La Plata County Business Report Premier Edition

Premiere Edition

INSIDE:

Cover Story: Southwest Ag (SWAG) The Hillyer Family Success Story Branding: Let’s suppose you’re in business for the money!

The Economy: In tatters? What now? The business community and planning departments share their forecasts and strategies HR Workshop: How to Turn Managers into Leaders ...Before They Go Bad!

2 La Plata County Business Report 2009

Marketing Manager Dennis Hanson General Manager Sharon Hermes Design Manager Brady Sutherlin Section Editor/Designer David Ohman Advertising Design/Prepress Mitchell Carter, Brady Choat, Jennifer Dickens, Terry Swarbrick, Michelle Uhl, Linda Vona, Tracy Willbanks Account Executives Cyrilla Cass, Darryl Hunt, Karolann Latimer, Shawna Long, Debby Morgan, Susan Wright Account Assistants Errin Kent, Larissa Lopez, Andrea Palli

The La Plata County Business Report is a publication of

INSIDEREPORT

Publisher Richard Ballantine

4 Welcome 6 Cover Story: Southwest Ag and the Hillyers

14 The Branding Workshop: Let’s Suppose You’re in Business for the Money

20 Economic Report: The economy’s in tatters; the unemployment is at its highest rate in 25 years; What Now?

44 HR Workshop:

Advertising Department To see the online version of the La Plata County Business Report, go to: www.durangoherald.com The Durango Herald uses reasonable effort to include accurate and up-to-date information for its magazine publications. However, all general information comes from a variety of sources and may change at any time for any reason. To verify specific information, refer to the organization or business noted.

On the Cover: The Hillyer Family, owners of Southwest Ag (SWAG) headquartered in Gem Village.

Photo: David Ohman

How to Turn Managers into Leaders...

Before They Go Bad!

La Plata County Business Report 2009 3

Welcome The La Plata County Business Report: Your navigation tool for a changing economy

4 La Plata County Business Report 2009

W

elcome to the premiere edition of the La Plata County Business Report. The launch of this new business magazine was not a decision born of caprice. With a recession challenging our economic engine, the time was right to publish a new magazine reflecting the perspectives and interests of the business community and our civic leaders. For those opinions on business, we took a cross-section sampling from large businesses, small businesses, consultants and independent contractors. We examined the current economic climate and plans for the future in Durango, Bayfield and Ignacio.

With some exceptions, most people in our region have been affected by the national economic meltdown. However, the effects on our economy are relative to the rest of the state and the nation. Simply put, our “boom” and “bust” cycle just was not as volatile as it might have been.

Nevertheless, effects of varying degrees are being felt throughout La Plata County. To help local entrepreneurs to navigate through the economy toward more prosperous time ahead, we want to offer what we believe to be important information you can use over the next several months, or even the next few years, depending on how the recovery tracks through the region.

Economic history tells us, neither economists, pundits, nor politicians have accurately predicted when a recession would be over until they, and we, all looked in the rear-view mirror. Has it reached bottom? When is the turnaround? When will we finally be on the uphill run on the bell curve? When will hiring return? This is pretty much uncharted territory.

The hardest hit businesses in La Plata County have been those associated with auto sales, real estate, and homebuilding with the tangential businesses including architects, landscaping, subcontractors and building material suppliers. Home remodeling, upgrades and repairs have taken an upward shift replacing the desire to “move up” to larger digs. These businesses are the most credit-driven in the area relying on

lenders for those large-ticket purchases while the credit market has been getting tighter.

We lead off with our cover story featuring Southwest Ag (SWAG) in Gem Village and how the founders, Dennis and Becky Hillyer, grew a family business from scratch into a dominant player in the farm and construction equipment market.

Have you ever wondered how to brand your company, or even what your brand really is?

“Let’s suppose you’re in business for the money.”

Our story about your company’s brand image will help you improve your market share in a competitive environment. For instance, did you know that your brand is composed of visual and behavioral dynamics?

In our effort to offer a broad overview on how the current recession is affecting entrepreneurs and governments, we offer their insights on the state of our local economy and how they are rethinking their business and planning paradigms for success.

Human resources management is a very complex asset for any company. Working nearly in the shadows, these managers are mistakenly perceived simply as those people we meet for a job interview or when leaving the company.

However, along with monitoring employee benefits programs and retirement plans, they are also involved with employee development. And that means promotions, often into a management role. But, on occassion, that new manager misses the concept of his dual role as a team player and team leader. Thus, employment law attorney, Lynne Sholler, offers tips on how to turn managers into leaders, “before they go bad.”

As feedback arrives from this first edition of La Plata County Business Report, we will continue to offer insights reflecting the needs and views of our business community. Until then, we hope you’ll find this new publication to be a resource of useful business information.

Looking north on Main Avenue in downtown Durango Photo: David Ohman

La Plata County Business Report 2009 5

COVER SPOTLIGHT ON: SOUTHWEST AG

THE HILLYER FAMILY: THE REAL DEAL Twenty-seven years ago, Dennis and Becky Hillyer took a leap of faith and, combined with their long-range vision, altered the landscape of The Four Corners and beyond.

Story and photos by David Ohman Aerial photo courtesy of Southwest Ag

6 La Plata County Business Report 2009

H

eading south and east out of Durango on Highway 160 highway the view is one of rolling farmlands and lush pastures dotted with horses and cattle. Then, of course, there are the scattered natural gas wellheads sprouting like industrial saplings. It was late in the morning and the air hung with monsoon-driven humidity signaling thunderstorms were on the way.

About 15 minutes past Elmore’s Corner, the highway bends eastward into a long straightaway on the final approach into the Town of Bayfield. And it’s on this abbreviated patch of highway where you’ll find Gem Village, not a town per se. But it is a community, at least in spirit.

At first glance, it’s a featureless collection of homes and sundry small businesses. The exception is a massive, bright shock of orange paint off to the left side along the frontage road.

You just can’t miss it as you drive by. This is the home of Southwest Ag, locally known as SWAG, one of the most successful dealers in the United States for industrial equipment giant, Kubota Ltd. of Japan. While this is not the only brand you’ll find here, all manner of bright orange Kubota equipment fills a large part of this expansive property. The brand has also played an important role in the growth curve of SWAG as an independent dealer for Kubota, and one of the few U.S. dealers offering “full lines and full service” for the brands they carry.

The Hillyer Family from left: Dennis, Rich, Becky and Garry

La Plata County Business Report 2009 7

This is the home for Southwest Ag in Gem Village, a sprawling but efficient property that was once, “a weed farm” until the Hillyers moved in. Photo courtesy of the Hillyer Family archives.

W

hen you consider, the “Big Three” of the tractor business has, for decades, been John Deere, Case-New Holland and AGCO, Kubota's rapid ascent to the position as the “fourth major” tractor manufacturer since entering the U.S. in 1972 is quite a success story. It was around the same time that Honda introduced the Civic coupe. A new era was born.

The SWAG story is really an American Success Story about how Dennis and Becky Hillyer created a small business and built it into a local business empire. Yet, despite all of the success, they never forgot their roots, family and

8 La Plata County Business Report 2009

sense of community.

Before launching their company, Dennis was the assistant manager at Basin Co-Op. They had been a Kubota dealer for about 2 1/2 years or so when he felt his entrepreneurial soul percolating to the surface.

Dennis believed that, as a co-op, the wheeling and dealing aspects of the tractor business were not compatible with maintaining appropriate profit margins. When Basin Co-Op decided to stick with selling commodities and get out of the tractor business, Dennis decided this was the right time to start his own business. He referred to the arrangement as one of “iron vs. commodities.”

Dennis was quick to note that, in the course of going his

own way, there were no burning bridges in the rear-view mirror. To this day, there remains a rock-solid friendship and business relationship with Basin Co-Op. With a couple of partners and the full support of his wife, Becky, the business was launched in the Grandview area. From the outset, while Dennis worked on promotion and sales, Becky taught herself bookkeeping and accounting, a skill her husband unabashedly credits with keeping the business together through thick and thin. Though the odds of success seemed a bit thin at the time, they started with equipment rentals to get the cash-flow heading in the right direction. Their business expanded with the addition of outdoor power equipment. Dennis refers to their La Plata County Business Report 2009 9

10 La Plata County Business Report 2009

After 27 years in business together,

tractor business as a “tractor package” concept. A one-stop-shop approach where they could not only sell or rent the tractor the customer needed, they provided all of the necessary attachments to accommodate the specialized need for the equipment, plus delivery and service.

About five years into their venture, the Hillyers bought out their partners. And as the business outgrew its original home, it became clear that a new location with plenty of room for expansion was necessary. In 1987, they found the current property with an affordable lease-with-option-to-buy in Gem Village, an area dominated by weeds, said Dennis. A very successful "mom & pop" business grew out of the rubble.

The business model that grew from that weed-strewn property is a statement of an acute entrepreneurial vision and an unfailing determination to succeed. Dennis realized he wanted to build a company where customers could find complete lines in each brand while providing the service to back up the sale.

Rentals have also played a key role in developing a strong customer following. Their reach now exceeds a 300 mile radius throughout the Four Corners, including Santa Fe and Taos.

this year marks Dennis and Becky’s

“Make hay while the sun’s shining”

As a family-run business, the Hillyers have managed to find the perfect balance between strategic, long-range planning, and the tactical, day-to-day management skills, a combination not easily found in most family businesses, or between business partners for that matter.

44th wedding anniversary. Clearly, all of the hard work and the goals they have achieved together just made their marriage all the better for it.

With their two sons, Garry and Rich, sharing the helm of the business, Dennis said, “I’m living a father’s dream. As a family, we’re closer than ever before.

The Hillyers standing amidst a group of Kubota tractors, from left, Rich, Dennis, Becky and Garry HIllyer.

D

ennis introduced more than 35 innovations to accommodate a growing demand for higher productivity to a farming community with a fairly short growing season: the end of winter and the start of winter. So he brought new ways for ranchers and farmers to be more efficient in the limited time they had and the budgets needed to turn a profit after turning the soil.

Some of those innovations included post drivers, high-efficiency hay tools, power tillage, “no-till” equipment for reseeding without the need to re-till the soil, and boomless spraying systems.

Staying ahead of the curve has allowed the Hillyers to maintain their position as the one-source company for equipment, information, and service on everything they sell and rent.

One of the creative marketing drivers for sales Dennis developed was the equipment rental division. Rather than offering demos for customers to try at no cost, he knew that if they rented that equipment, there was a strong likelihood that the customer would decide to buy it. And the deal was made even easier by applying the rental fees toward the purchase. When customers are thinking big ticket investments, Dennis has made it as easy as possible for the customer to take home the equipment needed for the long run.

When October arrives, SWAG runs an end-of-season sale on their rental equipment. Unlike cars and trucks, construction and farm equipment wear is based on hours of use, like aircraft, rather than miles. Most of SWAG’s rental equipment has about 500 hours of use. Since 5,000 hours is the equivalent of about 100,000 miles on a road vehicle, the rental fleet sold at season’s end is quite a bargain. This is also a win-win situation for SWAG and Kubota since all of that sold equipment will have to be replaced with the newest and best available.

La Plata County Business Report 2009 11

One of the newest lines they carry is an Italian tractor

by Antonia Carraro. This tractor is compact and bi-directional (steering fore and aft), and paired with another Italian tradition, more horsepower. Its maneuverability makes it ideal for snow removal, field work and a full range of multitask applications. Easy to transport and armed with a large selection of accessories, this specialty equipment is sure to be a winner.

What seems incontrovertible is Dennis Hillyer’s position as a guru of sorts to the farm and ranch industry throughout the Four Corners. Farmers and ranchers have counted on Dennis as a source of information on what they need for now and the future. He has, in essence, become the brand for Southwest Ag.

family businesses, or between business partners for that matter.

Are there any secrets to their success? The Hillyers are emphatic: 1. When starting a business with a spouse, make sure you have a great marriage that will withstand the ups and downs of the journey.

2. To create a loyal customer following, hitch your wagon to the top brands and link it to uncompromising customer service.

3. Never stop listening to the customers.

O

ver the years up to the present, the Hillyers have seen a new kind of farm and ranch customer: the lifestyle farmer. These customers moved out of the cities “with saddlebags full of money” as it were, to become gentleman farmers with more passion than experience for living life on a rural landscape. They have become a major part of the rental business and have come to rely on the Hillyers for sound advice. Those rentals have often turned into sales in other parts of the store.

The business model for SWAG has never stopped evolving while Dennis and Becky worked toward their 20year retirement goal, of building a business that could be sold to fund their retirement. When it came time to think about selling the business, they also held out the dream of turning over to their two sons, Garry and Rich. At first, since their sons were already successful, they weren’t all that confident that such a deal would happen. But, to their surprise and joy, it all fell into place as a dream come true.

Garry and Rich are now sharing the helm running SWAG. They grew up with the business and yet, there was no certainty that they would take over from their parents.

Garry, a graduate of University of Arizona with a degree in landscape architecture, gave up his lucrative practice as a landscape architect to join the family business. Rich, a basketball standout at FLC, graduated with a degree in business. After taking a year away from the business, he decided he wanted to be a part of taking the family business into the future. No one will be surprised if their children will want to carry on the tradition.

Becky continues to keep the books humming in perfect synch. “She’s been our rock from the very beginning,” Dennis said. “None of this success would have been possible without her.” Becky is equally adamant about crediting her husband’s long-range vision for their success.

Without hesitation, as a family-run business, the Hillyers have managed to find the perfect balance between strategic, long-range planning, and the tactical, day-to-day management skills, a combination not easily found in most

12 La Plata County Business Report 2009

4. Don’t let the business become stagnant; be willing to make changes before it’s too late to do so.

5. There will always be opportunities to make mistakes; learn from them and make the necessary course corrections.

6. Diversify with full lines of premium brands that will not betray your relationship with the customer (leave the secondary brands to the big box chains). From compact construction equipment to chain saws, accessories, and parts and service, these products and services have been hallmarks of the SWAG brand.

In fact, Dennis doesn’t see the big box operations such as Lowe's and Home Depot as competition. His focus on full lines of premium brands with full service to back up the sale, trumps the big box price points on selected items in each brand, suggesting that customers view big box purchases as an “expense,” while customers come to SWAG as an “investment.”

With all of this success, have the Hillyers considered branching out? Kubota has over 1,000 dealers across the United States and SWAG is already in the top 20 singlestore dealers. To duplicate the current operation, says Dennis, would require an enormous cash infusion and, frankly, they're happy with what they have built.

While it is not uncommon for couples to venture into business together, it is quite common for those marriages to dissolve under pressure. Not so for Dennis and Becky Hillyer. After 27 years in business together, this year marks Dennis and Becky’s 44th wedding anniversary. Clearly, all of the hard work and the goals they have achieved together just made their marriage all the better for it. With Garry and Rich now running the business, Dennis said, “I’m living a father’s dream. As a family, we’re closer than ever before.”

La Plata County Business Report 2009 13

BRANDINGWORKSHOP

LET’S SUPPOSE YOU’RE IN BUSINESS FOR THE MONEY!

ATTRACT NEW BUSINESS AND IMPROVE YOUR MARKET SHARE WITH VISUAL AND BEHAVIORAL BRANDING

Story by David Ohman 14 La Plata County Business Report 2009

T

here is an old axiom in marketing: “If you don’t brand yourself, your competitors will do it for you.”

Whether you own an established company or a new startup, how your target audience perceives you and your company is your brand. It’s not simply about a logo, brochure or web site. It’s about developing your desired market share. You are in competition with other companies going after the same finite customer base. Along with the quality of the product or service you’re offering, there is also that intangible called, “customer service.” We’ll get to that later.

The battle for your customer’s mind After all these years, one of the great and timeless books on branding remains, Positioning: The Battle for Your Mind, by Al Ries and Jack Trout. This should be required reading for any business owner or product manager. It’s a subject requiring more space than we have here. But suffice to say, the timeliness and quality of any product development or service is crucial in any company’s branding plans.

For the past 25 years, few companies have understood the concept of taking that concept forward better than Apple, Incorporated (formerly Apple Computer). Under the leadership of the arguably mercurial visionary, Steve Jobs, Apple has succeeded with exciting products with equally exciting product design.

Who could have imagined that Apple’s stock price would be quadruple that of Microsoft? How did they do it? When they opened the Apple Stores in major shopping malls, customers flooded in to see the new iMacs, iPods, then the iPhone. The iPod itself drove Macintosh sales for a few years until those loyal customers started buying everything “Apple.” Sales continue to be driven by products that worked great and looked better than anything else in their product categories. That’s a branding phenomenon not seen since IBM launched their famous logo and computer products in the 1950s.

Your brand’s success depends on the merger of two primary dynamics: visual and behavioral branding.

If perception really is the reality, your brand will have to be more than just skin deep. The old saying, “You can’t judge a book by its cover,” is especially true in branding a company. In this first discussion, visual branding, we’ll review how the cover of that book must compell a customer to pick it up. In the second part of this discussion, behavioral branding, it’s about how your customers see you on the inside: how you connect with the customer; customer service; a desire to understand their problems; and, personnel management.

As the economy struggles to get back on its feet, most business owners are looking for ways to cut some costs. Payroll is the biggest

expense for any company so reducing employee hours or, in the extreme, letting people go, may seem an obvious if painful decision. Another method for reducing costs has been reducing marketing expenses. The former can be an emotional juggernaut, while the latter can negatively affect your market share. If you reduce your visibility with the target audience, especially if your competitors continue, or increase, their exposure to a shared marketplace, you will run the risk of coming in last place. Lose market share to your competitors and survival is questionable at best.

More on advertising later in this story.

For new entrepreneurs with a new “earth-shaking” service or product, the energy and passion that created that big idea may also create an illusion, “They will beat a path to our door!” Well, you'll need to pave and light that path if want your audience to find you.

And the message must be delivered in an informative and very compelling manner. That “message” is going to be your “visual brand.”

Marketing Communications: your visual brand Generally speaking, the starting point of brand development would be your visual identity, the visual foundation of your brand once you have the product or service ready to “hit the streets,” as it were. The logo doesn’t always have to illustrate what you do. But it must set a visual baseline for credibility and be memorable. The IBM logo designed by Paul Rand in the 1950s, turned International Business Machines into a marketing paradigm for the century. From the logo to product brochures, packaging design, and television advertising, the quality of the message has convincingly told the world, “we have the best products and people to solve your technology problems.” Their message has always been compelling regardless of the new products being announced. To this day, IBM’s brand remains recognized world-wide as a symbol for product innovation, quality and customer service. And they’ve done it by maintaining a clear and compelling message regardless of media selection. The company has also been a model of production values. Along with great visual and writing concepts, the quality of execution of their concepts has never wavered.

Does a logo matter?

Yes, up to a point. Before deciding on an iconic logo for your company’s identity, the name of the company is also a key dynamic in this choice. If, like the IBM model, your company has a long name, creating a memorable icon could make your identity easier to remember. Or, if the name of the company is quite short and easy to remember, you can convert the name into a designed “logotype.” The familiar XEROX logo designed in the early 1960s by the world-famous New York-based design firm, Chermayeff & Geismar is a classic example of this. Apple Computer shortened its name to Apple, Inc. after the wildly successful iPod and iPhone brought in customers to their Apple Stores which then drove sales for their popular, easy-to-use Macintosh computers. The Apple

La Plata County Business Report 2009 15

symbol is now as recognizable as the IBM logo. Whatever direction is right for you, the development of your logo and identity is not child’s play. Just because it can be done on a computer instead of with pen and ink, “Don’t try this at home.”

Top designers have a gift for what I call, “intellectual osmosis.”

That is to say, rather than relying solely on artistic talent, they also have a craving, either academically or through life experiences, for the study of economics, sociology, psychology, anthropology and history, and then merge all of it into the creative process in order to arrive at a real solution to your real marketing problem.

All too often, however, a graphic designer with little practical experience will blithely create a logo that may look great on their computer monitor and stir their soul. But without the intellectual foundations, it has a real chance of failing as a marketing tool. Also, logos designed with lots of color and complex, fragile linework may apply to the web because you can use as many colors as you want in that RGB (red, green and blue) world. But they can cause expensive problems when putting ink on paper.

As with IBM and Apple, it’s also about how you apply that new logo to everything that will have your name on it, including business cards, stationery system, working papers (invoices, purchase orders, change orders, fax sheets), packaging, vehicle and building signage, and advertising. And it must be understood that, the success of those marketing communications efforts was based on design with a strong foundation of marketing principles, as well as understanding the psychology of your intended customer base, and your competitors.

There is no question that your budget will play a role in selecting a graphic designer or firm to develop your graphic identity.

Owing to the pressures of the economy, there are lots of talented and highly experienced, freelance designers “out there” willing to negotiate pricing to get your business. But be willing to pay a fair price for top quality work. Resentment on either side of the deal will prove unproductive and wasteful of time and money.

Here is another tip: do some research on what makes a successful identity and brand by going to the larger bookstores where you will find design trade magazines such as Communication Arts, Print or Graphis, as well as advertising and design annuals exhibiting the best-of-the-best. It will open your eyes to how thoughtful marketing communications design can work for you.

When and where to advertise ow that you have your company identity wrapped up, you'll need to “light the path to your door” so potential customers will feel the desire to contact you. Though websites are undeniably important for nearly any business, print advertising remains an important marketing communications tool. Yes, advertising is a commitment of resources, to be sure. But reducing or eliminating your exposure to the target audience will likely send them to your competitors. Remember: a well-focused, concept-driven ad campaign can “separate your company from the herd” to increase your market share.

N 16 La Plata County Business Report 2009

Have you noticed the continuous use of the word, “campaign?” Running one ad one time is simply here-today-and-gone-tomorrow. Out of sight, out of mind. An effective advertising plan requires a series of wellcoordinated ads that speak with one voice, much like a series of important ideas strung together into a cohesive and memorable story.

Since the tech meltdown of 2001, the web has rapidly regained its strength as a popular source of information and transactional communications. Since there aren’t any television stations headquartered in La Plata County, print advertising remains a very cost-efficient media choice. Which print media will depend on the industry you’re in, your target audience, and, of course, your budget.

Successful advertising in all of its iterations, such as print, web, radio and television, is driven by The Big Idea, media selection and frequency. From there, it’s in the presentation. The great concepts involve great writing and visual ideas executed in harmony.

So, should you go to print advertising or work from the web? This will be dictated by a number of factors including your budget and the current state of your marketplace but more than likely, your target audience. Are the web-centric or more comfortable with more traditional media such as print.?

Behavioral Branding: When it comes to interacting with new or existing customers, you must be perceived as “interested ” and not trying to be “interesting.”

Along with a great visual impression, there is the time-honored concept of customer service. We all know what it feels like to feel like someone’s commission. The salesperson is trying to appear very interesting (“Dig me!”) without appearing to be interested in you, your problem or your needs for a solution to it. Hence, to create the perception that you are focused on customer service, you must be “interested,” and not “interesting.”

Without that, a great logo and advertising campaign will count for precious little. In fact, lousy customer service will sink a company faster than marginal marketing communications. As Tom Peters, the business consultant and author of “In Search of Excellence” and “Thriving on Chaos” wrote on the subject of management, “Never over-promise or under-deliver.” (It should be noted that these books were written when some once-high-flying companies seemed bulletproof. Today, some of those companies are in serious trouble because they rested on their laurels rather than maintaining the pursuit of product innovation, quality and customer service. As the economic paradigms

If you don’t brand your company, your competition will be only too happy to do it for you.

La Plata County Business Report 2009 17

shifted in uncertain times, they lost significant market share.)

Regardless of whether you are selling widgets or financial services, it’s all about “service.” Top sales representatives will tell you, you are not really selling goods or services. You are selling “you.”

If you can sell yourself, you can sell just about anything.

Perception is reality et’s say you own a small-to-midsize business.

Maybe you’re in retail sales with a storefront, or you’re a consultant with an office. Do you make it easy to do business with your company? What does your store or office say about you? Are your merchandise displays in order with compelling signage to lure the customer to the cash register? Does your office look like a chaotic warehouse or an organized and efficient work environment? Is everyone dressed for business? When a customer walks in, is there someone to welcome him? If a customer feels ignored upon entering your store or office, it won’t take long for him to seek out one of your competitors. When shipping locally or beyond, are your deliveries made on time? Did the invoice reflect the original quote or were there hidden surprises? Did the products or services live up to expectations? These may sound like operations-oriented questions, but they are also going to affect your brand identity.

L

18 La Plata County Business Report 2009

The intangibles of behavioral branding randing even goes as far as employee and management behavior. At one time or another, we have all been in a store or office where, in plain sight and within earshot, a couple of employees are nattering on about a customer, fellow employee, or the boss. This will short-circuit your brand very quickly with the customer. We have also seen a business owner or manager disciplining an employee in front of fellow employees or a customer. This is another blade between the ribs of your brand. It tells your customer, as well as the other employees, that you are willing to ridicule and humiliate someone, anyone, in front of their peers, just to make a point or to vent some anger. Assume they will do that to you, as well. This is another example of tearing down your brand brick by brick. Actually, you can knock down the entire wall in one fell swoop.

B

Communications as behavioral branding There is a currently perceived lost art of communicating person-to-person, either in person, on the phone, or by email. Blame has been splashed around with some focus on the anti-social sterility of the internet. Others blame “the video gaming generation.”

One of the characters in Carrie Fisher’s classic tome, “Postcards From the Edge,” declared, “I have no time for instant gratification.” Perhaps that belief has infiltrated society as a whole. Maybe not. Yet, that statement does seem a bit prophetic.

The fact remains, there is more to communications than

installing a phone system and carrying a BlackBerry with you.

When an existing or potential new customer calls, or emails, be responsive. Let that customer know you care about them and their needs. If the phone rings, pick it up by the third ring. The patience of your customer can wear thin when they have to wait and wait for someone to pick up the phone. (There’s that, “no time for instant gratification” problem.) If you have “call waiting” on your landline or cell phone, avoid the temptation to cut off your current conversation to take another unless it’s really an emergency. If the caller feels like the proverbial “chopped liver” because you put them on hold to take another call, you probably lost that customer for life.

Then, believe it or not, the ubiquitous, automated “receptionist” that a potential new customer hears before talking with you, still frustrates most people. In larger companies or governmental offices with such a system, a common complaint has been the digital, circular “death march” of selections, not to mention the musicon-a-loop. “Press 1 for a map to the restrooms; press 2 in the event we may care about you,” and so on. Ask nearly anyone you know about their reaction when their first-time call to a company resulted in a live person picking up their call. Though we are becoming more and more accustomed to the world of digital automation, it’s a pleasant surprise to most people, and another element in the drive for repeat business. Despite rumors to the contrary, courtesy is not out of fashion and it will go a long way to fortify your brand.

Remember: your phone will take a message from the other caller. Be courteous and the dividends in public relations value will be enormous.

You are your brand. If you appear inattentive or discourteous, word of mouth will drive a stake into the heart of your brand and your company. If they have to leave a message, check your messages frequently so you don't keep customers waiting. The appearance of not being responsive is a big brand killer.

Branding does work! ecently, while researching a story for the upcoming fall edition of Durango Living, I talked to Doe Youtz, owner of Durango-based Little Paradise Landscaping, about her business model. Since her company seems perpetually busy thoughout the year, I asked how she manages to stay so busy, especially with prestigious projects. “It’s the little things, such as, listening to the client and promptly returning phone calls. It seems simple but, you’d be surprised how many business people forget who’s paying their invoices.” Customer service wins again.

Remember, creating your company’s brand may take time, but destroying your brand can happen overnight.

Branding is not an option. It will happen with or without your efforts. It is the reality of doing business. Follow these simple rules on branding and you’ll find yourself weathering nearly any economic rollercoaster better than your competition. It is not about how YOU perceive your brand. It’s all about how your TARGET AUDIENCE perceives your brand.

R

La Plata County Business Report 2009 19

ECONOMICREPORT La Plata County is primarily a service-based economy.

With home building the exception to the rule, there is little manufacturing. Across the nation, these are hard times, arguably the worst since the Great Depression. Effects vary across America and the world, as well as La Plata County. While the causes for this downturn are being reported, discussed and argued amongst a broad spectrum of economists, business leaders, journalists, entrepreneurs, politicians and talk show gasbags, this is no time for wait-and-see. The clock is ticking.

NOW WHAT? 20 La Plata County Business Report 2009

The news on a national level continues to be mostly bad depending on where you live or whose ox is being gored. Since the Dow Jones Industrial Average hit a low of 6,776.44 back on March 6, 2009, it has returned to the mid-8,000 range fluctuating up and down from there. What has been the cause?

Wall Street investors are looking for any signs that better times are just around the corner. Plus, some Blue Chip stocks are great bargains right now.

Still, unemployment claims continue to set off alarms for most economists. For instance, the monthly figures for new unemployment claims are somewhat lower than the past two months. But, in recent interviews with, and essays from, Princeton economics professor and Nobel winner, Paul Krugman, the lower numbers for unemployment claims actually mean that the economy is still getting worse, but doing so at a slightly slower pace.

To get a sense of how our local businesses and civic leaders are interpreting the fluctuations of the economy, we conducted several interviews in an effort to not only check the regional pulse, but also listen to the forecasts and strategies needed in the recovery process. Not surprisingly, businesses tied to real estate, new home construction and auto sales were taking the brunt of it while most retailers we spoke with throughout La Plata County indicated they were not feeling as much of a hit as originally expected. In most instances, retailers were not revealing any “secrets of the reef� until the tourist season comes to a close. Meanwhile, though daily sales figures are sporadic at best, end-of-month tallies are telling a better tale of the sales tape, contradicting news that collected sales taxes are running at lower levels compared to last year, we may very well have to wait till the season comes to a close before assessing profit/loss analyses. Here then, is a review of business trends, strategies for survival, and forecasts to help you and your business navigate through this recession.

La Plata County Business Report 2009 21

A caveat on what we “learned” while researching for this article: despite some gloomy news, our sampling of a variety of businesses in La Plata County frequently resulted in rather upbeat reports, or at least less fearful than we presumed would be the case.

Along with the shop-local campaign’s effectiveness with locals, reports of more walk-in customer traffic for local retailers seems to confirm modest increases in air passenger statistics from the Durango-La Plata County Airport. The numbers at the end of the summer tourist season will tell us how visitors and locals were spending their discretionary income on goods, travel and lodging.

In the course of researching for this article, we cannot presume to know what is truth, denial, or simply a need to keep the cards close to the chest. There are businesses who have dodged the recession bullet while others took a direct hit broadsides. Nevertheless, despite the collective pain endured by so many business owners and their employees in real estate, construction and auto sales, La Plata County has not been hit as hard as other regions in the state or the nation.

Nevertheless, personal perspective has brought back an old mantra which hs been playing out across the country and getting a lot of play around the internet: “If you lose your job, it’s a recession. If I lose my job, it’s a depression.”

Durango

D

urango’s tourists are back in town and, if converations with local retailers are any indication, sales are either up or, at least, holding their own. The words of Deb and Mike Gibson, owners of Appaloosa Trading Company, may accurately describe just how local retailers are faring: “Staying even is the new up.”

By contrast, construction and sales of homes has fallen dramatically as shrinking investment and retirement portfolios have forced many families to reconsider purchasing or building a second home, or at least scaling back on the project. This has also

22 La Plata County Business Report 2009

affected the construction-related trades, sales of construction materials, and the sales of home furnishings and accessories for those second homes.

On the plus side, remodeling and landscaping for existing homes has meant an uptick in residential refinancing at local banks while providing some needed relief for those contractors who’ve felt the sharp downturn. The recession also has homeowners who might have traded up for a larger home, deciding to stay put and invest in their current abode. Will they want to sell their newly remodeled homes or decide that the new kitchen and newly landscaped property truly equates to “home sweet home.”

Speaking with Durango City Planner, Greg Koch, new regulations responding to quality-of-life relative to the pace of development, are under consideration city councilors. And with the price

of commercial and residential real estate sitting at “bargain” prices for those who have cash, realtors see this as a great time of opportunity for those who can invest in property.

Koch also noted that as of this writing, a revised land use and development code is being generated resulting in rules that are “simpler and easier to understand while being more predictable, more efficient and fundamentally “friendly.” He also noted that in recent studies looking at public attitudes on development, 30 percent were pro-development, 30 percent were anti-development while the other 40 percent said they were for development but with limitiations.

Here then, is an overview of how some of our entrepreneurs are dealing with the current economy and what, if any, plans they have to come through it all the better for it. We couldn’t get to everyone in every business sector but, those that were interviewed did give us “fairly reliable” feedback.

The Real Estate Market: Coldwell Banker Heritage House Realtors n a March 23 interview with Gina Picolli, co-owner of Durango-based Coldwell Banker Heritage House Realtors, and recently appointed to the Colorado State Board of Realtors, we got her unvarnished opinion of where the real estate industry in Durango is, and what the near future holds.

Unlike La Plata County, the large-market players in development and lending could be “here today and gone tomorrow,” leaving their customers, feeling more like victims, to fret about keeping their homes, as well as their jobs. Was predatory lending a problem in our region?

According to Piccoli, lenders in this smaller market may be your neighbors, their kids may go to the same schools, or belong to the same sports teams as your kids. Safe to say, this is not a place to make enemies as a predatory lender.

When were the first signs that real estate sales were slowing down and just how dramatic was it?

“We peaked in 2006 with 2007 showing the first declines in closings. Right now, with the slowdown, we have also seen about a 10% loss in agents. When the market is hot, there are more agents and brokers wanting to be part of that success. When the market cools down, some agents drop out while we keep the better producers for the long haul.”

To compare the Durango real estate market with the rest of the country, there are several dynamics putting more downward pressure on other regions while ours is feeling less of that pressure.

Why is that? Piccoli noted, “With a population of about 50,000 people, we are not dealing with the sales and listings pressure of markets with millions of inhabitants, not to mention residential developments creating thousands of homes per project. We also have a more balanced economy than, say, California, Nevada and Florida.” Balance may be relative since La Plata County is not a manufacturing center.

Piccoli’s forecast for 2009: little chance of recovery before 2010. At best, 2009 will either hold steady or decline another 20% by the end of the year.

I

32043253

La Plata County Business Report 2009 23

Commercial Development: Prudential Triple S rudential’s Scott Kurlander and Larry Gardner shared similar concerns about too much product on the market with too few buyers. Indeed, 200506 were good years for commercial development in the Durango area. Vacancies for commercial space is filling more quickly in downtown Durango paying off the old axiom about the three most important rules of real estate: location, location and location. The further out from downtown Durango, the slower it gets.

In the meantime, Kurlander and Gardner feel that commercial developers are being hampered by Durango’s planning department. Is it an issue of just how much traffic can be absorbed, and is there going to be a demand for more retail, light manufacturing or lodging? One could argue that increased traffic reflects a greater need for those new businesses. If the traffic flow remains stagnant, does that reflect a general disinterest by the public for more shops and other commercial enterprises? Perhaps aforementioned, newand-improved land use and development code mentioned by Greg Koch will relieve some of the worries expressed by Kurlander and Gardner.

In the “making lemonade from lemons” department, this is also a time of opportunity for commercial developers seeking to build for the warehouse, manufacturing, retail and lodging industries. Just add money.

However, according to Art Chase, CEO of The Bank of the San Juans, the near-zero demand for commercial loans would suggest the recession has yet to bottom out. In fact, Chase suggests it will be two or more years before he sees an increase in loans for new construction, residential or commercial. Refinancing of existing residential loans is the more frequent loan activity for now.

As for the planning department’s role in opening the opportunities for commercial development, Koch reports that it is the economy that has held up commercial development, not his department. And that coincides with Chase’s comments on loan activity. And according to Koch, whatever clamour is erupting on commercial development it’s coming from the real estate brokers, not the developers. Ultimately, Koch contends, quality of life for Durango’s citizens is the top priority for the city’s planning department and the governing bodies.

Koch did note that, while compromise is important in resolving the more difficult issues of land development, his department will not compromise that “quality of life” Durango’s citizens are resolute to defend.

P

The Homebuilding Industry: Building Specialties Store Owner, Steve Osborne Real estate and land sales continue their role as an economic barometer affecting tangential businesses. The list includes homebuilders, building material suppliers, architects, landscape designers, and a host of contractors in surveying, framing, roofing, stonemasonry, excavation, forest clearing and construction equipment sales and rentals. The homebuilding industry is reframing its busi24 La Plata County Business Report 2009

ness paradigm for the long run. And the operative words are, “greener and smaller.” In the category of supplying building materials, we spoke with Steve Osborne, owner of the Building Specialties Store in Durango.

Osborne successfully weathered the recession of the late 1980s learning a lot from the experience. And while he has had to make some painful adjustments to his business in this recession, he is a redoubtable and nimble business optimist with a paradigm that allows him stay ahead of the curve; to not only make it through the recession, but to be stronger for it.

With their premium product lines and customer service, Osborne has created a loyal following which has helped to minimize the recession’s effects on his business. Also, Osborne had to make a few painful adjustments owing to the protracted slowdown. But he’s also built a rather egalitarian operation resulting in some shared sacrifice throughout all levels of the company.

So how has the downturn affected Building Specialties?

“For the calendar year ending 2008,” Osborne said, “we experienced a Steve Osborne, owner of the drop from 2007. I was Building Specialties Store in projecting an additional Durango reduction in business Photo: Andy’s Photography by the end of 2009.

However, now I think we may have a better year than expected.”

Where does he get the positive energy for his forecast?

“As a major participant at the 2009 Home & Ranch Show, I noticed some very interesting indicators,” he said. “There was positive feedback from other exhibitors. Plus, despite lower attendance figures at this year’s show, (apparently owing to particularly harsh weather conditions that weekend as well as the state of the economy), I saw more actual interest shown by those who braved the storms to see what was on display. This was a good sign.”

A

long with the slump in real estate sales, the business of building custom homes has been changing rapidly with the faltering economy has forced home builders to feeling the pinch, too.

To get a sense of what is happening in this business sector, we went to a couple of custom home builders: Mark Galbraith, owner of Galbraith Builders, and Troy Dyer, vice president of DyerBilt Construction. Their comments on advancing the cause for green build technology and innovations have been a recurring theme in conversations with other custom builders. In past conversations with custom builders Greg

La Plata County Business Report 2009 25

Mantell-Hecathorne, Alix Kogan and Russ Turpin, there was a common theme for sustained success and growhth in the future.

Everyone is going green.

Mark Galbraith, Owner, Galbraith Builders As the son of a well-known architect in Pasadena, California, Mark Galbraith was raised on architecture, art and design from an early age.

Arriving in Durango in 1990, Galbraith quickly became one of the town’s first custom builders of large luxury homes, influencing other custom builders who set up shop as the real estate boom began to ramp up. His home designs are uniquely contemporary though not radically so.

Over the past few years, like many custom home builders, Galbraith has seen some projects cancelled or put on hold as clients’ investment and retirement portfolios gave them pause.

However, he’s taken matters into his own hands by studying the latest in green technologies and innovations, thus achieving EnergyStar certification and LEED (The Leadership in Energy and Environmental Design Green Building Rating System™) certification at the Platinum level. At this point, there seems to be a pronounced turnaround in his business.

One project that had been on-hold is not only back on track, it will be a flagship home for maximizing the use of green technology, including a patio roof made of a new “bi-facial” photovoltaic solar panel. The PV film is so thin that, while capturing the sun’s energy with the topside cells, those same solar rays pass

26 La Plata County Business Report 2009

through to reflect off the light-colored deck flooring. That reflected sunlight is then captured and used by the PV film on the underside.

So what is Galbraith’s business plan for this recession and beyond? His basic business paradigm for success has remained resolute from Day One: design excellence with faultless execution, and a passion for customer service. With Galbraith’s everexpanding expertise in Green Build technology, and dedication to excellence, he believes he’s firmly in control of his company’s destiny.

Troy Dyer, VP, DyerBuilt Construction Troy Dyer, the vice president and son of company founder Terry Dyer, and Frank Enea, the project manager and head of estimating, echoed Galbraith’s strategy and outlook. “We’re seeing trends heading toward smaller homes built with the same attention to detail and green technology.” said Dyer. “This has become a “second” market for us. Smaller and greener but with the upgrades seen in the larger luxury homes.”

“We have also been attending all of the green technology trade shows. While there, we spend less time “shopping” and more time in the seminars and other classroom opportunities to learn as much as possible. It’s a non-stop education process. This is the future and we’re dedicated to keeping ahead of the curve.”

“How do you convince clients who may not be initiated into the green build ethic? Do they resist the cost of it?” I asked.

“We advise those clients that, while including green technol-

ogy may add to the cost of building or remodeling a home, the industry tea leaves tell us that a home built without green technology will be a tough sell in the real estate market. Future homebuyers will demand and/or expect green technology when they are hunting for a new or existing home. When the homeowner is still a bit iffy about it, we suggest that they at least “rough it in” so that, when they do decide to jump into green technology, their home will be ready for that retrofit situation. Plans to adjust their marketing strategy are in the works.

“Our web site will be going through a complete makeover this summer to reflect the new dynamics of DyerBilt. We’ll include a blog link on that site so that we can keep our audience informed on a daily basis.

“For instance, compared to a year or so ago, referrals and new contacts coming from the internet and our web site have seen a sizable increase to about 85%, and it seems to be a trend in most sectors of the custom building and real estate community. It seems most everyone is taking the electronic route to our door. That says a lot about how we communicate our message and how we position our company for the future.”

Banking and Credit Bank of the San Juans ack on April 22 of this year, The Durango Herald’s Patrick Armijo met with some of our local bankers on how they are dealing with this difficult economy. There were concerns about Wall Street’s reputation as an unregulated casino at the hands of several investment “banks,” some of which have collapsed and been absorbed by some of the nation’s largest banks, which affected local perceptions of banks.

In fact, the Wall Street debacle is putting banks across the country, including our local institutions, in a marketing bind as they work to separate themselves from the investment banks, which are not really banks nor are they part of the well-regulated banking system.

It has been nearly three months since that report, and in this economy, some things have changed while others have not.

On July 2, we went back to Art Chase, CEO of Bank of the Juans to get an update on the current economy and local banking. For Durango, Chase sees the current economic climate as the worst severe downturn since the mid-to-late 1980s.

Is there any commercial loan activity for current business expansion or new commercial development? Chase replied, “No and appropriately so. Uncertainty in the economy does not breed the confidence to expand or develop new businesses, especially on the larger scale.”

“From the viewpoint of a local bank,” Chase noted, “community banks operate under very tight regulations.” Banks such as his were not involved in the high-risk activity that have called up so much negative attention to the larger banks. Those such as Bank of America, Citigroup, and JPMorganChase had created their own investment arms that played fast and loose in those high-risk markets. Whereas, a community-run bank loans

B

money based upon local deposits.

With real estate loan rates remaining the lowest in recent memory, Chase sees a comeback for “jumbo” loans ($417k+) as those interest rates are taking a slow return back from the highs of 9% back to about 5.875%. That will help to sell the higherend inventory. Thus, homes in the $300-450k range have been the dominant selling range while sales for more expensive homes remained stagnant.

Is job security giving homeowners pause about buying up?

“There is a psychological aspect of home sales. For those who feel their jobs are pretty safe, there is a tendency to make those loans for either upgrading current homes or buying up. With the shortage of buyers. it’s hard to buy up if your home won’t sell.”

When asked for an analysis and prediction of when the recession would come to an end, Chase said, “I’m not sure, really. No one really knows. I think we’re in the middle of the storm for now. But without the extreme boom and bust cycles seen in larger markets, our downturn is not as hard-felt. Also, our unemployment rate is around 5.7% so, compared with the national average (that continues to rise past 9.5%), our local retailers and other small businesses seem to holding their own.”

Back in April, Chase said his bank’s loans were up 20 percent compared with that point in 2008. Refinancing of mortgages is the major driver of loans currently, and Chase said fixed-rate, 30-year mortgages below 5 percent are as low as he can remember.

Auto Sales Note: We’ve heard about the subprime lending in home sales where buyers were urged to extend themselves further to get into more expensive homes they may not otherwise afford. The same concept sub-prime system was also used by some auto dealers to push buyers into more expensive cars and SUVs where profit margins are much higher than smaller less expensive vehicles.

During the real estate boom, too many buyers frequently leveraged their perceived home equity to buy the luxury dream mahine they would not otherwise have purchased.

M

onty Roder, owner of Economy Nissan, is more than a survivor. Maybe his upbringing in New York City prepared him as such. New Yorkers are, generally speaking, not easily intimidated. They face the situation and find solutions, rather than run for shelter. And if you are going to be an entrepreneur, Roder believes you can’t stop innovating if you want to make it through the tough times. Before 1973, Roder was planning on an altogether different career path. It’s been a long and convoluted journey to Durango.

When asked about the upheaval in the auto industry with the bankruptcy filings of Chrysler and General Motors, franchises being lost and the possibility of being one of the few car dealers left standing in the area, Roder was philosophical, pragmatic and a bit sympathetic about the threats to his competitors.

La Plata County Business Report 2009 27

ness where you are accountable for sales every hour of every day, extraordinary risks must be compensated with great customer service. In an industry where brand loyalty is magnified, getting someone to switch brands is a big deal.

Keeping their loyalty will nearly always result in repeat business.”

As with most businesses, more money is made from repeat business and referrals than from creating new business from scratch.

And in a business so tightly related to the credit industry, you better have a great reputation for customer service.

Nissan is only one of several brands of cars Roder has represented in his career. So he decided long ago that the biggest brand to protect is that of himself and his team. Roder continued, “Build customer relationships or you’re likely to be standing on thin ice during a recession.”

However, over the past several years, car financing has taken on new dynamics as buyers can easily end up upside down after a few years with their car loan.

“There was a time,” Roder said, “when you financed a car for 36 months. Then it began to expand to 48, 60 and now even 72 months.” Some dealers even offer 84 months but that means you’ll be upside-down on your car’s equity long before the final payMonty Roder, owner of Economy Nissan and life-long ment.

NY Yankees fan. Photo: David Ohman With the current credit crisis, new car financing is getting more difficult. Fortunately for “It’s not that Jim (Morehart), Pat (Murphy) and I spend dealers including Roder, the used car market has become a new happy hours together after work, but I’m pulling for them to cash-cow making it easier to keep doors open while new car sales make it, and New Country, too. When all of us are healthy, it’s remain in a slump. better for the entire industry and our community.” said Roder.

Though new car sales are down everywhere, Roder remains It’s his belief that any failures among the other major brand dealupbeat. “The sun keeps coming up every day, we treat our cusers could create a mistaken belief among consumers that all of the tomers with dignity and respect, and hope they walk in planning dealerships may be in a shambles. to buy.” He added, “The key to surviving this recession and the So what is Roder doing to keep the doors open? Customer credit crisis, is to keep the attitude of always doing the right thing service for one. “A large part of the brand image for Economy for the customer.”

Nissan,” Roder noted, “is that customer service is just as important as the brand on the showroom floor. When you are in a busi-

28 La Plata County Business Report 2009

New Country Auto Center General manager Geno Trujillo may be sitting in the cat bird seat when the recession wanes and buyers for new cars begin their eventual migration into dealer showrooms. Why? With Italy’s Fiat buying Chrysler Corporation, and GM quickly gliding through its recent bankruptcy filing in an attemp to reinvent itself, Detroit’s Big Three is, for all practical purposes, down to The Big One: Ford.

Currently, new-car buyers remain skittish over cash flow and job security so the trend is toward used cars for now. In fact, as with Economy Nissan, used car sales have been plumping up the balance sheet and New Country is no exception with into positive gains for the last three successive months.

Then, there are all of the rave reviews from automotive journalists and the various customer satisfaction surveys about Ford’s newest lineup, it appears Ford has been anticipating the changes in customer desires for a few years now and that should translate into a sales resurgence for New Country Auto Center.

Trujillo also expects that, with their emphasis on customer service, especially in used car sales, they will build new customer loyalty. That, in turn, should translate into new car sales for New Country Auto Center when customer come back to to trade in that used car for a new one.

Retail Reflections ales for the retail business in our region are driven by local loyalties and tourism. However, while sales are down for some retailers, the numbers are up for others. In fact, the impact here is not as deep as in other parts of the country in large measure owing to fiercely loyal shoppers who support local businesses and local pride. In Small Town U.S.A., shoppers and shop owners, more often than not, tend to know each other outside of the transaction arena. Thus, one hand washes the other.

S

Geno Trujillo is the general manager of New Country Auto Center. Photo: David Ohman

In Downtown Durango, for instance, merchants are known for referrals to each other’s businesses. It’s part of the “Shop Local” campaign as well as a natural community spirit. Local pride and loyalty is just as prevalent in the La Plata County towns of Bayfield and Ignacio.

Appaloosa Trading Company: The Appaloosa Trading Company is known for leather goods and clothing with a decided tilt to the Old West. According to owners Michael and Deb Gibson, this downtown location is profoundly popular. Their Hermosa store also features home furnishings keeping with that Old West theme.

La Plata County Business Report 2009 29

The company has been in operation for 27 years with eight years at the Hermosa location.

For a time, wholesale distribution was a strong point in the company’s business model, including international sales in Japan and Europe. However, since wholesale inherently involves smaller margins, the Gibsons decided to reduce their wholesale market to regain the margins on their own retail sales. It has been a sound decision, one of many course corrections to maintain a successful track record.

One of the difficulties in meeting customer demand has been an unusually severe shortage of leather-lovin’ local artisans. The Gibsons are strong believers in hiring local talent.

However, this labor shortage put unfortunate pressure on their focus to make everything locally. So the Gibsons made a major decision: They found a number of leather artisans in Guadalajara, Mexico who share their passion. To maintain the Gibson’s concerns for quality of material, Mike has a source for American leather and ships it to the Mexican plant. Then, he makes occasional trips to oversee design and quality control. Though there is still a lot of merchandise made at the shops in Durango, the Mexican facility is an important element in maintaining the margins needed in a competitive market without sacrificing any quality.

One of the Gibsons’ secrets for success has been the selection of their retail locations. For instance, along with the Durango locations, they have two stores in Telluride, including the old bank building which also happens to be the site of Butch Cassidy’s very first bank robbery.

Yet, like most retail operations in the region, sales have experienced a bump in the road. Nevertheless, the Gibsons are not sitting idly by. They believe that change is part of life so they’ve never stop evolving. Mike may have summed it up best for this economy: “Staying even, is the new up.”

Backcountry Experience Becky and Ben Rockis, the sister and brother owners who bought the company about three years ago, have yet to have a tough year of it. In 2007, their first year of business, they exceeded expectations. Revenue was almost as good in 2008, and 2009 is trending toward a “fairly good” year overall. So what is propping up their 2009 in this recession?

Most retail development consultants would agree that their location is not conducive to customer traffic. There are no sidewalks for strolling shoppers, while auto traffic tends to speed by, unlike a location on, say, Main Avenue or East Second Avenue. Even the entrance and parking area face west rather than the fairly non-descript intersection of the 550 at 12th Street.

Nevertheless, their store does stand out with a distinctive look all its own, including an exterior sheathed in a rather subtle corrugated metal and a very large image of a black crow on the wall facing the 550. The quaint and quiet look of an oversized line shack belies the high-end product selections and the warm greetings that await at the front door. Though tourists

30 La Plata County Business Report 2009

Mike and Deb Gibson, owners of the Appaloosa Trading Company with their children Jessica and Shane. Photo: David Ohman

“Staying even is the new up.�

Michael and Deb Gibson, owners of Appaloosa Trading Company in Durango and Telluride La Plata County Business Report 2009 31

Becky and Ben Rockis, owners of Backcountry Experience, beneath their signature crow logo.

Photo: David Ohman

are certainly welcome, their marketing focus has always targeted the local buyers looking to enjoy the outdoors by the hour, day, week or longer.

But how could such a large store manage to sell enough goods without depending on tourism? One of the new dynamics in this year’s success has been the sale of large tents and lots of camping gear to families opting out of expensive, far-flung vacations, in favor of a week in the woods. And this is trending very nicely for Backcountry Experience. In fact, the whole trend toward local vacationing has created the moniker, “staycations.”

So how did they achieve all of this local loyalty? Since most of the outdoor specialty stores in the region carry much of the same merchandise, they believe they have the customer service that builds repeat business and referrals. According to Becky, their philosophy of, “fitting the solution to the customer rather than fitting the customer to the solution” has been paying off.

Rainbow Printing Dan McCarthy and his wife Absah Musa came to Durango six years ago after working in the emerging markets sector of Malaysia's financial hub for several years. A year later, they started their printing company as an investment with their chosen target audience in need of speed and economy.

While business has slowed down, they’re confident that they will be prepared for the recovery by offering a price point that many small businesses need, especially in this economy.

Along with a two-way working relationship with Basin Printing (across the street), part of their profit structure is based on working directly with the clients which streamlines the production controlled profit margins. His wife, Dan notes, is the financial management brain of the firm with a firm hand on cost efficiency.

Their end-of-2009 outlook may not be as rosy as they would like, but it’s not foreboding either. They are doing well enough in this recession to feel confident for a stronger 2010.

Thru the Lens For Thru the Lens photo studio, the old saying, “If it ain’t broke, don’t fix it,” seems to work just fine. While some photographers are adjusting to a reduced need for professional

32 La Plata County Business Report 2009

portraits, this portrait studio on Main Avenue in Durango has yet to slow down with their signature western themes, according to Ben Martinez, the store manager.

It’s a relatively affordable way to have a whimsical portrait of yourself or the family taken in full western attire. They also keep customers happy with long summer hours (8 a.m. - 11 p.m.) and rapid turnaround of photo prints, thanks to the digital revolution.

For Thru the Lens, their formula for success continues to thrive, even during a recession, which means there are no plans to change their business paradigm anytime soon.

Rocky Mountain Chocolate Factory One of Durango’s storied institutions has been The Rocky Mountain Chocolate Factory. I spoke with Howie Dickman, manager of the store in downtown Durango. The location provides easy access to the tourist trade, especially since the store is within steps of the train station. Dickman said that sales at his store are down about 10% from last year (a number that is confirmed in the company web site), a pretty modest hit compared to some retailers, especially on the national level. Still, in an economy that has severly battered some companies to the point of closing their doors, The Rocky Mountain Chocolate Factory seems to be weathering the storm for growth beyond the recession.

Retail in general ...

Stores such as Oohs & Aahs and There’s No Place Like Home, are reporting reasonable cash flow despite other trends. A rea-

sonable abundance of summer tourist foot traffic is helping to keep sales in healthy territory while “shop-locally” referrals are adding to the sense of hopefullness for a profitable season. A common refrain has been, “things could be worse.”

Coffee companies are doing rather well since specialy coffee beverages are considered affordable indulgences, even when the economy is slow.

Arts and Entertainment hen it comes to live entertainment, La Plata County is swarming with venues, from intimately sized bars and restaurants hosting very talented local bands playing to a loyal following, to The Henry Strater Theater with fun built into every show, and of course, the Community Concert Hall.

When mid-summer arrives, the Music in the Mountains festival is held under an expansive white tent at Durango Mountain Resort.

I was a volunteer at the festival last summer and I can tell you that nearly all of the seats were filled for each performance. This has been a very popular music festival indeed.

This year, owing to the recession and the concerns about discretionary vs. disposable income in the country overall, ticket sales at the Concert Hall are down about 20% (as of mid-June). Nearly the same is holding true for the music festival. However, as summer weather continues its advance, sales should improve for the festival.

W

La Plata County Business Report 2009 33

Going to the movies is playing a bigger role in entertainment during the recession and, historically, this has held true for nearly every economic downturn. Case in point: movie-going was a major source of relaxation during The Great Depression because it was just about the least expensive fun one could have.

And Hollywood was breaking out plenty of movies to be seen during the 1930s. The “talkies” were in full swing creating a rush to the box offices around the country.

This topic converges with home entertainment as technology creep invades every aspect of our lives. The state of the economy has not been kind to DVD rentals and big ticket purchases, especially for “mom & pop” stores relying on a loyal following.

Competition from the likes of Costco, Best Buy, Sam’s Club and Walmart has put a dent in sales at non-big-box stores. For instance, local mainstay, Louisa’s Movie House & Electronics, can be seen as a barometer for other independent retailers in this market segment in terms of slower DVD rentals and home entertainment sales.

To compete against the big-box operations, customers will often force smaller retailers into price negations “playing both ends against the middle,” to get the best deal while getting better customer service than they perceive from those retailers headquartered out of state.

NetFlix was the first to change the video rental business model affecting rentals and sales at the long-established stores such as Blockbuster. Now, NetFlix is being pressured because of

34 La Plata County Business Report 2009

the technology to download movies from internet sources, such as Apple’s iTunes, into a home computer connected to a large flat-panel TV. The idea of settling into a movie at home while lounging in PJ’s and dining on less expensive popcorn is not going away anytime soon. For families, especially those on a tighter budget, this is becoming the perfect option; no baby sitting expenses, no driving to a theater, parking problems or those occassionally annoying movie-goers sharing theater space.

Will “going to the movies” grind to a halt? Not likely.

Hollywood is creating a lot of films using digital special effects and computerized animation that are better suited for the big screen. This is not about wire-headed nerds taking over the movie industry. Producers are seeing a large, upward income swing with these movies. Why? Because many of these digitally produced films replicate what is taking place in the video game industry and that captures that huge 13-29 age range with disposable income ready to swarm the theaters.

Toh-Atin Gallery Owner Jackson Clark has managed to combine the best features of a retail establishment, art gallery and natural history museum. His gallery may seem like it’s off the beaten path at its side street location on West 9th Street in Downtown Durango.

But the gallery’s reputation for Native American art is widely regarded. In fact, Clark said they are already having a great year,

One of the many displays of Native American arts at Toh-Atin Gallery. Photo: David Ohman

much better than 2008.

One of the reasons for their success is, he also travels extensively to major shows to represent the collection while seeking the new and unusual. The results have expanding their reach and reputation while generating a considerable revenue stream throughout the year. Thus, Toh-Atin Gallery is not as vulnerable to season fluctuations.

The Open Shutter Gallery, devoted entirely to photography, is having a better year thanks to their move to Main Avenue from East Second Avenue last year.

Hotels, Guest Ranches and B&B’s The Double Tree Hotel he Double Tree Hotel at the corner of the 550 and College Drive, may not be an architectural historic landmark but it is a landmark by virtue of its location and ability to cater to large numbers of tourists. Originally built as a Red Lion Hotel, the Double Tree has a history of longevity and familiarity.

Summer is the "killing season" when it comes to revenue based on tourism. In fact, this is the income season for many businesses so the recession can have an effect on tourist travel habits.

Is the Double Tree an appropriate barometer for the hotel and lodging businesses vying for tourist dollars? Most likely. I met with Peter Marshall, the hotel’s manager for several years. Without divulging any “secrets of the reef,” he indicated that sales are down

T

from previous years, reflecting the state of the economy. He also confirmed the reports of other hotels and motels, that rooms are getting booked with much shorter notice than before. So while long-range planning becomes a rather dicey proposition for a manager or owner, things could be worse. In fact, when reviewing the balance sheets, the tourists are coming in droves, but their travel agendas have taken on some adjustments including more driving trips vs. air travel, shorter stays and tighter dining budgets, especially for traveling families.

Tour groups remain an important source of cash-flow for the Double Tree. In fact, they have taken to facilitating customer events by offering to create event websites and blogs so that the tour directors and participants can communicate with each other and with the hotel to coordinate the event. Once again, listening to the customers and creating ways to accommodate their changing needs is making the difference.

The Strater Hotel The historic Strater Hotel certainly has landmark status in Durango. Perhaps only the narrow gauge train has been in operation longer. Today, Durango native and owner, Rod Barker, has literally managed the hotel with its signature Diamond Belle restaurant at the corner, and the Henry Strater Theater next door, through good times and bad.

Over the past three years, Barker noted, 2008 was better than 2007 and 2009 is at a good pace so far. Since Durango is a very events-centric tourist destination, The Strater has been able to capLa Plata County Business Report 2009 35

italize on those events much to its benefit. Nevertheless, reservations were more predictable three years ago when they were about 30 days out. Today, reservations are coming in within days of the customer’s arrival. This indicates that travel planning is reflecting reduced discretionary income for traveling families and couples.

For the Diamond Belle, Barker noted, customers are trending toward lower-priced items such as the gourmet burgers. “It’s all about the fine art of living well,” says Barker. “If you can’t afford a great prime rib dinner, that’s ok. Enjoy a great burger, instead.”

Barker has always maintained his forward focus to prepare for any changes in the economy and/or consumer needs. His success is infused with the philosophy that change is good.

Ignacio

T

he Town of Ignacio, with less than 700 fulltime residents, is most often identified with the Southern Ute Tribe with its Sky Ute Casino, and the oil and gas extraction industry.

Though there are plans for growth, it’s more about growing the economy than the town's footprint. The main drag, Goddard Avenue, is sort of like a long, narrow shopping center. The casino at the north end acts as an “anchor” which, as any shopping center developer knows, is necessary to attract other businesses and the shoppers who will take advantage of a well-planned, attractive commercial district.

For Ignacio, the process of revitalization has already begun to take shape. Under the direction of Town Manager Jose Quintana, and the planning department lead by Patricia Senecal and Sara Wakefield, plans are afoot to capitalize on momentum from the new Sky Ute Casino’s tourism.

But while this is a very small town, it has a lot of heart and the confidence to achieve realistic goals of expanding its economy without putting the town at risk of a boom and bust cycle. To get a clear picture of business concerns, we met with a group of representatives from the local Chamber of Commerce and the planning department.

First, we met with Chamber member Ann Mooney, a teacher and co-owner with her husband Stephen of Moon’s Custom Cycles. With their reputation for keeping bikers happy, and some minor tuning, they are able to keep sales moving forward despite the current economy. Their customers come from afar to either purchase a custom motorcycle or to have their bikes made anew.

Next stop was Roots Natural Foods, a small store feeding a local demand for locally-grown healthy foods, such as meats, poultry and vegetables. In less than two months the owners, Amy Stuck and Jeff Ogden, are in the black with a loyal clientele.

Emily Meisner, owner of The Patio Restaurant, and president of the Chamber of Commerce, is excited about the town’s plans for renewal. Her restaurant has enjoyed feeding local customers, including a large contingent of oil and gas workers for many

36 La Plata County Business Report 2009

years. She and her husband have raised five children in Ignacio and are looking forward to helping the town take the necessary leaps forward to attract more tourists, as well as locals. And this seems to be the case up and down Goddard.

The Tierra Group, developers of Three Springs near Mercy Regional Medical Center, has confidence in Ignacio as a great place to raise families who will, in turn, enjoy a revitalized downtown. They’re building a 24-home development on the south edge of downtown Ignacio with two models completed and pads in place for more. “This will take some time but it will be worth the effort,” said Shane Seibel of the Tierra Group.

The Southern Ute Tribe continues to be the largest employer in Ignacio with expansion plans that will mean more jobs and a larger tax base to help fund overall town improvements. Andrea Taylor, Director of the Department for Tribal Information Services, noted that the various tribal operations will have positive and lasting effects on the region. As one of the nation’s wealthiest tribes, theirs is a large group of businesses with enviable standards for cost efficiency and profitability. Total tribal membership currently stands at 1,447 with a tribal council lead by seven representatives. The tribe’s land holdings contain 222,016 acres.

Taylor noted that the Southern Ute Tribe is positioned for continued growth and prosperity thus providing a solid foundation for Ignacio’s future.

Upper left: Ann Mooney in the showroom of Moon’s Custom Cycles, a shop she and her husband Steve own in downtown Ignacio. Their customer base draws from riders near and far.

Left: Amy Stuck and Jeff Ogden opened their store, Roots Natural Foods, mid-May 2009 in Ignacio. With local support for a home-grown store, their success seems well in hand.

Photos: David Ohman

La Plata County Business Report 2009 37

Bayfield

T

he Town of Bayfield sits in the middle of beautiful farm and ranch country about 18 miles east of Durango. The town is also a southern gateway to Vallecito Lake to the north. Straddling Highway 160East, Bayfield has two distinctly separate and commercial areas. On the northern edge of Highway 160East, you’ll find the newer commercial zone with shopping centers and gas stations along the frontage road. In the old town section, historic Mill Street remains a bustling hub with a mixture of function and charm.

The town is ramping up plans for long-term, sustainable growth, according to Town Planner Joe Crain, and Management Intern Jack McGroder, a young man with a broad scholastic and applied knowledge base about redevelopment and the inherent dynamics that affect every decision needed to make the planning process become reality.

Attracting new businesses to Bayfield while addressing the needs to improve the infrastructure are front burner issues for the town council and the Chamber of Commerce.

As McGroder noted, new visionary thinking is moving into the planning process with younger residents and business owners seeking to institute their brand of future-think.

One of the ways to check the economic pulse of a small town is to drop in at a local pawn shop. At Pine River Pawn, located on Highway 160East and owned by Dennis Larson, their business has seen an increase but they cite their new location with its greater visibility as a major reason for the uptick. They noted that while pawns are actually down from before, the quality of goods being sold or pawned has gone up. This may suggest the pain of a shrinking economy is hitting a more affluent clientele than before.

Vallecito Lake

V

allecito Lake and the surrounding area is a collection of stunning vistas, ranch land and verdant pastures with grazing horses and cattle, steep mountain peaks, and of course, the lake itself.

While local lodging and restaurants are having a good start to the summer, the guest ranch business has taken a huge hit.,the exception being Wilderness Trails Ranch just east of Vallecito Lake. Wits End Ranch, an elegant and sprawling ranch at the north end of the lake, is operating with the guest cabins only for the 2009 season. They are, however, taking reservations for the 2010 season. Till then, they are referring all other guests wishing a full ranch experience this season to Wilderness Trails Ranch just minutes east of the lake.

38 La Plata County Business Report 2009

Wilderness Trails Ranch, currently the only guest ranch in the area with a full ranch experience, is having a good summer thanks to a revised marketing strategy to increase summer bookings. Erika Roberts, who runs the family business with her parents, Jan and Gene Roberts, made important adjustments to their business paradigm.

The view from the front deck of the main lodge at Wilderness Trails Ranch. Photo: David Ohman

La Plata County Business Report 2009 39

Colorado Trails has also decided to take the summer off because of dramatically reduced bookings.

By contrast, Wilderness Trails Ranch is having a rollicking good summer thanks to a revised marketing strategy to increase summer booking. With Erika Roberts at the helm of the family business owned by her parents, Jan and Gene Roberts. As bookings for the summer lagged far behind schedule by late winter, the Roberts’s made an important adjustment to their business paradigm. Incorporating an aggressive networking program with tourism groups, rafting and other outdoor sports organizations, and chambers of commerce, they found a sizable market ready to make WTR a summer destination. The B&B reservations represented a new travel segment called “staycations,” referring to locals seeking a few days of fun without the expense of long-range travel.

According to Erika Roberts, “We have dramatically picked up our bookings. We’re seeing a lot more late reservations and folks interested in shorter stays for our new B&B packages. For our core summer season, we are around 85% occupancy, and the phone does not stop ringing!” As of midJune, they had to slow down on the number of B&B bookings to make room for guests seeking extended stays.

This was another case of a business owner with the vision to make the necessary adjustments when the economy demanded it. To their credit, WTR already had a well-established brand of their own. Along with dramatic scenery steps from the door of the main lodge, the staff is devoted to customer service, from the corral and riding trails to the dining room. As a result, the Roberts’s are able to develop new customers as repeat business opportunities.

On the west side of the lake, the marinas are thriving.

Their continued existence was in doubt when, during the spring, the Forest Service was unsure about renewing the operating permits for the marinas. However, the marina operators were given a reprieve resulting in a collective sigh of relief by all of the surrounding business owners. Among those who’ve capitalized on the marinas for years, there’s a string of motels, lodges and campsites punctuated by a general store and restaurant sitting side by side and owned by the same couple, Char’ and Jim Shank. The Shank House is a rustic, restored restaurant and bar and, according to Liz, the bartender, they’re having a great summer. She didn’t seem particularly surprised by this since their success seems to run year round thanks to the spirit of a very small but loyal customer base. To keep the community spirit alive and well, and the cash register ringing, bands perform 2-3 nights a week.

For a community of fewer than 200 full-time residents, Vallecito Lake is humming.

40 La Plata County Business Report 2009

At Vallecito Lake, the marinas are busy. Their continued existence was in doubt when, during the spring, the Forest Service was unsure about renewing the operating permits for the marina operators. A last-minute reprieve resulted in a collective sigh of relief by all of the local business owners.

Photo: David Ohman

La Plata County Business Report 2009 41

To say that the recession is constantly “moving the cheese” for local business owners, is an understatement. Still, there are entrepreneurs willing and able to make adjustments to their old business paradigms thus finding it easier to keep moving forward.

42 La Plata County Business Report 2009

Cut to the Chase t’s no surprise that the real estate sales and new home construction with its tangential trades, have taken a drubbing in the past two years.

Retirees and second-home buyers were a mainstay for new home construction until investments and other retirement plans were hit by the Wall Street meltdown. The prognosis for a rebound in that business sector is sometime in late 2010. Maybe.

Local banks have been seeing an up-tick in residential refinancing loans while loans for new residential construction is down to near-zero. Loans for commercial development are dead in the water.

Will Durango’s new car dealers for American brands survive as dealer networks are slashed? There are laws to protect dealers, up to a point, at least. But, plummeting new car sales are keeping local dealers on edge what with the tumult in the American auto industry. The fact is, there just isn’t much traction for most brands, save for Subaru, the only one to report a profit at the end of 2008 (just over 1.5 percent increase over 2007).

For local dealers selling American brands, there are storms to weather.

With plant closings and dealers being dropped, are the clouds breaking up anytime soon to lift sales? The Big Three of Detroit’s automakers are keeping our dealers guessing.

For instance, though heavily in debt, Ford is attempting to claw its way out of the slump with new lines of cars getting rave reviews from Edmonds.com, J.D. Power Associates, the Insurance Institue for Highway Safety (IIHS), and Consumer Reports, and nearly every automotive journalist in the business. In the meantime, GM’s recently successful run through its bankruptcy filing may allow it to emerge as a newer, leaner, meaner company. Will they produce the goods? It’s hard to gauge right now. For instance, the proposed electric Chevy Volt is meeting consumer resistance with its mere 40 miles per charge. But then, the company has never been known for quickness and agility when it comes to bringing product to market, so we'll have to wait and see what's next from GM. Though Chrysler is now part of Italian automaker Fiat, manufacturing of the surviving brands will remain on American soil but with a much smaller dealer network. In the meantime, dealership owners such as Economy Nissan's Monty Roder are doing better than simply holding their own as high quality used vehicles become the current gold standard for cash flow.

City planners, some representing a new generation, are optimistically looking into the long-term needs of their respective communities with smart growth as the operative phrase encompassing environmental protections in the growth process.

Local small business owners are reporting that while sales are not where they were a year or two ago, "things could be worse." Effective campaigns promoting "staycations" and supporting local businesses have had a positive effect throughout the county. And according to statistics provided by the Durango/La Plata County Airport, a modest increase in air passenger traffic is reflected in the increase in tourist foot traffic amongst local stores. One reliable barometer for local tourism has been the sizable crowds aboard the Durango & Silverton Narrow Gauge Train each morning.

The numbers at the end of the summer tourist season will tell us how visitors and locals were spending their discretionary income on goods, travel and lodging.

Nevertheless, despite the collective pain endured by so many business owners and their employees, La Plata County has not been hit as hard as other regions in the state or the nation.

I

% Unbeatable market reach for your ad message.

Take advantage of the enormous audience The Durango Herald provides to power up your sales.

OK - don’t walk, run to your phone!

Call us at (970) 247-3504 and we’ll help you get your ad campaign started today.

Our great 30-day reach of 86% is available to any business that runs their advertising in The Durango Herald weekday edition, Sunday edition and DurangoHerald.com. CM&B local market survey, June 2009.

La Plata County Business Report 2009 43

HR:WORKSHOP

HOW TO TURN MANAGERS INTO LEADERS ... BEFORE THEY GO BAD

Story by Lynne Sholler

44 La Plata County Business Report 2009

Illustration: David Ohman

Most of us have worked for The Boss from Hell at one time or another. He or she creates chaos and stress in the department, even throughout an entire company. Career paths are ruined and long-standing business realtionships are lost.

In short order, they can kill the company brand that took years to develop.

Can these managers be saved?

Are they worth saving?

A

s an employment law attorney and human resources consultant, I regularly hear stories about bad bosses.

Some abuse their authority, make unreasonable demands, or threaten job security.

Others hog the credit, are missing-inaction, or treat certain employees with favoritism. Then there are the intimidators, screamers, ridiculers, and isolators.

Statistics back up these stories. A September 2007 on-line poll of 7,740 interviews conducted by Zogby International for the Workplace Bullying Institute found: • 37% of American workers have been bullied at work.

• Bullying affects nearly half (49%) of American workers when including witnesses.

• In 62% of the cases, when made aware of bullying, employers do nothing.

• 72% of bullies are bosses.

• 55% of those bullied are rank-and-file employees.

Similarly, in the aftermath of recent corporate scandals, a majority of jurors surveyed in employment cases believed that too many workers are treated unfairly. See, “How Juries and Judges Are Re-examining Directors’ Officers’ Duties in the Wake of Corporate Scandals,” Corporate Counsel Weekly (January 2004).

The costs of these bad bosses is extensive: turnover, absenteeism, legal claims, stress, stifled creativity, lost productivity, low morale, poor work, sabotage, loss of reputation, and difficulty in hiring. Is there hope we may mold malcontented managers into productive leaders? With proper attention and mentoring, in most cases the answer is yes.

Effective Transformation How can this be done? The same way any business problem is addressed: create a plan, implement it, and evaluate it. Here are the suggested steps:

Tune in Many owners, CEOs or boards choose a “hands-off” approach to operations, lacking knowledge that a problem exists.

Assuming "all is good" by looking only at the bottom line is shortsighted. Those who hold an investment in company success must focus on the full picture. Periodic participation and asking questions provides a simple start: “How are things going? Are there any problems I should be aware of? What weak links are there to accomplishing our goals this year?” When asked, the information typically comes forward. Yet, some messengers believe they will be shot, so provide a safe environment for them to speak. To learn the full picture, consider 360 degree evaluations: ask certain staff, clients, and service providers to rate a manager's performance. Each will provide a different perspective with useful insight.

Create and enforce policy Set performance and conduct expectations including the obvious: respectful relations with co-workers and clients is required. If a zero tolerance policy exists, abide by it without exception. Consider creating a corporate culture committed to constructive communication: an open door policy, fair grievance procedures, and conflict resolution practices should all be contemplated. Those practices will become habit in short order.

You might think this is too costly, burdensome, or pampering the staff. From my shoes, the cost of not doing it will be significantly higher. Most employees like their work and simply expect to be treated fairly. Enforcement of the policies, regardless of who offends, demonstrates fairness. Fairness breeds loyalty. Loyalty increases productivity. Increased productivity increases profits.

Act promptly and honestly Do not wait until the yearly evaluation. When you become aware of a problem manager, nip it in the bud. Have a simple, candid conversation modeling the desired behavior. Avoid generalities or a long winded rant. Skill and planning are required: write out honest but non-threatening language; prepare to diffuse defensiveness; and anticipate the response and your reply. Adept owners or managers balance directness, firmness, encouragement, and support.

Lousy managers can send your best people running to your competition.

If this is becoming a trend, you need to review the cause and effect of migrating talent.

Consider individuality There’s not one magic pill which corrects all behaviors. Think about the personality style of the menacing manager.

Is she motivated by recognition? If so, create a plan which, upon success, results in an award presented to her at a major meeting, or a newsletter article about her with accolades of adulation.

If motivated by technology, entice him

La Plata County Business Report 2009 45

with a new gadget or software. Another may be motivated by a day off with pay or a gift certificate for a massage. Give the individual what they need. Meyers-Briggs and other personality tests can be found on-line to help decipher individual styles. (www.personalitypathways.com)

seminars, and have them share the lessons learned with their coworkers.

Use carrots instead of sticks People naturally are more responsive to positive reinforcement, so reward desired behavior. Implement merit raises, bonuses, prizes, or perks based on the highest 360 evaluation score, productivity, employee retention, or other criteria important to your organization.

Train managers All managers need professional development regardless of personality style. Franklin-Covey's course, Seven Habits of Highly Successful People is an excellent choice. Numerous seminars exist on topics such as constructive feedback, coaching, role modeling, conflict resolution, team building, leadership, and cooperative communication strategies. If budget constraints prevent travel, hire a local consultant or trainer. Alternatively, search for resources via the Web, library or bookstore. Consider creating your own workshop: Does your attitude support team building? How well do you motivate others? What are the traits of the best and worst boss you've ever had? Which traits do you have? "Homework" such as book or article reading could be assigned to a meddlesome manager. To assure the message is received, follow up by asking, "What did you learn? How might we apply those lessons here to achieve better results?"

Once a plan to redirect behavior is developed, document it.

Establish benchmarks, an accountability plan, or a corrective action plan. State the consequences for failure to meet expectations. Visit the plan periodically and reward successes.

Implementing these steps may transform a bad boss into a productive leader. Ultimately however, the individual must want to change behavior and succeed. Some just "don't get it" or are incapable of correcting the problem. In that situation, inadequate performance may justify the last resort: termination. That may save costs in the long run too, but discuss it with legal counsel first.

Train staff Also train employees so they may empower themselves.

Consider classes on workplace personality styles, communication, stress management, dealing with difficult people, and conflict resolution. To save money, send employees to different

Lynne Sholler is a Durango employment law attorney and CEO of Employer’s Advantage, a human resources consulting firm.

She may be reached at 970.375.7756 or lmsholler@bresnan.net.

This article does not substitute for legal advice for any specific situation.

46 La Plata County Business Report 2009

Accountability

La Plata County Business Report 2009 47

48 La Plata County Business Report 2009