It was just a decade ago that a Cleveland-area investor paid Alan Groedel, at the time a 30-year-old former buyer for Victoria’s Secret, to write a business plan for him.

The investor had only one nonnegotiable demand: that the business be focused somewhere in the geriatric sector.

“I probably spent half of the two months [allotted] fumbling. Then I wrote the plan,” Groedel recalls.

That company became Provide-a-Ride, one of Cleveland’s biggest entrepreneurial success stories of the ’90s. A three-time member of the Weatherhead 100 list of fastest-growing area companies, by the end of the last decade, it had grown to about $3.2 million in revenues, led by its owner, the man who wrote the plan (Groedel bought out the investor’s interest soon after the company was launched).

Its success was especially noteworthy, given how tough this industry sector has become. Groedel’s company provides nonemergency medical transport through the use of specialized vehicles such as step vans.

He occupies a tiny niche of the medical industry, which has been rocked by declining federal reimbursement for coverage. Plus, he’s in a highly capital-intensive and labor-intensive field, which could easily be a recipe for failure.

For all those reasons, he says, “I had always been positioning it for a sale.”

And yet for a decade, he never got an offer.

It’s not hard to figure out why. His was an especially tough niche in which to make a profit: alternative medical transport, or AMT. While the glamour and profits were in the ambulance business, the opportunities there were winnowing for smaller companies.

During the 1990s, two national consolidators began buying up many local ambulance companies, including such players as Sue Olsen’s Metro Ambulance.

Margins in the homelier AMT sector of the business, meanwhile, weren’t quite at anemic grocery-industry levels, but neither were they very healthy, he says.

“It isn’t a highly valued business, because the margins aren’t high and the risks are significant,” he says.

The challenges lately have included an acute shortage of semi-skilled full- and part-time labor to drive the equipment and a near-catastrophic cut in Medicare reimbursement levels by the federal government, which has led to the undoing of such certifiable industry success stories as Geric Home Health Care, which went out of business last year.

Watching this landscape unfold around him, Groedel tried to prepare. He had been talking to Rural Metro Ambulance, a publicly held, Arizona-based national player, pitching it on turning over to him its alternative transport services in this market. The bigger company was clearly interested in some sort of arrangement, since it was losing money on those operations, even though its customers demanded it continue to offer them.

But Rural Metro was also listening to similar overtures from Baltimore-based Yellow Transport Inc., a multimodal provider of specialized transport services. And in the end, the courtee got the two courters together.

“They [Metro] introduced me to Yellow, and all of a sudden, someone [Yellow] was at my door, saying, ‘We want to buy you.’”

Yet, even while he was about to sell his company, Groedel never considered walking away with his cash. First, there was the fact that he wouldn’t make enough from the sale (which he declined to identify) to retire. At just 41, he has two small children, and says, “I’ve grown accustomed to a nice lifestyle.”

He also was sure his specialized knowledge would be essential to making the new joint venture work.

“I knew that the business was still at a state that it required the owner’s involvement. You need a fairly established, mature business in order to be able to walk away from it, in a mature industry. Our industry is still a new one,” he says, and his stand-alone company had neither the maturity nor sufficient management infrastructure to allow him to walk away cold.

Perhaps most important, he was excited by the new owner’s vision. It essentially boiled down to using Provide-a-Ride as the first local model for integrating alternative transport services into the ambulance business around the country, under a joint venture called HealthRide (the local operation has about 140 employees, about 60 more than before Groedel sold it).

The new owner’s tantalizing pitch to Groedel, as he puts it, was, “‘We plan on growing your business five-fold, and Rural Metro wants to duplicate it across the country, and you’re [still] involved.’ So I was anxious to be tied up with these guys.”

Only one problem: That would change the sale negotiations markedly. Rather than simply seeking the highest price for his company, Groedel now had to be careful to structure the deal more as one between two future partners, even if one was, in truth, working for the other.

“It’s amazing how quickly a sale like this changes the nature of the conversation,” Groedel says. “You’re not merely trying to get the most for your business,” but you’re also trying to strike the proper tone for a continuing relationship. “So the parties have to watch how they treat each other at the negotiation table. It was all the more important that everything was exactly as you said it was.”

It was here that he had the luck of the family draw: a lawyer brother with a background in securities transactions. Howard Groedel, of the law firm of Ulmer & Berne, was once a securities attorney in the enforcement division of the Securities and Exchange Commission in Washington, “chasing down bad guys,” as he puts it.

Now, his practice focuses on mergers and acquisitions in the middle-market, closely held field for Ulmer, among Cleveland’s most-elite business law firms. He’s been intimately involved in helping advise his brother with the business almost from the start.

“The most important thing he warned me is that you’re sitting across the table from your future partners, so I had to be careful of the representations I make about the company,” Alan recalls.

In a traditional negotiation of a business sale, the buyer is often interested in tying the former owner’s interests to the business for a period after the sale, in order to effect a smooth turnover and provide a bridge to customers and suppliers. That’s typically accomplished through financial incentives written into the sale agreement.

The difference here, though, was that “if you sell a company and (eventually) walk away, and later there’s a dispute, you give back some money or go to court to settle it. But here, you don’t want to go to court against your employer.”

Alan’s next hurdle: Convincing his wife it was the right decision.

It’s hard to bring a spouse up to speed” with the details of a business when he or she doesn’t work in it every day, he says. “It’s difficult, because when you start up a business and you’re successful, change is difficult [for the family]. Her concerns were loss of control and uncertainty. But what I had to sell to her was that running a small business in my field was very uncertain all the time.

“So I spent a great deal of time making my wife comfortable” with the decision to sell.

Again, he received help from his brother/attorney.

“When you’re an attorney, you’re always trying to do your best,” says Howard. “But when it’s kin, there’s a little extra pressure. I would say the deal was the subject of a lot of dinner-table discussion” in the extended family. He also talked to Alan’s wife, addressing any concerns his sister-in-law might have had.

“It wasn’t my job to convince her. It was to put this deal in context with other, similar, deals,” says Howard.

In the end, Alan seems at peace with his decision. As he talks about the sale, which closed around the middle of last year, at his home in Pepper Pike just before the end-of-year holidays, he takes evident pleasure in watching his toddler son come home and burst into the dining room for a hug from dad.

Even after the sale of his company, he says, returning to the conversation, “I kind of missed the feeling of being an employee, because I didn’t walk into a place with a system, I walked into an entrepreneurial environment that was fresh and unstructured. It wasn’t so much do this A and B, but, ‘How can we help you do this better?’”

It wasn’t a terrible adjustment, he says, “but it was an adjustment. I’ve got a boss, even though he’s out of town, and I have to give him some numbers and some idea of the direction I’m taking.”

Thankfully, he says, it hasn’t been too long since he’s had to answer to someone, back in the late ’80s, when he worked at that beacon of adolescent male fantasy, Victoria’s Secret.

“It was only 10 years ago that I was part of a team, and I remember what that was like.”

John Ettorre (jettorre@sbnnet.com) is a contributing editor at SBN.

Published in Cleveland
Monday, 22 July 2002 09:45

Gut check

Gavin Smith and Jeff Craze know they’re not big fish in the regional microbrewing pond. They don’t have 10 years of brewpub experience behind them, nor do they possess the deep pockets necessary to buy smaller breweries and establish national and regional distribution channels.

But what Smith, CEO, and Craze, president of Western Reserve Brewing Co. do have is good old-fashioned marketing sense, an understanding of the value of hard work and a realization that even if your business has a good product, it’s worth tinkering with.

In their first three years of business, the pair has been busy, garnering local and national awards for Western Reserve’s brewing excellence. From the outside looking in, they must be doing something right.

So what can your business learn from a couple of home brewers turned pro? A lot more than you think.

Do your homework, build a plan, but trust your gut

It’s no secret that you’re unlikely to succeed in business without a solid plan. Nor can you produce a quality product without devoting countless hours to research and development. But beyond that, every good business begins with a gut feeling that something will work.

Smith and Craze spent two years developing their business plan before Western Reserve brewed its first barrel in 1997. They traveled to other breweries, including local ones, to gauge how things were done in the microbrewing industry. Now, with a bit of experience under their belts, they are in the midst of devising a new three-to-five-year plan, which Craze says encompasses a proposed expansion.

Western Reserve was the duo’s first commercial venture — both came from other industries — but they followed the old business school motto: When you’ve run the numbers enough times, trust your intuition.

“We had a couple gut checks along the way,” Smith admits. “When we built our manufacturing plant, it wasn’t easy. We had to lean on our passion for beer and passion for Cleveland in order to get through the challenges we didn’t expect.”

But trusting their guts extends deeper into the organization, allowing Smith, Craze and brewmaster Jeff Ogden to venture into the great unknown. Explains Steve Louzos, marketing and public relations manager, “One of our favorite sayings is that you learn something new every day ... if you’re not careful.”

Don’t be afraid to tinker with a good product

Western Reserve’s beers have received national awards, but Smith and Craze aren’t willing to rest on early success. That’s why Ogden constantly tries new concoctions that require the special touch of someone who is a healthy combination of alchemist, artist and mathematician.

“It’s critical to be consistent and use exact calculations,” Ogden explains. “Making sure batches taste the same requires spending that extra half hour or hour doing the math. But you have to look at what you’re doing, smell it, taste it and make it that way as well. If you go strictly by the numbers, you lose the creativity of the process.”

This tinkering has helped create Western Reserve’s seasonal beers, including the logo-fancy Bockzilla, which touts a beer-guzzling cartoon Godzilla on the label. Like any good company, Smith says, you have to stay on the cutting edge and continually adapt and develop new products.

Image is everything, so create a good experience

Public perception of your company normally translates into how well you really do. That’s why Western Reserve takes an active role in the community and puts its best spokespeople forward. Those two things, explains Louzos, are the drivers behind Western Reserve’s current marketing campaign, which features Smith and Craze as a couple of cartoon talking heads.

“They’re the best spokespeople for the company because of their passion for the product and belief of getting involved in the community,” he says.

And unlike larger businesses, where the CEO and president often leave the bulk of community relations to a team of well-seasoned professionals, Smith and Craze are apt to be found pressing the flesh with the public at events, letting people attach a face to a company name.

“We were at an event recently with a lot of country music fans,” says Smith, “and the people couldn’t get over how much we were just a couple of regular guys like them. They connected with us and our beer, and realized we were two enthusiasts who cared about the product.

“That’s what it’s all about for us — having a good time, making enough money to keep roofs over our heads and producing high quality beer.”

How to reach: Western Reserve Brewing Co., (216) 361-2888

Dustin Klein (dsklein@sbnnet.com) is editor of SBN.

Published in Cleveland
Monday, 22 July 2002 09:44

A convenient change

When Robert Stein assumed the top spot at Dairy Mart five years ago, he looked at the path the 61-year-old convenience store chain had taken and realized it was the wrong one.

An explosive acquisition phase during the mid-1980s left the organization with many older stores that could not compete with petroleum giants like BP and Shell, which had entered the convenience game in a well-funded fury and threatened the company’s long-term survival.

Simply put, Dairy Mart had overextended its resources and was in dire need of a makeover from the 1970s convenience box concept to which executives had strictly adhered.

“We just weren’t managing our existing network of stores as well as we should have,” says Stein, CEO of the convenience store chain. “If you combine that with the oil companies getting into convenience when they weren’t before ... That was a loud wake up call. We said, ‘Wait a minute, that’s our business.’”

Stein decided to move Dairy Mart’s corporate headquarters from Connecticut to Ohio, so executives could be closer to the Midwest stores at the heart of their operations. In 1998, those corporate offices were relocated to a new building in Hudson.

Meanwhile, Stein sold off and closed older stores at an incredible rate to raise the capital needed to secure prime corners of real estate for new, larger stores that offered gasoline and food, like the oil companies with which they were doing battle.

Dairy Mart posted a $1.5 million loss at the end of fiscal year 1998, but during the following 12 months, Stein’s new strategies started to catch the eyes — and wallets — of consumers. A new marketing focus and strategic partnerships helped the chain reach profitability by the end of fiscal year 1999.

The impressive turnaround was not lost on Convenience Store Decisions, an industry trade magazine that named Dairy Mart the year’s top store chain from a field of 2,900 companies. To hear Stein tell the story, the rebound was simply a matter of pruning the company’s weak links and giving customers a reason to walk in the door.

“We just had a lot of internal things we had to fix,” Stein says of Dairy Mart’s past, delivering the words with the stony cadence of a football coach “We used to be a deal company. We were making deals and getting bigger, but we weren’t saying, ‘Wait a minute. What do we have here? And how do we make what we have better?’”

When Dairy Mart executives purchased the popular Northeast Ohio Lawson Milk Co. stores from Consolidated Foods in the mid-1980s, they also swallowed stores from five other independent companies.

Along the way, Stop-N-Go, Dutchland Farms and Sunnyland Farms stores ended up under the Dairy Mart banner. By 1987, after three years of steady acquisitions, the chain reached a total of more than 1,200 stores in 11 states.

Such explosive growth did not come without its own set of challenges, namely keeping a fresh face on an aging network of stores. Another stumbling block was the fact that the integration of gasoline into the convenience store concept was a trend that could not be ignored. That posed a problem, because many Dairy Mart stores were tucked into neighborhoods, which made such an investment physically impossible.

To raise money for capital improvements, Stein sold off the former Lawson Milk Co. ice cream plant in Cuyahoga Falls and dairies the company owned in Ohio and Connecticut. He gradually closed smaller and older stores that did not fit his vision for the chain and sold the original Connecticut Dairy Mart Chain so management could focus on stores in the Midwest.

Those moves whittled the chain to half the size it was during its peak period of acquisitions. Today, about 30 older Dairy Mart stores are closed every year and 20 new ones are built, depending on where the company can find land.

“(Closing stores) doesn’t matter to me because it’s not how many we have, it’s how good we are,” explains Stein. “We went into a whole quality vs. quantity mode. We’re in a position now where we’re going to grow the quantity, but in a quality fashion.”

Early in the revitalization period, Stein decided to replace the dated blue and white Dairy Mart logo in favor of something friendlier and more contemporary.

“We wanted one that gave the feeling of friendly and homey,” explains Stein, who ended up with today’s much stronger red and blue uppercase “DM” logo.

This reimaging campaign included the remodeling of stores, installation of new pumps for locations that already offered gas and setting aside bigger marketing budgets for the next three years to make sure consumers were aware of the changes. Stein focused mostly on billboards and radio, media that were sure to catch the person on the road, Dairy Mart’s prime customer.

One of the most successful marketing strategies, however, started out as an experiment. After initially offering ATMs inside his stores, Stein pulled them out because they were not making enough money for Dairy Mart or the bank. But with the proliferation of ATMs elsewhere, it soon became apparent he would have to find some way to bring the machines back.

He wanted to test the idea of a no-fee ATM. Customers would still get hit with a small surcharge from their bank, but would escape the extra $1.50 to $2 charge for using Dairy Mart’s machines. Stein found a bank willing to go along with the plan, as long as Dairy Mart paid a fee to subsidize the service.

He budgeted extra marketing dollars to make up for the cost of the machines and found the promise of a no-fee ATM brought people in the door. Better yet, they were buying Dairy Mart products during those quick visits to grab cash.

“It’s just one of those things that touches a chord with people,” says Stein, who still seems a little surprised at how well the idea was received. “I think it gives them the residual feeling of, ‘Gee, these people are doing something good.’”

On many of the 170 Dairy Mart billboards that dot Ohio is an ad that prominently displays the Millstone Coffee brand the convenience store offers.

Stein is banking on the fact that visitors to his stores will be enticed by a coffee that is not just a dark liquid dumped into a styrofoam cup. It’s part of a branding plan to tie Dairy’s Mart’s name with popular products that, by themselves, will bring people into stores.

Stein landed an exclusive deal with Proctor and Gamble to sell brewed Millstone to Dairy Mart’s morning customers, an agreement sweetened by the fact that the brand is currently the subject of a national television advertising campaign pushing the sale of Millstone coffee beans in grocery stores.

He also struck a deal with Chevron to provide gasoline for stores in Kentucky and Indiana, and is looking for a similar arrangement in Ohio. The presence of a brand name and logos on the overhead canopies, he says, has increased gas sales and prompted customers to buy a higher octane gas than they would if they were buying a store brand gasoline.

“What you get with that is a clear and recognizable brand,” explains Stein. “Marketing, over 100 years, has taught people that branded gas is better than unbranded gas.”

Finally, Mr. Hero restaurants were included in Dairy Mart stores as Stein aggressively pursued his goal of making food service a viable traffic builder. He is serious about it, going so far as creating a new six-person department charged with developing Dairy Mart's food service strategy.

This spring, Dairy Mart will roll out a line of breakfast offerings that will compete against McDonald’s and Burger King in the battle for the stomachs of early morning commuters.

It's all part of Stein's master plan to evolve Dairy Mart from the simple jug of milk and loaf of bread convenience store business that sustained it for years. Stein knows the corner store is not what 21st century consumers want anymore. They want a place where they can buy a hot sandwich, grab a cup of coffee, fill their gas tank and buy a newspaper, all in one stop.

And he’s more than ready to provide it, announcing last year plans to build 90 new convenience retail stores during the next two years.

“It’s going to take time, because you can only build so many stores a year based on capital and finding the land, but that’s what we’re going to be doing for the next several years,” says Stein. “There is plenty of business out there.”

How to reach: Dairy Mart, (330) 342-6600

Jim Vickers (jvickers@sbnnet.com) is an associate editor at SBN.

Published in Cleveland
Monday, 22 July 2002 09:43

A campaign with bite

When The Goodyear Tire & Rubber Co. wanted to tout the advantages of its new Mud Runner Run-Flat tire for all-terrain vehicles, a courageous crew at Akron-based Hitchcock Fleming & Associates Inc. went more than the extra mile to produce a convincing promotional video and brochure for the product.

In fact, the team went all the way to the Everglades, where Hitchcock creative director Bob Clancy, account manager Amy Freed Humbert and art director Tony Carter found themselves up to their necks in alligators.

Literally.

“Amidst hundreds of gators, we demonstrated how the Mud Runner Run-Flat gets you through the muck, even with a few holes created by razor sharp jaws,” Clancy exclaims.

The point of the promo, says Clancy, is that jagged obstacles in the off-the-beaten path of a speeding all-terrain vehicle can bring a thrilling ride to a disappointing — and even dangerous — halt.

The good news, says Goodyear’s specialty product manager Ed McMahon, is that the Run-Flat technology enables ATV drivers to keep on trekking, despite what may run under the wheels.

“You can have a gaping hole two inches in diameter, and continue to run on it for up to 50 miles at 25 miles an hour,” McMahon says.

“And you can go even farther if you go slower,” says Clancy.

But it’s doubtful that an ATV operator would want to slow down when stranded in the middle of nowhere — especially if nowhere is a festering quagmire that happens to be home to slithering, 800-pound swamp things with razor-sharp teeth.

There’s comfort in the fact, says Clancy, that the brawny Mud Runner has a computer-enhanced tread design that keeps it from clogging, and the slotted lugs have a “biting edge” to prevent the wheel from becoming bogged down.

To corroborate the claim in the most persuasive manner possible, Clancy gathered a group of professionals from Akron and beyond and traveled all the way to Gatorland, the “Alligator Capital of the World,” in Orlando, Fla.

Included in the entourage were Akron photographers Jim Martin, Scott Earhart and Ray Langston of Studio Martone Inc., and commercial production photographer and director George Remington of Cleveland-based Remington Productions Inc.

Along with the Hitchcock team, the crew pulled on their khaki pants and pith helmets and partnered with other Florida and California-based production professionals to capture the action.

McMahon says that since ATVs are intended for fun and excitement, he wanted to avoid traditional advertising slants in which a vehicle glides along a paved road, spiraling autumn leaves in its path. What Hitchcock came up with, he says, was perfect for the product.

“It was a natural because of the popularity of shows in which the Australian adventurer is always out hunting crocodiles and reptiles,” says Clancy.

Through a California casting firm, Humbert hired young Australian actor Eric Finney to play just such a part for Goodyear’s video. Then she made arrangements for the use of an ATV manufactured by Minnesota-based Polaris Industries and operated by Polaris stunt driver Ritch Ragle.

Pooling their talents in a mud swamp swimming with prowling razorbacks, coiled rattlesnakes and stinging insects, the Hitchcock team, the Akron photography and film crew, the stunt driver and the actor succeeded in producing a promo that has pure bite.

The objective, of course, was to show that Goodyear’s tire is completely at home in the mud, and credibly illustrate its remarkable capabilities to savvy sports enthusiasts, hunters, farmers and other ATV users.

Humbert says the sheer essence of the product itself was enough to make that impression — there was no need for special effects.

Even Clancy, who’d written the script for the actor and narrator, was amazed.

“I’m an ad man — I’ve heard all the claims and I thought I’d seen it all,” says Clancy. “But the stunt driver drove so far out into the swamp that I thought the ATV was going to sink into the water and disappear. He was up to his waist in water, mud and muck, and this tire just churned through everything — it never once got stuck.”

Ant it wasn’t just the Mud Runner’s marsh muscle that was impressive, says Humbert. She was surprised when the tire resisted the power-locked jaws of a hungry alligator. Lured by horsemeat placed in the tread grooves, the 20-foot amphibian tried to bite into the tire.

Humbert relates that Gatorland officials are accustomed to working with production crews, and the trained alligator handlers have accommodated about as many requests as an alligator has teeth.

“It’s the same location where the James Bond sequence was filmed, where Pierce Brosnan walks across the backs of alligators,” says Clancy. “Any film that has gators in it was probably filmed at Gatorland.”

Humbert says that when she initially viewed capabilities videos provided by Gatorland’s public relations department, she was mesmerized by the daring and expertise of head trainer Tim Williams. Referred to as the attraction’s “Dean of Gator Wrestling,” Williams is a 25-year veteran of swamp creature exploits.

“Once we got there, he instilled such confidence in us and made us feel so comfortable that within an hour, we were standing literally up to our necks in alligators and not feeling the danger that really is there,” she says.

Clancy confirms that after three days in the swamps, hundreds of pounds of horsemeat and some close calls with prehistoric pea-brains, the Hitchcock crew brought back some dramatic advertising, which they’ve since dubbed, “Swamp Thang.”

The group also came home with a few stories to tell their friends and Kodachrome memories for the office bulletin board — such as the photograph of Humbert straddling one of the ferocious beasts.

“As long as you have a big bucket of horsemeat near you and you’re throwing it in their mouth, they seem to obey pretty well,” Clancy laughs.

Humbert says that about 3,500 dubs of the video were made available for ATV and tire dealers, and the promo debuted at Goodyear’s annual dealer conference in January at the Venetian Hotel in Las Vegas. Airing continuously in a large screening area at the convention, the video drew the attention of 4,200 Goodyear, Kelly-Springfield and Dunlop dealers who attended.

The response to the four-minute action spot and the four-page color brochure was as expected, says McMahon: Viewers agreed that Goodyear’s Mud Runner Run-Flat is “the meanest, nastiest thing to crawl out of the swamp.”

“We’ve won awards for these things in the past, but I think this is the best one we’ve done so far,” says Clancy. “But you can only be creative to the point where your client allows you to be creative. Ed and his team at Goodyear did a terrific job in that sense.”

How to reach: Hitchcock Fleming & Associates Inc., (330) 376-2111

Published in Akron/Canton
Monday, 22 July 2002 09:43

Dwight Smith

If you see Dwight Smith, president and CEO of Sophisticated Systems Inc., driving down the road, he might be singing.

“I ought to have some musical talent, as much as I listen to it,” says Smith, 42, who particularly likes the tunes on his Jackson Five CD. “I love music. I have always wanted to play an instrument.”

Two years ago, Smith purchased a used saxophone with the intention of learning to play. The lessons have been put on hold, however, with Smith busy running one of the fastest-growing information technology companies in the country.

“Sometimes there’s not enough time in the day,” he says. “But I have people around me that are very understanding and supportive, and that means a lot.”

These are people like Lynn Berta, Smith’s executive assistant.

“She takes care of me and the company’s interest,” Smith says. “She lets me do a lot more than I am capable of doing and have time to do.”

The other unsung hero is Damaro Lewis, second in command at Sophisticated.

“He is one of the people that keeps my feet on the ground,” Smith says. “Frankly, I think he is the smartest person in the company — so much smarter than me.”

Back in 1990, long before Smith met up with these folks, he found the confidence to venture out on his own after getting a taste of entrepreneurship at a Michigan software consulting firm.

As branch manager, Smith was responsible for about 50 individuals, including all hiring and firing decisions, as well as choosing what projects to pursue. It was like running a small business, Smith recalls.

“I said, ‘This is fun.’”

After growing up in Springfield and attending Ohio State University for both his undergraduate and graduate work, Smith was sure Columbus was where he wanted to be.

“I love Columbus. It’s just a warm, friendly city,” he says.

So he sold his house in Michigan, left his job, returned to Columbus apartment living and lived off his savings while forming Sophisticated Systems.

He remembers transferring what he calls his “IBM mentality” to the business: “I always wanted to do business with big companies.”

Today, Smith’s company boasts such clients as Nationwide, Honda, the State of Ohio, Abbott Labs and Bank One. Sophisticated even made Inc. magazine’s list of the country’s 500 fastest growing private businesses in 1996 and 1997.

Sophisticated Systems was profitable its first year in business, Smith says, generating $80,000 in revenues. It has remained profitable every year since, with 1999 revenues estimated to be in excess of $24 million. The company employs between 120 and 130 individuals, with about 20 more full-time subcontractors.

That’s a far cry from the beginning, when Smith was the only employee.

“With that kind of growth comes some challenges and a lot of excitement,” Smith says.

Already firmly planted in Columbus, Dayton, Indianapolis and Detroit, Sophisticated may enter the Cleveland marketplace this year.

“Our employees make the company go,” the characteristically modest Smith says of Sophisticated’s success. “They are appreciated every day.”

In addition, lots of big companies have given Sophisticated a chance, Smith says, and that translates into tremendous credibility.

Although Smith ascribes Sophisticated’s success to others, folks close to Smith know there’s another reason — Smith’s diligent work ethic and high moral and ethical character. Jim Hackbarth, president of Cornerstone Partners, an executive recruiting firm in Columbus, has known Smith since the two were salesmen at IBM right out of college.

“He is, without a doubt, one of the most forthright, honest, what-you-see-is-what-you-get businessmen in Central Ohio,” Hackbarth says. “He walks the talk.”

Other colleagues, such as Don Anthony, president and CEO of a Columbus consulting firm known as The Warrior Group, emphasizes Smith’s ability to focus and put the things he is trying to achieve into a concrete plan.

“He cares about people and issues,” Anthony says. “He does things that most typical business executives will not do, just from the standpoint that it’s the right and humane thing to do.”

Smith’s character extends far beyond the day-to-day operations at Sophisticated. As the father of three stepsons, he is openly committed to kids — his own and others.

Last year, he established the JSS Foundation, named for his stepsons, to provide financial and other support to kids and to foster the notion of entrepreneurship.

“Every day, the reason I work an extra hour is because I want to try and get in a position where I can really help kids,” he says.

In spite of his hectic schedule — in addition to running his own business, Smith chairs the entrepreneurial committee at the Greater Columbus Chamber of Commerce, is a board member at Columbus State Community College and the Columbus Regional Minority Supplier Development Council, and serves on the Governor’s Small Business Advisory Committee — quality of life is important to him. Not only does he exercise to help alleviate stress, he derives much of his strength from his religion.

“If I had a penny for every time I prayed during the day, I would be retired already,” Smith says. “It gives me strength and it always guides and directs me to do the right thing. I have many people to answer to, but especially to God.”

Smith is earnest about his obligation to give back to the community, and he is thankful for the position he is in. He often recalls his earliest jobs, baling hay for $1.55 hour and waiting tables for $1 an hour plus tips.

“I feel like one of the most blessed people in the world,” he says. “I have been put in a position to give back and I hope that I have been wise in those decisions. I hope I have not missed opportunities.

“When it’s all said and done, you can’t take it with you.”

Lori Murray (Lori3204@aol.com) is a free-lance writer for SBN.

Published in Columbus
Monday, 22 July 2002 09:42

Ascension through the ranks

When James Pilla was 18, he shared two goals with his best friend.

First, he wanted to buy a car dealership by the time he was 25 years old. Second, he wanted to earn his first million by the time he was 30.

Pilla reached the first goal in June 1993, less than one month before his 26th birthday, when he bought a 5 percent stake in Motorcars Infiniti. Pilla blew by his second goal with time to spare.

At 32, the slick-haired, straight-shooting Pilla is a rare breed in today’s business world. Rather than found an Internet venture and strike it rich in the futures game, he’s taken a page from previous generations and worked his way up through the ranks.

Pilla is managing partner and 50 percent owner of Motorcars East, Motorcars West, Motorcars Infiniti East and Motorcars Infiniti West, all part of Lee Seidman’s regional auto dealership empire, The Motorcars Group. He’s also vice president of those four dealerships within The Motorcars Group.

And by the way, if the name seems familiar, it’s no coincidence. Pilla is related to that Pilla. Bishop Anthony Pilla is his uncle.

Unlike many of his contemporaries, Pilla didn’t enter the car business with a freshly minted MBA or as a hotshot salesperson. Instead, he quite literally started at the bottom of the auto food chain — washing and detailing used cars at a local Chevrolet dealer.

Since joining The Motorcars Group, Pilla has earned a reputation for taking floundering dealerships and turning them into cash cows. His four locations accounted for a total of $90 million last year, and Pilla expects that number to reach $100 million by year’s end.

Pilla’s turnaround ability is a result of his never-say-die mentality and a belief that if you invest in your customers, you will always come out ahead.

“People always told me I was too young to do this and couldn’t possibly pull it off,” he says. “I’ve spent my whole life proving them wrong. I met a partner who saw something in me years before anyone else saw it and gave me the guidance and opportunity needed.”

Pilla may have begun his career as a detailer, but he quickly decided that was not his lot in life. He tried to land a job at Fairchild Chevrolet as a car salesman in 1988, but the general manager wouldn’t hire him because he was too young and too unseasoned.

In fact, recalls Chuck Gile, that GM and now managing partner of Motorcars Honda and Motorcars Toyota in Cleveland Heights, Pilla was rebuffed three times.

“I finally hired him on the fourth time,” Gile says. “I was impressed with his persistence, and I liked his aggressiveness.”

Even then, Gile didn’t trust him to be a full-time sales rep. Instead, Pilla was offered a 30-day tryout as a sales consultant at minimum wage. That was all Pilla needed. He not only stayed on after the initial run, but in his first year was among the top-selling Chevrolet sales consultants in the country.

That earned him a promotion to aftermarket manager. In one year at that spot, he increased sales from $100,000 to $400,000.

That was the first time Pilla’s ability to drive improvements rose to the surface. But it wouldn’t be the last.

Says Gile, “He’s very aggressive and very visionary. He knows what he wants to accomplish and puts his efforts into getting it done. And, he’s willing to take risks in order to make that happen. A lot of people aren’t willing to do that.”

The next time Pilla pulled his turnaround act was shortly after he bought into his first dealership in 1993. With annual revenue of $18 million and 22 employees, Motorcars Infiniti was losing money. But Pilla believed he could make the dealership profitable. He took out a second mortgage on his house, borrowed money from friends and family and tapped into his savings to buy his 5 percent stake.

Within six months, the dealership was profitable and Pilla had garnered Seidman’s watchful eye.

“When Jamie and I talked, he was a couple months short of his 26th birthday,” says Seidman, whose Motorcars Group today stands at 12 dealerships. “When I went into business I was a couple months short of my 26th birthday. I had to borrow money to go into business. So did Jamie. There are some definite parallels between us. I saw a lot of energy, enthusiasm and bright ideas in him, so I wanted to give him a chance.”

It didn’t take long before Seidman decided to get Pilla more involved in operations. The two bought a Mercedes-Benz dealership and added it to The Motorcars Group. Pilla was put in charge, and in less than one year, took it from selling 60 to 80 new Mercedes each year to selling 160 to 200 a year.

“He’s got a lot of guts,” says Seidman. “He’s willing to make the tough choices in order to get something to work. Even if it’s not the most popular decision.”

While he deflects much of the credit for the turnaround to others within the organization, Pilla cites several things that helped spark better results: increased advertising, more follow-up calls to customers and potential customers, aggressive pricing policies and beefed up service departments.

All of which has helped bring people in the door and sent more cars out the driveway.

Despite what seems like a tireless schedule, Pilla’s carved out enough time to raise a family. He and his wife live on the East Side with their two children, ages six and four.

The importance of family was instilled in Pilla at an early age. He comes from a large, tight-knit family, and has seven older brothers and sisters, all of whom still live in the Cleveland area.

“Every Sunday, I go to Mass with my mother,” Pilla says. “Then, we go to her house for brunch. We’re a very close family and that’s very important. My brothers and sisters are there. It’s a huge deal.”

And, growing up with a father, Joseph G. Pilla, who was a former chief federal probation and parole officer for Northeast Ohio, and an uncle like Bishop Anthony Pilla, it’s safe to say that Pilla’s childhood was spent toeing the straight and narrow line.

“The rules of our house when I was growing up were simple,” Pilla recalls with a smile. “You can do anything you want, but you better not be on the front page of tomorrow’s paper.”

Seidman says Pilla’s upbringing is evident in the way he treats his co-workers and employees. “People grow up with a healthy respect for others, depending on how they’re treated,” he says. “Jamie is a good motivator because he knows how to treat people the right way.”

The unique childhood also taught him the importance of giving back to the community. Besides the numerous boards that Pilla donates his limited time to, he also sponsors a student at his alma mater, St. Ignatius, paying the student’s full tuition and serving as a mentor.

Time is so much more valuable than money,” Pilla says. “Anybody can just cut a check.”

It’s this belief and commitment to people that both tempers and drives Pilla’s vision in the business world.

Tinkering with existing operations isn’t anything new for Pilla. He’s always demonstrated a penchant for trying new ideas to drive change. In late 1994, he noticed his dealerships wasted an incredible opportunity in the new and used vehicle departments because of poor inventory management.

Further, he blamed the problem on his managers, asserting they couldn’t properly gauge the demands and demographic characteristics of their customers.

Pilla turned to technology for the answer, and hired a college student to enter customer data into an Excel spreadsheet — name, ZIP code, income level, make and color of the vehicle sold, financing option and cost of the used vehicle sold. The entire project cost less than a few thousand dollars, Pilla says, but the results were remarkable.

Between Jan. 1, 1995, and May 31, 1997, gross sales rose more than 15 percent. Advertising costs decreased 43 percent, while Internet costs shrunk 26 percent. The total cost to sell a single vehicle declined $192 per unit, and Pilla says the gross per employee rose more than 167 percent.

In 1993, he initiated three new programs into his four dealerships that few other competitors offered: loaner cars, valet service (pick-up and delivery of cars at a customer’s home) and washing every car brought in for service.

“That started the real windfall,” Pilla says.

The programs were costly, he admits, estimating the price tag at around $1,500 per car.

“I’d spend it all day long because it shows how important it is to take care of our customers,” Pilla says.

Despite his good fortune, Pilla says he doesn’t take anything for granted and often works 70 to 80-hour workweeks in order to stay one step ahead of his competitors.

“There are a couple keys to success in business,” Pilla says. “You have to be awake while your competitors are sleeping, and you always have to risk more than others think is safe. I’ve never been content. I’ve had the mentality to risk everything and never look back if I believe in something.”

Seidman says there’s one more key to Pilla’s ability to overcome whatever obstacles block his way.

“He’s a very good judge of people,” he says. “He can talk to somebody for a while, observe them and determine whether they can get the job done. That’s an important trait if you want to succeed.”

And not coincidentally, it’s a trait Seidman apparently has as well. He did it with Pilla nearly seven years ago.

But now Pilla has a new goal: “Through expansion and acquisition I would like to grow this company to a $500 million business in five years.”

Just don’t tell Pilla he can’t. Otherwise, he’ll make it his business to prove you wrong.

How to reach: Motorcars Group, (440) 232-3057

Dustin Klein (dsklein@sbnnet.com) is editor of SBN.

Published in Cleveland
Monday, 22 July 2002 09:41

The state of business

William Patient made his mark on the Cleveland business scene in 1993, when his led the spin-off of Geon from BF Goodrich and took the plastics company public.

Today, nine months after his retirement from Geon’s top post, Patient is still deeply entrenched in the local business community. As the chairman of the board for Cleveland State University, he is charged with helping position the school to build business leaders for the 21st century.

Patient recently sat down with SBN to offer his take on the state of business in Cleveland and how well he believes Northeast Ohio supports entrepreneurs.

How would you evaluate Cleveland’s environment for nurturing business?

That question is one that’s on the minds of a lot of leaders in Northeast Ohio. People are still concerned when they look at entrepreneurship in Northeast Ohio and how well it’s doing. I’m probably a little more optimistic than some.

There are a lot of people in Northeast Ohio who have good ideas about business. There is hardly a lack of educational institutions in the area. I think the educational resource capability is good, but I don’t think we’re as well developed in the area of capital resources.

If you talk to some people from capital companies, they’d say we have plenty of money, we just don’t have any good ideas. I’ve always been a little suspicious of that. There are an awful lot of opportunities in the region requiring what I would call seed start-up money for ventures. The right kind of capital availability is important, and I’ve never felt comfortable that we’ve had enough of it in this area.

Is there a trend of business students getting their education here and then leaving after graduation?

I don’t see a terrible flight of people out of Cleveland. Statistically, 85 percent of the people who graduate from CSU stay in Cleveland and the area. The statistics for some private schools are much lower, like Case Western, for example.

Statistically, they probably do have a lot more (leave). ... One thing I do see as a negative is we don’t spend enough time working in the minority community. We’re just starting to develop that. Cleveland is a community with a very large African American and Hispanic community, and if you’re going to develop businesses in this region, you’re going to have to develop it in those communities.

Why do you think Cleveland is lagging behind other cities when it comes to Internet start-ups?

Part of it is really just people’s mobility and the fact they can live places where the sun shines more often than it does in Cleveland. I’d be surprised if it was anything more than that, because I’ve lived in a lot of places, and I’ve never seen a place that is more business friendly than Cleveland.

Governor (Bob) Taft has picked up on it and I do think he’s really intent on supporting technology and technology development. Whether there’s a specific result for that or whether it’s just this kind of aura that we’re technically friendly, it’s important. Taft is certainly intent on making people understand that.

We also have to turn around and look at our strengths. We have probably one of the strongest areas of medical research anywhere in the country. University Hospitals and Cleveland Clinic are two powerhouses of medical research. We’re also developing some very interesting capabilities in software and a lot of software is being written here.

When you look at Cleveland’s overall ability to support business, what aspect would you change?

There has to be a resolution of the airport issue. I never thought about it because Geon’s business is not that people intensive. We were more capital intensive. But, when you sit down and talk to people whose sole resources are their people who travel, you start to see how much money they spend out of their total budget on air travel.

For consulting firms and knowledge factories, that’s a huge part of their expense. There has to be a place where they can get economical and good air service.

Cleveland cannot escape that we are moving away from a capital intensive business climate, and that means mobility. That also means you have to be in a location where people feel comfortable that they can jump on an airplane and conveniently and economically get where they want to go.

If you can’t, you’re going to be at a disadvantage, period.

How to reach: William Patient, Cleveland State University, (216) 687-2000

Jim Vickers (jvickers@sbnnet.com) is an associate editor at SBN.

Published in Cleveland
Monday, 22 July 2002 09:41

Searching for an angel

The NASDAQ is soaring, the economy is booming, dot-coms are cropping up like daffodils in the spring, and it seems that every week, yet another IT-related company announces a multimillion dollar public offering.

It’s no wonder, then, that entrepreneurs might think that securing venture capital is as easy as strolling to the nearest ATM. It turns out, though, that the biggest challenge Cleveland start-ups face is not finding millions in venture capital, but securing seed money, early-stage contributions that go toward such things as hiring staff, leasing equipment and beefing up business plans to ultimately make a new enterprise more appealing to big-money investors.

“In the early stages, you need to get other kinds of financing to get to the point where you can get venture capital,” says Warren Goldenberg, a partner at the Cleveland law firm Hahn, Loeser and Parks. “It’s much more difficult to get the angel funding into the deal. There just aren’t as many people ... willing to make those investments.”

And they are extremely risky investments. Jim Cookinham, executive director of the Northeast Ohio Software Association, says that while seed money is critical to, say, a fledgling dot-com, “we’re talking incredibly high risk. You put in $75,000 and chances are pretty good that you’re not going to see it again.”

The National Venture Capital Association (NVCA) and the Venture Economics group of Thomson Financial Securities Data reported in January that an astounding 50 percent of more than 540 initial public offerings in 1999 were venture-backed, a 30 percent increase over 1998. According to the NVCA, the median age of an IPO in 1999 was only 4 years old, many of them IT-related start-ups.

But the headquarters of such venture-backed IPOs, Goldenberg says, are more likely to be in California than Cleveland. Even when companies are born here, financing must often come from out of state. Witness Cleveland-based NetGenics, a biotechnology software firm that in March filed plans for an initial public offering. The company has never made a secret of the fact that its investors are based in other, larger cities, including New York and Chicago.

Are Cleveland start-ups doing something wrong or simply at a different point in the start-up funding curve? What can new ventures do to improve their chances of grabbing precious seed money and, ultimately, venture capital?

The answers are complicated. Northeast Ohio must clear a number of hurdles — among them, a dearth of qualified managers, low numbers of proven successes among start-ups, and a shortage of fully realized business plans with which to seek investments in the first place.

“If you look at California or Boston, they have well-developed networks of angel investors,” Goldenberg says. “These are people who became rich themselves by forming technology companies — they understand it and are willing to invest.”

They also, he adds, understand the importance of strong management to the success of their contribution. “Investors are looking for qualified management as a stronger [requirement] than technical ideas.”

Lack of solid management can be a real liability — indeed, a deal-breaker — when entrepreneurs search for seed money and venture capital. Locally, Northeast Ohio’s industrial legacy is something of a roadblock: Cleveland, Goldenberg says, is “still a big corporate town,” where working for someone else is the rule excepted by start-ups.

Finding management, as opposed to technical talent, is a Catch-22: The area needs successful start-ups in areas like biotechnology and software development to give managers the experience individual and corporate investors like to see.

Goldenberg says that by contrast, in Southern California, “all these people are walking around with business plans in their briefcases. There’s a whole pool of people who have formed companies and gotten rich and now [are managers] of new companies. That’s a different kind of talent from somebody who’s a manager at a Fortune 100 company. It’s a different skill set.”

Wayne Zeman, executive director of the Lewis Incubator for Technology (LIFT) for Enterprise Development Inc., agrees.

“I call it the genetics of this region,” he says. “[Northeast Ohio] has a lot of wealthy people, but most of them made their money in the heavier industries, like steel and automotive. To have them jump to information technology is hard. They don’t have the comfort level necessary ... to make an investment. It’s going to take some time.”

Another difficulty facing Cleveland-area tech entrepreneurs is follow-through — putting a strong plan behind that great idea.

“Some businesses haven’t developed their idea to a stage where it’s fundable,” Zeman says. “They haven’t looked at the competition, they haven’t looked at what’s already out there. They feel that they have a strong technical idea that will automatically be a great business. That’s not always the case.”

As to management-recruiting difficulties, Zeman says some companies have actively sought out-of-state staff with a local connection.

“There’s a surprising pool of people who either were educated or grew up in Northeast Ohio and really value this region. There are a lot of people across the country that would like to come back, but you can imagine the challenge in finding them.”

So what’s an entrepreneur to do, short of packing a briefcase and heading for Silicon Valley?

The outlook is hardly as bleak as it may appear. Most local experts agree that the landscape is improving. Zeman points to technological resources throughout the area — from universities and medical facilities, to NASA’s Glenn Research Center — as well as the state’s Edison business incubator and education programs, as forming a strong support system to help entrepreneurs and inspire confidence in potential investors.

The encouragement and support are apparently working: Almost 40 percent of last year’s Weatherhead 100 list of the fastest-growing area companies were in the IT category, from software development and telecommunications to e-commerce. In 1998, less than one-quarter of the Weatherhead 100 were IT-related firms.

Goldenberg notes that the very fact that people are recognizing the difficulties finding seed money and venture capital signifies progress.

“I think it will continue to get better,” he says. “Now, when I go out and am talking to people [about investing] in deals, they’re willing to listen.”

Zeman notes that more ancillary businesses, such as law firms, investment bankers and business incubators such as LIFT, are placing particular emphasis on helping to pair entrepreneurs with potential angel investors.

“Our job is to help people start and grow technology-based businesses,” Zeman says. “That covers a whole range of technologies — software, IT, and also biotech and biomedical.”

The organization offers, in addition to four incubators and various educational programs, two programs to help start-up companies find sources of capital. Innovest (www.innovest.org) is a statewide program that places about 30 entrepreneurs in front of 300 or so potential investors, “a full range of angel investors, venture capitalists and some investment bankers. It really covers the whole range of possible sources of funding.”

Innovest has resulted in some $180 million in investment capital in its three-year existence, much of it in the form of early-stage funding.

The other program, operated by Enterprise Development for the federal Small Business Administration, is an Internet-based matching service through which entrepreneurs can post an abbreviated business plan for access by qualified investors.

Could these things happen without help from Innovest or SBA programs? “It’s hard to say,” Zeman says. “But this is a venue that makes it much easier, particularly when trying to find angel investors. Because they’re all individuals, it’s hard to get these businesses hooked up with them.”

Goldenberg and some of his colleagues have stepped up to the plate, putting together deals for start-ups and often actively seeking investors.

“Somebody has to,” Goldenberg says. Attorneys might, in addition to completing corporate legal work, do anything from provide strategic business advice to help structure financing or hook businesses up with investment bankers. “In many cases the entrepreneurs are very young and ... have never done this before.”

This May, NEOSA will host the Seed Capital Initiative, a day-long event designed, in part, Cookinham says, to graduate entrepreneurs from what he calls “financial kindergarten” and inspire confidence in potential angel investors. The Seed Capital Initiative — scheduled just before the Cleveland World Trade Conference, which this year will focus on e-business — will include a presentation of early stage financing options and business plan reviews “to expose investors to these companies and [help them] evaluate ideas,” Cookinham says.

Goldenberg, whose firm is a co-sponsor of the event, hopes to attract not only potential investors, but the stockbrokers and financial planners who advise high net-worth individuals, “to get people comfortable with how these deals are done.”

How to reach: NEOSA, (216) 592-2257; EDI, (216) 229-9445; Hahn Loeser & Parks, (216) 621-0150

Shari Sweeney (Sweene@aol.com) is a Lakewood-based freelance writer.

Published in Cleveland
Monday, 22 July 2002 09:41

Under new direction

Eight years ago, Larry Wilgus had to accept an ominous reality. If he didn’t dream up a potent marketing approach to multiply the audience of Spectacular Music Productions, the performances would cease and his dream company would die.

Spectacular Music was born in 1976 when Wilgus, a choral and orchestral conductor, assembled an orchestra and choir of 90 high school students to entertain 6,000 people at Canton’s Memorial Civic Center. Within a year, the choir numbered 200 performers, ages 17 to 75, from 30 towns in Stark, Wayne, Tuscarawas and Summit counties.

In 1985, Canton’s Palace Theatre became home to the company’s annual “Christmas Music Spectacular.” By 1991, a local dance troupe was added, and that same year, Wilgus debuted the annual “Spring Music Spectacular.” In 1997, the first annual “Romantic Strings” concert was performed with a 42-piece orchestra — a show now known as “October Pops.”

“At first, we were primarily a choir concert, and I think that was one reason we weren’t getting a return audience,” says Wilgus, adding that building a loyal customer base has always been a challenge. “Today, we’re more of a Broadway musical with choreography, costume changes and elaborate sets and props.”

Despite expanded entertainment, too many seats remained empty. The problem was the marketing strategy — advertising through local newspapers and radio stations, supplemented with mass mailings to previous ticket buyers — wasn’t working. The pressure was on to lure semi-classical and pop music lovers who would buy tickets and keep coming back.

Desperate for direction, Wilgus met with Sherry Gesquiere, tourism manager for Canton Regional Chamber of Commerce at that time. For more than an hour, Gesquiere rattled off pages of marketing ideas while Wilgus excitedly took notes.

“When I walked out of there, I knew that conversation was going to change our whole marketing thrust, but I jumped right on Sherry’s suggestions because I thought, ‘I’ve got everything to gain and nothing to lose.’”

The new strategy was to target the tourism market. Gesquiere explained that Wilgus must first develop marketing materials to promote shows scheduled for the following year.

“It was hard to decide what we were going to do a year in advance because at that time, we were only working three or four months ahead,” Wilgus explains.

Gesquiere also advised Wilgus to join the Canton Chamber and the Ohio Travel Association. She told him about the Heartland Travel Showcase, and encouraged him to secure a booth and strut his stuff. When Wilgus and his wife, Helen, who co-produces the shows, touted the company’s talent at the Heartland Showcase, they booked 20 appointments and the wheels started turning — literally.

“That year, we drew about 35 motor coaches. The next year, we had 56, and 72 in 1994. That gave us an immediate audience,” Wilgus says, noting that he’d also been marketing at Cleveland and Columbus travel shows. “This year, we already have 100 motor coaches booked for the Christmas show.”

The tour groups bring about 150 motor coaches annually to the productions, keep the performances going and fuel Stark’s economy. Canton Regional Chamber of Commerce Tourism Department reports reflect that the tour groups have brought almost $2 million to Canton’s economy in six years.

But building a strong local base for performances remains a major challenge for Wilgus.

“Our problem is twofold,” he says. “Most motor coach groups won’t make reservations unless we can seat them on the main floor. And the Palace Theatre has no elevator to make balcony seating convenient and attractive. So we have almost 6,500 empty seats, primarily in the upper balcony, over the 11-performance run of our three major annual shows.”

Balcony seating, typically purchased by local patrons, represents 42 percent of the theater’s seating capacity. Local visitors bought about 4,300 tickets in 1998 and 4,700 in 1999. Still, 37 percent of the seats remain empty.

“We’ve got to fill those seats to generate funds for costumes, sets, backdrops, union orchestra and music,” says Wilgus. “We exist almost entirely on earned income through ticket sales, but those sales are just not enough to secure a healthy future.”

Reducing the number of shows isn’t a solution, Wilgus says, because the current number is necessary to attract local patrons and accommodate motor coaches. But it’s too risky to maintain the majority (80 percent) of Spectacular Music’s patrons from the motor coaches.

Worried by the precarious balance, Wilgus brainstormed ways to lessen that reliance by luring local patrons. Two years ago, an idea evolved that he says may be the key to selling more tickets.

“Focusing on the idea that people go to Blossom Music Center because they want to hear music, I met with Blossom’s general manager, David Carlucci. He recommended ways we could market a show there, and said he’d do all he could to work with us.”

Booking the Blossom event, however, was no minor task.

“Blossom brings in people from around the world, and being a local boy and not a national name, it was a challenge. The Cleveland Orchestra has top priority, and Blossom is owned by Universal Concerts, which brings in national names. Kent State also has a tie-in. So, we had to work around everyone else’s schedule to find an opening,” Wilgus says.

When the date of Saturday, June 17, was finally set in stone, Wilgus went about putting it on paper.

“Even though we’re listed on some of Blossom’s advertising and on their Web site, it was primarily up to us to market our performance. We put it on our own Web site, www.spectacularmusic.org, and we hired Crowl, Montgomery & Clark of Canton to develop a major public relations campaign,” he says.

Having settled on strategic newspaper and radio advertising, the push was on to drive readers and listeners to www.TicketMaster.com, which has exclusive rights with Blossom. Then, in April and May, Wilgus sent two direct mailings to 16,582 people, from a rented a list of 10,000 names from a local database management company, combined with his own list of prior ticket buyers.

Wilgus also signed on for two months of speaking engagements, addressing 20 audiences in organizations such as Rotary International, Lions and Kiwanis. In the process, he says, he learned something alarming.

“I discovered that most people haven’t even heard of us — which is why we’re going to Blossom. This is target marketing and we’re going right to the source where we know we’ll find people who love music,” he says.

Wilgus feels confident that Spectacular Music’s Blossom debut of “Starlite Pops” will bring valuable exposure to thousands of music enthusiasts and may ultimately bring crowds to the Canton shows. He also hopes the event will inspire new singers and dancers to participate in future Spectacular Music performances.

It’s a lot of work, an expensive undertaking and a big risk, Wilgus says. But he’s willing to give it his all because this is his dream — a midsummer night under the stars, where he’ll conduct his orchestra and captivate crowds with Strauss waltzes and music by Miller, Ellington, Gershwin, and Rodgers & Hammerstein.

“If the goal is to fill our shows at the Palace Theatre, generate funds to perpetuate the programs that will continue to foster economic development, and allow our 300 local singers, musicians and dancers to use their talents — then you’ve got to do what you’ve got to do.”

How to reach: Spectacular Music Productions (330) 453-6086

Published in Akron/Canton
Monday, 22 July 2002 09:39

On the Mark

When it became apparent that Florine Mark had achieved success in her early days as a Weight Watchers franchisee, some people attributed it to good luck. She didn't necessarily disagree with the assessment.

"They used to say, 'Well, you're very lucky,' and I used to say, 'Yeah, I'm very, very lucky, but I work very hard at being lucky,'" says Mark, president and CEO of the WW Group, the largest franchisee of Weight Watchers International. "I think that's what everybody has to do, you have to work hard and you have to -- I believe I'm lucky, I really believe I'm lucky. So it happens. If you believe it strongly enough, it will happen."

If her operating principle is valid, Mark has worked quite hard. Her company, located in Farmington Mills, Mich., spans 10 states, including Pennsylvania, as well as Mexico and Ontario. Across the WW Group, approximately 100,000 people regularly attend 2,500 meetings held at more than 1,000 locations. In Greater Pittsburgh alone, 10,000 people meet in several hundred sessions at more than 90 locations.

Ironically, Mark turned to Weight Watchers in desperation as a final attempt to shed excess pounds.

"I had lost 50 pounds nine times before with diet pills," Mark recounts, and she eventually overdosed on amphetamines. "My family doctor said, 'I'm not going to be responsible for your life if you take any more diet pills,' and I didn't know how I was going to lose weight, because I never felt I could do it myself."

Mark joined Weight Watchers in New York in 1966, dropped 50 pounds and gained the idea for a business venture. She started her franchise in Detroit with a single meeting.

In this month's One on One, Mark, who was recently a guest speaker at The Business Show in Monroeville, talks about what it takes to be successful in business, why she and Weight Watchers continue to prosper -- and why she's got a dream job.

SBN: Why has Weight Watchers been successful?

Florine Mark: We believe in what we say; we walk our talk. We don't give pills, we don't sell food, we don't make you pay in advance for anything. Everyone that works with us believes in our product and our service. We have a big staff of advisory boards of the finest doctors, psychologists, exercise physiologists, psychiatrists, M.D.s, D.O.s, constantly researching the best ways to lose weight, the best ways to exercise. We've changed out diets several times, four or five times over the last 30 years. We always want to be up to date.

You seem to be very enthusiastic about your business. How does Weight Watchers hold your interest after all these years?

Weight control is a very passionate, fabulous field because you see only your successes. Your failures seem to drop out and don't come back, so you'll see among the people who are there, your customers -- we call them our members -- people who are happy, who are doing something about themselves, are getting healthier, who are getting motivated to do better in life. It's a very passionate, very wonderful business.

The product we sell is self-respect. When people ask me, 'What do you sell?' it's not losing weight. We sell self-respect. When you see an 11-year-old kid that's lost 30 pounds and feels good about himself and is playing soccer and baseball, how do you put a price on that?

When you see a man that comes in and says, 'After I lost 70 pounds, I found out I had a rare form of breast cancer in men, and the doctor said that if I hadn't lost the weight, I'd have been dead in a year,' how do you put a price on that? It's been the most wonderful business ever. I could never think of changing, I could never think of doing anything else.

What kinds of risks did you have to take when you were starting out with Weight Watchers?

Well, I had no money. I had small children and a lot of responsibilities. I could have gone out and gotten another job that would have paid a steady salary. I didn't know if this was going to pay off as far as the money was concerned, but every day is taking a risk, whatever you do. But I have no regrets.

In fact, I'm more passionate about what I do today than I was, say, 25 years ago. But it's easier now. Then, I was the bookkeeper, I was the controller, I was the advertising person, I was the marketing person, I was the leader, I was the receptionist, you know, I did everything myself. Now, I have a full staff of people all over the country from Mexico to parts of Canada and the Midwest and to the East. And it's very exciting.

What might you have done if you hadn't become a Weight Watchers franchisee?

I wanted to be a movie star, I wanted to do television on-air, I wanted to do radio. I like to write, I wanted to do public relations. I think that's what I would have done, but I think marketing is what I love the most. And I do all of that now. I'm on TV. I write for our newspaper, with a circulation of 350,000; I'm very involved in that. So all of my dreams of what I wanted to be -- I'm writing a book -- all are happening.

Who were your mentors?

At the very beginning, there were no women around, so my mentors were my CPA and my lawyer. What I did, even though I had no money, was to find the finest law firm and the finest CPA firm, and I told these guys that I had no money but I was going to be successful. I must have convinced them because they treated me the same way then as they treat me today, and today I'm their largest woman client. Then, I didn't have 500 bucks.

What are the factors that have helped you to become a success as a Weight Watchers franchisee?

I believed in the product. I had a fire in my belly, a passion in my heart. I recognized that success was, first, what you want, and then what you're willing to give up to get it. I've always done strategic planning. I've always had goals. I've always written things down; when I get up, I'm always writing things down. I believe in people, I believe in my gut.

My goal was always to hire people that were better and smarter than I was and let them do the job; I've always done that. When I find out that it's not working, I have to make changes. But I've been pretty right for a very long time. I have a lot of people that have worked for me for 25 years.

How is running Weight Watchers like operating any other business?

I think in most businesses today, if you want to be honest about it, the intellectual problems can be solved very easily. You hire the best CPA or the best engineer, you buy the best equipment, whatever. The real problems are people problems, and that's where a lot of people in business seem to go astray because they don't keep their eye on the thing that's most important -- that's the people who work for them, and their customers.

And if you pay 100 percent attention to that and pay other people to do the financial and the other stuff, you will have a good business. If the people who work for you, if their morale is good and they like what they're doing, you're going to have customers.

What occupies most of your time?

The morale of my staff is 50 percent of my time, and 50 percent of my time is everything and anything to do with bringing members into classes. I'm involved in the marketing department, I'm involved in the advertising, I'm involved in the training of the staff and the retraining of the staff.

What advice do you give to entrepreneurs?

Be very passionate about your product; believe in it. If you don't believe in it, forget it. Take the risk. Keep your eye on the people that work for you and the ones who are buying your product. Write plans. My plans change all the time, but at least I write them. I put them down on paper; I know where I'm going. I trust other people. I manage my team and I certainly have the final say, but I can't ever remember having to use that authority. It can't be right for me and not right for you, and it can't be right for you and wrong for me, so we have to sit there and talk about it and communicate until it's right for both of us. You have to be able to give. You can't be egotistical, you can't be a monarch -- the only authority in your business. First of all, it won't be any fun, people won't respect you for it, and I don't think you'll do as well.

Ray Marano (rmarano@sbnnet.com) is associated editor of SBN.

Published in Akron/Canton