blow to the construction industry.

 

What is some of the confusion surrounding this issue?
The problem is that a lot of contractors don’t even know they have this protection in place at all. And those that do — and try to submit a claim — are getting denied. This has really be a disingenuous move by the insurance company; first agreeing to provide this coverage a few years ago and now denying claims that contractors are filing.

 

What is the fallout from this move by insurance companies to deny these claims?
Premiums continue to go up because, in part, contractors are paying higher premiums to cover completed operations. In addition, surety bonds, which are mandatory for government projects, are getting very expensive and more difficult to obtain because the bonds are being forced to cover items that should be covered by the CGL policies.

 

How can a builder be sure that a CGL policy covers what he or she wants covered?
Almost all CGL policies today specifically provide completed operations coverage. However, to insure that they are truly covered, contractors should get in writing from their CGL carriers that they will cover damage to the completed project caused by the faulty work of subcontractors, as is it set forth in the CGL policy. Many contractors not only have their CGL insurance with a particular company, but also its property, auto and other insurance.

If an insurance company balks and doesn’t want to put it in writing, renewal time is a good opportunity for contractors to gain leverage and threaten to seek out another insurance company. I’ve seen this done by contractors and it is quite effective in getting the insurance company to commit to ‘completed operations’ policy in writing.

 

Are there other things builders can do to cover any exposure they may have not covered by their CGL policy?
The standard CGL policy contains several exclusions — an example being damage caused by spillage or overspray or other contamination by pollutants on the job site, such as painting, spraying, airborne particles, etc. Depending on the type of work done by the contractor, the CGL policy exclusions should be reviewed and removed from the policy where appropriate. It may cost an additional premium but it will be worth it.

 

STEVEN SCHEMBER is senior litigation partner at Schumaker Loop & Kendrick law offices of Tampa Bay. Reach Schember at (813) 227-2247 or sschember@slk-law.com.

Friday, 28 July 2006 20:00

Smooth sailing

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 When Marriott employee Joe Collier III could not accommodate one of his biggest clients, he quit the franchise hotel chain and started Mainsail Management Group Inc., a property development and management company.

Mainsail entered the corporate housing industry in 1998 when it built the 360-unit Mainsail Suites and Conference Center in Tampa as an extended-stay training facility for PricewaterhouseCoopers’ international consultants.

“I started out sold out for 10 years with one client,” Collier says.

But when IBM bought out PricewaterhouseCoopers’ consulting practice two years into the agreement, it absorbed a lease on a facility it no longer needed. Collier renegotiated to give IBM some of its money back and opened Mainsail Suites to the public.

Today, Mainsail operates lodging facilities in several major metropolitan areas and has developed a resort in the British Virgin Islands.

Smart Business spoke with Collier about how he finds the best employees to ensure a positive customer experience.

As the company grows, how do you ensure customer service remains strong and consistent across properties?
We generate customer feedback forms. We get hard-copy and e-mails back and automatically our customers get something from us, so we get lots of data. We also leave room for people to write us and tell us how their experience was. We use that as a lesson for the staff.

Another thing we do is send the staff out to see other customer service, good or bad, and let them experience it first-hand so they can fix it and make it better at our place. We’ll stop at other hotels or get on a speaker phone and go through a shop call, when 10 people are sitting around and call up a reservation agent at another hotel or another product and listen how they perform, good or bad.

We’ll say, ‘See how bad that person sounded? How they did not ask the right questions?’ Sometimes bad examples are the best examples.

How do you attract and retain the right employees to ensure good customer service?
We try to put together sort of a culture package. When people come on board, instead of handing them an orientation package of nuts and bolts, we try to give them a sense of what the culture is going to be like.

People coming from big companies, a lot of them are attracted to what we’re offering from a culture standpoint. They meet the boss right away, they get a tour of the property and they get a sense of core values rather than just focusing on, ‘This is what you’re going to get paid per hour and these are your retirement benefits.’

We get a sense pretty quickly as to whether or not they’re going to fit in. We try to go with this ‘hire slowly, fire quickly’ thought process.

How do you find new employees?
We pay a bonus to employees that bring somebody on that we end up hiring. We get word-of-mouth referrals and we do a lot of networking. Then we hire people that we run into that are great.

Somebody who is really awesome that we run into in some service situation, we bring them in for an interview and steal them from other businesses. Not just other hotels, but folks you can tell have the right kind of hospitality spirit. That’s who we want with us.

How is running a company different from simply working for one?
The biggest difference is the financial guarantees that I personally have my neck out for. Those are clearly different when you own your own company.

When you work for a company, the worst they can do is fire you. When you own the company and you feel responsible for all these people feeding their families, not only do you have that responsibility out there, but you also have a financial responsibility for the mortgage. But I wouldn’t trade it for the world. This is a much funner way to go.

How do you handle that pressure?
If you have really good people, that makes it a lot easier because you have sharp people all around you and the chances of something falling through the cracks are much less.

You try to get out and meet with some of your peers. That’s why it’s good to belong to associations. You get a chance to hear some other guys from different backgrounds talk about their issues and how they have solved some of their problems in their companies. You’ve got insurance companies, guys from engineering backgrounds, real estate, big financial guys and people who own restaurant companies.

I wouldn’t say it’s lonely at the top — I don’t believe that — but you’re facing different issues.

HOW TO REACH: Mainsail Management Group Inc., (813) 243-2600

Thursday, 29 June 2006 20:00

On the upswing

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Florida’s red-hot real estate market, which has sizzled for so long, could soon have a big impact on commercial lease rates and properties. Due to the residential boom, available commercial space is shrinking and rates are ready to begin climbing.

“The last 24 months have been as hot of a real estate market as I’ve ever seen,” says Russ Sampson, executive vice president and director of brokerage services for Colliers Arnold in Tampa. Sampson has been in Florida for the last 20 years. “It’s absolutely overheated.”

Sampson says studies show that over 1,000 people move into Florida every day. Within the next seven years, up to 9 million people are expected to join them. To create room for everyone, zones have been redrawn to make commercial land residential. The lasting effect means fewer commercial properties, which could soon send lease rates soaring.

Smart Business spoke with Sampson about the forecast for Florida’s real estate market and what companies can do to lock in lower lease rates.

How is the real estate market currently changing?
Investors and people living in the state of Florida have interest-only adjustable rate loans. Now, interest rates are starting to inch up, and they’re getting back to the point where they are a lot higher.

People jumped in at 3 percent, and now the interest rates are at 5 or 6 percent. All of a sudden, their cheap mortgage payment has doubled.

The bottom line is that there is going to be a correction and those adjustable rate mortgages will come back and put some people in a financial bind. That’s a trend I see coming down the pike.

How does this affect businesses?
From a commercial real estate perspective, costs have gone up substantially all across the board. Land doubled in value and sometimes went even higher.

For the first time ever, developers were getting changes in zoning to make commercial land residential. Consequently, you have a growing shortage in commercial property because it has all been switched over to residential.

The cost of construction has risen 20 percent to 40 percent over the last three years. In order to build a commercial project, a developer has to plug in all the costs and expect a reasonable return. Today the rate for an office building, which would give the developer a reasonable return, is more than $30 a square foot for new construction.

The dynamic here is that you have all-time low vacancy rates — in the single digits, which means there is very little space available in the existing product type. It should be fueling this incredible real estate boom, but the lease rates have yet to catch up with the rising costs of new construction. In order for new construction to occur, there will need to be significant pre-leasing activity.

We have strong demand, low vacancy rates and high construction costs. It’s an interesting time because the lease rates are going to go significantly higher. Recently, they have gone up by 20 percent in the last 12 months, and I fully expect them to go up another 10 to 20 percent in the next 12 months.

Because lease rates are going higher, existing commercial buildings are becoming substantially more valuable. When those rates rise and get up to the middle to higher $20-per-square-foot range, that’s when you’ll see new construction in office and industrial buildings.

What advice would you give a company in its current lease?
Even if you have a couple of years left on your lease, I’d encourage you to go back and renegotiate deals and extend the lease out as long as you can. Or if you need to move for whatever reason, do it now rather than later. Lock in the longest term you can at the lowest rates, because I believe lease rates are going up substantially over the next few years.

There are very few vacancies, and retailers are doing pretty darn well with all of these baby boomers moving into Florida. Sign longer-term leases and lock in the lower rates, because that’s not going to be the case three years from now.

RUSS SAMPSON is the executive vice president and director of brokerage services for Colliers Arnold. Reach him at (813) 221-2290 or rsampson@colliersarnold.com.

Thursday, 29 June 2006 20:00

All in the family

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Michael Plummer learned all about marketing when he bought into a little pizza shop in Iowa nearly 35 years ago.

Today, he’s parlayed that experience into a company that helps businesses across the country flourish by catering to new families just moving in.

Plummer is the founder of Our Town Inc., which works with established local businesses to welcome new families to an area by providing them with $300 to $500 worth of coupons for free products and services.

“I don’t care how much you advertise,” Plummer says. “The most important part of a retail business is getting someone to come in and experience your service. If it’s good enough, they’re coming back.”

Plummer began franchising Our Town last year, and his 30 franchises produce $25 million in annual revenue. He plans to add 30 more franchises this year and is projecting more than 400 within the next six years.

Smart Business spoke with Plummer about how he keeps employees happy while building a prosperous business.

How do you attract and retain top-notch employees?
We believe everyone — from our lowest employee who does the most menial task, to our CEO — should be treated with respect. We respect our employees to such a degree, we provide benefits that truly are not normal.

We provide employees with $200 a month toward health insurance, which covers 90 percent of people’s full insurance. We pay more than scale. We allow our people to participate in our growth by many having compensation bonuses based on growth.

We have a gourmet chef, and we provide a free lunch every day and a hot meal on Fridays because we want them eating nutritious foods. We don’t want them eating fast food. It’s poor for performance and it’s poor for their health, so we provide nutritious meals and deli sandwiches.

We shut down for four days every year and take all of our employees on a cruise, where we pay 100 percent of the employees’ costs and we subsidize their partner so they only pay $150 for both of them to go on a cruise. And they’re compensated for that time; it doesn’t count against their vacation time.

Every Tuesday, a neuromuscular masseur comes in and he gives each person a 20-minute massage. It usually takes him about three weeks to work through everybody.

After one year of employment, our employees are allowed to contribute 3 percent to a 401(k), and we match it. We do as much as we can to let them know how important they are.

Every business should do that. The result is we rarely lose employees.

How do you ensure you get the best quality people when you’re adding them so quickly?
We do multiple interviews and we employ a simple profile test that takes about 20 minutes to fill out. It tells you, here is what this person is really good at and if you hire them, here is what you need to manage them with and here are ways to effectively get this person more into your system.

I’ve found it to be incredibly accurate. When we’ve hired people off that, the things it said they would need help with, they did need help with. And the way they suggested we treat them to compensate for that seemed to work.

It’s multiple interviews with people who see things differently. Usually it’s three people — obviously the manager they report to, and then two others who would look at things from another perspective.

For any business, a bad hire is the worst thing you could have. It creates more work and it puts stress on the relationships; the employee is not happy and certainly the employer is not happy. And then termination is just a miserable thing for everybody.

How do you maintain a cohesive company culture?
Through making sure we don’t forget where we came from and always being accessible to everyone. Our employees know there is no one too big to do anything. Somebody spilled something on the carpet out front, and I went to clean it.

Everyone here is equal, and that’s very important. We read surveys to them from the families who send them in because they don’t know. When you’re sending out 9 million packets, you think you’re a production facility. But that’s not what they are.

So we explain to them that they’re helping these families. The best way is to keep grounded. There is no one too pious or pompous to go out on the production floor and do the things that they do.

We’re all equal, and that goes a long way to making people feel they’re part of a tight-knit group. And we are. Our employees are happy to be here.

HOW TO REACH: Our Town Inc., www.ourtownamerica.com

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