Monday, 22 July 2002 09:33

Telework facts

The International Telework Association & Council completed a study this year that covers the growth and characteristics of telework in the United States. Here are some of its key findings:

  • There are 16.6 million regularly employed teleworkers in the United States who work at least one day a month and are at least 18 years old.

  • About 9 million U.S. workers telework at least one day a week. In 1995, according to FIND/SVP, there were 8.5 million teleworkers. While 9 percent of U.S. workers telework, 41 percent believe their jobs could be performed in their homes.

  • While a few years ago most teleworkers worked for small- to medium-sized organizations, half now work for organizations with at least 1,500 employees.

  • Of all teleworkers, 54 percent are employees, 13 percent are contract workers, 9 percent are operators of home-based businesses and 27 percent are self-employed teleworkers.

  • The highest proportions of teleworkers are in the New England, Mountain and Pacific states.

  • Males make up 65 percent of the home-based work force. The average teleworker is in his or her early 40s, slightly older than the average nonteleworker surveyed.

  • Four out of five teleworkers commute to work on days they are not telecommuting. Their average commute distance is 19.7 miles, vs. 13.3 miles for nonteleworkers.

  • One out of every five telecommuters reports that his or her direct supervisor is in the same state.

How to reach: International Telework Association & Council, www.telecommute.com

Ray Marano

Published in Pittsburgh
Monday, 22 July 2002 09:33

Budget chic

The headquarters of Web hosting provider pair Networks Inc. has the earmarks of cutting-edge industrial-look design, with plenty of exposed ductwork and electrical conduit, an angular metal sculpture clock and plasma video screens in the reception area.

Not unlike the offices of many companies in high-technology industries, pair Networks' 12,000-square-foot complex flouts the design of conventional office spaces. And, as with a lot of tech offices, it seems as if the owners must have spent a bundle to get the sleek utilitarian look that has become nearly de rigueur in New Economy companies.

"I wanted it to be a reference to our corporate identity," says Nancy Kumpfmiller, a principal in the company that she and her husband, Kevin Martin, a former research systems programmer at Carnegie Mellon University, founded in 1995 in a 600-square-foot office.

But the company's new offices, while sleek and modern, weren't the biggest expense for pair Networks' headquarters. The real money was packed into the on-site data center -- and for good reason.

The owners say their company hosts 100,000 Web sites but few visitors at its facility. With security and technological redundancies being the highest concerns for clients, the offices aren't used extensively for courting new business or schmoozing customers. For pair Networks, the design of its River Park Commons offices on the South Side in the former Gimbels warehouse revolves around the data center.

A close look at the design details reveals that pair Networks achieved its striking look without breaking the bank. In fact, the idea from the beginning was to achieve a comfortable, inspiring workspace for its 25 employees without spending a fortune. The company's corporate colors, blue and gold, cover large areas of the walls and architectural features.

Kumpfmiller nixed a proposal for linoleum floors and opted instead for retaining the existing concrete floors in most of the space. The rectangular panels that detail many of the walls are inexpensive medium-density fiberboard. Fluorescent light fixtures hang low over the workspaces, and flat, white walls provide soft reflected light.

Common areas are lighted using institutional fixtures bolted to metal tracks suspended from the ceiling on round steel-bar stock. And employees are encouraged to personalize their workspaces to suit their tastes and make themselves comfortable.

Perhaps most indicative of the blurring of the line between work and play that today's information age workers are so comfortable with is the electronic game machine that stands in the corner of the conference room. Even Kumpfmiller's original vision for pair Network's offices reflects a clearing of the barriers between work and personal time that younger workers in the tech industries are demanding.

Says Kumpfmiller: "I wanted it to be almost to the point of looking like a club you would see in the Strip District." How to reach: pair Networks, www.pair.com

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

Published in Pittsburgh
Monday, 22 July 2002 09:33

A design to bank on

It is hard to believe that just a few years ago, the Pennsylvania National Bank building was in danger of falling to the wrecking ball. Today, the handsome structure anchors a prominent intersection in the city's resurgent Lawrenceville community.

But since its original owner folded during the Great Depression, the building has housed a succession of short-term tenants with little regard for preservation. In the 15 years before it underwent its lifesaving restoration, the building was vacant, serving mainly as "a retirement village for pigeons," says Luke Desmone, CEO of Desmone & Associates Architects, the architectural firm that now calls it home.

Despite the dilapidated condition of the building, Desmone & Associates teamed with the Lawrenceville Development Corp. in 1995 for a $600,000 project to resurrect the structure. Early next year, it will take over the entire building, as Lawrenceville Development moves into another building that is undergoing renewal.

The building presented a number of opportunities for Desmone. It offered a chance to move from its less-than-ideal quarters in Point Breeze. It could provide a showcase for the firm's restoration practice, which accounts for between 60 percent and 70 percent of its business. It had a large, open space to promote teamwork and creativity. Finally, its design and orientation, with 30-foot ceilings and tall windows, allow natural light to illuminate the 3,800-square-foot space.

The firm's employees had hands-on involvement in the project from the beginning. For instance, Jimmy DeCecco, a senior architect, designed and built the furniture.

Says Desmone: "We're looking for the challenging projects."

Ultimately, the Pennsylvania National Bank building is something of a bargain for the architectural firm.

Says Desmone: "No one could afford in today's market to recreate this building." How to reach: Desmone & Associates, www.desmone.com

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

Published in Pittsburgh
Monday, 22 July 2002 09:33

Up in flames

It was three days before Christmas last year and about two minutes before opening.

Wadi Ina was in the back room of his Chardon-based New York Deli and Grille doing paperwork when one of the restaurant's servers walked into the office and said he was pretty sure there was smoke seeping into the restaurant.

"I peaked through the back door," Ina recalls. "I saw flames coming through the door of the store next door."

The fire department arrived within minutes, but it was too late to save the business next door, Bostwick Hardware, which was completely destroyed and today remains a vacant shell.

For Ina, however, the story was different. His firewall held up and the deli remained largely intact. There was plenty of damage -- firefighters ripped holes in the walls looking for ways to attack the flames, smoke and water marred the restaurant's remaining walls, floors and equipment -- but Ina's real battle was with his landlord.

"I was sitting in the parking lot saying, 'This is not happening,'" he recalls.

And, as he watched firefighters battle the blaze, Ina wondered about the future of his business and his business plan. The lease clearly indicated who was responsible for the repairs; what it didn't define was the time frame in which those repairs were to be completed.

The resulting daily struggle to get his operation grilling again not only hindered business, but also prevented the Lebanese immigrant from implementing his long-term plans, both for the future of his business and for his family.

The plan

Ina wanted to retire by age 55, but the young restaurateur was savvy enough to know he needed help to get there.

He met with Mark Arlen, a planner with the Cleveland Financial Group, and the pair spent months running the numbers. The final plan considered all aspects -- from employee retention strategies and buy-sell agreements to retirement income -- to finance Ina's leisure days.

"We had done the whole plan," Ina says.

Implementation had barely begun when the fire sparked, putting it all in jeopardy.

After the fire, Ina devoted his attention to getting the New York Deli & Grille opened. He likens it to "seven months of being pregnant because you're in labor every day."

Because of the interruption in his business, Ina didn't have the income to support his plans for an employee retirement program. Business interruption insurance helped, but not enough to move forward with other plans. Even when Arlen called to remind him to maintain his life and disability insurance policies, Ina wondered where the money was going to come from.

Ina and his partner survived the seven-month hiatus, reopening the restaurant in August.

For now, Ina's financial plan is on hold until the business and cash flow return to normal and he and his partner settle lingering concerns. The process, which should have been underway, now is likely to be pushed back one or two years. It's problems like this, Arlen says, that reinforce the notion at that preparation is key.

"People need to be more focused on planning ahead and thinking ahead before things happen," he says.

The rebirth

One minute Ina was worried about holiday party trays and juggling vacation schedules; the next, it was how to get the business running again.

"Yeah, you do have insurance, but it's a big, drawn-out process," Ina says. "It's not like they give you a blank check."

The New York Deli is not Ina's only venture. Without another restaurant, the Manhattan Deli in Willoughby Hills, Ina may not have been able to get his restaurant opened, even in seven months.

"If I didn't have another business, it would be very close to bankruptcy," he says.

Ina's partner in the Chardon restaurant wasn't so lucky. He and his wife, who also worked at the deli, were forced to find other jobs while repairs were made, even though the partners had business interruption insurance. Ina, himself, sought outside help.

"We had to go to the bank to borrow money to keep it going," he says.

The main problem was the lease, Ina says. While it did articulate who was responsible for the repairs to the infrastructure (the landlord), there were no stipulations on the time he had to complete them. Without knowing when they would be able do the detail work -- and burning through cash faster than expected -- Ina was limited during negotiations with his own insurance company. Knowing Ina was desperate, the insurance company held all the cards.

That changed when Ina received a bank loan. Once he no longer had to worry about day-to-day money issues, it put him in a better position to negotiate with his insurance company. And, he hired a private adjuster to work with the insurance company to get the claim settled faster. It's something he regrets not having done from the beginning, and will make sure to do if disaster hits again.

Like many business owners, Ina once believed, "It'll never happen to me." He now knows all too well the trouble of falling for that fallacy and follows another philosophy -- it's never to early to start planning, although it might be too late.

To other business owners who aren't yet true believers in preparedness, he offers this advice: "Get started as early as you can because you never know what tomorrow brings." How to reach: New York Deli & Grille, (440) 286-3388; Cleveland Financial Group, (216) 765-7420

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.


Ina's plan

When the planning process began, Cleveland Financial Group's Mark Arlen asked Wadi Ina what his goals were for the future.

Ina replied, "a comfortable lifestyle."

Arlen asked, "What does that mean?" and kept asking as Ina further articulated his hopes. "Success" and "Peace of mind" followed.

The pair finally settled on "Make a better life for your family -- better than your parents made for you."

To get to that goal, Arlen led Ina through a four-part process -- objectives, assumptions, recommendations and implementation. It's something any business owner setting plans for the future should consider.

Objective

Simply put, what do you want to accomplish? Ina wanted to plan for the future of his family and his business. Arlen led him through a variety of issues, including:

  • Emergency reserves

  • Accumulation goals

  • Mortgage analysis

  • Education funding

  • Retirement planning

  • Investment planning

  • Risk management, including disability and survivor income needs

  • Estate planning

  • Business planning

Assumptions

The assumptions were based on information Ina provided about his business. One of his goals was to provide five years worth of education for each of his two children. The assumption was that he would need $25,000 per year for five years in today's dollars, inflating at 5 percent.

Recommendations

Based on their ages, Ina was told to save $731 each month for his 8-year-old son, Jason, and $557 a month for his 4-year-old daughter, Nicole.

Implementation

The final step of any long-term plan is to schedule the implementation of each of the accepted recommendations. It was that part of the process Ina had barely begun when the fire hit.

Now, because everything is being pushed back, the numbers will have to be adjusted, Ina says.

Published in Cleveland
Monday, 22 July 2002 09:32

Diamond in the rough

In 1993, accountant Gary Isakov was a senior manager at Ernst & Young. He serviced gold mine companies, pension funds for multibillion dollar clients and directed board meetings.

Later that year, he received a job offer from a much smaller company, where he would start at almost the junior level and work primarily on smaller accounts for less money. Isakov jumped at the chance. Why? The job was in the United States. He was working in South Africa.

"I felt it made more sense to make a future for myself in the United States rather than South Africa," says Isakov, in the flinty accent of his homeland. "Things are very unstable there."

Today, Isakov is a partner and director of health care services for SS&G Financial Services Co. Since he was hired, SS&G has hired three other accountants from South Africa and tapped into a talented and experienced labor pool which wants to take advantage of the opportunities available at an American firm while escaping the high crime rate and volatile government in their own country.

The firm's unusual recruiting efforts have not gone unnoticed. Isakov returned to South Africa this past summer to interview accountants for several other firms in the United States.

Thanks to a strong economy, dot-com companies and a sharp drop in the number of accounting graduates, SS&G had been scrambling in recent years to find quality prospects.

"Accounting firms are battling to find experienced accountants," Isakov says. "You can find people out of college, but we were specifically looking for people with a minimum of three or five years in public accounting. Sometimes it's difficult even to find people."

Like other companies, SS&G placed ads in local newspapers and trade journals and attended job fairs, but it wasn't attracting the experienced accountants it was looking for. Isakov, whose arrival in 1993 preceded the labor crunch, knew that accountants in his home country go through three years of mandatory training called articles after they receive their accounting degrees.

It was just the experience the firm wanted. And, although tax laws and some accounting principles vary between the countries, three years accounting experience is still much better than none at all.

"The training is phenomenal," Isakov says. "The education level is very high --- it's very focused -- much more so than in America. In South Africa, which follows the British system, from your first year at university, you're doing accounting, economics, business, finance, marketing; it's very business-oriented, very business-driven, and the education level is very good. So the people you get out of school there are good caliber people."

SS&G placed an ad in the Sunday Times, the country's largest newspaper, asking interested candidates to e-mail resumes to SS&G in Cleveland. When the ad was placed, SS&G was recruiting just for itself.

However, word of the trip spread through The Leading Edge Alliance, a consortium of independent accounting firms which SS&G created, and other member firms wanted a piece of the action.Forget the myths

While companies may be eager to recruit overseas after local markets have dried up, they need to be prepared to invest plenty of time and energy in the long, bureaucratic process of obtaining work visas for employees.

"America's not what it used to be," Isakov says. "My American friends still think that you can jump on a boat, pass the Statue of Liberty, land on Ellis Island, a doctor checks you out and that's it. America has become a very difficult country to get into legally. There are a lot of papers, a lot of documents.

"Once you've done it, it's not a problem, but you do have to get professional help to do it."

Not only does it take several months for the paperwork to clear, the U.S. Department of Immigration and Naturalization is only issuing 107,500 work visas from Oct. 1, 2000 to Sept. 30, 2001. Isakov expects the visas, called H-1B visas, to be gone by March.

The visas entitle the employee to work for three years at the same company. It can be renewed for another three years or the employee can earn citizenship. Family and children can come to America with the employee, but if a spouse wants to work, he or she has to obtain a separate visa.

Despite these restrictions and complications, SS&G partner Mark Goldfarb says the effort is worth it.

"Knowing that there's this wonderful work force in South Africa that we've been able to hire, we've decided to go back to South Africa and make it a worthwhile effort," says Goldfarb. "Gary and the other accountants from there we've hired have really worked out well."

Know the terrain

SS&G's ad in the Sunday Times garnered 100 responses from accountants not only in South Africa, but also from Zimbabwe, Namibia and Nigeria. The resumes were paper screened by the firm's human resources staff before Isakov traveled 8,367 miles for 20 in-person interviews.

"Interestingly enough, it wasn't just white, Anglo-Saxon South Africans," says Isakov. "There were African South Africans, there were Indian South Africans. Actually, one of the people I really liked was from Zimbabwe. It was a real broad spectrum of personalities and backgrounds applying for the jobs."

Aside from the $1,200 plane ticket and rental car, Isakov kept costs down for SS&G by staying with friends and family and borrowing office space from a friend. He spent two to three hours talking with each applicant, and usually visited the home and shared a meal with the top candidates. While interested in the move, many candidates were worried about the relocation.

"They had questions and concerns about education, living and work and cost of living in the United States," Isakov says. "They truly are coming in blind. Their only perception of America is what they read in magazines, books or see on television, which obviously is not a true depiction of life."

Candidates also expressed concern about assimilating into America and losing touch with home. Luckily, Isakov had walked that path only seven years ago and could put their worries to rest with the story of one of his early days living in Cleveland.

There was an international rugby match in which South Africa was battling Australia in a heated rivalry. Due to the sport's lack of popularity in the States, no major network or local cable station was carrying the game. So Isakov grabbed a phone book and started calling downtown sports bars until he found one showing the game.

"I dressed up in my rugby jersey and my scarf and I went down not really knowing what to expect," Isakov says. "I bumped into about 40 or 50 South Africans. It was a wonderful way of saying, 'Hi, I'm here,' and they took me under their arm and we became friendly that way."

An offer they can't refuse

Because he was recruiting for numerous firms, Isakov couldn't make job offers to applicants. He did, however, pass on names with strong recommendations. His latest trip yielded about eight recruits, four of whom Isakov expects will accept job offers.

Although SS&G is behind this kind of aggressive recruiting effort, firms need to consider the time factor involved and if the time wouldn't be better spent on domestic recruiting. But, if you're not getting the kind of experience you need for your particular industry, maybe it's time to broaden your human resources horizons.

"This took a significant amount of my time and my HR person," Isakov says. "We probably spent at least 120 hours on this. It didn't help my chargeable hour goals, but obviously this is an investment in the future." How to reach: SS&G Financial Services Co., (330) 668-9696

Morgan Lewis Jr. (mlewis@sbnnet.com) is a reporter at SBN.

Published in Cleveland
Friday, 19 July 2002 07:15

Getting started

Virtually all large companies, and many smaller businesses, have adopted and implemented substance abuse policies. If you are in that minority without a policy addressing this important issue, here are some suggestions for getting started.

B>Tailor the program to your company and employees.

Developing a drug policy is not a "one-size-fits-all" proposition. Different companies have different legal requirements. Some industries -- trucking, for example -- are subject to federal mandates in regard to drug testing. Industrial firms with employees operating heavy equipment will want to have more stringent policies than a service company with office staff.

B>Confer with your professional advisers -- in corporate risk management, human resources and legal counsel.

Drug testing and substance abuse policies should be integrated into your corporate risk and safety programs in order to be effective. They are also a vital part of the company's employee handbook. All records must be kept confidential. Link the substance abuse policy to the company's Employee Assistance Program (EAP).

Commit to the policy.

Substance abuse programs and drug testing are only worthwhile, and legal, if uniformly and consistently applied. Disparate treatment of employees or of applicants for a position is a sure invitation for a lawsuit.

Understand the costs and benefits. Make an informed decision on the expenses of implementing a substance abuse program -- testing, reporting, follow-up. The benefits will be empirical as well as qualitative. Source: Gordon R. Friedrich, vice president and corporate counsel, The Reserves Network

Published in Cleveland
Friday, 19 July 2002 06:35

Time out

When he was 16 years old, Richard Harris woke up at 5 a.m. to work in his father's carpet warehouse.

He swept, helped installers measure and cut carpet by hand, and hoisted the rolls onto the truck. Meanwhile, his father, Hy, was in the office, checking on jobs, calling installers and balancing the books of the Harris Carpet Co.

Fast forward 22 years. Harris, now vice president of Marshall Commercial Floors Inc., is faced with a dilemma: Double the size of his business again and risk alienating his current customer base or take a step back and risk losing new customers to competitors.

Most business owners dream of having more business than they can handle. But Harris chose to slow the growth and follow a philosophy he developed during his eight years working side-by-side with his father.

"I think you have to get to a point and say, 'Time out,' and look at what you have and take care of the people that have been loyal to you," Harris says. "The key to success in this business is loyalty. Loyalty is everything."

He may be the head of a $6 million company division, but Harris still proudly dresses as an installer. On a mid-January day, he strolls out of his Beachwood office in jeans, sport shirt and a leather jacket, then explains that he saves the business suits for sales meetings with company CEOs and real estate developers.

"I'm not afraid to get my hands dirty," Harris says. "I'll go in the warehouse, help them cut carpet and help the guys load carpet. I talk to my installers on a regular business day because I want to be in touch. They're my eyes and ears."

Although he worked with his father for eight years, Harris spent the bulk of his 24 years in the carpet business at other flooring companies, absorbing the knowledge of how to and how not to run a company. He worked for Crown Carpet and ProFlor, then Carpet Barn and Tile House, which Harris points out filed for bankruptcy well after he left the company.

But while he developed his skills elsewhere, throughout his career, he continually called on the sales and management savvy he learned working with his father.

"I'm still from the old school," Harris says. "What is done in today's age and today's economy, over the Internet and by phone calls and sending out pamphlets and brochures and bidding, my philosophy is beating the pavement. Going right after the owners and cutting to the chase, winning them over with integrity, my name in the business and my dad's reputation in the business."

New beginnings

So it should have come as no surprise when, in June 1996, Marc and Chuck Wien, owners and co-presidents of Marshall Carpet & Tile Inc., tabbed Harris to help launch and run the commercial division of their flooring business, which up to that point only served retail customers and homebuilders.

"Being in business at that point for over 25 years, we felt that we had a void in our business," explains Chuck Wien. "We were getting faxes from general contractors, we were getting inquires from property managers who knew of us, but certain types of commercial needs were beyond our capabilities."

As the Wiens began to plan their company's expansion, they bumped into Harris at a business conference. At the time, Harris was looking to branch out, and his reputation and experience in the industry made him the perfect leader for the Wiens' venture.

"We basically built the business around him," Wien says. "We did open separate facilities, staffing, labor. We kept everything separate and independent of our current operation. From there, he just went to work."

Using contacts from his former jobs and some of the Wien's current clients, Harris landed $2 million in sales for the commercial division in its first year.

Then the floodgates opened.

Three large flooring and carpeting businesses in the Cleveland area went out of business, unleashing hundreds of customers into the market. Marshall Commercial Floors started to more receive business than anyone had imagined. Apartments, offices, stores and restaurants by the dozen called with orders.

New installers were hired. More office staff was added. Over the next two years, sales tripled to $6 million.

That was when Harris pulled back the reins.

"We were hearing some rumblings out in the field that people were concerned that we weren't going to do the same job we always did," says Harris. "I said 'Time out, this doesn't make sense.' If we can take on some of the new business, fine. But only if we can handle the existing business the way we always have. That's what's important."

Staying the course

Harris knew his competition would benefit because he was passing on some new projects, but in the long run, it was better for the company.

"All a customer wants is someone to respond to them, take care of their needs, do the job they're looking for, and continually have that aggressive service they want," he says. "As soon as you lose that service, they're looking to do business with someone else."

Harris' growth rate is now where he wants it. He manages approximately 20 crews of installers, who are all subcontracted, a five-member office staff and three employees in his warehouse. Although there are two part-time sales representatives, Harris still handles 99 percent of the commercial division sales himself.

"I beat the pavement, knock on doors and keep coming at my customers until I get an opportunity to sit face-to-face with the people that run this city and run the businesses," Harris says. "You just can't work behind the desk. It's being out at the project, being on the site and getting your shoes dirty."

While Harris never shies away from the bigger jobs -- he recently completed a $200,000 flooring project for Cleveland State University -- the foundation for his division was built on smaller jobs that can be completed in days instead of months. Too often on the larger projects, flooring companies wage bid wars and drop estimates until the jobs are barely profitable. The risk usually outweighs the reward.

"I'm geared for (the big projects), but I'd rather stay away from them," Harris says. "I would rather do 20 jobs that equal that amount than one, than be on the hook with one person. I'd rather be on the hook with 20."

Accountability

Like everything else in the construction industry, carpeting and flooring projects are prone to error and delays. Sometimes, it's the fault of one of Harris's suppliers. Sometimes, it's one of his people.

Harris never claims to be perfect, but what keeps his customers coming back is that he admits when he's wrong and corrects the mistake.

"From the mill level to making the goods, to shipping it, to unloading it, to cutting it, to sending it out on the job site, there's a lot of hands on that carpet," Harris says. "The way I look at it, if you jump through hoops on accounts and you make mistakes, you have to be human, be honest with them and fix what you did. My customers know I'll do that."

Harris' ability to soothe an irate customer was one of the key characteristics that landed him the job at Marshall.

"Rick is a super salesman," Chuck Wien says. "He's very caring about his accounts and very responsive with his accounts, and that's what it takes to succeed in that business."

Today, with slow, sustained growth in check, it's what Harris says he's able to maintain. And, it's exactly what he learned from his father all those years ago.How to reach: Marshall Commercial Floors Inc., (216) 514-7900

Morgan Lewis Jr. (mlewis@sbnnet.com) is a reporter at SBN Magazine.

Published in Cleveland
Friday, 19 July 2002 05:47

Change is good

Change in a business environment is natural, and, if managed the right way, can be beneficial.

Here are some quick tips to help you along the way:

Plan for change

Assume your company will replace roughly 20 to 30 percent its employees every year, and make contingency plans to lessen the impact. Some steps to ease the pain:

Always be in recruiting mode. Identify blue chip candidates, interview them, background check them, keep in touch about their availability.

Cross-train employees everywhere possible. As departments lose talent, other employees will need to pick up the slack, at least temporarily.

Budget for turnover and the training costs involved in making a new employee productive.

Document mission-critical processes, so new, untrained employees can step right in.

Outsource noncritical services. If it's not part of the core business, why do you want to be in that field? Let someone else manage turnover, benefits and other productivity-draining administrative tasks.

Welcome the benefits of turnover

With new employees come new ideas, new perspectives and new experience. Sometimes the needed push for a new system or production makeover is an idea from outside the way you do things.

New people are usually itching to prove what they can do in a new environment -- many times they bring an energy and drive that's needed to move a project, improvement or service forward.

Turnover can be motivational

Sometimes, companies become complacent, willing to accept unquestioningly what is done and why. An influx of new people can bring challenges to those corporate assumptions.

By creating an environment that welcomes critical thinking, you can boost creativity. And rewarding those willing to challenge assumptions and find a better way to do things serves notice to the clock-watchers that a new wind is blowing through the company, and they can fight it, sail with it or find another pond. Don Shadrake is vice president and CIO of The Reserves Network/The FocIS Group.

Published in Cleveland
Friday, 19 July 2002 05:38

A good sport

It happens all the time. Just when you find that perfect restaurant, little-known bar, great shop or favorite beer, the company goes out of business.

That's what happened to C. David Snyder, former owner of Realogic and now chairman and CEO of Snyder International Brewing Group LLC.

"I saw that Crooked River (Brewing Co.) was in bankruptcy," he says. "It happened to be the beer I drank. So, it seemed natural to help."

Consider it a dramatic change of direction for Snyder, who had spent his career working as a consultant with some of the top firms in the nation, including Arthur Andersen and Cooper & Lybrand. After that, he founded and sold two companies, and in the early '90s, launched Realogic, a local IT consulting firm.

Two weeks before Realogic was scheduled to go public, Snyder and his partners received a phone call that set in motion the changes.

"We got an offer, one of those offers you couldn't refuse," he says. "And it was time to sell."

The sale was supposed to allow Snyder time to relax, but instead, he found himself with too much time and some extra money in his pocket -- a dangerous combination for a man who had no plans to truly slow down, let alone retire.

"I'm one of those guys that will probably do something until the bitter end," he says.

Snyder may be wishing for that end to come sooner rather than later on Feb. 18, when he'll be the guest of honor at "An Evening of Good Sport Networking," a roast to raise funds for Junior Achievement.

Snyder agreed to the roast, presented by the Cleveland Crunch and sponsored by SBN Magazine because, "It's a worthy cause and it sounds like fun."

The event begins with a 3:05 p.m. Crunch game, followed by a cocktail hour from 6 to 7 p.m., then dinner and the roast at 7 p.m. Tickets are $250 a plate, $2,000 for a table of 10.

Snyder admits there's a difference between beer brewing and IT consulting.

"It is a different part of the brain," he says. "It is business-to-consumer and is different because now you have wholesalers and retailers that are selling your beer -- you don't control all of your revenue."

When Snyder assumed the reins of the faltering brewery, he brought with him time-tested business principles to turn it around. He retained most of the brew staff, but developed a new marketing plan and orchestrated a long-range plan for consolidation within the industry.

"You can't be a $1 million to $2 million brewery today and make any money," Snyder says. "It costs too much to run an ad or invest in infrastructure. That's why you are seeing a tremendous amount of consolidation. I had no idea at the time that we were going to get into the beer business. I saw what was happening with the consolidation and I thought it would be good for a roll-up strategy."

Over the past two-and-a-half years, Snyder's been in acquiring mode, snapping up Cincinnati's Hudephol/Schoenling Brewing -- maker of Little King's beer -- and buying a 51 percent stake in the Fredrick, Md.-based Fredrick Brewing Company, a public company known for brewing beer using hemp seeds.

But beer alone isn't enough to satisfy Snyder.

"I'm not a 40-hour-a-week guy," he says. "I could probably hold down a couple of jobs."

And that he does, but on his own terms. Snyder has invested in a number of technology firms nationwide, including Digital Atoms, which is headquartered in the Washington, D.C., area.

"With the exception of beer, it (technology and consulting) is really all I have done," he says. "I have developed a reputation for it, and there were a lot of people who were asking me to get back in. I had a lot of people twisting my arm."

Snyder's arm was twisted enough that he founded a technology consulting firm in Cleveland called Brulant, which means "hot" or "scorching" in French.

To Snyder, business is business, even when it involves the fast-moving world of technology.

"In some ways, it's changed a lot. But in some ways, it hasn't changed at all. It is still about relationships. Technology changes, but you still have to have good people running it."

Snyder says he's enjoying himself now more than he ever has, and he's become an integral part of the Crooked River creative team.

"I came up with Expansion Draft (beer), and it was a great seller for us," he says.

And, Snyder's helped draft slogans like the ones seen at Crunch games, where the side boards read: "Expiration date, born-on date, how about get a date?"

For Snyder, much like frequent product tastings, it's all part of the business.

"We have fun with it," he says. "It's only beer; you can't be too serious about it."

Beer and sports obviously go hand-in hand. Crooked River is involved with most major sporting events in Cleveland.

"People who like sporting events like beer," he says. "There is a lot of statistical evidence out there that says effectively (sporting events) are just a big bar. If you go to the baseball game, you will see people standing in line to get our beer while there is nobody in line to get the other beer."

Beer and sports may go together, but what about a Cleveland-owned beer company that has a stake in a Maryland company, and its relationship to a certain Baltimore football team?

When faced with the question of whether to sell Crooked River beer at the Baltimore Ravens' stadium, Snyder had to make a crucial decision.

"We had an opportunity to sell our beer at Ravens' field and we turned it down," he says. "That should tell you something. We did a deal with the Washington Redskins to sell beer. We sell a lot of beer at Camden Yards, and we were written up in the New York Times about that. But with the Ravens, I just can't do it."

So at least one thing is certain -- on Feb. 18, Snyder won't take any flack about selling out to the minions of Art Modell. How to reach: Snyder International Brewing, (216) 619-7424; Cleveland Crunch, (216) 896-1140

Kim Palmer (kpalmer@sbnnet.com) is managing editor of SBN Magazine.

Published in Cleveland
Thursday, 18 July 2002 13:19

Death and taxes

Which is worse -- death or taxes? Thomas M. Zaino says the latter doesn't have to be a hassle for business owners.

Appointed tax commissioner by Gov. Bob Taft in 1999, Zaino oversees 1,300 employees in 11 divisions with nine regional offices and collects $18 billion in state taxes. In his short tenure, the former partner with PricewaterhouseCoopers has helped revamp Ohio's estate tax administration and has been the champion of technology's integration in the Ohio Department of Taxation's filing and collection procedures.

Considering his organization benefits from the taxes Ohioans pay, Zaino's support of technology tax credits and the simplification of tax rules for the self-employed is very business friendly. SBN Magazine talked with him about new developments in Ohio estate tax processes and other issues that affect Ohio business owners.

What are the most common mistakes business owners make when filing taxes?

Math errors, failure to fully complete forms and appropriate schedules, failure to attach schedules, miscalculating apportionment factors, improper treatment of allocated income, using old or nonexistent account numbers and failure to make timely estimated payments of tax.

We have seen more and more tax changes for self-employed and part-time employees. Do you see this trend continuing?

Last year, the IRS reorganized itself into four business units, one of which is called the Small Business/Self Employed Operating Division. This shows the emphasis that the IRS places on this segment of the taxpaying public. Eventually, changes will be made in either the tax law itself or in how the IRS administers the tax law as it applies to self-employed individuals. I would guess that the changes will simplify compliance with the tax law, rather than the enactment of brand new tax benefits.

Recently, there have been a number of tax breaks directed toward the owners of small businesses. What will their effect be?

In late January, Sen. Chris Bond of Missouri introduced the Small Business Works Act of 2001. It contains a number of provisions designed to help small business. Those include an increase from 60 percent to 100 percent for the deduction for health insurance costs for self-employed individuals. There is also a repeal of the Alternative Minimum Tax (AMT) for individuals after 2004. Between 2001 and 2004, the AMT is reduced by 20 percent each year.

The AMT is a computational nightmare for corporations. In fact, three separate sets of depreciation schedules have to be kept by corporations just to comply. The bill would eliminate the corporate AMT for corporations with gross receipts of less than $7.5 million for the first three years of the computation period, and this amount increases to $10 million thereafter.

The bill would help small businesses stay competitive by making the research credit permanent. It would allow taxpayers with gross receipts of $5 million or less over a three-year computational period to avoid using the accrual method of accounting. Similarly, taxpayers with less than $5 million in gross receipts over the three-year computational period would be able to avoid using inventory accounting.

It also increases the amount of equipment purchases that small businesses may expense each year from the current $24,000 to $50,000, and increases the phase-out threshold from $200,000 to $400,000. And, the bill allows depreciation of computer equipment and computer software over just two years.

There have recently been changes in Ohio's estate tax law. How will they affect small business owners or family-owned businesses?

The bill affects estates dealing with a date of death on or after Jan. 1, 2001. After that date, as long as a business interest belonging to a descendant meets certain qualifications, the value of that business interest, up to a maximum of $675,000, can be deducted from the value of the descendant's gross estate for Ohio estate tax purposes. If a qualifying business is passing from generation to generation and the value of that business is under $675,000, that business passes Ohio estate tax free.

The bill also provided a major tax cut of almost $200 million for Ohio families over the next two years. For dates of death on or after Jan. 1, 2001, an estate with a gross value of $200,000 or less does not have to file an Ohio estate tax return and will not pay any Ohio estate tax (the previous threshold was $25,000). This amount increases to $338,000 for dates of death on or after Jan. 1, 2002.

The Alternative Minimum Tax hasn't been extremely popular. Why do you think that is?

When the individual Alternative Minimum Tax was originally enacted in l969, it was aimed at millionaires who paid no income taxes. Today, it is beginning to hit an unintended target: middle-class taxpayers. In testimony before the Senate Finance Committee on March 8, it was noted that in 2000, the AMT affected 1.3 million taxpayers. In the next decade, that number is expected to jump to 17 million taxpayers.

While the AMT currently targets high-income families, the number of middle-income taxpayers earning between $50,000 and $75,000 a year hit by the AMT would skyrocket from less that 1 percent in 2001 to a whopping 32 percent just 10 years later.

Why the increase in the number of taxpayers who will have to deal with the AMT? Because of the lack of indexing of the AMT rates and exemption amounts, as well as the expiration of temporary tax credits, all of which protect taxpayers from the AMT. Congress will have to do something about this, but the cost in potential lost revenue is quite high. How to reach: Ohio Department of Taxation: (888) 405-4039 or www.state.oh.us/taxKim Palmer (kpalmer@sbnnet.com) is managing editor of SBN Magazine.

Published in Cleveland