Daniel Bates

Monday, 22 July 2002 10:07

In Brief

When it comes to a marketing strategy for Fantastic Sams hair salons in Pittsburgh, the local franchise may advertise in the newspaper and send direct mail to the many communities around its 20 salons. But perhaps its most effective marketing message comes from its partnership with a rather odd bedfellow: Children's Hospital.

For the past year, hair stylists from Fantastic Sams have taken their scissors and combs on the road to Children's, where they offer free haircuts to the hospital's pediatric patients. Working with the hospital's Child Life/Volunteer Services department, stylist-volunteers so far have cut the hair of around 150 adolescents and teens.

"The stylists help our patients to look and feel better," says Ellen Good, manager of Child Life/Volunteer Services at the hospital. "Fantastic Sams lifts the spirits for so many families, and the monthly event helps the hospital normalize an environment for the kids."

As for what Fantastic Sams gets out of this goodwill gesture, says Mary Anne Ohsol, a Fantastic Sams salon owner: "It is a great opportunity for many of us to give back to our communities."


So you want to sell your product on the Web ...

If you're a computer software company, bookseller, airline, publisher or music store, the Better Business Bureau has some good news for you: Consumers are more likely to buy your products over the Internet. Not so, however, if you offer insurance, other financial services, or food and drink.

These are the findings of a recent survey conducted by Greenfield Online Inc. for Better Business Bureau subsidiary BBBOnLine.

Among its findings are that 77 percent of the respondents said they would be willing to purchase computer software online; 67 percent would buy books; 64 percent would buy compact disks, 63 percent would buy computer hardware; 61 percent would buy airline tickets; and 53 percent would buy magazine subscriptions.

On the downside, more than 60 percent said they are not likely to buy insurance on the Net; 53 percent would not buy financial services; and 55 percent wouldn't buy food or drinks.

In general, according to the survey, the respondents over the past 12 months had spent an average of $446 on products via the Internet, with 16 percent having spent more than $1,000. Those surveyed said they would feel comfortable spending no more than $1,500 over the Internet.

The respondents' main concern: the security of online shopping, which is where BBBOnLine comes in.

Says James Bast, president of the Council of Better Business Bureaus: "It's the perception of half the respondents that there are many disreputable companies offering products for sale on the Web, and both purchasers and non-purchasers seek cues to indicate the reputability of a company on the Web...This highlights the value of our BBBOnLine program in boosting consumer confidence and voluntary self-regulation of businesses in the electronic marketplace."

And so it does.


Overheard

"When you're an entrepreneur and someone is waving a bag of money in front of you, it's usually a compelling reason to go into that market."

∇Mark Juliano, president of start-up Islip Media, in discussing how he directs the market focus for his set of high-tech.products. He made the remarks while presenting at a recent MIT Enterprise Forum program in Pittsburgh.

The greenhouse effect on Pittsburgh's economy

No, we're not talking about atmospheric conditions. We're talking about an actual greenhouse that is being planned for a vacant former shopping center along Chateau Street on the North Side.

The greenhouse is part of a grand plan, called the Harbor Gardens project, to turn the run-down 2.99-acre site into an economy-stimulating 70,000-square-foot office building with 58,000 square feet of rentable space.

Heading the project is the Bidwell Training Center Inc., a non-profit organization designed to give career direction to underprivileged inner-city residents. The North Side-based organization plans to relocate its headquarters into the new commercial facility when it's completed.

The Urban Redevelopment Authority of Pittsburgh has approved $1,542,505 in grants and loans for the project. Total cost is expected to reach a little more than $8.3 million.

The most innovative part of the plan is the greenhouse, which will serve as an incubator business that accommodates the cultivation of horticultural products for wholesale distribution. The business itself is being set up to help fund Bidwell Training Center at a time of government-funding cutbacks.

Monday, 22 July 2002 10:05

Never too late to learn

You may have survived the perils of early-stage growth and are breezing into aggressive growth, but, according to the University of Pittsburgh Katz Graduate School of Business, it's still not to late to learn a thing or two.

That's the premise behind the school's recent creation of The Institute for Entrepreneurial Excellence. And within that institute is a new center for the top management of midmarket, high-growth companies-the Entrepreneurial Fellows Center.

The center is recruiting its first class of "Fellows" for a program beginning in January 1999. The center will teach business management and also match attendees with successful local entrepreneurs who will serve as mentors. It's being led by Ann Dugan, who also is the head of the school's Small Business Development Center, a federal- and state-funded program for start-up and emerging businesses, and The Family Enterprise Center.

Frederick Winter, dean of the Katz School, says the new center reflects his vision to reach a business sector, which he says has been underserved by existing economic development services. It also rounds out the school's programs for all entrepreneurial stages.

For more information, call (412) 648-1542.

Monday, 22 July 2002 10:03

From the editor

"Thanks, but I can do it myself."

OK, admit it - it's an axiom all of us have spouted at one time or another in our professional lives as we fiercely defend our stubborn, blind, entrepreneurial independence. And it's a philosophy many of us have championed since childhood.

Take Nicholas, for instance. My three-year-old son often pulls away from me as I try to dress him. "I can do it myself," he huffs before struggling to dress himself. By the time he's finished, his shirt is on backwards and both legs are jammed into one pant leg.

I'm no better sometimes. Several relatives attending my son's recent birthday party offered to help me assemble his new Big Wheel tricycle. "I can do it myself," I snapped, aggravated, of course, that the toy came in a box with dozens of parts, screws, nuts and bolts. An hour later, I wound up with an assembled front wheel, pedals and handle bars, and the two back wheels beneath a plastic seat. However, because the assembly process was designed to be irreversible, I couldn't attach the two sides. So my son spent the afternoon scooting around on the seat and two wheels. Yes, I nearly ruined the tricycle.

And I did it all by myself.

Sound familiar? Apparently not at Worthington-based Strobel Machine Inc., this month's cover story subject. Like many company owners, Larry Strobel led his machine tooling shop by example. Thanks to a mechanical engineering degree and hands-on experience that went back to his teen-age years, he could machine metal parts with the best of them. And when the company was small and prospering, he could get by with that experience.

But as the company grew, so did the administrative and personnel sides of the business. Then cash flow became an issue. Suddenly, Strobel found himself having to stand back and run his company, but away from the shop floor. He admits he wasn't very good at it, and eventually the numbers reflected that.

At the brink of failure, however, Strobel didn't stick out his chest and declare, "I can do it myself." Many who have done that know where it leads. Instead, he sucked in his pride, swallowed a healthy dose of humility, and admitted he needed help-lots of help. He then sought the advice of a turnaround consultant.

As it turns out, the turnaround specialist taught Strobel a lot. Strobel learned how to handle cash-flow problems. He learned where to effectively cut costs. He even learned how to get more out of the expensive computer-numeric-controlled machine-tooling equipment he had purchased.

In the end, Strobel's heaping serving of humble pie saved the company. Make no mistake-it took courage to avoid the age-old entrepreneurial mantra, "Thanks, but I can do it myself." By showing his weakness, he strengthened his position and now has a profitable company to show for it.

I, on the other hand, had a tricycle in two pieces and a son who wondered why I would give him such a present. Nonetheless, when I tried to get him to quit scooting around on the back half so I could fix the problem, he pulled away. Can you guess what he told me?

Monday, 22 July 2002 10:02

When "no" isn't good enough

If a local lender tells you your application for a U.S. Small Business Administration-backed loan has been declined, you shouldn't necessarily accept it at face value.

Reportedly, one recent applicant called the SBA office in Pittsburgh to find out why the loan was declined, only to find the lender had never submitting the application to the SBA. That loan apparently is now being processed.

David Miller, SBA assistant director for economic development, says it's a rare occurrence, particularly among the government agency's preferred lenders, with which he says the SBA maintains good relations. But it does happen.

He says it sometimes is little more than a misunderstanding, since local preferred lenders have full authority to prescreen applications and make their own judgment calls before submitting applications to the SBA for approval. Other lenders judge applications by their own eligibility parameters.

However, they're not supposed to "blame" the SBA if the decision to decline is the lenders'.

So here's what you can do, Miller says, to avoid doubt about your loan applications:

  • Women, minorities and veteran entrepreneurs can go through a pre-qualification program designed to provide loan analysis before you approach a lender. Two local organizations administer the program: the Regional Development Funding Corp., (412) 471-1030, and the Minority Enterprise Corp., (412) 434-5806.

  • If the lender says the SBA formally declined your loan application, by law he must provide a detailed letter of explanation-if requested. Always ask for the letter.

  • If you still aren't satisfied with the application process, Miller says, you can call the local SBA office at (412) 395-6565. He says officials will gladly look into the situation for you.

Monday, 22 July 2002 10:00

From the editor

searchable

Sam and Lady were just plain mean. They paced and growled and spit at all of the construction company workers who passed their chain link pens each day at the company headquarters. All of the workers were smart enough to stay clear of those two teeth-gnashing German shepherds for fear of becoming lunch. Except for one young, unskilled laborer.

I wanted to tame those beasts. While the others just ignored their wanton aggression, I wanted to form a bond, to nurture those seemingly wild dogs that seemed to be fighting for attention. And you know something? I did. With a bologna sandwich.

One day, I decided to share my lunch with them, and suddenly, they quit barking at me. Instead, they whined as they followed me along the edge of the pen. They let down their guard and licked my hand. They wagged their tails when I passed by. I was now their friend, and before long, I was eating my lunch inside the pen with my loyal new friends for life. All I did was give them my sandwich.

A simplistic illustration, perhaps. But I see so many companies that treat their employees much the same way as those dogs were treated by most of my co-laborers.

The workers are placed on the shop floor or in the warehouse, ignored by management and left with the notion that they're just lucky to have jobs and a few benefits. The workers complain about conditions, growl at management, think of their jobs as just jobs, and occasionally file lawsuits-right up until the day they organize under a local union.

And to think that many of them simply would like a proverbial bologna sandwich and caring bosses.

I was surprised recently to see the results of a study of local companies and their growth needs as they pertained to employees. Many business owners complained that, in Pittsburgh, they can't find enough highly skilled employees willing to work cheaply-and loyally. Think about that for a moment. Interestingly enough, those same owners complained of high turnover rates in a generation of worker that knows no loyalty.

That's exactly why we decided to feature a small, obscure manufacturer and distributor of industrial and medical gases on this month's cover. The importance of Butler Gas' contribution to the local economy isn't in its size or technology, but rather in its apparent treatment of its people.

As small as the company may be, its owners decided years ago that their most valuable assets are their workers-happy, trained, satisfied workers. They bond with them. They nurture them. They offer a wide range of continuing education designed not only to improve worker efficiency, but to make them feel better about themselves and their long-term professional goals.

Take their efforts to design personal growth plans for each employee, for instance, or their in-house mentoring program. These owners want happy employees who have an interest in growing the company. Their efforts, the owners claim, have paid dividends in moving the company forward, especially in times when flexibility and drastic change are necessary in the way the company does business.

Without question, such employee treatment is an investment that costs money and lots of time-and requires a long-term perspective of the business and its goals. But if you're thinking that you're not really in a position right now to afford to institute such employee-friendly treatment, I have a question for you: Can you afford not to?

You may find that all it takes is the courage to change and, well, a bologna sandwich. Or two.

Monday, 22 July 2002 09:59

New online education by the SBA

The U.S. Small Business Administration has added yet another program to its growing list of business-education resources: an online classroom.

Now, business owners can walk through half-hour classes on a wide range of business growth topics, such as how to raise capital or create a business plan, as well as information on Y2K compliance and a number of financial and marketing courses at the SBA’s Web site, www.sba.gov.

Each session, the SBA says, provides self-paced learning modules formatted into easy-to-follow learning templates. Content is enhanced with graphics, audio and numerous electronic links to other business resources. Certain courses are offered in both English and Spanish.

You also can tap into online counseling with SCORE volunteers, a library and a course evaluation and comments forum.

Says Aida Alvarez, the president’s SBA administrator, in a prepared statement: “Our new Small Business Classroom is designed to meet the business education and information needs of the 21st century aspiring entrepreneur. This bold and innovative tool can be used to empower men and women to thrive in an ever-changing economic landscape by opening the doors of economic independence through business ownership.”

Monday, 22 July 2002 09:59

From the editor

It used to be said that the only people who like change are babies with, well, dirty diapers. And I used to believe that, too. Then my youngest son proved the cliché so very wrong—and, along the way, taught me a profound lesson in business and in life that I won’t soon forget.

Just a few weeks ago while sitting at the dinner table, I noticed an unmistakable fetor, shall we say, emanating from Nicholas, who wasn’t wearing a diaper. So I stopped eating and looked him right in the eye as he stood there on his chair. From there, the conversation went something like this:

“Nicholas, did you do something in your pants?” I asked him.

“No,” he said, looking right at me with serious determination.

“Come on, Nick, you did something in your pants, didn’t you?”

“No.”

“Now Nick, are we going to have to change your pants?”

“No,” he insisted. “I just tooted.”

With that, he sat down and finished his dinner.

Think about that for a moment. Here’s a kid who absolutely needed to embrace change, a kid who knows all too well the consequences of remaining unchanged for any length of time. And yet the perceived humiliation and embarrassment of admitting a need for change was enough to drive him to shameless denial.

Some business owners and their employees are no different. Market conditions change. Technologies change. Customer attitudes change. So why do some business owners choose to remain comfortable in the status quo? When it’s time to change their names or their product lines or even their distribution systems to fit the times, they sit down and keep working. Why change something that helped get them to this point, they reason. Why rock the boat?

The answer is simple: diaper rash.

What I don’t understand, though, is that, when those owners and top executives start feeling the pain of their deliberate inactions, many of them remain in denial right up until the very death of their companies. At this point, they seem so embarrassed by their previous inaction that, by making the change in the end, they would have to admit they were wrong before. So they just stand at the table and say “No.”

As you will see in this month’s issue, change is the overriding theme—not so much in the content or in the many subjects we address, but rather in the way we, at SBN, have embraced change ourselves.

As you will notice on the cover, we have narrowed our name to SBN and have added the much-needed tagline, “Smart Ideas for Growing Companies.” We made the change for one simple reason.

As we’ve learned over the years, the word “small” is such a subjective term. The U.S. Small Business Administration defines small business as any company with 500 employees or less. Some would call that large. Others view small as that little corner grocer in your neighborhood, or the old barber at the end of main street. And some small companies’ owners simply don’t like the idea of calling their $10 million revenue enterprises, well, small.

Meanwhile, our goal from day one almost five years ago was to educate entrepreneurs and help our readers grow their companies. You could say that, technically, we’re not about small business and we’re not about big business. We are about the growth strategies that help transform small businesses into big businesses. But that’s not always how we’ve been perceived.

What we needed to change, then, was how we convey that message to our readers and advertisers. Hence, the new tagline.

We’ve also changed the inside, from a fresh new design to a cleaner presentation of local business strategies and other lessons from the local trenches. All of the changes are reader driven and aimed at making SBN easier to read and easier to cultivate ideas you can use to grow your companies.

Sure, we could have stayed the same. We could have found a way to justify the notion that what we’ve done in the past works just fine. And we could have ignored your continued input over the years. But would our competition?

Will your competition?

Change gives us energy. It positions us for the future. It gives us all hope in moving forward. It keeps us alive. Indeed, change is good.

Unfortunately, Nick learned that the hard way. As he found, the consequences of inaction are inevitably more painful than change.

Reach editor Dan Bates by phone at (412) 321-6050, by fax at (412) 321-6058, or by e-mail at dbates@sbnnet.com.

When most companies want to improve communication among employees, they install e-mail. Or they publish an employee newsletter. Marketing communications firm Blattner Brunner Inc. is building its own town square.

You won’t see pigeons in this front office gathering place, but you should see employees communing over coffee or lounging on couches, amongst themselves and with clients—sharing ideas and strategies.

“The advertising industry is not to be taken too seriously,” says agency principal Joseph Blattner, the agency’s chairman. “It’s about fun, and you have to create continuously. Our town square is about having really relaxed, functional, wired places to work. It’s about having a very productive place for people to meet, communicate and get things done.”

The town square, at the entrance to the Blattner Brunner office, includes a coffee bar with bar stools, counter and a continuous flow of Starbucks coffee; a living room setting with rocking chairs, couches and other soft seating; and four “privacy rooms” with soft seating and desks, Blattner says. The entire area will be rigged with computer network plug-ins, where employees and clients can hook up their computers for demonstrations and other presentations.

The town square concept is only part of an extensive renovation of the 20,000-square-foot 16th floor of Four Gateway Center, where Blattner Brunner is moving April 1 to accommodate its 60 employees. It’s moving from the 6th floor of One Oxford Centre.

The move, Blattner says, takes his staff one giant step forward in his quest for the ultimate open office environment to accommodate the firm’s teaming atmosphere. For some time now, the firm has divided its employees into teams that include people in account services, public relations, sales promotions, media planning, production and budget management. Previously, each was a separate department.

But even the teaming concept, Blattner says, wasn’t enough to effectively divide up the work.

“It got to the point where ‘team-crossing’ became so significant that there was no integrity left in the teams we set up,” he says. “Of our 20 clients, 15 utilize all the services of our organization. So the question became, how can the information flow effectively through the entire organization?”

That’s where Four Gateway Center comes in. With help from architectural firm Burt Hill Kosar Rittelman Associates, which designed the space, Rome Communications, which planned the technology infrastructure, and Pro Com Systems, which designed the presentation technologies, this marketing communications firm is taking the open-office concept to a seeming extreme in search of good communication.

Unlike the Oxford space, which has offices for some of the executives and tall cubicle walls for the rest of the staff, the new office will have only four-and-a-half-foot walls around cubicles—and no executive offices.

Asked about potential noise problems in such an open environment, Blattner says the firm is taking care of that with a sound filtration or “attenuation” system above the ceiling with speakers that pipe a quiet hissing sound through the air to mask quiet conversations around the office. Carpeting and other materials likewise have been chosen to soften any noise. Blattner says the attenuation system and other features provide enough privacy to avoid employee distractions while encouraging everybody to work together more closely. The cost, he says: about $1,000 a square foot.

“Giving us more privacy by taking down walls is an incredible concept,” he says.

Blattner does acknowledge that adoption of this open office/town square concept comes with some worry over its acceptance by all staffers.

“There’s trepidation, there’s fear,” he says, “but they got excited about it.”

To help ensure the concept’s continued success, the company now has a human resources director on staff whose main purpose is to help develop and promote the firm’s desire to push teaming to a new level.

Says Blattner about the entire project: “It’s fun, it’s functional and it’s wired.”

Monday, 22 July 2002 09:58

From the editor

Sometimes, wisdom shows itself when you least expect it.

The first time I walked into my father-in-law’s auto body shop, I could smell paint fumes and see his workers sanding away at a car’s crumpled body. But that’s not what jumped out at me. It was that sign.

You couldn’t miss it dangling from the ceiling as you walked in through the big garage door. The large plastic banner didn’t welcome customers or caution them about the garage’s hazards. It didn’t even advertise the shop or products it used on customers’ cars. It simply hit customers over the head with this strange message: “Good work is not cheap. Cheap work is not good.”

There it was, Jacobs Auto Body’s seemingly blunt message for all to see. I stood aghast. Why would he want to tell potential customers that his services didn’t come cheaply — and that they should expect to pay? And pay. And pay some more. Boy, he had nerve, I thought.

What was he thinking? Why didn’t he just hang a sign at the entrance that said, “Pay or go away!” How could he expect to attract customers with an attitude like that?

And yet, damaged cars always lined the garage.

Good work is not cheap. Cheap work is not good. As usual, I guess I missed the point. It wasn’t until years later, when my father-in-law closed his shop and retired, that the sign’s real meaning hit me. As a business writer, I had begun to see how that ugly price game took its toll on small companies, which were unable to compete on price, but which lowered prices anyhow just to get the business as more and more consumers demand price over quality.

Roy Jacobs refused to play that game. Now I realize he had taken a stand in favor of quality over price. If customers wanted good quality auto body repair work, they should expect to pay for it. He couldn’t make it any clearer or simpler than that. His big red sign said so. And those customers who didn’t let the sign scare them away ultimately got what they paid for — and kept coming back.

Now that’s wisdom, as I see it.

The problem is, entrepreneurs in their independent stubbornness not only don’t like to seek the wisdom of others, they don’t even see it when it dangles before them. Yet there it is for all to see. And it comes in all shapes and sizes.

Maybe it’s something their customers suggest. Maybe an industry peer shares an experience. Maybe the lesson comes from a local competitor that made the wrong choices. Or maybe it’s a sign.

In celebration of our fifth anniversary, we’ve compiled a small tome of the lessons of wisdom we’ve collected since we launched in Pittsburgh in April of 1994. They all come from you, our readers, and the business leaders driving Pittsburgh’s economy. Some are lessons from success. Others come from the pain of failure, and still more emerge from the many challenges in between.

Like that sign, we’ll put the lessons before you. But we certainly can’t make you heed any of the advice or apply it to your business. That part’s up to you. For they are merely lessons. The wisdom comes in what you do with it all. The wisest of you will read it, take it to heart, and make it yours to pass on. For the rest, perhaps others someday will learn from your mistakes.

As for Roy Jacobs, he posted his business credo for all to see. But it wasn’t just a sign. It was — and always will be — his way of life. That’s wisdom. Reach Daniel Bates by phone at (412) 321-6050 or by e-mail at dbates@sbnnet.com.

Monday, 22 July 2002 09:57

The art of the cooperative

In downtown Pittsburgh, a group of watercolor artists has adopted a similar approach to give audience to their art in a way that doesn’t put them in the poorhouse.

The idea came to artist Meda Kiming Rago early last year. She had been showing her work in local cafes that agreed to hang her art. But when she lost her job after the company she worked for dissolved its office, she decided to pursue her art full time.

To make a living at it, though, she thought she would have to find a gallery willing to show her work, which meant paying 15 percent to 30 percent commission to the gallery.

“After framing and other costs,” Rago says, “it’s tough to make a living at it.”

Then she and a number of her fellow painters, all members of a local Watercolor Society chapter, got together and discussed potential solutions. That’s when someone brought up a cooperative gallery in Washington, D.C., where members paid $1,000 in dues a year and had to commit to gallery sitting. No such cooperative existed in Pittsburgh, so they created one.

She and artist friend Kit Paulson (wife of Scott Paulson of WDVE-FM fame) last summer opened Watercolors, a gallery on Liberty Avenue downtown, which boasts 75 members, each of whom pays a $100 initiation fee and $25 a month for the right to hang three pictures at a time on the gallery walls.

But even this small cooperative needed rules. First, the group set up bylaws that include such legalities as protecting any single member from being personally liable for problems that might arise; making sure the gallery and cooperative are insured; and requiring regular membership meetings.

In addition, members must agree to “gallery-sit” periodically to make sure the gallery doors stay open at designated times.

Rago says the biggest challenge is making sure members and officers communicate regularly. She notes that most of the artists don’t get caught up in membership politics, as long as they can display their art.

“The bottom line is that most artists would rather be making art than doing business,” she says.

The gallery so far has sold more than 60 paintings, which Rago says demonstrates the early success of this cooperative.

“It’s the fulfillment of a dream for me,” she says.

For Watercolors gallery information, contact Rago at (412) 231-2049.

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