Todd Shryock

Monday, 22 July 2002 10:08

Utility audits

On face value, it seems simple: Every month, you receive a bill from each of the utility companies that service your business. Your bill amounts to the number of units used, whether it be gallons, kilowatts or whatever, multiplied by the unit rate.

But are you getting the best possible price? How can you be sure you were charged the correct amount?

"When we do an audit, we look both forward and backward," says Stuart Phillips, director of customer service for Equitax, a San Jose, Calif.-based utility auditing firm. "We look at usage history for recoverable mistakes, which we find 25 to 30 percent of the time. We also do a forward review of what you are paying on a net cost-per-unit basis. People always say they can get you a better rate, but rate isn't the only thing on your bill."

Items like meter charges, taxes and flow rates may all be included in your final cost. There may also be special charges or complicating factors from sewer districts, lighting districts, flood abatement areas or other assessments.

Phillips says that if they have worked with a particular utility before, they usually know exactly what type of error they will find.

"If there is an error with a provider, it's usually an error throughout the class of service," notes Phillips. "It's not an issue of the size of the user, it's often an issue of the provider."

Refunds can usually be obtained, depending on the particular governing statutes that apply to the utility.

"As long as you can provide the utility with specific documentation, they are typically cooperative, providing you have met the rules and format required," says Phillips. "Some utilities make it difficult and some make it easy."


Mistakes happen

Many businesses can be put on the wrong rate plan from the beginning, particularly if they're in a new building. For example, when a manufacturer has electrical service installed, a provider might put it on the same plan that 99 percent of manufacturers fit into, rather than looking into that business's particular needs.

"They basically plug you in and start billing, but you may have more than one billing option available to you," says Phillips. "Until you do a detailed analysis, you don't know."

Mistakes can also occur in the actual billing process, not just the rates.

"I've seen simple miscalculation errors to the decimal point being in the wrong place and the business paying ten times what they should have been," notes Phillips. "For most errors, you would assume that 50 percent of the time they would favor the utility, and the other 50 percent they would favor you. But from what we've seen, well over 90 percent of all errors are in favor of the utility provider. There is a built in bias of 'If we're going to err, let's err on the side of the utility provider.'"


The audit

Auditing utility bills is not just for large corporations. In fact, smaller users often have a better chance of finding potential savings than larger ones.

"The larger the user, the fewer the billing options, so there is less chance of a mistake," says Phillips. "For large users, both the user and the utility are much more vigilant about making sure the bills are correct."

Refunds have ranged as high as $50,000 for a single user, with annual savings topping out in the same amount. Obviously, not everyone will find that big of an error in their billing, but Phillips says about 70 percent of their audits turn up some savings.

The length of the audit depends on how quickly the auditing firm or person can get the information from the provider. An auditor will request detailed usage measurements broken down by the day or even more frequently. Once the information is obtained, the actual audit can usually be completed in a few days.

"We will look at every single line item on a bill and see if there is a better way to do it," says Phillips. "It might involve changing the rates, or changing all or some of the components. We make sure that at the end of the month the business is paying less per unit than when we started. In some cases, raising the rate may actually result in paying less on the bottom line, because of other factors."

For maximum savings, an audit should be performed every three years. Phillips recommends choosing an auditor who is paid a percentage of the savings actually achieved, because the process is difficult to understand.

Some utilities, especially electric, will do an analysis of your usage patterns and make sure you are on the right rate plan.

"Generally, what determines which tariff we use is the load factor: a measurement of how level the customer's usage is throughout the month," says Tom Ringenbach, manager of business development for American Electric Power, which serves much of the Midwest. "We will check to see what the business might be eligible for and look at their peak demands, delivery voltage and other factors."

Someone from the utility can also tell you how to operate your equipment more effectively.

"AEP will review your operations and suggest how you can improve your energy efficiency," notes Ringenbach. "One example, for a restaurant, the billing is a function of peak demand. If the business owner turns on every piece of equipment simultaneously, it will set a high peak demand. A simple solution is to stagger the startup over a more lengthy period of time. There are things that are more complicated than that, but there are things a customer can do that won't affect their operating efficiency. It won't affect their product, but they can save some energy costs."

For more information, go to www.equitax.com or contact your local utility provider.

Monday, 22 July 2002 10:08

Automated lenders

A personal relationship. Understanding your business. Local commitment. These are common mantras used by banks of every size, and you can find many more in any financial institution's advertising campaign.

The focus is almost always on the relationship between the banker and the business person. Then Automated Teller Machines appeared, and now online banking via the Internet. How important is personal banking?

"There are several factors that are driving online banking," says George Kivel, managing director of Mainspring, a financial business advisory service that specializes in Internet business. "The first is just customer convenience. Some organizations are able to self serve for ordering some services or checking the status of accounts. It's more convenient and a better use of their time to do it online rather than traveling to the local branch."

Banks benefit through long-term cost reductions. The short-term costs of installing the system are eventually paid for by increased volume of electronic transactions without the need for additional personnel.

"The Internet gives banks the ability to take what were high value but high-expense services and scale them to a larger market," says Kivel. "Their hope is to take sophisticated cash management products that used to take a workstation and special software, and provide them in a more cost-effective manner over the Internet."

Banks will be able to handle business accounts in a more integrated fashion, because some services may be linked electronically to the business, whether it be the broadening of Electronic Data Interchange to smaller companies or even handling credit card processing for Internet orders from a company's Website.


A machine's world?

Despite the consolidation of local branches and more and more banking transactions occurring through the beeps, buzzes and static of a modem, most entrepreneurs won't see their banker disappear. In fact, they might see more of him or her.

"Online banking will allow for more face-to-face time on critical business issues," notes Kivel. "The relationship manager at a bank used to do a lot of paperwork, and it was a burden on their time. With many routine services being provided through the Internet, they should be able to spend more time relationship building.

"The Internet can take the person in or out of the loop. It's a business decision for the bank, not a technology decision."

Many banks have yet to realize the potential of-or haven't quite decided how to utilize-the Internet as a vehicle to deliver services. A lot of sites are still fundamentally nothing more than brochures, or offer little more than account balances or other statement information. Those offering services often limit them to self-service type transactions, such as address changes or stop payment orders.

"To establish a relationship, it still requires a fair amount of time doing something with people," says Kivel. "Auto loans and mortgages are more accessible online, while products for small businesses and corporations are not. Banks that are selling a commoditized service have a better chance to open online accounts. Those that are not can still try to establish face-to-face contact using online services as a channel of communication, not a primary point of entry."

The initial wave of banking sites that actually offer more than basic contact information have primarily targeted consumers, not businesses. Some have established integrated accounts with larger corporations where the banks actively work on issues such as cash flow, but the small business market is a niche that relatively few banks have targeted.


Is it time to sign on?

"Online banking is sort of in an 'early adopters' phase," says Kivel. "For those small businesses that are actively pursuing an electronic commerce strategy in sales and are looking for a merchant relationship, then online banking could be advantageous. But it certainly isn't something that is imperative for businesses at this time."

The services are typically the same or less than what would be received from doing banking in person or other means, and there is no difference in price.

"From the business side, there is no huge gain," notes Kivel. "It might work better for some businesses from a convenience standpoint, but it's not important to be using it."

Monday, 22 July 2002 10:07

Knowledge management

What if instead of searching through filing cabinets in three different departments, all the documents on every customer and vendor was at your fingertips.

With knowledge management software, any file can be accessible to any workstation in the company, or even from a laptop outside the office.

“Knowledge management simply boils down to a management of information in the company,” says Peter Kusterer, vice president of sales and marketing for North America for AFP Technology, a software manufacturer.

Knowledge management software usually refers to programs that handle the management of document transfers between a computer server and people connected to the network.

“Companies have these knowledge databases that support what they sell or market,” says Kusterer. “For tech support companies, the database might be of software, while in the appliance market, it might be of parts.”

Company documents contain most of the information that may need to be communicated either internally or externally. Organizing the documents into computer format lets data be transferred from one document type to another without rekeying. For example, an invoice may contain information on the customer, the amount due and the amount received. The system may be set up so that certain data are in particular places on a document, which is scanned by the computer and can then be transferred to accounting records or sales logs.

Knowledge management software varies widely by function, cost and complexity. It can be contact management programs, such as GoldMine — which allows a transfer of data between a sales manager and sales staff — to AFP Technology’s FormScape, which allows a more universal capability.

Some are out-of-the-box solutions, while others are customized for every user. Most programs are also mentioned in the same breath as the “paperless office” because they not only automate many tasks, but also convert many paper files to electronic versions.

“What we find is companies are having difficulties locating information,” says Kusterer. “With the archives in FormScape, we can store everything in a permanent medium such as a CD or hard disk. Using the viewer, anyone could look back at a physical replica of the document.”

For example, if a customer called in and didn’t understand why they were charged for freight, a customer service representative could call up a copy of the actual invoice on the computer rather than having to dig through a filing cabinet. If the invoice was a mistake, then the rep could attach a computer version of a sticky note to the document and e-mail it to accounting to deduct the freight charge.

“We’ve managed that entire process all in software, from a central repository of information” notes Kusterer. “No one had to dig for a file that might have been misfiled. This software gives you the ability to sort information and route it.”

The FormScape software can also be customized to take advantage of advanced printing capabilities, such as self-sealing envelopes. The software will even look at how many pages the document is, and because the self-sealers usually only work with single pages, will only use that function if the document is one page.

The programs pricing, like their options, widely vary. A basic contact management program for the sales staff can be bought for a few hundred dollars, while customized applications can cost anywhere from $5,000 to $25,000.

“With more companies becoming knowledge based, it’s important to better manage information,” says Kusterer. “How many companies have been victimized by the departure of a key employee who has all the information in their head? If you’re a small company, you’re even more vulnerable.”

Monday, 22 July 2002 10:06

“Big Boss”

Computers grace the desks of the company receptionist and CEO. They have become standard issue for employees that need to create, analyze or modify data.

But the computer’s power isn’t always being directed into spreadsheets, sales goals or customer service. Take a random glance at a given computer in the office at any time and you might find work-related material, or you might find a flight simulator. Maybe the accounting department is zapping aliens while the office manager is playing Solitaire, and the sales manager is looking at something you can’t even describe without being hit with a sexual harassment lawsuit.

Computers have allowed employees to share information, communicate via e-mail, track statistics and play games. Some companies allow workers to play games on their lunch hours or during non-business hours, but how can you be sure what’s going on when? Many games have a “boss button,” which when pressed will either bring up a screen saver, blank screen or something that looks work related.

Internet access for employees has also added to the problem. Online games, chat rooms and other diversions, including pornography sites, are diverting the attention of your work force.

Websites are even getting in on the deception, and many seem to be catering to those who want something more interesting to do while at work. A popular baseball site has a button that brings up a bogus spreadsheet in case the boss should wander in while you’re analyzing the pennant race.

You want to make the company computers effective tools, not high-tech toys, but what can you do?


Reasons to watch

“It doesn’t matter how big or small your company is. You don’t want harsh pornography to be distributed or left on a computer,” says Stuart Rosove, founder and vice chairman of the board for Sequel Technology, makers of monitoring software for businesses. “It’s a legal issue. Pornography viewing can lead to sexual harassment claims.”

The first reaction might be to use one of the Internet screening programs that have become widely available. The difficult part for Internet users is trying to figure out which sites are relevant to the company. Employees at a medical research company might be perfectly justified searching for sites containing the word “breast,” while those at a shoe manufacturer probably have no reason to do so.

It doesn’t address other electronic problems, such as game playing or e-mail abuse. What if someone e-mails your marketing plan to a competitor?

“Management does not have a good way to supervise or view what employees are using their computers for,” says James Cofano, president and CEO of Silverstone Software, makers of com.Policy, a computer-monitoring program. “Cyber crime is one of the fastest growing problems in business. Managers need to see how employees are using their computers. Maybe they are not using their time wisely, or maybe they’re using the wrong procedures.”

Whether a disgruntled employee is sabotaging or deleting files, or someone is using the company’s computer for games, these programs can give you a traceable trail to act on.


How they work

Sequel’s Net Access Manager monitors traffic to and from the Internet down to the individual user. It does not read content, but instead produces the equivalent of a phone bill for the Internet, showing who is using the Internet for how long and for what purpose.

When the product was installed on Sequel’s own network, some interesting facts came out.

“The inside sales team was using the Internet the most,” says Rosove. “I thought it would be the software development crew. But on further investigation, I found out the sales team was corresponding with customers and doing research. I also found a direct correlation between high Internet use and high sales. I was able to take this to the shareholders and show them how we use this medium for productivity.”

Many companies have found that employees are visiting objectionable sites or wasting time.

“I’m a believer of that which is inspected will improve,” notes Rosove. “People don’t call sex number from work, because they know there is a bill and they will get caught. We’ve never had an employee rebellion.”

Parameters can be set to match the company’s goals, whether to block some sites or limiting surfing to nonbusiness hours. Net Access Manager is designed for Windows NT and some Unix systems, with prices starting at $3,000 to $4,000 for a starter package.

Silverstone’s com.Policy program takes things one step further. Anything that is on an employee’s screen, whether an Internet site, a word processing document or a game, can be seen by management.

“The foundation of the program is the company policy,” notes Cofano. “It is important to let the employee know what the expectations are. Most company policies don’t cover e-mail or computer use. The employees need to know what they should and shouldn’t do.”

The program comes with policy templates that assist a company to inform the employees of computer usage rules. Once the software is installed, it collects data from every workstation on its daily use and generates a log of all the programs run, Websites visited and e-mail activity. A date and time for each user are provided.

There are also screen shots of each computer, which can be set up to take a “snapshot” of each computer screen on average of every 30 minutes. This can be increased to one per minute if a manager thinks there is a problem with a particular person.

“The screen shots make it easy for a manager to see what the employee is looking at,” says Cofano. “If they saw a game and the time was 2 p.m., it might be a problem.

“Once people know they are being monitored, they’ll postpone doing their brother-in-law’s resume.”

One analogy by a com.Policy user: We all follow the rules of the road. We drive more carefully when there is a police car behind us.

Users of the software have discovered anything from employees selling drugs over the Internet to high-level managers viewing porn in the middle of the day.

“It varies from objectional material to people running businesses on the side to disgruntled employees downloading files before they leave,” says Cofano, whose software is targeted for businesses with 50 or more employees.

The program will run on Windows 95 or NT, and starts at a single station evaluation copy for $129 with additional stations added at $50 each in quantity.


Strategies

There are ways to try to shift employees away from the fun and games and back to the humdrum tasks assigned to them, whether it be through monitoring software, programs that filter Internet sites or even something like DVD’s Antigame software, which searches out game files on employee’s computers and erases them.

But some business owners wonder if this has gotten out of control. Have the employees become so untrustworthy to complete their work that management needs to keep track of their every keystroke?

“Most people that resent it are the abusers,” says Cofano.

More than likely, these are the same people dodging work with the novel in the partly open desk drawer or a stack of Post-It notes covered with doodles.

“It makes people ask themself if what they are doing is relevant to work, and definitely makes them more accountable,” adds Cofano.

Games or even an e-mail to mom can help relieve stress or fill the monotony between customer calls, and company policy may even allow for an occasional diversion. An employee who has to explain every minute of work is not productive.

But game playing can be addictive, and companies need to protect themselves from lawsuits that could stem from improper Internet use.

The solution is to find the balance between serving t he company and respecting the employees with a policy that fits into your corporate culture. No one ever said technology was easy.


For more information, go to www.silverstone.net, www.sequeltech.com and www.antigame.com.

Monday, 22 July 2002 10:05

Maximum air time

Competition in the wireless industry has created a confusing mass of industry claims between competing services and technologies. But one thing is certain: A wireless phone can be a powerful business tool.

"The best way to start is to do a self- inventory," says Mike Houghton, president of Communicreate, a public-relations consulting firm, and a former spokesman for the Cellular Telephone Industry Association. "Determine what you need the phone for and how you plan on using it."

Will it be mostly for voice, or do you also plan to send data? Also determine the primary usage time. Will you use the phone during the workday, or is it mainly to extend the workday by making evening calls during the commute home or during weekend trips? In which areas will you be using it? Just in your local area or all over the metropolitan area? Out of state?

"Once you figure out how you are going to use it, you can compare that usage pattern to pricing plans, and pick the one that best meets your needs" notes Houghton. "When looking at pricing plans, it is my suggestion to assume you will use it more than you think. You think you'll put it in your car and only use it if you break down and need help, but then one day you'll be lost and call for directions. You'll realize how much time and aggravation it saved you, and you'll start using it for other things too."

If you will be traveling through rural areas where the distance to the nearest tower will be greater than normal, consider a phone with more power, such as those typically mounted in the car, rather than the small portable models. If business leads you to less desirable areas of town, a more inconspicuous model that doesn't require a car antenna might be a better choice.

If the conversations are of a sensitive nature, find a phone that offers scrambling or other security features. Once you have looked at all these questions in-depth, then you're ready to start shopping.

"There is a proliferation of wireless competitors and resellers," says Houghton. "It's easy to get confused, but if you've done a self-inventory, you can go into it informed on which phone is best for you."

Digital usually offers more deluxe features, such as messaging, faxing or the transmitting of data right from the handset. Because wireless data is still limited in speed, be sure to determine whether the phone will handle the duties you are expecting it to perform.


Contracts

Many providers will offer you a cheap phone in exchange for an extended-service contract. If you break the contract, you usually have to pay the remaining price of the phone.

Be careful before signing any contract. The lure of a cheap or free phone often blinds people to the contract requirements. Contracts can limit your flexibility to adapt new technology that might be better suited for your needs. Many offers also include free minutes, but compare those with the time you'll actually be using the phone. Free minutes on the weekend are worthless to someone who uses the phone only for business during the week.

Companies are responding to the demands for flexibility by offering phones with either no contracts or ones limited in scope. You may end up paying more for the phone, but the long-term benefits may be worth the extra money.

"In the last year or so, there have been pricing plans offering services nationwide with no roaming charges," says Houghton.

Again, this is a feature that needs to be considered. A lack of roaming charges is of little use to someone who stays in the same area when using the phone.

"It's really good to find someone who knows the phone," says Houghton. "Almost everyone has some type of phone now. Talk to your friends and neighbors. Find out what service they have, and if they're happy with it. Find out what the customer service is like."

There are even phones available that can be used in Europe. For example, you could take your phone on your trip to France, and people back in the office could simply dial your wireless phone number to reach you. You would always be in touch with the office, regardless of your location.

"There's a lot of things happening in the industry to meet the needs of the small-business person better," says Houghton. "But don't dismiss analog services. You can get a cost break, and if all you needed was wireless voice communications, it's something to look at. If you need more, look at the digital services available."


Strategy tips

Because many people want to avoid charges for incoming calls, they leave their phone turned off-which usually defeats the purpose of having it in the first place. However, many providers are now offering free voice mail with their phones. If the phone isn't on, the call goes directly to voice mail.

This feature allows for all incoming calls to be deposited into voice mail, where you can review them.

Some providers are also offering the first minute free for all incoming calls. This also gives the user a chance to decide if the call is important enough to pay for, or warrants a "let me call you back."

Theft should always be a concern.

"Whether it's you or your employees, don't leave the phone out in plain site," warns Houghton. "Don't leave it out on your car seat. They are very popular with crooks who like the ability to make calls and do illegal things using someone else's phone. Don't even leave the cord hanging out of the cigarette lighter."

Monday, 22 July 2002 10:04

The final deal

Kenneth Bob was once the CEO of a small, successful software company in New York, but is now an executive at another software firm.

This isn't the result of failed products, poor cash flow or mismanagement, but rather a business decision. He made one of the most difficult decisions an owner can make: He sold his business.

As part of the deal, his company, Lightstone Group, was acquired by Descartes Systems Group, where Bob now serves as senior vice president of product strategy and business development.

"There have been a couple of moments where I've looked in the mirror and had to tell myself I'm not the CEO anymore," says Bob. "The systems manager was looking at how to redo our network, and I told him I thought he was picking an expensive way to go. He looked at me like, 'What do you care, you're the senior VP for strategy.' You have to realize that it's no longer your decision. On the flip side, I get to do things like strategic marketing full-time, which is the fun part."

Lightstone Group, which manufactures supply chain logistics software, was identified as a potential acquisition target by an industry analyst, who started the sales process. The company's software product wasn't strong enough to stand alone and needed to be part of a larger product offering. At first, Bob and his board of directors had considered an initial public offering to raise enough money to acquire other product lines, but then the right deal was offered.

"We looked at [Descartes'] strategy, we liked the terms of the offer and Lightstone fit right in," says Bob. "From the offer to the close, it only took two months."

Lightstone's product was integrated into Descartes offerings, and the office simply became the New York office for Descartes. The employees were basically unaffected by the deal, other than they now answer to the home office in Waterloo, Ontario.

"This is one of the most difficult things I've done in my life," says Bob. "Change can be good, but no one likes change done to them. But it was a great opportunity for us."


Selling points

"The first thing a person considering selling a business needs to do is figure out how much they need out of the business to achieve their goals," says David Geller, president of Atlanta-based Geller Financial Advisors.

Once the goals are established, they can realistically assess what it's worth to determine if they will be able to meet their goals.

"The second thing is to a make sure you are affiliated with a good accounting firm," says Geller. "You need good financial statements to show the buyer."

One of the aspects that made Bob's deal go smoothly was an audit statement from a Big Six accounting firm that showed everything was in order.

"Once you know what it's worth, you need to hire a business broker or start networking to let people know it's for sale," notes Geller. "What you want to do is get more than one interested party. You want to ideally look for someone who's business will be synergistic with yours."

Lightstone turned down the first offer that came in, but when company officials were presented with Descartes' offer, they saw products that complemented theirs, a similar culture and a fair price-all things that led to a speedy deal with little disruption to the business.

Geller lists the following tips to consider:

  • Get an idea early on of how the potential buyer values the company. "You don't want to spend a lot of time in long discussions when the price is not compatible," says Geller. "Ask them what formula they will use and what a ballpark figure would be. I once spent an enormous amount of time on a deal where the people came in with a price that was 40 percent under what we wanted. It was a complete waste of time."

  • Almost always flinch at the first offer. "Rarely is the first offer the real offer," notes Geller. "Even if it is a high first offer, if you flinch some, you'll probably get more."

    Also be wary of becoming overly emotional during a deal. If a buyer offers $5 million, and that allows you to spend the rest of your life on the beach and that's all you're thinking about, they may drop the offer to $4.8 million. You figure that's still enough to put you on the beach and agree to it, only to find the offer now at $4.6 million.

    "Owners have gotten so emotionally involved that it makes it incredibly difficult for them to say no," says Geller. "The buyer will just keep nicking down the price."

  • Create reasons for key people to stay. In many cases, a business may be almost exclusively people, especially in a service firm. If you can find a way that encourages key people to stay on, it may make a potential buyer more comfortable knowing that the majority of the company's resources aren't going to walk out the door the day after the deal is completed.

  • Keep the deal focused. Completing an agreement can be as quick as 30 days to as long as a year or more. Make sure both sides are committed to the deal to keep everyone focused and the paperwork moving along.

    "Once you bring in the lawyers and accountants, it's not cheap," says Geller. Valuation and other fees can be $7,500 to $25,000 depending on the complexity of both the business and the deal.

  • Expect a short stay. "Many times, a buyer will say they don't want to change anything and keep the former owner on to oversee the operation," says Geller. "That's rarely a reality. They don't own it anymore and aren't the final decision-maker, which is frustrating. Overwhelmingly, most owners I've dealt with are gone from the new business within 24 months."

    If you're selling, you need to emotionally prepare for that. If you run a 50-person company, owning that business is often a big part your personality. It can be a big letdown once the company is gone.

    "They need to think about what they are going to do," says Geller. "Most don't want to sit on a beach and sip Margaritas all day. These are aggressive, bright people who want to do things."

Bob has an escape clause if things don't work out with Descartes, and that type of forward thinking is important to any deal.

"Prepare your decision-makers and your board," says Bob. "Think about how you are going to deal with your employees. As soon as you can tell them, tell them. Think about where you and your employees will fit in the new company, because there could be someone that doesn't fit in. There are a lot of things to consider, and you should be very careful."

Monday, 22 July 2002 10:04

Show time

Trade shows can be a great opportunity to promote your products to potential distributors or develop sales leads, but they can also be places to waste money.

"They're very costly, and it's hard to get by without spending some money to make some money," says Prasuti Kirk, president and CEO of Side Saddle Inc., a San Diego-based board game developer who relies on trade shows to promote her products to buyers.

With proper planning, excessive costs can be avoided, allowing you to concentrate on making sales. Consider the following:

  • Location. "If a show is planned, you can select where you want to be on the floor, and you won't have to pay rush charges," says Carla Hannum, president of Santa Clara, Calif.-based Crystal River Business Solutions, a marketing communications firm. "People think that once they're assigned a spot, it's set. Usually position is given to businesses with prestige or longevity in the show. But if you keep calling the expo managers, you can negotiate for a better space. It just takes a little time and planning."

    Look at the show layout and determine where you would like to be. You may be able to improve a location by upgrading from a booth of 10 feet by 10 feet of 10 feet by 20.

    "It's been my experience that businesses can get where they want to be without extra charges," says Hannum. "Some shows say they give you preferred positioning if you buy their gold exhibit package, but there's usually no reason to do that."

  • Booth size and setup. A small company does not normally need a large booth. An area of 10 feet by 10 feet is almost always enough space. "Call people you are interested in talking to and set up a meeting during the trade show," says Hannum. "That is far more effective than paying for a bigger booth size to try to get their attention."

    Hannum recommends that first-time exhibitors buy a used booth, and consider doing any graphics themselves by taking the work to a large format printer to have it printed, laminated and have Velcro attached.

    If you decide to rent a booth, rent it from a local vendor, not from the show service.

    A smaller booth can also save money on setup fees. In most places, anything that takes longer than 30 minutes to set up typically requires union labor to do it, which can cost $50 an hour or more. Even something as simple as plugging in a computer or a light might require a union electrician. Read the show rules carefully, and also be sure you understand exactly what comes with your space.

    "A lot of shows, the only thing you get is a 10 by 10 space of concrete floor with a backdrop and two dividers on either side, and that's it," says Hannum. "Electrical, carpet and carpet padding can be extra. Some smaller shows include them as part of a booth package, but make sure you know what you're getting before you get there."

    Don't ask for extras without asking the cost. A small trash can might have a $35 rental fee; a different chair might cost $250.

    "Bring your own stuff and don't lose anything that's already there," advises Hannum.

    If at all possible, take the booth on the plane with you to avoid shipping and receiving charges. Most shows will charge $250 just to receive packages, regardless of size.

    "These aren't hidden costs," says Hannum. "They're all explained in the trade-show guide, so read it thoroughly. It's all disclosed."


Effort equals profits

Remember, your company is at a trade show for a reason. The show has to be approached as a sales opportunity, so whether you or one of your employees is representing the company at the event, think accordingly.

Kirk's booth has only one product, so the entire marketing message is focused.

"I had a test of that, because another person at the show who had a lot of toys and games in a corner booth in an exclusive section and put my game out and didn't make any sales. Meanwhile, I did incredibly well at my booth. I worked one item, and I think that was very helpful."

At larger shows, people may have a schedule of booths they plan to visit, with no browsing in-between. While working a trade show, you have to be part sales manager, part carnival barker.

"I'd see a buyer race by, and I called them in and was able to make a sale," says Kirk. "I'm always talking and selling. At one show, a guy across from me said, 'I'm going under the table to take a nap. Call me if anyone comes by.' That's wasting money. The best way to save money is not to waste it."

Monday, 22 July 2002 10:04

Open the books

Chad Engler has seen the value of open-book management. His company, Rochester, N.Y.-based In-Seitz Inc., a business-communications agency, was opening up its books before the term open-book management was created.

"Before we went to open-book management, we were paying our employees a salary plus overtime," says Engler. "That just encouraged everyone to work more overtime, and it doesn't help the company make more money. They were being rewarded for taking longer to do a project."

The company eliminated overtime, and replaced it with a profit-sharing plan that linked an employee's success to the company's success. A formula was created for different groups within the company, based on the particular job function. The formulas are intended to measure how well people are doing the job, then relate that directly to payment. A better effort or result means a bigger share of the profit-sharing checks.

"For people who are paid a lot [through salaries], they are expected to deliver a lot," says Engler. "A newer person has less expected of [him]. They're not held to the same stringent conditions a seasoned person would be."

The formulas continue to evolve as business conditions change or the company finds a better way to measure performance. Finding an accurate formula can be difficult, especially for a receptionist or someone who keeps the computers running.

"Some of the formulas take a little while to create, but you can get everybody," notes Engler.


Leadership is key

"The most important ingredient to successful open-book management is the trust the employees have in their leader," says Frank Shipper, a professor of management at Salisbury State University in Maryland. "The person needs to be straightforward with everything-the good and the bad."

The leader also needs to make sure the system is fair to everyone, regardless of what was done in the past. "The right type of person will not accept excuses that provide rewards the books don't justify."

Information regarding an employee's affect on the bottom line have to be tied to a performance bonus. In one case, a company that Shipper studied implemented open-book management, but wasn't willing to link it to money.

"It didn't last very long, because the employees were asking, 'What's in it for me?'" says Shipper. "The company was privately held and the owner was unwilling to share the profits. The company is in worse shape than it was before. You have to share the pain and the gain."

Implementing a plan that exposes the company's financial information to everyone can take courage. Overcoming the fear can be one of the most difficult steps.

"The main fear of business owners is that the employee's will figure out the owner is making a lot of money," says Engler. "Business owners get scared when they consider this."

While some open-book companies go so far as to reveal individual salaries, In-Seitz stopped short, revealing a group's combined payroll expense instead. The employees have enough information to measure their group's performance, without making people uncomfortable. Sharing information is important, but it would be a waste of time without an effort to educate the employees as to what the numbers actually mean.

"One of the biggest pitfalls is to allow people to see the financials, but they don't know how to read them," says Engler. "They can be very confusing and it can have a bad effect."

Engler leads a weekly forum where everyone has the opportunity to discuss particular issues or expenses, and how they can be improved. The employees learn what the numbers mean and how they can achieve a bigger bonus.

"You have to get everyone to act as if it were their own company," notes Engler. "You want them to act just like it's their money. You give them a stake in the results, and give them feedback and training along the way."

Shipper echoes Engler's sentiment, saying that everyone can be taught to read a financial statement. "If you look at every kind of employee, they all have the capability of understanding baseball stats," says Shipper. "There is nothing different between financial statements and baseball stats when taught properly."

But don't expect employees to take ownership and keep a close watch on financials when the stakes are low and the bonus checks are issued annually.

Shipper says that employees should be able to earn 15 percent of their total salary through the performance bonus.

"If you're only going to offer 2 or 3 percent, then don't bother," says Shipper. "If you are not willing to really share all of the information and, to some extent the profits, then don't start."

The more frequently the checks are issued, the more employees will realize their actions affect the bottom line.

"Some companies hand out a check once a year, announce what the profit was and say 'Have a nice day,'" says Engler. "The employees feel like they have no control over it and they don't trust it. The immediacy of the reward helps.

"I really encourage business owners to keep an open mind about open-book management. Sharing company information works to your advantage, not your disadvantage. Imagine everyone working in a company treating every dollar as if it were theirs."

Monday, 22 July 2002 10:03

When push comes to shove

Push technology offers an automated way to sort out the clutter of the Internet and deliver specific internal information to the employees who need it most.

"Push technology is basically about automation," says Maureen Fleming, senior research analyst for the Gartner Group, a Stamford, Conn.-based information-technology research firm. "Information can be published content or pure data. The technology has been around for about a decade, but it's just now migrating to the Internet."

The business use of the technology is twofold:

  • Monitoring external factors. The technology can monitor competitors' or customers' Websites, or sources of industry news. The technology will notify you when there is new information available, saving you the time of continuously checking the sites.

  • Distribution of information. Using this technology, companies can create specific channels of information that relate to specific topics such as human resources, supply needs, general company information or contract requirements. Rather than inundate everyone with every bit of information, people "subscribe" to the information channels that interest them. Employees might subscribe to human resources, while suppliers would want updates on supply needs and contract requirements.
"For smaller firms, this solution may not be any better than e-mail," says Dan Weiss, director of technical operations for Cleveland-based MFA NetWorks. "A lot of employees are still having trouble using e-mail, so push would just create more problems."

Weiss oversaw the implementation of push technology for a large corporation with more than 1,000 desktops. From the company's perspective, its Website had all the internal information available to all the employees, but the workers were not taking time to check the site. With push technology, the company was able to deliver specific content to the desktops of affected employees, who no longer had to check the Website or sift through countless e-mail messages that weren't relevant to their position.

In a smaller firm, it's usually just as easy to create a few e-mail lists targeting specific groups of individuals or suppliers. Industry and other news can be delivered using a free news-clipping service provided by most of the major search engines.

"Push technology may be more trouble than it's worth for some firms," says Fleming. "But smaller companies need to be careful about staying nimble from a customer service standpoint. The monitoring aspect can also be very critical, particularly when it comes to monitoring opportunities."

Push technology can also increase security risks, because a virus from a supplier's computer could be "pushed" into your network. Bandwidth may also become a problem if 20 people are downloading all the updated information at 9 a.m. every day.

"Figure out what you want to do with the technology," says Fleming. "Don't count on sales and selling opportunities with it. Deploy it for internal use if there is enough of a critical mass to justify it."

Monday, 22 July 2002 10:03

Sold on sight

The World Wide Web may allow the world to learn about your products through the company Web site, but it doesn't mean they'll want to buy anything.

A product description, some nice graphics and a picture can go a long way, but for some items, that's not enough. It's just too hard to visualize how the product works or if it will meet their needs, especially if it's something like a large piece of equipment.

John Lofquist, president and CEO of Centrack International, an Internet-based advertising service for used heavy equipment, knows the value of pictures.

"There is more interest in equipment with photos," says Lofquist, whose site displays machinery used in construction, mining and forestry. "The problem is with dealers and small contractors, they don't have the time to take the photograph and submit is for listing. Anything visual like that is important in marketing."

Because equipment changes hands so quickly, video streaming for each listing doesn't make economic sense. Also, many of Centrack's customers-countries in Latin America, Asia and Africa-don't have the bandwidth to deal with video files. But Lofquist does see a few areas where video technology can enhance Centrack's services.

For some extended auctions, where the equipment will not change hands for 60 days, Centrack will be offering full video and audio streaming, allowing potential buyers to see what the equipment can do and what it looks like. Think of it as a sales presentation over the Web. The other area is having a sort of equipment encyclopedia online that would have video of the particular type of machine. A seller would post a picture of what was for sale, and a potential buyer could see what kind of condition it was in, read a description, then access Centrack's database to watch video highlighting that particular machine's key features and abilities.


Immersion technology

A new type of imaging technology has already revolutionized the way the real estate industry does business, and may be able to help you.

Interactive Pictures developed the IPIX system, which puts computer users "in" the picture.

Where as most photos are simply flat images of what the photographer thought was the best angle, IPIX is more like a fixed vantage point from which the user can look around 360 degrees. The system uses a $1,000 package of a digital camera, fisheye lens and special software to take the pictures. When the image is viewed on the computer, the user can turn and see what's in any direction, including up and down, and can also zoom in or out. (For a small software download and sample pictures, go to www.ipix.com.)

The real estate industry has already embraced it, because it allows potential home-buyers the ability to tour the house, looking at the features they want to focus on. From a picture taken in the living room, a buyer could turn to the left to see a big bay window, or to the right to see a marble fireplace. With a handful of photos, the real estate agency is able to present the entire house to a potential buyer.

"For years, people have looked at little square shots," says Jim Phillips, CEO of Interactive Pictures. "This has really reinvented photography. The big market is real estate right now, but the destination hotel chains like the Hyatt or Hilton are now shooting their properties with it."

Car manufacturers are taking pictures from inside the car, allowing people to look all around to get a feel for the interior without ever being there. John Deere is using it to provide immersive pictures for its heavy machinery.

Walt Disney resorts are using the technology to provide conference planners not only with immersive shots of hotel rooms, but also available restaurants and meeting facilities. Planners can get a feel for the ambiance of each without having to take the time to physically look at each one or make a decision based on a static brochure photo.

The good news for small business is the technology is based on existing hardware that continues to drop in price. Phillips is already working with the major digital camera manufacturers to bring this technology to consumers. Those static photos on your Web site can now be immersive. Potential buyers can look at your facility or a comparison of your product line.

"We believe that if the Internet grows to 140 million subscribers in three to four years as predicted, we will be a big part of changing photography as we know it," states Phillips.