Chelan David

Tuesday, 28 February 2006 12:18

Advanced medicine

A new breed of robots deployed at hospitals allow physicians to virtually consult with patients, even if they are miles away. So far, patient reaction to these mobile robot systems has been favorable. A study by Johns Hopkins Hospital shows that 80 percent of the patients surveyed feel that the robots increase physician accessibility.

In the future, Dr. Neil Martin, professor and chief of neurosurgery at UCLA Medical Center, believes the robots can be utilized to help man emergency rooms where time is of the essence.

“Immediate care is critical,” he says. “Telemedicine and virtual presence allow physicians, who are not physically on site, to avoid the time waste that’s involved in traveling to the site of care.”

Smart Business spoke with Martin about how the mobile robot system operates, the benefits that it provides for patients and the importance of medical innovations.

How does the mobile robot system work?
There is a robot in the intensive care unit which is about 5 1/2 feet tall. It has, as its head, a flat panel computer screen and just above the computer screen is a camera. The doctor who uses the robot is usually sitting in a remote location, and they use the robot to make rounds at the intensive care unit.

On the physician side, you have a computer screen with a camera above it, just like the robot does, and you can see what the robot sees so you can drive it with a joystick. The remote physician can drive the robot from bed to bed and have a real-time, face-to-face discussion with the nurse at the bedside.

The developers of the robot call this virtual presence, because you can turn the head of the robot to look at the patient, the family or the nurse and have a two-way discussion as if you were standing there.

What are the advantages and disadvantages of being monitored by a robot?
The old system, from a patient’s perspective, was that when the nurses saw a problem, they would call the physician and they would talk over the phone about what was going on. The physician was totally dependent on the nurse’s description of her observations.

Now the physician can actually observe the patient and interact with the patient. It’s that much better than a phone call — you get direct information, you can examine the patient, ask them how they’re feeling and they can ask you questions. The robot, of course, doesn’t replace the physician’s normal daily personal rounds. It does extend their ability to make rounds of a similar sort 24/7 from their home or office.

What feedback have you received from patients?
By and large, they feel a little bit self-conscious when they first start talking to you through the robot. Then very quickly, they engage with you eye-to-eye and they start talking to you as if you were standing right there.

People in the past have said they would rather interact with their own doctor through the robot than some doctor that they don’t know in person. Kids love it. All the kids, whether they’re your patients or not, want you to do rounds on them.

What changes in training does this new technology require?
All that it requires is that somebody sit down at the control station and learn how to operate the software and operate the joystick to drive the robot. Otherwise, the interaction is exactly as if you were standing there. The technical training might take an hour.

How important are innovations such as the mobile robot system?
It’s known that if an intensivist is managing the patients in an ICU, the morbidity and mortality rates go down, the cost of care is less and the length of stay is (shorter). Overall, the care is safer, better and more effective.

There have been various telemedicine systems used to allow remote intensivists to participate in the care of patients in an ICU. There is a growing amount of evidence that telemedicine can be an effective way for physicians to manage patients remotely and I think that we will see more and more circumstances where telemedicine is used.

Will this practice help pave the way for shorter hospital stays, and ultimately, decreased healthcare costs?
There are studies that have been published that demonstrate that intensivist participation in the ICU via telemedicine reduces cost. If you can render better care it’s going to be more cost-effective. And the cost of the technology is not extreme by any means. It is very realistic.

Dr. Neil Martin is a professor and chief of neurosurgery at UCLA Medical Center. For more information, reach UCLA Medical Center at (310) 264-7113.

Tuesday, 28 February 2006 12:09

M&A considerations

The past several years have been good to middle-market business owners looking to sell their companies. The confluence of private equity funds and businesses looking for a strategic edge, both bidding on the same entities, has caused prices to spike.

Dan Shea, managing director of W.Y. Campbell & Co., a subsidiary of Comerica Inc., says that banks have also played a role in the active market, given their willingness to fund deals.

Smart Business spoke with Shea about the current climate for selling businesses, the types of buyers who are driving the market and how valuations should be handled.

What’s the current environment like for selling a business?
It’s one of the best markets since the late ‘90s. Buyers are aggressive because they have cash and feel good about the economy, while banks are helping by providing acquisition debt. At the same time, sellers see what a good time it is to sell, given the activity levels of buyers and historically high prices. It’s a liquid market, which isn’t always the case.

Toward the end of 2005 and on into 2006, it appears that the growth in the number of deals has started to level off. We don’t believe that transaction volumes are going to go down, we just see them leveling.

What types of buyers are driving the market?
The strategic buyer has been more active in recent periods and is looking to benefit from the synergies that can accompany a purchase, such as with a target’s customers, products, channels and geographic locations. Both public and private acquirers are aggressively seeking growth through acquisition to complement internal growth initiatives.

There are also private equity firms that go out and raise capital for the purpose of buying and holding companies. They look to grow sales and profits before selling anywhere from one to seven years down the road for a nice return. According to Private Equity Intelligence, through September of 2005, private equity capital fundraising surpassed the level achieved in all of 2004, so there is a tremendous amount of capital waiting to be invested.

When contemplating selling or acquiring a business, what should a CEO or business owner consider?
If they’re a seller, they need to be mindful of making a market for their business. Most middle-market companies are privately held so the process is not as easy as selling stock on the open market. With private companies, there is no established market for the business; you have to make the market.

Hire someone who can prepare and provide the appropriate information in a compelling manner under confidentiality agreements to qualified prospective buyers and then assist in establishing a price, a structure, and terms and conditions acceptable to both parties. A seller wants multiple buyers bidding for their business to ensure they can drive a good deal — too many lose value (and time) by engaging in what we call one-off transactions.

Buyers, both strategic and financial, need to make sure the perceived benefits of the acquisition are for real. Strategic buyers in particular need to have a realistic integration plan and a realistic forecast of expectations for the combined entity, because studies show that the majority of transactions fail to meet objectives. The way to fix this problem is to set realistic objectives and then don’t overpay — you can pay at most for the value the acquisition creates and, ideally, less would be better.

How should the valuation be handled?
The market will decide the eventual price but it behooves sellers to have a good idea of the likely outcome before initiating the sale process. Realistic expectations are critical or else a lot of time and money will be wasted.

Sellers should have their investment banker develop an estimate prior to engagement. This estimate should triangulate the results of a variety of valuation techniques including guideline public company and recent transaction analyses.

We rely on discounted cash flow analysis as well because this technique provides for more granularity. It is where you take a look at the expected future cash flows of the business and value the business based on what those cash flows are worth today.

People talk about multiples of various accounting measures such as sales or earnings to arrive at initial value estimates or as rules of thumb, but discounted cash flow analysis is the predominant technique employed for estimating value at a more thoughtful level.

Daniel S. Shea is a managing director of W. Y. Campbell & Co., a subsidiary of Comerica Inc., and head of the firm’s Los Angeles Office. His responsibilities include relationship management and client representation in sell-side, buy-side and private placement transactions. Reach Shea at dshea@wycampbell.com or (310) 297.2894.

Tuesday, 31 January 2006 09:06

Hollywood accounting

Studio honchos are fond of a practice known as Hollywood accounting. This method distributes profits earned by a project to corporate entities, which are typically owned by the same institution. The net result is that a project’s profit is reduced, which in turn trims down payments to profit participants.

The difference between generally accepted accounting principles and the Hollywood version, says Marcia Harris, a partner in Alschuler Grossman Stein & Kahan LLP’s Entertainment & Media Department, is significant. “In studio accounting, it’s whatever the contract says,” she explains. “They are not in any way limited or hampered by generally accepted accounting principles.”

Smart Business spoke with Harris about how movie studios benefit from this practice, some of the legal issues that are raised and how disputes are settled through arbitration.

What does Hollywood accounting consist of?
It consists of whatever the contract says. Most of the studios have definitions of their profit participations, whether you call them adjusted gross, contingent proceeds or however you define it.

There are 20- to 30-page definitions that describe how the studios will account to participants. It has nothing to do with generally accepted accounting principles, it has to do with what the parties negotiate. Unless you are a very heavy player you don’t get too much chance to negotiate many protections in those definitions.

How can a movie studio benefit from this practice?
They can assess expenses to a film or television show that more properly would be part of the studio’s general overhead in operating as a studio. If they can charge it off to a film or television show, that takes it off of their financial statement.

They can create fictions, where instead of reporting all of the revenues from the distribution of home video or DVDs, they pay a royalty from one of their entities to another entity. Thus the participant only participates in the royalty, not the full pot of revenues.

In the studios that have multiple distribution channels and production channels, they can deal with each other and manipulate the license fees among their affiliated entities so that the participant receives less revenue than might otherwise be the fair market value.

How can players in the business secure agreeable contracts from studios?
If they can get a deal that is pure gross or a gross at the source deal, that is the way. The more attenuated you get with distribution fees, distribution expenses and production costs, that just leaves more areas of potential abuse.

The first thing they can do is try to be very successful so that they don’t have to worry about some of the usual manipulations. Also, they should have good representatives that know what they’re doing when they’re negotiating these agreements, because the more protections that they can negotiate in, the fewer problems there will be down the line.

What are some legal issues that are raised by this accounting method?
Breach of contract is one of the usual claims. In the last few years, whether or not a distributor owes a fiduciary duty to participants has been litigated.

In a case that went up to the Court of Appeals, Gary Wolf vs. Disney, having to do with Who Framed Roger Rabbit, the court found that there was no fiduciary duty between a participant and a distributor in arms-length transactions. However, they said if the relationship between the studio and the participant was akin to a joint venture, then they may find a fiduciary duty.

Another claim that is litigated frequently is the implied covenant of good faith and fair dealing, which basically alleges that the studio denied the plaintiff the benefit of his bargain.

If a case goes to an arbitrator, what does the arbitration process consist of?
It’s as varied as there are arbitrators. I had one arbitration that was supposed to last three days. Instead we had 21 days of testimony and it lasted for (more than) two years. Other times it’s much speedier.

The studios have, in the last few years, tried to get their participants to agree that if there is a dispute concerning participation accounting, it goes to arbitration to avoid a jury and avoid all of the discovery that you would be entitled to in court. Most arbitrations for studio accounting have to do with whether the studios are self-dealing among their affiliated entities.

How has the advent of DVD sales and rentals affected Hollywood accounting and the studios’ revenue models?
It has certainly added to their revenue streams. DVDs, have in many instances, generated more revenues than a film’s theatrical distribution. They’ve also distributed DVDs of television shows like the entire Sex and the City series. These revenue streams continue to be extremely important to the studios, and to a lesser degree, the participants.

Marcia Harris is a partner in Alschuler Grossman Stein & Kahan LLP’s Entertainment & Media Department. Reach her at

Tuesday, 31 January 2006 08:12

Computer spies

Spyware is a general term used for software that gathers information about Internet users without their knowledge or consent. Symptoms of an afflicted computer can range from intrusive pop-up ads to frequent crashes.

But a stealth spyware program can be the most dangerous. Quietly embedded, a user might not even be aware that a hidden program is recording passwords and other confidential and private information.

Like viruses, spyware programs mutate at a swift pace. Fortunately, protection for computers has evolved as well. “Spyware is now recognized as a threat and protection is available through enterprise level software,” says Hormazd Dalal, president of Castellan Inc.

Smart Business spoke with Dalal about the malicious nature of spyware programs, the importance of businesses protecting themselves from spyware and the transformational nature of viruses.

What is spyware and how does it differ from viruses?
Spyware is a malicious code designed to monitor activity on a computer. Examples of this include basic monitoring, and the more malicious key loggers, which means that the perpetrators write a program that sits on the computer and then logs your keystrokes. This means they could log passwords that you are typing in, or your credit card/social security numbers, etc...

Basic Monitoring spyware is more annoying than malicious. They record what you do, how long you spend at each site, and then they force pop-up ads on you. Generally, its used by marketers, but it can plague a computer because it spies on the way you’re working.

Viruses, on the other hand, are in a different category and they are written to do damage on your computer. Spyware is different from viruses but equally malicious.

How have malicious threats like spyware and viruses changed over the years?
Spyware is relatively new. Computers have started to get infected by it over the last 18 months to two years. Just like viruses, new ones are written every single day by somebody out there with different objectives, from making sure that you go to a certain homepage to tracking where you’ve been, to sending pop-up ads to you.

How can a business protect its network from spyware?
Just like with viruses, when they first came out, there were standalone tools to help with protection. Now most businesses are well-protected from viruses because they have enterprise-level monitoring and management services.

These services check viruses before they come into a network and monitor the virus definitions on the work stations centrally, so you can look at one computer and do a sweep of the entire network.

Likewise, there are some manufacturers making very good enterprise-level spyware protection. This software sits on the server and deploys the latest definitions through every workstation in the network and implements levels of spyware protection — from making sure that your homepage isn’t hijacked to making sure that something isn’t added to your startup programs.

How important is it for a business to protect itself against spyware?
As important as protecting yourself against viruses. In fact, possibly more. Because without it you risk having identity theft and your computers can slow down and freeze. And of course, pop-up ads can become an annoyance and reduce productivity.

How does a business know if its computers are infected with spyware?
Invariably you will go to your homepage and you will find that it has been hijacked and you’ll be getting pop-up ads. But in some cases, you don’t know because it’s just logging everywhere you’re going on the Internet and it’s not taking up (many) resources.

With a slow PC you can tell. Fast PCs just manage to let that process run. With a serious infection the user will know about it but might not notice a minor infection.

What steps should a business take if it is infected by spyware?
There are several removal tools available. Typically, you need a professional or an IT person to come in who knows how to run these tools. Sometimes systems need to be brought down into safe mode before they can be cleaned up.

In some very, very extreme cases, the computer needs to be rebuilt with the software being reinstalled. This is a last resort, which is both expensive and time consuming, which is why the protection is so important.

Hormazd Dalal is president of Castellan Inc. Reach him at (818) 789-0088, ext. 202, or hormazd@castellan.net.

Monday, 26 December 2005 19:00

Time for change

Change affects each and every one of us. Without it, individuals and businesses alike would remain stagnant. Of course, in the business world, change should not be instituted simply for the sake of change; there must be a clear strategy in place to accomplish a specific goal. It is also important to understand that change can be implemented more swiftly in some organizations’ cultures than others.

“The key,” says Don St. Clair, vice president for marketing and adjunct faculty member of organizational leadership at Woodbury University, “is you really have to know your organization. Organizations are living, breathing entities and they all have different personalities and propensities to absorb change.”

St. Clair spoke with Smart Business about how change should be communicated to employees, the importance of acting swiftly yet compassionately and how organizational change can lead to innovation.

What are the basic principles of organizational change?
I think of three things: the change should be intentional and purposeful, it needs to be well-planned and it needs to be well-communicated. Members of an organization should be afforded the opportunity to understand what’s happening, why it’s happened and how it’s going to happen. That really creates the best opportunity for the acceptance of change, and hopefully buy-in. We want people to accept the change as a minimum and what we’re really hoping for is for people to embrace the change.

How should a business owner communicate to his/her employees that there will be an organizational change?
Very directly, first of all. We hear that information is power, but information is also medicine. The more organization members know, the more they are able to process, reconcile and embrace what’s happening.

They need to understand the necessity of change and the benefits of change, or the consequences of not changing. And we can’t just say it once. Think of it as a good advertising campaign: you have to hear a marketing message, depending on whom you ask, seven to 12 times before you really get it. It’s the same thing with communications in a change situation. People have to hear repeatedly what’s happening, why it’s happening and how it’s going to affect them.

The other thing is that the minute change begins, rumor begins. The only way to mitigate rumor is to continue telling the truth so that people are able to hear what’s really happening and recognize rumor for what it is.

How important is it for employees to feel like they have a defined purpose and role to play in the change?
It’s vital. The first human reaction whether it’s from the oldest, most senior staff member or the newest, most junior staff member is, ‘How does this affect me?’ Buy-in or acceptance is more likely to occur if organization members understand their role.

Change is stressful, so understanding how one fits into change reduces that stress. In some cases change has an adverse effect on an organization member. That organization member’s role may change in a way that they’re not comfortable with or their role may be eliminated.

When change is going to have an adverse impact on members of the organization then that has to implemented very swiftly and very compassionately.

It has to be done in a forthright and honest manner because other people in the organization are going to be watching how you treat the people who are coming out on the short end of this change stick. They’re going to know in their hearts that if they’re ever on the short end that’s how they’re going to be treated. That’s going to impact their morale, loyalty and productivity to the organization.

Once a change is in place, how can a business owner measure its effectiveness?
Metrics need to be established up front, before the change is implemented. You need to identify why you’re making the change, identify the outcomes you want and how those outcomes can be measured.

Those outcomes may take many different forms. It can be productivity improvement, customer-service improvement, cost-structure improvement — the list of potential benefits from a given change is endless. More qualitative outcomes like improvements to morale or teamwork are much harder to measure. Outcomes of qualitative nature really require the executive to be in touch with his or her organization in a very personal way.

The key is to identify your desired outcomes in advance, determine how they’ll be measured, set a time frame for when you’re going to measure and then just do it. There will be different metrics and different measurements depending on the organization and the situation.

How can organizational change lead to increased innovation?
Increased innovation must be the purpose for the change. If that’s the case, you’re going to want to engineer change designed to open creativity and encourage experimentation in your organization. Innovation tends to come from consistent effort, constant questioning and the willingness to make mistakes. Careless mistakes can’t be tolerated, but the only way to never fail is to never try. So a company with a never-fail culture will find it very difficult to innovate.

Collaboration is very important to a healthy organization. Bringing divergent views of a problem or market opportunity is a good way to seed innovation. However, when collaboration requires consensus building, innovation may suffer. At some point innovation requires decisive action.

Don St. Clair is vice president for enrollment management and marketing at Woodbury University. He is responsible for the recruitment of students and overall university marketing. He also teaches teaches regularly in Woodbury’s innovative Masters in Organizational Leadership program. Reach St. Clair at don.stclair@woodbury.edu.

Tuesday, 27 December 2005 11:31

Intellectual collateral

A company’s intellectual property is often considered its most valuable asset. This is especially true for high-tech companies. For instance, intellectual property is particularly prized by computer software developers who have patented their software, and by life science firms that design proprietary products.

The value that intellectual property provides shouldn’t be viewed strictly in revenue terms. It can also serve as collateral to secure various types of financing. Of course, lenders require legal documentation to prove that these assets are indeed proprietary.

“If a business is interested in leveraging its intellectual property by offering it up as collateral for a loan,” says Bonnie Kehe, the senior vice president and regional managing director for Comerica Bank’s Technology & Life Sciences Division, “that business owner should ensure that it is properly patented, trademarked, copyrighted, etc.”

Smart Business spoke with Kehe about how value is assigned to a company’s intellectual property, the steps that a business should take if it’s interested in securing a loan with these assets and why an increase in this financing option is a good sign for the tech sector.

What types of businesses tend to use intellectual property as a financing option?
Businesses that have a valuable portfolio of intellectual property. A software company, for example. A medical device company, where the technology is their own, and they’ve actually designed and developed the product. Most companies have some sort of intellectual property such as trademarks. Also, there can be value in a branded name, which is intellectual property.

How do you assign value to a company’s intellectual property?
It’s typically a subjective valuation and it’s based on a variety of factors. For example, if you can project future cash flows based upon the sale of a product that is your own, like software, then you can come up with a value of that intellectual property.

In the situation where a company has institutional investors, like venture capitalists, then the investors have likely assigned a value to the company in connection with a recent financing.

The third way would be independent intellectual property appraisers that institutions hire to value a company’s intellectual property portfolio. Again, the valuations are based on a lot of different matrixes, including discounted cash flow.

How important is it for CEOs or business owners to look after intellectual property not only as a legal asset, but also as a financial asset?
If the company is planning on leveraging the intellectual property portfolio, or if there is intellectual property that is integral to its business, than it’s very important. The CEO or business owner should ensure that it’s legally registered and properly protected.

What are the first steps that a business should take if it’s interested in securing a loan with intellectual property assets?
There has to be some matrix for assigning some sort of valuation, even though it may be a very subjective valuation. If it’s just a brand name that the company is looking to leverage, there are some lenders that will lend against brands. What’s key for other lenders is that the intellectual property is adequately protected — it’s registered, it’s patented.

In the case of software, it needs to be not only copyrighted, but also registered with the Library of Congress. So there is a two-step process with the registration and copyright of software.

Also, the business should work with intellectual property attorneys, because there are a lot of law firms that have special practices specifically related to intellectual property.

How common of a practice is it to lien intellectual property when making a loan?
In middle-market lending it is not terribly common. It is very common if a financial institution is banking a technologically driven company, meaning a company that is deriving a part of its revenues from its intellectual property.

Do you expect to see an increase in using intellectual property for financing options?
We hope so because it’s indicative of a strong technology market. With the dot-com bust, the entire tech sector was in a trough from 2000 to 2003, 2004, and we’re now just beginning to see some activity. The sector is here to stay.

It’s the future, both on the life sciences side as well as the information technology side. We would hope to see continued growth in the financing of tech companies. A lot of it is going to be an economy- and industry-driven phenomenon.

Bonnie Kehe is senior vice president and regional managing director of Comerica Bank’s Technology & Life Sciences Division. Reach her at (714) 433-3266 or bekehe@comerica.com.

Wednesday, 23 November 2005 05:28

Disaster survival

As the past few years have taught us, disasters, both man-made and natural, can strike any place, at any time. If not prepared, a business might be forced to close, which can have devastating consequences.

Steve Kessler, CEO of Sander A. Kessler & Associates Inc., believes a well-crafted disaster plan is the key to ensuring a businesses’ survival in the wake of a catastrophe. “The best thing to do is to keep the business operating. The best way to keep the business operating is to have a disaster preparedness plan. By keeping the business going, I keep my customers, and if I keep my customers, I keep my employees,” he explains.

Smart Business talked to Kessler about creating a disaster preparedness plan, the importance of backing up data and the virtues of business interruption insurance.

Both man-made disasters and natural disasters can cripple a business. How can being proactive and preparing for the worst-case scenario help a business reemerge from a catastrophe?
It can mean the difference (between) being able to go back into business or not recovering at all.

Having a solid disaster plan in effect might put you in a position to not only reemerge from the disaster more quickly, but also attract business from competitors who were not as well prepared. While they’re still trying to figure out what to do, you’re already back in business and providing products and services to not only your customers but their customers, as well.

When formulating a disaster preparedness plan, what steps should a CEO or business leader take?
They should ask themselves the question what if? What if it is a fire within their own locale? What if it is a quake or a flood that affects the whole city? Can they operate from another location? Can they get their equipment? How do they communicate to their customers that they’re still in operation? How do they get their power and their water?

It is important to ask these questions. And they should not do it alone, they should include the strategic people in the organization because multiple heads are better than one.

What type of information should be included in a crisis communication plan so that a business leader can stay in touch with their employees if a disaster strikes?
Number one, you should create a telephone tree so that there is a process where people within the organization can contact all of the associates or employees and notify them of what the plan is. All of the owners, leaders and managers should have a copy of the plan along with their areas of responsibility. The associates don’t have to have a copy of the plan, but they should be aware of it and know what their responsibilities are, if any.

How important is it to back up computer data frequently and keep a backup tape off site?
It’s critical. In fact, it’s so critical that we have three layers of redundancy. We use a service in Calabasas that has two servers constantly replicating our data. We have backup tapes that go off site daily to a local storage facility. Then we have weekly backup tapes that leave the state and go to Arizona.

Without data you’re finished. Whether it be customer based information, accounts receivable or accounts payable, this information is critical.

What advice would you give about obtaining business interruption service?
This is the single most overlooked area of insurance. Business interruption covers continuing expenses, the profits you would have earned had the disaster not occurred and salaries of key personnel. Without it most businesses don’t the have the financial means to cover these three critical items.

People think they’re going to be back in business in a couple of months, but if your building goes down it will take three months just to secure permits. Then you have to build.

And if you have a natural disaster, everyone is scrambling for contractors and permits so you’re going to be down longer than you thought — maybe up to a year. If you don’t have this type of insurance, you might never get back into business because you will lack the financial resources.

What are some other types of insurance coverage that should be in place?
You need to always insure your property to the full replacement cost value for building, inventory and equipment. If you’re in a flood plain, such as our recent situation in Louisiana, you need to carry flood insurance. If you’re in an earthquake-prone area such as California, then you need to carry earthquake coverage.

Also, the policy should contain building ordinance insurance which covers demolition costs, increased costs of reconstruction and any loss of value of the undamaged portion of a damaged building. At the time of a loss, no one ever complains that they have too much insurance.

Steve Kessler is CEO of Sander A. Kessler & Associates Inc., a property and casualty insurance and employee benefits firm. Reach him at (310) 309-2200 or steve@sanderkessler.com.

Wednesday, 31 August 2005 11:57

Family affair

In 1981, when Noreen Campbell and her two sisters, Bonnie and Sharon, took over the family business, they had plenty of experience, as they had helped their parents run the small food store since they were children.

Today, McGinnis Sisters Special Food Stores has evolved into two specialty food stores, with locations in Monroeville and Brentwood, and a staff of more than 100.

Next year, the sisters plan to open a third location in Mars. Campbell says high demand for specialty food items is one reason for the growth; another is a growing trend among second-generation Americans who are sick of fast food restaurants, are exploring their roots and want to sample dishes unique to their heritage.

Accordingly, Campbell stocks the stores with delicacies ranging from crab-stuffed mushrooms to kielbasa.

Smart Business spoke with Campbell about growing the business, working with family and keeping McGinnis Sisters’ ideas fresh.

What early lessons did you learn from working at the store with your parents?

Growing up in the business taught us a work ethic and responsibility. Our parents were very old-fashioned, so if you wanted something, you had to work for it.

When we were younger, of course, we didn’t like it because we wanted to go out on dates and be with our friends.
 
How did you grow the business into two specialty food stores with more than 100 employees?

We found it very difficult to compete with the local chains because we couldn’t even buy the product as cheap as they were selling it. So we jumped into specialty foods. A lot of women were starting into the work force, and I think their lifestyles changed.

Women felt like they could do it all, including having a family and a career. We provided home meal replacements before anyone ever thought of that, and convenience type things to make people’s lives easier.

Jumping onto the specialty food bandwagon was very good for us. There were new things coming from overseas, and people were very interested in cooking. Also, people empathized with us that we were females in a very male-dominated industry.

What are the advantages and disadvantages of working so closely with your family?

The advantages are that we really love each other and we’re very flexible with each other. We want each other to succeed. We don’t have that bitter fighting that some families go through.

It wasn’t like we were best friends growing up, but we’ve really come to be best friends now that we’re older. The only disadvantage I can think of is that we were so close and our kids were raised together. Sometimes you need a little break.

Where do you see McGinnis Sisters 10 years from now?

We’re going to open a new store next year. My sisters and I are kind of getting into our sunset years but we enjoy the business and want to continue working. My job is to bring in the third-generation members of the family, and I have one already in the business who has been here a little over a year.

We mentor them and find out if they’re really, truly passionate about it. The future will be what they want to see. They are, of course, full of excitement and vim and vigor.

What strategies do you use in managing your employees?

I think we’ve taken a lot from our father. He used to say, “Love your employees.” Not in a romantic way, but do as much as you can for them without hurting the business.

We’ve tried to uphold that as one of our keynotes and want to keep that as we go forward. We are going to get larger but we don’t want a corporate feel, we want a family feel. I think we are very open communicationwise.

We are different than men in that we do a lot of consensus-building. Whether that’s good or bad, I’m still not sure, but that’s just our style.

What’s the most rewarding part of your job?

When people say that they really love something, like one of my mother’s recipe. It sends chills up your spine to know that you’re keeping the reputation alive.

We’ll be in business 60 years next year, and my parents have both recently passed away, so it just makes you feel really good.

How to reach: McGinnis Sisters Special Food Store, (412) 884-2323 or http://www.mcginnis-sisters.com

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