2 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
In This Issue:
Getting Started:
SUCCESS STORIES:
ADVICE & MORE: • HR: Finding success in difficult times/Page 19 • FINANCE: Don’t neglect longterm planning in tough times/ Page 20
• McIntire plant proves a good fit for IMT/Page 3
• Q&A: With Mason City financial guru David Underwood/ Page 22
• Sukup’s growth is all in the family/ Page 5
• HEALTH: ‘Diabetes will bankrupt us,’ one expert believes/Page 23
• Being No. 1 is serious business at Larson/Page 9
• COMMENTARY: Community attitude key in economic development/Page 26
IMT McIntire plant manager Les Zahn.
• CDI is rebounding — and then some/ Page 11
Brian Throne, Iowa operations manager of Lar son Manufactur ing.
• Back from the ashes: Riceville businesses rebuild and find business better than ever/ Page 12
Underwood
• MARKETING: Create a ‘love affair’ with customers/Page 27 • ADVICE: Entertainment and travel deductions are tricky issues/Page 28 • ADVICE: Do’s and don’ts of social networking/Page 29
INTERNSHIPS:
• ADVICE: News to use for entrepreneurs/Pages 31-34
• Programs are valuable to your business and your interns/ Page 17
ON THE COVER:
• Two business, one established, one new, that use internships/Page 18
Welder Lee Jarosh of Alta Vista works at the IMT plant in McIntire. The plant has proven to be a good fit for the firm. — Photo by Tim Ackarman
In Business: Vol. 8, No. 1, March 2010 Publisher: Howard Query 641-421-0500 howard.query@globegazette.com Editor: Joe Buttweiler 641-421-0542 joe.buttweiler@globegazette.com Managing Editor: Tom Thoma 641-421-0566 tom.thoma @globegazette.com Associate Editor: Jane Reynolds 641-421-0564 jane.reynolds@globegazette.com
Associate Editor: Bob Steenson 641-421-0530 bob.steenson@globegazette.com Advertising and Circulation: Greg Wilderman 641-421-0545 greg.wilderman@globegazette.com
••• In Business is a quarterly publication of the Globe Gazette. Reach us at Box 271, Mason City, IA 504020271 or by e-mail at news@globegazette.com.
Success stories offer lessons for us all nd now for a breath of fresh air ... some success stories. I think everyone in North Iowa’s business community can agree: It’s high time for things to be looking up. They already are for many businesses hit hard by the recession. For some, they actually thrived during the downturn, or at least were not terribly affected. So we decided to focus on some of them — located right here in North Iowa — and touch on some of the strategies and mantras they employed to stay successful in tough times. A couple of themes you’ll notice: They’ve looked for ways to operate efficiently, have kept in touch with customer needs, and have done right by their employees, creating environments where people like to work and make improvements. Not that it’s all easy the first time around. As new correspondent Dana Yost reports in his story on Larson Manufacturing, getting employees to buy into new ways of doing things can be very difficult. Larson, which makes doors and windows and employs about 450 people in North Iowa, instituted the 5S system in 2003, 2005 and 2008. Each of the first two times through with 5S (Sort, Set in order, Shine, Standardize and Sustain), there were improvements, but then slippage. But they didn’t give up, said Brian Throne, Iowa operations manager for Larson. “And now it has become our culture.” The company has also implemented Lean Manufacturing practices and employee incentives. While sales were down last year, profit was up. Sukup Manufacturing in Sheffield has continued to grow and will soon add a second production line for building stand-alone grain dryers. Sukup will be adding a 200-by-300 foot building this spring. Wet weather, demand for corn by ethanol companies and expectations for higher yields are driving growth in demand for its products.
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Also in this issue, we report on IMT’s opening of a plant in McIntire and on motor home painting company CDI rebounding in Forest City. Success is measured in many ways. For a pair of Riceville businesses, it was in rebuilding after a fire. County Line Locker and TrueValue Hardware have rebuilt and reopened, coming back from an Oct. 31, 2008 fire. The potential loss of the businesses Joe Buttweiler was a major concern in In Business the small town, but with Editor help from economic development and public entities, both have reopened. Also in this edition, we report on the value of internships — including ones at a local funeral home — and offer many suggestions for setting up internships. We have a Q&A with David Underwood, offering advice for businesses, and a health story on the importance of controlling diabetes. Human resources columnist Jim Cronin shares an “excellent” resource for tips on doing well in business during tough times, a book called “The 75 Greatest Management Decisions Ever Made ... And Some of the Worst: Business Leaders Talk about the Good and the Bad.” A couple of the stories Cronin shared from the book speak to decisions that created remarkable results — one by focusing on customer service, and the other by doing right by employees. Cronin, author of “No Fluff, No Puff, Just Management/Communication Principles that Work,” also touches on internships. As any good businessperson will tell you, it’s critical to keep in touch. That’s part of why we publish In Business — to provide valuable information about running a small business. We hope it’s helpful to you and that you find pieces worth sharing with other key people in your business. And that it helps drive success.
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 3
SUCCESS STORIES
McIntire plant proves a good fit for IMT sitting vacant. McNeilus officials considered selling the building, but its fate remained uncertain. As it turned out they didn’t have to look far to find a By TIM ACKARMAN new tenant. For In Business McNeilus is a wholly MCINTIRE owned subsidiary of t’s not often when Oshkosh Corp., which having a business also owns Iowa Mold and leave town turns out Tooling. Aspects of an to be a success story. Oshkosh military conConsolidation by tract were a good fit with McNeilus Truck and IMT’s manufacturing Manufacturing, however, process. created about 40 new The company added jobs in the city of McIn- employees at its Garner tire. facility but just didn’t When the company have space to absorb all closed its satellite facility of the extra work. in the tiny Mitchell The subject of the County community, vacant building came up most of the approxiat meetings attended by mately 25 employees officials of both compawere absorbed into its nies and it soon became Riceville location. apparent the McIntire Although no jobs were location would be ideal for IMT. lost, a large plant was
Closing of McNeilus Truck and Manufacturing ultimately worked out
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to McIntire to assist with training. “They asked me to stay on board and run the place,” he explained. “I came here in September and I never left.” Zahn inherited a modern facility already designed for industry. Cutbacks by other manufacturers meant the area also offered a strong labor pool. Job fairs held at McIntire and in surrounding communities were well-attended, Zahn said. “The first one we had right here on-site drew over 100 people,” he said. The plant was TIM ACKARMAN/For In Business equipped and staffed IMT McIntire plant manager Les Zahn displays a photo of the military's LHS (load handling quickly, according to Zahn. “We were up and system) vehicle, for which the facility is manufacturing components. running in quite a short “That’s the nice thing “They work well togeth- also provided the plant time.” about sister companies,” er.” manager. Les Zahn, who The facility opened in said Nicole Kyle, a marMcNeilus not only worked as a supervisor in late September and curketing analyst with IMT. provided the plant, it Riceville, initially went Continued on Page 4
4 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
NIACC looks to fill need for trained industrial workers By TIM ACKARMAN
as the economy picks up.” IMT had little diffiAn inadequate labor culty finding welders for pool could eventually its new facility in McIn- limit growth in the area, tire, according to plant according to Lightner. manager Les Zahn. “The “I think the future for majority of our people North Iowa related to are coming from other IMT is to train skilled manufacturing facilities welders,” he said. that have downsized.” Josh Byrnes is the But Todd Lightner, Industrial Division vice president of human chairman at North Iowa resources with Oshkosh Area Community ColCorp., predicts finding lege (NIACC). He overqualified workers may sees six programs: TIM ACKARMAN/For In Business become more difficult as electromechanical sysJosh Byrnes, Industrial Division chairman at North Iowa Area Community College, displays a scale-model wind turbine conditions improve. “It tems technology, tool could be a real challenge Continued on Page 8 built by students. Wind energy is a field with strong job growth, Byrnes said. For In Business
IMT/From Page 3 rently has 35 employees. “It’s been good for the community around here to get some of these people back to work,” Zahn said. Brenda Dryer, executive director of the Mitchell County Economic Development Commission, was pleased to see jobs coming to the area without the need for extensive recruitment and costly incentives. “It’s great when a new company comes to town; it’s even better when an existing company is willing to make a continued investment in our area,” she said. In addition to Zahn the plant employs two material handlers and one quality technician. The remaining staff members
TIM ACKARMAN/For In Business
There is ample room for growth in the McIntire facility and it can be ready in a short amount of time. are production welders. Zahn anticipates hiring four to five more workers soon. Applications are no longer being accepted, although Kyle encourages prospective employees to check the IMT Web site periodical-
ly (www.imt.com/enUS/careers.html). The plant operates two 10-hour shifts four days a week. Most employees drive from neighboring communities and appreciate the gas savings the schedule affords, Zahn
explained. Production in McIntire consists entirely of components for the military’s LHS system. Zahn said these cargo vehicles are designed to handle “all military packaging, anything from hospital
supplies to ammunition.” There is ample room for growth in the McIntire facility. Both Zahn and Kyle hope there will be opportunities to expand the operation in the future. In addition to
building military components, they said, the plant could be used to assist with producing IMT’s lineup of commercial service vehicles. “The commercial side is still slow but we anticipate that to pick up very quickly,” Kyle said. “When it does we want to be ready.” “We’re set up where we could do a lot of different stuff in a short amount of time,” Zahn noted. Although when it might take place is dependent on the pace of economic recovery, Kyle is optimistic growth will eventually occur. “IMT is very committed to this area,” he said. “We’re very proud of this facility and our facility in Garner. McIntire is our future.”
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 5
SUCCESS STORIES
Sukup’s growth is all in the family Innovative product line, family’s hard work has company poised well for future
never know what the Lord has in store for us.” In addition to By TIM ACKARMAN farming For In Business Eugene Sukup those 160 SHEFFIELD acres, the orty-eight years ago Sukups fed Mary Sukup never hogs using imagined she’d be wet shell helping to oversee the corn. finances of Eugene had a multidifficulty milliondrying surdollar corCharles Sukup plus grain poration. so he made a stirring “We bought 160 auger to facilitate the process. Although his acres and first effort was “a disasall we Mary Sukup ter,” he soon developed a wanted to do was get it paid for,” she system that was both workable and marrecalled. “I thought I’d be farm- ketable. “We still sell thouing all my life,” said her husband, Eugene. “We Continued on next page
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TIM ACKARMAN/For The Globe Gazette
Sukup Manufacturing employee Scott Speer checks the wiring on a 10-horsepower centrifugal fan. The company is planning to construct a 200-by-300-foot building this spring to meet the growing need for grain storage, drying and handling equipment.
On the Web: www.sukup.com
6 • IN BUSINESS
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SUKUP/From Page 5 “It’s really exposed the sands of them, (although) weaknesses in peoples’ we’ve improved them grain drying and storage over the years,” Eugene systems,” Charles said. said. Charles believes the FORTY-SEVEN years company is poised to meet and more than 80 patents those needs due to its later, Sukup Manufactur- innovative product line. The company that began ing is a world leader in by producing stirring grain storage and hanaugers and other graindling equipment. While many manufac- drying accessories added stand-alone dryers in turers are moving jobs 1998, grain bins in 2001 overseas, the Sukups employ about 400 people and an expanded material-handling lineup for to build their entire line of products at a facility in large private and commercial operations last year. Sheffield. Despite challenging WHILE OTHER leadtimes for many corporaing bin companies are tions, Sukup Manufacturheld by large investors, ing continues to grow. The Sukup has continued company will soon add a under family ownership. second production line for Charles believes the building stand-alone grain family’s Midwest roots dryers and plans are in the works to add a 200-by300-foot building this spring. The nearly $4 million investment should create at least 10 new jobs when completed. “Our business doesn’t correlate with the national economy or even the general ag economy,” explained Charles Sukup, Eugene and Mary’s son and the company president. “It’s the size of the corn crop.” HIGHER YIELDS and greater demand from the growing ethanol industry have led to a greater need for on-farm and local commercial storage, Charles said. “Over 50 percent of the corn in Iowa currently is used for ethanol production,” he noted. As production has TIM ACKARMAN/For In Business risen, back-to-back wet Sukup Manufacturing employees Steve Meyer and Cathy Holland install a cover on a stand- falls have also increased alone grain dryer. The company will soon increase output of this and similar dryers by the moisture content of adding a second production line. corn leaving the field.
help them understand the needs of their customers. “We drive by corn fields to come to work,” he said. Most Sukup employees are also North Iowans, many with a farm background. “Ninety percent of them or better are homegrown people,” said Eugene. An understanding of agriculture encourages workers to take an extra measure of pride in their products, Charles believes. “They can easily put themselves in the customer’s place.” Eugene instituted profit sharing for employees in the 1970s and believes in treating all his workers with Continued on next page
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 7
SUKUP/From Page 6 respect. Retention is strong as a result. Eugene’s first hire, Dennis Foss, recently celebrated 45 years with the company. “Thirty percent of our employees have over 10 years with us,” Charles said.
ethanol.” Although Eugene is now 80, there’s a good chance a Sukup will be at the helm should that corn boom of 2030 materialize. Charles’ brother Steve is the vice president and CFO. Steve’s daughter, Crystal, works in the “people department,” and ALTHOUGH GRAIN her husband, Matt, is an markets can be volatile, electrical engineer. At the Sukups are optimistic least three more of Eugene regarding prospects for and Mary’s grandchildren continued growth. are considering employ“The seed corn comment with the company panies project doubling after college. corn yields by 2030,” DESPITE BEING well Charles said. “They’ve got a use for it past retirement age and with ethanol, that’s the having the utmost confibeauty part,” Eugene said. dence in the younger genDespite research using erations, Eugene and Mary other materials, Eugene still report to their offices predicts the relative ease nearly every weekday. with which corn can be “I just enjoy doing it,” stored and transferred Eugene said. “I never will ensure its place as a worked a day in my life.” mainstay for ethanol pro“We enjoy working duction. with the people, both our “You’ve got to have a own people here and our product that’s available customers through the 365 days a year,” he said. years,” Mary said. “Our “Corn is an easy compeople here are our very modity to work with for best friends.”
Sukup Manufacturing employees Rick Guldberg and Gordon Lembke stack grain bin sidewalls as they emerge from a metal press. Increased corn yields and the growing ethanol industry have spurred brisk demand for grain storage, drying and handling equipment. TIM ACKARMAN/For In Business
8 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
TRAINING/From Page 4 and die, heating and cooling, building trades, automotive and welding. Total enrollment is about 250 students. Like Lightner, Byrnes anticipates a growing need for trained industrial workers. “A lot of our skilled labor is in that baby boomer age group,” he said. “I think we’re going to have a lot of opening in all of these areas, quite frankly.”
“I’m on the road all the time taking tours,” he said. “Sometimes we don’t even know what we have in our own backyard.” Byrnes invites employers to sit on advisory boards for each program. The boards meet about once a semester to review curricula and assess industry trends. Although technical skills are important, BYRNES AND HIS instructors work employers frequently to ensure the training they offer preByrnes told Byrnes their biggest pares students to fill those openings. Forging relationships with area busi- concern was finding reliable workers who would behave and dress approprinesses is a big part of their strategy. ately. NIACC responded by instituting “We’re always trying to network a “soft skills” program three years ago. and make connections with compaStudents must abide by an attendance nies because it’s probably going to lead to jobs for our students,” Byrnes policy, use a time clock and wear a uniform shirt to class. Tobacco use and said. foul language are not permitted. There is no substitute for taking a Participating students receive a first-hand look at area workplaces, NIACC industrial certificate indicatByrnes said.
ing they have demonstrated professional conduct. “Not only do they have a good skill set, but I really hope they’re a good person when they leave here as well,” Byrnes said.
nity college in the nation doing this.” Many companies have donated funds or surplus equipment and materials to enhance educational opportunities at NIACC. The college, in turn, tailors equipment acquisitions to present and anticipated NIACC WORKS with employers industry needs. individually to facilitate specialized Industrial jobs have often been training. Instructors will help develop stigmatized as being undesirable but curricula specific to the employer’s Byrnes notes this attitude is changing needs and conduct training at the as blue collar goes high-tech. workplace. NIACC will also adminis“I think the days of old, dirty, ter company-specific welding tests to industry and manufacturing are over. be certain students have the skills a That word is getting out there,” he particular employer requires. said. “I’m in a very fortunate situaNot all NIACC training takes place tion. Our numbers in IT are going in North Iowa. The school has partthrough the roof.” nered with NextEra Energy to develop Byrnes hopes to see continued a hydraulics training job trailer for its industrial-sector growth in the area wind-energy needs. NIACC is now and even stronger interest in NIACC’s training NextEra employees at sites technology offerings in the future. around the country. “I think this whole program is the “It’s a beautiful relationship,” best-kept secret in North Iowa, and it Byrnes said. “We’re the only commu- shouldn’t be.”
GLOBE GAZETTE • SPRING 2010
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Being No. 1 is serious business at Larson Even in down market, company continues to improve its margin By DANA YOST For In Business LAKE MILLS n the production floor of Larson Manufacturing’s facility in Lake Mills, safety leader Bill Humphrey looked up as Iowa operations manager Brian Throne walked past. “People like Bill are the key to making all this happen,” Throne said. Humphrey, a 35-year employee, smiled. “Our little jewel in North Iowa,” he said. “Just unstoppable growth all over — that’s the way it’s been.” “No. 1, right?”
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THE EXCHANGE was lighthearted, but being No. 1 is serious business at Larson. Founded in 1954, it has been the nation’s No. 1 seller of storm doors since 1992, according to its Web site. It has taken steps to keep its grip on the top spot with product innovations, implementing Lean Manufacturing practices and an array of employee incentives. The company, which also makes storm windows and retractable screen doors, employs about 1,500, including at least 450 in North Iowa. Its corporate headquarters were in Lake Mills but are now in Brookings, S.D., where it also has a manufacturing plant. It also has plants in Clear Lake and North Carolina. In 2007, the Lake Mills site added a 65,000-square-foot
atrium-like break room, and emphasis on ergonomically friendly work stations. Throne said there has been almost no turnover at the Iowa locations, other than an occasional retirement. “The company has maintained steady employment at their facilities in our region through some creative ways of scheduling the workload, etc., so that they did not have to lay off employees,” said Teresa Nicholson, executive director of the Winnebago-Worth Counties Betterment Council. THE COMPANY also donates to projects and causes in cities where it has operations, said Marilyn Hoffman, executive director of the Lake Mills Chamber Development Corp. “They are always giving back in some way,” she said, “and just the things they do for their employees — the training and profit sharing.”
It is especially important, Hoffman said, at a time when DANA YOST/For In Business many small, rural cities strugBrian Throne, the Iowa operations manager for Larson Manufacturing, shows a rack of wood material that was gle to keep employers. “Right now it’s critical to designed with input from employees. Excess wood from a project is stored in trays on the rack, then reused when another project calls for a similar-colored wood. The rack helps reduce waste by allowing material to be have employers that are steady,” she said, noting other recycled from one project to another. Lake Mills businesses have had down times, even though modernized warehouse. Two suffered. According to the New improve our margin, so profsome are now coming back. years ago it opened a centralYork-based Window and Door itability-wise we are doing ized distribution center in publication, 10 of its top 100 fine. Last year, sales were down “Larson has remained pretty Albert Lea, Minn., that disbusinesses in the industry in 8 percent but profit was actu- consistent and offers jobs our community very much needs tributes about 85 percent of the 2008 have since shut down ally up.” right now.” company’s product, Throne production or distribution Larson shares that profit Larson has also adopted said. In recent months it has facilities. with employees through a earned major awards for safety “Our market has declined 20 profit-sharing program. It also manufacturing practices that and efficiency programs. percent the past five years,” offers a cash bonus system that emphasize efficiency, waste reduction, recycling, safety said Throne, a rural Lake Mills last year was exceeded when and ergonomic work stations. THOSE ALL ARE examples native who returned 13 years CEO Dale Larson contributed It uses both the Japaneseof steps that have helped Lar- ago. “But within our market we $1,000 to each employee. rooted Lean Manufacturing son stay profitable despite the still have over 50 percent of the Other employee amenities process and the 5S system recession, a period in which market. include a health and fitness many of its competitors have “We have continued to program and, at Lake Mills, an Continued on next page
10 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
LARSON/From Page 9 (sort, set in order, shine, standardize and sustain). A large number of its employees are trained in both programs, and Larson works with North Iowa Area Community College on employee training programs. An example of the 5S program is in the new Lake Mills warehouse. Attached to the manufacturing plant, its 65,000 square feet include three five-level storage bays that with the aid of computer programs and bar-coded stocking allow material to move quickly through the plant, cutting waste, Throne said. Throne said the 5S system keeps the facility organized — “visual and simple” — and standardized. The new facility replaced a 105,000square-foot warehouse in Lake Mills the company sold and 60,000 square feet of storage in Clear Lake. The new plant ships and receives all materials for both Iowa plants. Getting employees to buy into the modern practices has been vital, Throne said. “They absolutely do,” he said. “It’s been a long, tough road to get to where we are today. You certainly are going to butt heads with a lot of people, and get people to accept change. “We launched our initial 5S in 2003 and made some nice improvements, then struggled and felt ourselves slipping back. We launched it again in 2005 and slid back again, and relaunched it in 2008. “The point is we didn’t give up, just because we’d slid back,” Throne said. “And now it has become our culture. ... It’s amazing the impact that had not only on our safety but on efficiency and storage and quality of the product.” Larson designed and built the first wood-core storm door in 1966. In the past four years, the company said, it has applied for 16 more patents. But being a leader in innovations is no longer a guarantee of market dominance, Throne said. Many foreign companies can make doors more cheaply, so if Larson is going to hold on to customers — it sells mainly to retailers, including home-improvement giants Lowe’s and Menard’s — it has to offer a better product, and it had to take steps to shave its own bottom line, he said.
DANA YOST/For In Business
Employees Mike Henkel (left) and Dwayne Bottleman work at a frame fabrication center at the Larson production facility in Lake Mills.
Larson earns recognition: Recognition has come with success at Larson Manufacturing. Late last year, Larson earned a top safety designation from the Occupational Safety and Health Agency, and the Lake Mills Chamber development organization named Larson the community’s 2009 business of the year. In 2008, Larson earned the South Dakota Better Business Bureau’s Integrity Award for following through on quality and productivity promises it had made to customers and employees. “By staying ahead of the curve on quality control, technology and employee programs, Larson Manufacturing has set itself apart as an employer who sees the employees as the backbone of the compaThe new manufacturing models have made that work, he said. “The key to us being No. 1 is to provide services to our customers like no other: We had a 98 percent fill rate and on-time
ny,” said Teresa Nicholson, executive director of the Winnebago-Worth Counties Betterment Council. “By utilizing newer technologies and updated quality processes, they have allowed their employees to grow in their experience and knowledge of the product and take ownership of the quality of their product. “This, in turn, shows the company realizes that without those employees who physically manufacture the product being good at what they do and happy within the company, their product would suffer and, therefore, their company would suffer as well. “There are many things that Larson Manufacturing has done that serve as a great example for other companies.” delivery, and that’s our minimum. We haven’t dipped back,” Throne said. “We have to get our customers what they want and when they want it and keep them from looking elsewhere, and
that is our chief thing against foreign competitors. We can get there through efficiencies. They (foreign companies) can get it for you cheap, no question. But if we can do it the way (customers) want with acceptable margins, we can keep them from looking elsewhere. “Once the door is opened, we’ll never get it back — so, (lean, efficient practices) are absolutely essential to our success.” In recent years, Larson has acquired other companies: A manufactured home company in Watertown, S.D., a retractable screen company and the storm-door division of Pella. It is also growing in production of noise-reduction products, especially for airport authority projects. “Every year, we create a theme for the year,” Throne said. “Our theme for 2010 is ‘to make the best better.’ The point there is we can’t sit on our laurels. We get a lot of competitive pressure from foreign and domestic competitors, and we have to keep striving for improvement.”
GLOBE GAZETTE • SPRING 2010
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CDI: Rebounding — and then some Motor home painting plant adds employees, and is even working overtime By TIM ACKARMAN For The Globe Gazette FOREST CITY hings were looking good for Justin Ulrich of Clear Lake. After graduating from high school in 2004, the Algona native attended the Scott Community College auto body program before landing a job with CDI LLC in Forest City. Ulrich met his girlfriend, Ashley Weaver, at work. Two years ago she left CDI after the birth of their first child. About a year later she was pregnant with the couple’s second baby girl. Life for the young family changed dramatically in October 2008. The economic downturn forced layoffs at CDI and Ulrich was among those let go. TIM ACKARMAN/For In Business “I was pretty worked up about it,” Ulrich said. “(There Justin Ulrich masks a unit for touch-up painting in the final-finish area at CDI LLC in Forest City. Ulrich is one was) a lot of loss of sleep and of more than 100 CDI employees to be called back from layoffs within the past year. figuring out how to pay the bills.” the company’s motor homes. Ulrich looked for another job Although CDI will accept without success. other custom “Everyone else said they painting jobs, the were downsizing, too,” he vast majority of recalled. its business is The couple was forced to get with Winnebago. by on a single unemployment Production check. “Things were pretty was booming at tight.” the time CDI arrived, recalled Nagle ULRICH’S STORY was far general manager from unique. Dave Nagle. CDI, based in Elkhart, Ind., “We expanded this facility began operations at its Forest three times in the first two City location in 2002 after years,” he said. being approached by nearby By 2007 the plant was paintTIM ACKARMAN/For In Business Winnebago Industries to han- ing 15 to 16 units a day and A Winnebago Adventurer awaits final-finish painting at CDI. dle the full-body painting for employed around 200 people.
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Motor home sales took a drastic downturn in 2008, however. Having barely had time to recover from record high fuel prices during 2006, the industry was rocked by the credit crunch and dramatic decline in the stock market after the financial crisis of 2007-2008. By the time Ulrich was laid off, the plant was painting about three units a day and employed just over 30 people working partial weeks. ALTHOUGH ECONOMIC recovery has been sluggish, things are improving for both companies. Winnebago has hired back at least 350 workers since August and its firstquarter sales-order backlog for fiscal 2010 was up 350 percent compared to the same period in 2009. CDI is currently painting about 12 units daily and has around 170 employees. “We’ve called the majority of our work force back and more recently added new people,” Nagle said. Justin Ulrich was among the recalled workers. He was still living on unemployment during the summer of 2009 when the opportunity to return to CDI arose. “I jumped all over it,” he said. Business at CDI has rebounded to the point that many employees are currently working overtime. “We’ve worked nine Saturdays in a row now,” Ulrich said recently. “I’m averaging 50Continued on Page 14
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BACK FROM THE ASHES Riceville business rebuild, and find business better than ever By TIM ACKARMAN For In Business n Oct. 31, 2008, a fire broke out at County Line Locker in downtown Riceville. The building, inventory and most of the equipment were destroyed. Keeling Auto Parts to the north was also mildly impacted. Riceville True Value Hardware to the south had significant smoke and water damage. Its roof and vacant second story, which once housed the Riceville Theatre, were beyond repair. The potential loss of two longtime retailers was a grave concern. Residents would have to drive considerably farther for services once available locally, and neighboring businesses would likely suffer as a result. “There are multiple stops when people make a trip into town,” said Brenda Dryer, executive director of the Mitchell County Economic Dryer Development Commission (EDC). A downturn in business traffic is something the city could ill afford, Dryer explained. “Riceville is a very small community with a very small industrial and commercial tax base. They rely heavily on local-option sales tax,” she said. Dryer drove through Riceville the day after the fire and realized an immediate response was needed. “I know what my day will be like on Monday,” she told her friends. The entire town stood ready to assist as well. Volunteers helped to clean up and salvage what they could. A benefit was organized to assist the families affected. Dryer, in cooperation with the Howard County and Riceville EDCs, helped the owners to obtain business-planning expertise and local revolving loans. Tax-increment financing was arranged to help service the new debt while maintaining Riceville’s pre-existing tax base. In October of 2009 each business held a grand reopening in new and expanded facilities. “I’ve been to ribbon-cuttings for multi-milliondollar projects, standing beside the governor and Sen. Grassley,” Dryer said. “I’ve never gotten as emotional as I did the night of that dedication.”
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“When you’re in a small town you know everybody. I think it’s great.” — Sue Anderson, waiting on Laurlae Winfield at the new Riceville True Value. TIM ACKARMAN/ For In Business
TrueValue Hardware: Customers are coming back Sue Anderson has been employed at the hardware store in Riceville for 18 years. She’s now working with her third owner and in her fourth building. “I think it’s a shame that we lost that old theater,” she said. Curvin and Nancy Zimmerman purchased the hardware store in June 2002, moving from what is now Keeling Auto to the theater in 2004. At 4,850 square feet, it was nearly double the size of the previous building. “We just loved it,” Curvin said. “It was working well.” Although the fire was contained to the roof and second story of the
building, “water was pouring from the ceiling for days,” Curvin explained. “It was a terrible mess.” At the time of the fire the Zimmermans were also in the process of re-opening the town’s only grocery store. Suddenly they found themselves facing the challenge of reviving two businesses. Community volunteers helped the Zimmermans remove inventory from the damaged store. “We might have had 50 or 60 people,” Curvin recalled. “It was a tremendous response, lots of willing workers. By evening we had everything out.” The city helped the Zimmer-
mans temporarily relocate to a vacant structure nearby. “Within a week to 10 days we were in that building,” Anderson said. The new location was much smaller than the old. The Zimmermans kept just the basics on hand throughout the winter, selling the rest of the salvageable inventory at auction. “It worked fine. We were very glad for it, but it was limited,” Curvin said. Remaining open during the rebuilding process was important to the Zimmermans. Continued on next page
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 13
County Line Locker back with help from its friends Merrill Angell always liked the meat business. The Osage native worked at a locker during high school and made nationals as a member of his Future Farmers of America meat-judging team. He and his wife, Rose, moved to Florida in 1997 but longed to be closer to their children and grandchildren. When they learned County Line Locker was for sale, the couple came home for a class reunion and ended up buying the business. Thirteen months later it was destroyed by fire. Although the locker was insured for the value of its aging building and contents, constructing and equipping a modern structure would cost several times more. The insurance would allow the couple to recoup its investment, however, and Merrill questioned whether he was willing to rebuild the operation from scratch.
“Do we want to go back to work that hard at our age?” he asked. “I’m considerably younger than he is,” Rose joked. Financing was also a concern. Despite their insurance, a community fund-raiser and the assistance of the EDCs, the Angells could not undertake the effort alone. A group of 10 area livestock producers stepped forward as partners, allowing the business to not only rebuild but expand. “Even though we never grew up (in Riceville), they just enveloped us with compassion,” Merrill said. The Angells already owned a lot behind their building, providing ample space to rebuild. They consulted with experts from Iowa State University, sought input TIM ACKARMAN/For In Business from state meat inspecMerrill Angell checks beef aging at County Line Locker. The business opened in a new and expanded facility in October tors and toured several Continued on next page after being destroyed by fire in 2008.
TrueValue/From Page 12 “It kept us in touch with the community,” he said. Demolishing the old structure and building another represented a significant unplanned expense for the Zimmermans, and Curvin admitted the venture tested their courage at times. The assistance they received encouraged them to take the risk. “I would have felt guilty walking away,” Curvin explained. “Why not give back to the community and move on?” The business not only moved on, it moved up. Working with the EDCs as well as TrueValue, the Zimmerman’s designed a “tight and efficient” 7,040square-foot structure, increasing their inventory by 25 to 30 percent. True
Value carried the entire cost of that inventory for six months, including $150,000 for 10 years. Anderson appreciates the extra space, the modern computerized check-out system and above all the infloor heat. “I froze to death in the old building,” he said. Curvin said the investment is already paying off. “Customers are coming back, and a lot of new faces. Our slower days in total sales are as good or better than what our best days were in the old store,” Curvin said. “It’s not a road we would have TIM ACKARMAN/For In Business chosen to come to this point, but we’re The new Riceville TrueValue store is a “tight and efficient” 7,040-square-foot structure happy with what we have.”
14 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
LOCKER/From Page 13 lockers. With adequate capital and an understanding of their needs, the Angells constructed a 60-by-110foot building, nearly twice the size of their old facility. The new structure is more energy efficient and incorporates many labor-saving conveniences, including a rail system for transferring carcasses and a sharp freezer designed to accommodate large carts with stackable meat trays. Although 85 to 90 percent of their business comes from custom processing, the Angells hope to grow their retail sales with a large refrigerated meat counter and display case. “The old locker never had a retail area, so that’s new to us,” Merrill said. Also new at County Line is catering, including meats, sides and service items. “It’s picking up by word of mouth,” Merrill said. The new locker is processing twice as much beef
as it was before the fire while remaining steady with hogs. Deer processing is growing as well. To accommodate the growth, the Angells have expanded their staff. “Before we only had seven people, now there are 10,” Merrill said. Merrill hopes to add more products as time allows. Right now it’s all he can do to meet the needs of loyal customers, many of whom put off butchering while the Angells rebuilt. “We had some pretty big beef come through the door the first month because people had been holding them waiting for us to open,” Merrill explained. Although the fire seemed devastating at the time, the Angells are happy with the final outcome. “Things happen for a reason,” Merrill said. “God must have looked at us and said, ‘You’re serious about this. I’ll have to get you something decent to work with.’ ”
TIM ACKARMAN/For In Business
County Line Locker reopened in this new building on Oct. 31, exactly a year after the old facility was destroyed by fire.
Tips for success: Although it wasn’t by choice, both the Zimmermans and the Angells took on significant expansions of their businesses during a tight economy. So far they’ve enjoyed outstanding success. They offer these tips for fellow small-business owners.
CDI/From Page 11 plus hours a week.”
mistic regarding prospects at Winnebago ALTHOUGH THE and, by extension, CDI. FACILITY has room to “I’m hopeful we’ll see accommodate additional some continued growth, Nagle has taken a strength and improvecautious approach to ment in the future,” rehiring. Nagle said. “They’re the “I’d rather work Satur- best company in the days than lay people off,” industry to be associathe said. ed with. I think they’re Despite the recent ups in a better position than and downs, Nagle is opti- their competitors to
rebound.” Ulrich doesn’t mind putting in the extra work until Nagle believes additional hiring is warranted. “I used up most of my savings and everything else I had (during the layoff),” Ulrich explained. “Now it’s just catch-up time.”
Merrill Angell:
Curvin Zimmerman:
• Talk to people with expertise. • Work with your local businesses and agencies. • Don’t be afraid to ask for help, because there are a lot of people who want to help.
• Have an interest in what you’re doing. • Be accommodating and listen to the customer. • Be present and visible. The customer likes to see the owner at the business and to develop a one-onone relationship.
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 17
INTERNS & YOUR BUSINESS
Internships are mutually valuable experiences By LAURA BIRD laura.bird@globegazette.com n internship program can be a valuable asset to a business and isn’t as difficult to start up as some might think. “I do believe any business could have an internship program,” said Mary Reisetter, director of career planning at Waldorf College, Forest City. Companies benefit
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from internships because they can provide extra help when they are short-staffed, serve as a screening for potential full-time employees and bring fresh ideas, Reisetter said. Businesses of any size can have an internship program, too — it just take a little planning. Several things need to be decided before a business starts advertising an
internship opening, Reisetter said. Some of them include: • What type of projects or responsibilities will an intern have? • What type of skills will qualify someone for the internship? • How many hours per week will the intern work? • How long will the internship be? • Will the internship be
paid, work for college credit or perhaps both? Many of these things can be adjusted depending on the person hired, but employers should be able to generally answer these questions beforehand. Once a business answers these questions, Reisetter recommends contacting local colleges or career centers to let them know they’re inter-
Program enjoyable, challenging By LAURA BIRD laura.bird@globegazette.com MASON CITY
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amie Rolland, Osage, is experiencing all of the aspects of working at a funeral home. She’s been on call 24 hours a day, has embalmed a body and worked with families through the funeral planning process. All of this is part of her internship at Hogan Bremer Moore Colonial Chapels in Mason City. “It’s very full,” Rolland said of the internship program. “They make sure I experience all aspects of funeral services.” Hogan Bremer Moore has offered internships “for decades,” said owner Dave Moore.
ships because interns take time.” Moore said the internships benefit not only the intern but the business, too. “It keeps us fresh Moore and on our toes,” Moore said. “It challenges us and I enjoy it.”
INTERNS HELP provide the funeral home with fresh ideas and trends, and keep it up to date on the latest laws and regulations. In return, interns like Rolland gain real-world experience. For example a family they recently worked with was having a legal conflict. GRADUATES OF mortuary sciBoth Rolland and Moore ence programs must complete a researched the issue and eventualyear-long internship before the ly came up with a compromise for state of Iowa grants them a license. the family. The funeral home isn’t required “She got real-world experito offer internships but chose to do ence,” Moore said. “She can get so. some of that in the classroom, but “Our funeral directors here are until she sees how it plays out in passionate about what they do,” real life ... that’s what makes the Moore said. “If they weren’t we program worthy.” probably wouldn’t enter into internHogan Bremer Moore tailors the
program to each intern’s needs — something they’ve learned to do over the years. “It depends on the individual,” Moore said. “Some are Rolland quick learners and some take a little longer. Some come in with more experience than others.” Either way, the funeral home tries to give an intern as much experience as possible and more responsibilities as they grow more comfortable with the various roles of a funeral director. ROLLAND SAID she has learned a lot since completing her practicum there and starting her internship at the beginning of February. Practicums, courses involving practical experience as well as theoretical study, also are required but are completed while in school. “It’s definitely been a tremendous learning experience,” she said.
ested in hosting an intern. Colleges/career centers will probably request some information and ask additional questions about the internship, she said. Once someone is hired, Reisetter said, some keys to a successful internship program include: • Providing a job description and explaining duties, such as deadlines, to an intern. • Taking an intern on a tour of the building and introducing him or her to employees. • Scheduling regular
meetings with an intern to go over their performance and answer any questions. • Informing an intern of the company’s dress code or proper work attire. These things will hopefully result in a positive experience, which will benefit both the intern and business. Internships are a valuable experience for students, Reisetter said. “They give students a chance to gain on-the-job experience that’s so important when they go out to look for their first job.”
18 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
He doesn’t always need them, but interns fill bill in busy times and photography services. Some of the internships have been paid while others have not. It often depends on the project. By LAURA BIRD For example an laura.bird@globegazette.com internship might not FOREST CITY be paid if the work is ric Guth does a lot of projects for a non-profit through his small Forest City organization, he business, Epsilon Producsaid. tions. “If I’m making ERIC GUTH: Sometimes the projects can get money off of it I try overwhelming for him, which is ‘... Be clear to pass it along to why he occasionally turns to and up front them,” Guth said. interns. on expec- “Maybe it’s not as “I use interns mostly because much as a full-time tations’ the type of work I do can be very person, but I like to project-oriented,” Guth said. “If I reward them if they’ve done a good don’t have a big project I’m workjob.” ing on I don’t really need extra help When Guth does hire an intern sitting around not doing anything, but then when a project does come he doesn’t follow a set program. However, he has learned what in I put the word out ...” works and what doesn’t work over On average Guth has employed one intern a year since starting his the years. “It’s always very important to be business in 2003. His business specializes in Web clear and up front on what your expectations are,” he said. “They sites services, video production
Doing things the right way makes for positive experience; some interns return
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have to know what you want them to do or it’s going to be very difficult for them to do it. “If you don’t give them any direction they’re going to feel lost or overwhelmed,” he said. He also likes to check in often with his interns to make sure they’re on the right track. Doing these things usually results in a positive experience, and sometimes interns come back for a second internship. “It’s such a great experience for them,” Guth said. “I just appreciate and look forward to the opportunity to let them have a good experience working on a project with a real client.” Guth also appreciates the fresh perspective interns bring to Epsilon Productions. “It’s nice to have fresh young eyes,” he said. “I’m not very old, but they’re even fresher than I am. “It’s nice to have that outside opinion and bring that to the table, too.”
JUST FOR ENTREPRENEURS: Pages 31-34 • Risk and networking. • Starting a business requires planning. • Necessity is mother of entrepreneurs.
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 19
ADVICE: HR
Success in these difficult times By JIM CRONIN
For In Business ne way to learn about having your company do well in these present hard times is to learn from the experiences of successful entrepreneurs who have preceded you. An excellent reference source is a book entitled “The 75 Greatest Management Decisions Ever Made ... And Some of the Worst.” The book’s subtitle is “Business Leaders Talk About the Good and the Bad” (ISBN 1-56731532-1). The author is Stuart Crainer, described in the dust jacket as a regular contributor to the Financial Times and the author of several businessrelated books, some of which have been published in several languages. The book lives up to its title, containing summaries of a number of decisions made by business owners in the face of
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impending operational and marketing challenges.
order service. And, very significantly, it was well known that the group’s employees were very loyal — with virtually no turnover or absenteeism — due to the Dead’s policy of paying its employees even when the band was not on tour.
his 2,400 employees — at a total cost of $10 million. He also invested $15 million in a ONE EXAMPLE involves the new infrastructure. customer service efforts made The result: The work force by Jan Carlzon. In 1981, this was so grateful and performed newly appointed CEO of Scanso well that both productivity dinavian Airlines sent all of its and quality shot up dramaticalmanagers to customer service ly with the owner estimating seminars lasting for up to four that he was “paid” many multiANOTHER LESSON about weeks. ples of his “investments” in his the positive results that can The result: Within four employees. flow from creating employee months the airline went from Lesson reaffirmed: Good loyalty was learned as a result being an “indifferent perfaith and substantial investof a tragic fire which tore former” to the most punctual ments in your employees can through a Massachusetts knit- pay very high dividends. European airline. Besides improving customer ting mill in 1995, threatening The book is filled with a wide service, creating customer loy- the livelihood of the mill’s variety of very interesting owner and its 2,400 employees. examples of effective managealty can also pay impressive It was pointed out that the dividends. ment decision-making, from In the 1980s, unlike many owner could have taken the earlier centuries through recent other musical touring groups in insurance proceeds and lived decades. You can find it on show business, the Grateful well through his retirement Internet stores such as AmaDead permitted its fans to tape years. zon.com. their concerts with the result It would serve as a great deskBut instead he took a totally top resource and I would recomthat by the mid-1990s, different approach. In the face mend ordering a sufficient 100,000 fans were visiting the of no production capacity, the number of copies to distribute to group’s Internet site daily. owner announced that he all the members of your manFans were also given easier would continue to pay the access to tickets through a mail wages and health insurance of Continued on next page
About the author: Jim Cronin has been an employee relations (management) counsel with the MinneapolisSt.Paul law firm of Felhabor,Larson,Fenlon & Vogt for more than 30 years. The content of his column is presented as general information,not as legal advice.Specific situations must be assessed individually by counsel of your choice. Cronin is the author of “No Fluff,No Puff: Just Management/Communication Principles That Work.” Readers may preview chapters of this resource manual at www.nofluffnopuff.com.It is also available for purchase at www. Barnes&Noble.com. Send your questions or comments of general interest to him at jjcanddrb@ earthlink.com.
20 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
HR: FINANCE
Don’t neglect long-term planning in tough economic times By CRAIG BRAGET RSM McGladrey, Mason City f you own a business, it’s likely your biggest investment. Unfortunately, it may be facing many of the same economic challenges as investments in the stock market and real estate. You may simply be trying to survive these challenges. But it’s critical to think about longterm considerations as well. Save for retirement If most of your money is tied up in your business, retirement can be a challenge. So if you haven’t already set up a taxadvantaged retirement plan, consider setting one up this year. Keep in mind that if you have employees they generally must be allowed to participate in the plan, provided they work enough hours. Here are a few options: Profit-sharing plan. This is a defined contribu-
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tion plan that allows discretionary employer contributions and flexibility in plan design. You can make deductible 2009 contributions as late as the due date of your 2009 income tax return, including extensions, provided your plan exists on Dec. 31, 2009. Simplified employee pension A simplified employee pension (SEP) is a defined contribution plan that provides benefits similar to those of a profit-sharing plan. But you can establish the SEP in 2010 and still make deductible 2009 contributions as late as the due date of your 2009 income tax return, including extensions. Another benefit is that a SEP is easier to administer than a profit-sharing plan. Defined benefit plan. This plan sets a future pension benefit and then actuarially calculates the contributions
About the author: Craig Braget is a tax director in the Mason City office of RSM McGladrey. He has more than 14 years of public accounting experience, including helping clients with tax compliance, audits, regulatory issues, mergers and acquisitions, S Corp conversions and marketing consultation. For more information, contact him at craig.braget@rsmi.com. needed to attain that benefit. The maximum annual benefit for 2009 is generally $195,000 or 100 percent of average earned income for the highest three consecutive years, if less. Because it’s actuarially driven, the 2009 contribution needed to attain the projected
future annual benefit may exceed the maximum contributions allowed by other plans, depending on your age and the desired benefit. You can make deductible 2009 contributions until Sept. 15, 2010, provided your plan exists on Dec. 31, 2009. Warning: Employer contributions are generally required and must be paid quarterly if there was a shortfall in funding for the prior year. Plan your exit An exit strategy is a plan for passing on responsibility for running the company, transferring ownership and extracting your money. This requires planning well in advance of the transition. Here are the most common exit options: Buy-sell agreements When a business has more than one owner, a buy-sell agreement can be a powerful tool. The agreement controls
what happens to the business when a specified event occurs, such as an owner’s retirement, disability or death. Among other benefits, a well-drafted agreement: • Provides a ready market for the departing owner’s shares; • Sets a price for the shares; • And allows business continuity by preventing disagreements caused by new, unwanted owners. A key issue with any buy-sell agreement is providing the buyer with a means of funding the purchase. Life or disability insurance often helps fulfill this need and can give rise to several tax and nontax issues and opportunities. One of the biggest advantages of life insurance as a funding method is that proceeds generally are excluded from the beneficiary’s taxable income. There are exceptions, however, so be sure to consult your tax adviser.
Cronin/From Page 19 agement team.
to work side by side and talk with regular employees on a daily basis and Internships thereby determine the progress the Internships can be very productive interns are making in comparison to and helpful to both employers and the progress made by the employees their interns. during their past internships. Internships can benefit employers The length of internships can vary by providing them with the services depending on the complexity of job of individuals who have expressed a duties and differing lengths of learnsincere interest in a certain field or occupation and are willing to spend a ing curves for specific job functions. Employers can benefit by performfair amount of time to “check out” ing in-depth interviews of the interns at their initial interest. regular intervals. Such interviews can Internships can benefit individuals by giving real-life experiences in a job monitor ongoing performance-related progress and hurdles while providing classification before deciding if a future job opportunity in the particu- time to address minor performance issues before they become major ones. lar industry is what he or she would Finally, at the conclusion of the enjoy doing for the next several years. internship period, all interns should be An internship also enables interns
reviewed with the goal of improving your internship program. Such interviews should be in-depth and not cursory, pursuing answers to questions regarding the internship as specific as the following: 1. What developments surprised you the most? 2. What pleased you the most? 3. What disappointed you? 4. What angered you? The post-internship interviews should not be avoided. They are a matter of finding out what, if any, of the features of your internship program need to be improved, discarded or just finetuned. And the recent interns and the supervising management representa-
tives should have the answers to your basic questions about what needs to be fixed. In past columns I have written about the need for your commitment to make various employer programs succeed and, based on my years of experience in representing employers in both the private and public sectors, the vice of not monitoring existing programs with the goal of strengthening them promptly whenever needed. It is a reality that it is truly better not to initiate or maintain a workplace program (like internships) which is not fully funded and monitored enthusiastically by top management.
22 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
“In forecasting, we have to try to tell when the other shoe is going to fall.”
Q&A with David Underwood A state budget guru, he also offers unique perspective for businesses By JOHN SKIPPER john.skipper@globegazette.com MASON CITY avid Underwood worked for Curries in Mason City for 21 years, retiring three years ago as its chief financial officer. Today, he carries a business card that reads, “David W. Underwood; CFO on Demand.” For the past 12 years he has served on the state’s Revenue Estimating Conference, which has the important and challenging role of estimating revenues that the Legislature is required to use in preparing the state Underwood budget. Recently, Underwood talked with us about his role on the Revenue Estimating Conference and other business-related topics.
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We had a situation at Curries where we had a breakdown and the only repair service was in Chicago. What if you had that same piece of equipment in China or Mexico and had to get help from Chicago for repairs?”
going to fall. We do a September estimate, updating our estimate for the current fiscal year and look toward the next year. Then in December, prior to when the Legislature meets, we do the estimate for the next year.
Q. What are some of the impor tant factors in estimating? A. The biggest driver is employer-related data because of with— David Underwood, on the feasibility holding. We look at the number of of moving a plant out of the U.S. people employed, the hours worked per week and whether pay A. Prior to its existence, the gov- raises are being given. ernor’s office and the Legislature In a recession, there is loss of would come up with budget estijobs, fewer hours worked, less mates and then they’d fight over overtime. Also, sales receipts go what the estimate should be. They down. All of those things have to can’t set a budget until there’s a be considered. budget estimate, so it’s important Changes in federal laws also have that it gets done. So my job really is an effect. to get the other two to agree. What will the federal stimulus I’m kind of a mediator, looking package do? When will that money to come to some kind of comproactually arrive? How many jobs Q. Who is on the Revenue Esti mise. I try to ask all the right ques- will it create? mating Conference and how are tions so we can do good forecastThe goal is coming up with the the people selected? best possible estimate. A. It is made up of three people. ing. People ask, “How much political The governor has an appointee Q. How good a job have you pressure is on you?” and I say, (currently Richard Oshlo). done? “None, because everyone wants The Division of Legislative SerA. Generally speaking, we’ve the best possible estimate.” vices has an appointee (currently come pretty close. Holly Lyons). The challenge is when the econQ. How often do you meet — and Those two people select the third how long do the meetings last? member. They picked me. I’ve been omy is declining or increasing rapidly. It’s like when we know a A. We meet quarterly. The meeton it for 12 years. recession is coming — we just ings last anywhere from 10 to 45 I think you’re on it until you don’t know when. minutes. That’s because a lot of the quit. In forecasting, we have to try research work has been done by the staff beforehand. Q. What is the REC’s function? to tell when the other shoe is
Q. Let me switch gears and ask you about something totally dif ferent than what we’ve been dis cussing. I have heard that you think it is actually cheaper for companies to manufacture their products in the United States rather than opening plants in Mexico or China — and that you can prove it. Is that true? A. Here’s what I’ve said: A lot more things go into the making of a product than just paying workers. So if a company moves its production to Mexico or China because they can pay their workers a dollar an hour, they may be in for some surprises. What about production costs? What about freight costs? What about reliability of workers? What about the time it takes for workers to produce the product or the time it takes to ship the product? What about the availability of mechanics and repair people? We had a situation at Curries where we had a breakdown and the only repair service was in Chicago. What if you had that same piece of equipment in China or Mexico and had to get help from Chicago for repairs? I never said everyone would lose money by moving their plants to Mexico or China. I did say not everyone would make money — and some of them will probably have to shut down.
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 23
YOUR HEALTH
‘Diabetes will bankrupt us’ That’s the projection, says one doctor on the epidemic raging through the U.S. “If we don’t change our diet and exercise habits or find new, more effective and less-expensive ways to prevent and treat diabetes, we will find ourselves in a lot of trouble as a population.” — Dr. Elbert Huang, assistant professor of medicine at the University of Chicago
By TIM ACKARMAN For In Business ny way you look at them, the numbers are scary. In the next 25 years the prevalence of diabetes in the U.S. is likely to almost double while spending on care for the disease may nearly triple, according to a University of Chicago study published in the December issue of Diabetes Care. The current incidence of 23.7 million cases would increase to 44.1 million while spending would rise from $113 billion to $336 billion. Some experts consider these projections conservative, noting they are based on the assumption that the nation’s obesity rate will remain stable. Obesity has increased significantly over the past 20 years,
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however, and there is little to suggest this trend will change soon. “If we don’t change our diet and exercise habits or find new, more effective and less-expensive ways to prevent and treat diabetes, we will find ourselves in a lot of Huang trouble as a population,” said Dr. Elbert Huang, assistant professor of medicine at the University of Chicago and lead author of the study. “Projections are on the national scale this will be the thing that bankrupts us,” said Dr. Mark Johnson, director of the Mercy Diabetes Center in Mason City. BASED ON national statis-
tics and population demographics, Johnson estimated there are around 18,000 diabetic patients in North Iowa. As the population ages and obesity levels rise, that number is expected to increase. The financial impact of the disease, troubling as it is for the nation as a whole, can be significant for the individual patient as well. “The average patient with diabetes in this country is on eight medications,” Johnson said. Patients must also monitor their blood sugar regularly (glucose test strips represent the largest out-of-pocket cost for most patients, Johnson noted) as well as have frequent office visits and laboratory tests. Such intensive treatment is
required because diabetes normally does not occur in isolation. About 90 percent of patients suffer from type 2 diabetes in which the body can produce insulin but is unable to use it effectively to control blood sugars. Most of these patients also suffer with some combination of obesity, high blood pressure, high cholesterol and heart disease, a complex known as metabolic syndrome. WHILE THE EXPENSE of managing this syndrome can be significant, the financial and health costs of ignoring it can prove staggering. “How expensive is laser treatment on your eyes?” Johnson asked. “How expensive is Continued on next page
24 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
DIABETES/From Page 23 dialysis? How expensive prevent diabetes for is coronary bypass?” many and allow diabetic Johnson and other patients to control their members of the profesdisease with fewer drugs sional team at the diataken at lower dosages. betes center discuss the Many patients assume potential a “diabetic catastrophic diet” is health ramicomplex. For fications of most the diabetes recommenwith their dations are patients but the same as do not for the genattempt to eral populamotivate tion: healthy “Patients with eating. “Salt through fear. “Uncongood control live restriction, trolled diatrans-fat a normal life. betes causes avoidance, Ours is a these saturated fat things,” he reduction, message of said. portion conhope.” “Patients trol,” John— Dr. Mark Johnson, with good son director, Mercy Diacontrol live a explained. betes Center normal life. While this Ours is a sounds simmessage of hope.” ple, Johnson said, even Johnson noted there intelligent and wellare a variety of relatively educated patients often inexpensive generic have little understanding drugs available to treat of proper food choices. diabetes and reduce or “We’ve done a poor eliminate its complicajob in our culture of tions. Adopting a identifying what is healthy lifestyle can help Continued on next page
Diabetes data: • Total: 23.6 million children and adults in the United States — 7.8 percent of the population — have diabetes. • Diagnosed: 17.9 million people. • Undiagnosed: 5.7 million people. • Pre-diabetes: 57 million people, • New cases: 1.6 million new cases of diabetes are diagnosed in people aged 20 years and older each year. — American Diabetes Association, 2007, the most recent year for which data is available)
Are you at risk for diabetes? Take a basic test at www.diabetes.org/
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 25
DIABETES/From Page 24 healthy eating,” he body in motion will said. work. Most Americans Light weight training have an inadequate or similar resistance intake of fresh fruits, activity is also recomvegetables, mended to and whole increase grains. Simmuscle mass “We’ve done a and help ple sugars, fats and poor job in our retain bone highly density. culture of processed Johnson identifying foods tend also encourto dominate. what is healthy ages patients This norto consult eating. ... mally leads their primaTypically a to excessive ry health intake of care plate in the salt and United States providers calories. regularly. is two Most peoPatients or ples’ expechealth care portions.” tations providers — Dr. Mark Johnson, with quesregarding director, Mercy Dia- tions are appropriate betes Center serving size welcome to are also contact the unrealistic, diabetes Johnson believes. center whether or not “Typically a plate in they intend to use the the United States is two facility on a routine portions.” basis. Along with better “Mercy has invested eating habits, Johnson in this not for finanencourages patients to cial return but for get a minimum of 20 to improving the quality 30 minutes of aerobic of life for patients exercise on most days. with diabetes,” JohnWalking is an excellent son said. “We are just choice but most any an e-mail or a phone activity that keeps the call away.”
TYPES OF DIABETES: Type 1:
Type 2:
Type 1 diabetes is usually diagnosed in children and young adults, and was previously known as juvenile diabetes. In type 1 diabetes, the body does not produce insulin. Insulin is a hormone that is needed to convert sugar, starches and other food into energy needed for daily life. Only 5 to 10 percent of people with diabetes have this form of the disease. With the help of insulin therapy and other treatments, even young children with type 1 diabetes can learn to manage their condition and live long, healthy, happy lives.
Type 2 diabetes is the most common form of diabetes. Millions of Americans have been diagnosed with type 2 diabetes, and many more are unaware they are at high risk. Some groups have a higher risk for developing type 2 diabetes than others. Type 2 diabetes is more common in African-Americans, Latinos, Native Americans and Asian Americans as well as the aged population. In type 2 diabetes, either the body does not produce enough insulin or the cells ignore the insulin. Insulin is necessary for
the body to be able to use glucose for energy. When you eat food, the body breaks down all of the sugars and starches into glucose, which is the basic fuel for the cells in the body. Insulin takes the sugar from the blood into the
cells. When glucose builds up in the blood instead of going into cells, it can lead to diabetes complications. ••• Source: The American Diabetes Association; Web site, www.diabetes.org.
26 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
COMMENTARY
Community attitude key in economic development to create an opinion about our area. The community represents us all. When we, the staff at the North Iowa By GREGG GILLMAN Corridor Economic Executive Director, North Iowa Corridor Development Corp., tell a Economic Development Corp. company or site selector Gillman something, they expect e don’t know when they visit. Site selectors for potential new us to put a positive spin on it; that’s our job. So they want to know what you business or business expanthink. And what are you going to tell sions could be among us right now. them? They could be sitting behind you at We need you to help us retain and the Surf Ballroom or a NIACC Performing Arts Series performance. They recruit business. could be flying into the airport or be YOU’RE PROBABLY thinking, pumping gas next to you. They want to know what you think of “What can I do?” your city; what you think about busiKeep in mind that this phrase can be ness and industry; if you like living said in two different ways. here. And they’ll use this information In your mind, is it, “One person can’t
Your opinion could be crucial in a community’s site selection by business, industry
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make a difference”? Or is it the preferred message of an area wanting to progress, “Where do I sign up?” The definition of community development in the scope of economic development is varied. According to Janus Economics, a provider of site selection and real estate and economic development consulting services, here’s what it takes to make a community “development ready”: • A community united and working together. • Infrastructure sufficient to support growth. • Prepared sites and/or available buildings. • Effective economic development programs. • Community able to close deals. • All aspects of community because
you never know what’s going to win the project. IT MEANS that it takes efforts of an entire community to have an effective and complete economic development program. “Unlike commercial product marketing, place marketing requires the active support of public and private agencies, interest groups and citizens,” said Philip Kotler in his book, “Marketing Places.” “A place’s potential depends not so much on a place’s location, climate and natural resources as it does on human will, skill, energy, values and organization.” So what can one person do? How about this: • Talk about the community in a Continued on next page
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 27
TOOLBOX: MARKETING
Create a ‘love affair’ with customers Marketing expert: Woo, surprise, delight customers and make them feel special By MARY PIEPER mary.pieper@globegazette.com MASON CITY arketing in North Iowa is challenging because everyone is so spread out with small pockets of people here and there, according to national marketing expert Drew McLellan. The Internet adds to that challenge because “anyone can shop outside of market,” said McLellan, founder of the McLellan Marketing Group in Des Moines. This means local loyalty is difficult to maintain, said McLellan, who has shared his expertise with clients such as Nabisco, IAMS, Kraft Foods, Meredith Publishing and John Deere as well as many small business owners. Those small-business owners can overcome competition from big chain stores and the Internet by creating a “love affair” with customers, he said.
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he said. Although it is important to woo customers, at the same time business owners — both large and small ones — should “plan to be a boring drip,” McLellan said. One of the most common mistakes in marketing is changing logos or ad taglines, he said. If you change the color of a can of Coke from red to green, “It’s not Coke any more,” McLellan said. He also said a marketing campaign should be like a dripping faucet or a slow, gentle rain rather than a downpour that lasts for a short while and then goes away, because people need to see something eight to 13 times McLellan before they notice it. McLellan, who spoke at a seminar in January at North Iowa Area Community College, said learning to use social media such as Facebook, Twitter and blogs is important because consumers and competitors are already using it.
EACH SOCIAL MEDIA network has distinct advantages, according to McLellan. FOR EXAMPLE, if you own a small bookstore He said Facebook is good for creating an online and someone could easily order a book from Ama- space where “raving fans” of your business can zon rather than buying it in your store, customers congregate. will come to you anyway if you cultivate a relaTwitter is good if you want to provide informationship with them, according to McLellan. tion about your company in “bite-sized” pieces, He advises business owners to woo customers by according to McLellan. surprising and delighting them, and making them He said joining LinkedIn is a great way to share feel special. your expertise. Fortunately, “You don’t have to have a mariachi A blog takes longer to maintain but is good for band playing in the lobby” to surprise and delight establishing yourself as an expert in your field, them because consumers these days have become according to McLellan. very jaded, McLellan said. McLellan advised business owners who have A good example of doing something nice for Facebook and Twitter blocked at the workplace to customers is a massage therapist giving them a lift the ban. He said if employees are going to certificate for a free massage to give to a friend, waste time at work, they will to go eBay or Amazon
Gillman/From Page 26 positive light. • Understand that just because someone wins doesn’t mean someone else is losing. • Don’t understand the development plans for your city? Ask your councilperson. • Support local businesses.
• Vote in local elections. • Treat fellow citizens and strangers with respect — you never know who they might be. The North Iowa Corridor Economic Development Corp. is the lead marketing arm for our county, but you are the secret weapon.
So let’s strive to point in the same direction: The direction of progress. • For more on the North Iowa Corridor EDC, visit www. northiowacorridor.com. • E-mail Gregg Gillman at ggillman@northiowacorridor. com.
if social networking sites are banned — and unlike other Web sites, Facebook and Twitter can be beneficial to the business. SOCIAL MEDIA allows business owners to track what people are saying about the company through Google alerts. Even if what people are saying is negative, it gives the company a chance to respond and set things right, according to McLellan. For example, the CEO of the Best Buy Geek Squad — which repairs, installs or upgrades electronic equipment — discovered through a Google alert that a disgruntled customer had blogged about his recent bad experience with the Geek Squad. The company not only helped the customer with his problem, but named him an “Honorary Geek” and even gave him a Geek Squad uniform. The customer then updated his blog, stating, “I’m a raving (Best Buy) fan.”
28 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
TOOLBOX: FINANCES
Entertainment deductions are a tricky issue By JOYCE M. ROSENBERG AP Business Writer aking a client out for lunch is one of the most basic business activiBy JOYCE ROSENBERG ties there is. And it’s one that can AP Business Writer run a small-business owner afoul of the IRS. ou’re planning a vacation, and There has been a tug of war for years thinking about taking some between the government and businesstime during your trip to see a es over entertainment expenses. The client. Maybe you can get a big tax agency is on the lookout for companies deduction? Well, maybe not. that take excessive deductions, or that Many small-business owners find try to bundle together personal and the deduction for travel expenses to business expenses. be one of the most tempting, but also Barbara Weltman, a tax attorney in trying, parts of the federal tax law. Millwood, N.Y., and author of “J.K. Even aside from the issue of business Lasser’s Small Business Taxes,” said versus personal travel, many owners this has been one of the most litigated are surprised to find the IRS has areas in tax law. some strict limits on how big a What follows is a basic look at the deduction they can take. deduction for entertainment expenses. IRS Publication 463, Travel, EnterAnyone who wants to claim the deduction should read IRS Publication 463, Weltman said one of the biggest misTravel, Entertainment, Gift and Car takes that owners make with the enterExpenses. And it’s a good idea to go tainment deduction is that they don’t over these expenses with a tax profesrealize they can only claim 50 percent sional. of their expenses. So that $5,000 becomes $2,500 on a tax return, and WHAT’S ENTERTAINMENT? the tax savings is considerably less. Most commonly, people think of If your entertainment seems to be too business lunches or dinners, or taking lavish for your circumstances, the IRS clients to the theater, a sporting event or a nightclub. Anyone who has a busi- might put a limit on how much you can ness and plays golf is also likely to take claim. It might question your deduca client out for a round at a club. Rent- tions as agency employees review your return, or it might challenge your ing a room and holding a party can expenses during an audit. And you’re constitute a business expense. still subject to the 50 percent rule on But the IRS has rules that can limit the amount the government allows. the deductions a business owner can take for most forms of entertainment. BUSINESS MEALS For example, you can probably deduct There’s an old joke about two busithe costs of playing golf with your client. But you can’t deduct your mem- ness people who want to deduct the cost of their dinner out. bership fees at the club. “How’s business?” one asks. Reading the rules before you even “Don’t ask,” is the reply. spend the money on tickets or a meal is So, they move on to talk about anya good idea, especially if the event or thing and everything else, confident food is expensive. that they’ve satisfied the requirements for a tax deduction. THE 50 PERCENT RULE The IRS doesn’t think it’s funny. A business owner who spends Although many small-business own$5,000 a year on business meals and ers, as a matter of course, deduct the theater or sports tickets isn’t going to cost of any meal with a business assoget a windfall at tax time.
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Travel deductions: tempting but complex
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tainment, Gift and Car Expenses, lays out many of the rules that govern tax deductions for business travel expenses. The rules can be very complicated, and the government often differentiates between travel in and outside of the U.S. There are also rules for cruises taken for business purposes. Business owners should get some advice from a tax professional to help them navigate the tax code. But here are some basics about the business travel deduction: BUSINESS TRIP OR VACATION? A classic example: You’re going to Continued on next page
ciate, the government’s rules require that the main purpose of a meal or other form of entertainment be “the active conduct of business.” Moreover, it said in Publication 463, an owner must have “more than a general expectation of getting income or some other specific business benefit at some future time.” But the IRS does allow the cost of the meal to be deducted if it takes place directly before or after a business discussion. For example, you meet a client in your office and discuss a new contract. When you take the client out for lunch afterward, the meal should qualify for a deduction. It may turn out that despite your best efforts, you couldn’t cut a deal as a result of the meal. You can still deduct it. Tax professionals warn about entertainment, and meals in particular, that owners should keep careful records, and not just credit card receipts. Weltman suggests a diary that includes “who you met, what was the purpose, what was the date.” TICKETS TO EVENTS Deducting the cost of tickets to
events can be a little tricky. A careful reading of Publication 463 is suggested. For example, if you get the tickets through a ticket broker, you can only deduct 50 percent of the face value of the tickets. But if you buy tickets to a sporting event that benefits a charitable organization, such as a golf tournament, you can deduct the full amount of the tickets. If you decide to just give the tickets to your client rather than go yourself, the IRS gives you a choice to treat it as entertainment or as a gift, “whichever is to your advantage.” In this case, do the math. Under the tax law, businesses are limited to deducting $25 per gift per person in a tax year. So if you gave a client a $100 ticket as a gift, you can deduct only $25. If you treat it as entertainment, you could deduct $50, or 50 percent of the ticket price. Keep in mind, if the tickets are to be considered an entertainment expense, you’ll have to engage in a business discussion with your client or customer before or after the event. And, if you decide to go, then you must treat it as entertainment. WHAT IF IT’S YOUR FRIEND? OR SPOUSE? Often, business associates are friends. And many owners are inclined to deduct the cost of entertaining these friends. You still need to follow the rules of being able to substantiate that the meal or event qualifies for the deduction. “Just because you’re friendly with the person doesn’t bar the deduction, but it has to be legitimate,” Weltman said. If your client brings a spouse or significant other along, chances are you can only deduct what you spend on your client’s entertainment. But if it’s the sort of event where everyone brings a mate, it might be acceptable. In any case, consult a tax professional.
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 29
TOOLBOX: SOCIAL NETWORKING
Do’s and don’ts of social media marketing By PAM LONTOS Special to In Business
f you haven’t gotten on the Social Media Marketing (SMM) bandwagon yet because you think it’s just a fad with no real bottom line benefit, think again. One professional speaker has been using SMM for less than six months and has received two book contracts with mainstream publishers, has contracted four full-fee speaking engagements, has secured a keynote for a large international convention, has been contracted for a monthly column in a large distribution magazine, has received a consulting deal in a new niche market, and has contracted with two foreign governments for consulting services — all because of social media marketing. “But that’s just a fluke,” you may
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say. Not so. The fact is for those who do SMM regularly, these kind of results are more common than you’d think! If you’re ready to receive some serious benefits from your SMM campaign, adhere to the following dos and don’ts.
Don’t assume that you can abandon everything outside of the social media marketing realm once you start having some success. SMM is just one part of the funnel that brings people to your product funnel. It’s a • DON’T BE UNPREDICTABLE. useful and cheap part, You want people to know that but you also need the Orman they’re going to get a message from credibility and marketyou every Monday, Wednesday and ing from other traditional publicity Friday (or whatever days you decide). tools, such as print publicity, radio So pick a distribution schedule and interviews and television appearstick with it. If necessary, put ances. reminders in your calendar so you In addition, some online reputaremember to post your microblogs tion sites will give you a lower rankon those days. ing if you don’t have anything in the “real world.” Just remember, you still • DON’T ABANDON YOUR TRA - need media exposure and a physical DITIONAL PR. presence, in addition to your online
presence. Acclaimed financial expert Suze Orman is at the top of her game because you see her name everywhere — she’s interviewed in magazines and newspapers, is seen on TV and heard over the radio. That’s why so many of us rely on her advice; she is seen as the financial expert because she is all over the media. So, be sure to keep getting publicity in print and other traditional media, in addition to generating attention with SMM. • DON’T BE NEGATIVE. Unless your image or brand has something to do with complaining, don’t do it. Only complain if complaining is what you’re known for. It’s better to give positive reinContinued on next page
TRAVEL/From Page 28 a trade expo in Orlando, Fla., and decide to bring your family. You can deduct only the amount that you spend on business-related activities. So you can deduct the amount of what a hotel room would cost for yourself, but no more. If you rent a suite to accommodate your whole family, you can deduct only the price of a single room. When you take your family out for a meal, it’s not deductible. But if your spouse accompanies you to a business meal where spouses are expected to attend, his or her portion of the bill may be deductible. But check with a tax professional before you complete your return. Another classic example is to extend the amount of time spent in a business destination
for a personal trip. After the trade expo ends, you and your family spend a few days going to the Orlando attractions. From that point on, the only part of the family’s expenses that is deductible is the cost of your trip back home. Some owners try to deduct the cost of a vacation by including some minor business activities. That won’t go over with the IRS, which is very clear in Publication 463: “The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip.” “The predominant purpose of the trip has to be for business,” said Leon Dutkiewicz, a certified public accountant
with Margolis & Co. in Bala Cynwyd, Pa. “The primary purpose cannot be personal.” But if you do have to engage in some business activities on what is primarily a vacation, any expenses related to those activities can be deducted. The same rules apply if you send employees on a business trip. HOW MUCH CAN YOU DEDUCT? Generally, the IRS permits businesses to deduct the full amount of their travel expenses, including transportation, car rental, lodging, even dry cleaning and tips. But only 50 percent of the price of your business meals can be deducted. A business meal is considered entertainment even when it takes place during your trip.
And the IRS allows companies to deduct just 50 percent of what they spend on meals. If you like to live the high life when you’re traveling, be aware that the IRS does not permit deductions for expenses that it calls lavish or extravagant. The agency acknowledges, however, that an expense may not be considered lavish if it is “reasonable based on the facts and circumstances.” So the IRS might agree to your renting a luxury car to take clients to a black-tie dinner at a conference, but not for you to visit a manufacturing plant in an industrial park. Dutkiewicz noted that the IRS has standard per diem rates for lodging and meals in different locations across the country. You should not claim a higher amount than what the
government allows. However, if under the circumstances it’s reasonable for you to be paying more, you may be able to take a larger deduction. You can find those rates in Publication 1542, Per Diem Rates. Dutkiewicz said there’s no specific dollar amount that would raise questions at the IRS. As with other business expenses, the agency will consider the totality of a company’s circumstances in deciding whether to allow a travel deduction. So, he said, a business owner who sells software and is often on the road to visit customers is likely to have a large travel deduction that the IRS will accept. But a dentist who the IRS believes should have minimal business travel but claims a large amount might find his or her return questioned.
30 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
Pappajohn Business Plan Competition deadline is April 30 DES MOINES — The deadline for entering the 2010 John Pappajohn Iowa Business Plan Competition is April 30. New and start-up businesses (in business for fewer than four years) are eligible to enter the competition for the chance to win up to $25,000. For the first round, applicants must submit business plan information via AngelSoft. A link to the AngelSoft submission page is available at the competition Web site, www.IowaBusinessPlanCompetition.com. Based on the information
submitted in the first round, judges will select and contact businesses to submit full business plans. The selected businesses will be contacted May 12 and must submit full business plans through AngelSoft by June 30. The business plans will be reviewed, and seven to 10 companies will be selected to present their business plans to the judges. These businesses will be contacted the week of July 27 to schedule presentation times. Presentations will take place Sept. 9. After presentations are com-
pleted, three finalists will be notified. Each finalist will prepare a 15-minute presentation to be given at the Iowa Venture Capital and Entrepreneurs Conference in Des Moines on Oct. 5. Winners will be announced after the presentations. The John Pappajohn Iowa Business Plan Competition is designed to stimulate business development and provide support for outstanding business plans. This year a total of $50,000 will be awarded to the top-three submitted business plans
($25,000 for first prize, $15,000 for second and $10,000 for third). Honorable mention and $1,000 will be awarded to additional companies. Assistance with business plan entries is available at the Iowa John Pappajohn Entrepreneurial Centers located at Drake University, Iowa State University, North Iowa Area Community College, the University of Iowa and the University of Northern Iowa; the Small Business Development Centers throughout the state; and the business accelerators in Ames, Cedar Rapids, Davenport, Dubuque, Iowa
City, Red Oak and Mason City. The John Pappajohn Entrepreneurial Centers provide entrepreneurial education and business support, partnering with agencies like the Small Business Development Center (SBDC), the Iowa Department of Economic Development (IDED), Entrepreneurial Development Centers (EDCs) and local entrepreneurs to assist with funding and other business needs. Rules, eligibility, timelines and assistance information are available at www.IowaBusinessPlanCompetition.com.
SOCIAL MARKETING/From Page 29 forcement in your microblogs because people are bombarded with negative messages every day. You don’t want your message to be lost among the other negative ones. You want to be the one positive thing in people’s day. You want them to look forward to the next time they get your message. • DO FOLLOW THE RIGHT FORMAT FOR YOUR MICROBLOGS. Be sure that your micro-blogs include helpful advice, insightful tips or unique trends that your followers will learn from; this kind of information will grab their attention and make them want more. Each microblog should be 140 characters, including punctuation and spacing, in addition to your Web site link at the end. The more helpful and unique your messages are, the more interest you will generate, thus bringing more people back to your site. • DO “FUNNEL” YOUR SMM CONTACTS TO YOUR WEB SITE. The goal of your microblogs is not only to reach your target audience and help them solve their problems, but also to drive them back to your Web site to sell your products or services. That’s why it’s so important to include your Web site at the end of your microblog message. So, when your readers want more information or want to buy your products and services, they can go directly to the source: you! • DO HAVE A PLACE TO COLLECT ALL YOUR POSTINGS.
Anytime you do a post on Twitter, Facebook or any of the other SMM sites, you’re really creating a microblog. You need a place where your microblogs collect. Twitter provides that service, but if you use theirs you’re giving them all the traffic. Rather, have your microblogs collect on your own blog. Then you can have your long posts there, as well as your shorter microblogs. • DO DEVOTE ENOUGH TIME TO YOUR SMM CAMPAIGN. Individuals who are successful with SMM spend an average of five to seven hours per week developing and working within their network. If you can write your microblogs quickly you won’t add too much time. Remember, it’s not always about the number of contacts you collect, but rather having the “right” contacts and reaching your target audience. • DO MAKE SURE YOUR PROFILE IS 100 PER CENT COMPLETE. You won’t get ranked in the social media searches unless your profile is 100 percent complete. Realize that a photo for your profile accounts for 20-40 percent of your ranking, so if you don’t include a picture you’re setting yourself up for failure. Therefore, the biggest profile factor after your name and e-mail address is your photo. And by the way, logos don’t count as a photo, even if your logo includes a picture of a face. The bottom line is if you want your message to
spread through the Internet, make sure your profile is complete. Social media marketing is a vital addition to any PR campaign. When you follow these simple dos and don’ts, you’ll get people following your every move, which will lead to more customers and higher sales — the exact payoff every business needs. ••• Pam Lontos is president of PR/PR, a public relations firm that works with speakers, authors and experts. She is the author of “I See Your Name Everywhere” and is a former vice president for Disney’s Shamrock Broadcasting. Contact her at Pam@prpr.net or call 407-2996128.
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 31
TOOLBOX: ENTREPRENEURS
Risk and networking in entrepreneurship Pappajohn Center working to change culture in North Iowa to realize risk is essential and failure is nothing to be ashamed of
sibility study is that the business or enterprise will not succeed. In those cases the endeavor is avoided or altered and the failure is also avoided, but the result was also a positive one for those involved. Regardless of all the analysis there is still risk in By JAMIE T. ZANIOS the execution Vice President and Director, and market NIACC John Pappajohn Entrepreneurial Center changes et me spend a minute discussing risk as part of amongst other Don’t get me wrong, I entrepreneurship. influences. So am not rooting Risk and risk analysis are essential to entretaking risk is preneurship. At the NIACC John Pappajohn Entrefor failure, but important but preneurial Center, we are working to help change measuring rather advocat- also the culture in North Iowa. and undering a tolerance Too often persons that have taken a risk and standing the started a business and not fully succeeded at their of risk and ‘fail- risks are equally endeavor have been ridiculed or spoken about like important. ure’ as part of this, “Did you hear that John Doe had to close his I repeat, what Zanios business? Isn’t that a shame?” we hope to an entrepreThat kind of view is not prevalent in communichange is the neurial culture.” culture in North ties with high entrepreneurial activities. Iowa that sugOn the contrary, in many cases in Silicon Valley, — Jamie Zanios gests a business for example, those that have had to close a busiNIACC Pappajohn Center closing is a failness bare a mark of honor and experience that is ure. What it sought out by investors. represents is disappointing, yes, but it also represents a willingness to put oneself on the line and WHY? BECAUSE, in “failure and adversity” take a risk and that should be admired, applauded strength and knowledge are born. When those and encouraged. people in Silicon Valley begin a new business and Business churn — the number of businesses take another risk, they are not scorned by the investing public or local governments but are wel- started plus the number of business failures as a comed, encouraged and supported financially and percentage of total businesses in the area — is an important economic indicator; the higher the peremotionally. centage the more robust the economic activity. In fact, there are some venture capital compaThe more businesses started the better chance we nies and other organizations that will not fund a have for a successful growing economic environstart-up company by a person if it is his or her ment — and jobs. first effort and if he or she has not failed once The business incubator was envisioned to help already. Don’t get me wrong, I am not rooting for failure, address the need for more start-up companies and but rather advocating a tolerance of risk and “fail- increasing the churn. It also helps mitigate risk, but doesn’t eliminate it. ure” as part of an entrepreneurial culture. Dr. Jeffry Timmons, director of the Price Babson THE ENTREPRENEUR’S EXCHANGE (a NIACC College Fellows Program — considered one of the JPEC/SBDC-sponsored event to bring North Iowa top entrepreneurship programs in the USA — said, entrepreneurs together for information, network“Without failure an entrepreneurial environment ing and support) has proven a great success and does not exist.” attracted hundreds of entrepreneurs. This is another area where risk can be measured AT THE NIACC JPEC, we do not forget the and ideas floated to gain support and feedback. If importance of risk analysis as part of entrepreneurship, however, and that is part of the curricu- you are a business person, an entrepreneur or just have a passion, check out our Web site at lum for Fast Trac and our credit classes. Sometimes the result of a risk analysis or a fea- www.niacc.edu/pappajohn for information and
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schedules of upcoming entrepreneurship exchanges, learn about the business incubator and other activities and make plans now to attend the next event. Networking occurs at each of these sessions with entrepreneurs and business owners and those looking to start a business, learning from each other and sometimes becoming clients or vendors to each other. From an entrepreneurial standpoint, this is an important endeavor to help new and existing businesses network with each other and learn from each others successes and failures. We can grow North Iowa, but you, your idea and your passion are the key to our future success. The NIACC JPEC is here to help you realize your dream, provide tools and support along the way and serve as a guide throughout your business life cycle. Whether starting, growing or transferring ownership the NIACC JPEC has been of assistant to countless businesses and can help you too. Give us a call. ••• — Reach the NIACC John Pappajohn Business and Entrepreneurial Center at 641-422-4111 or 888466-4222; online, www.niacc.edu/pappajohn. Email Jamie Zanios at zaniojam@niacc.edu.
32 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
TOOLBOX: ENTREPRENEURS
Necessity is mother of entrepreneurs in tough times By MEGAN HORN University of Northern Iowa
ith the unemployment rate at 10 percent according to the Bureau of Labor Statistics, some people have had to find new ways to earn income and support their families. Many have turned to entrepreneurship, something experts have coined “necessity entrepreneurship.” According to Maureen CollinsWilliams, director of the University of Northern Iowa’s Regional Business Center (RBC), necessity entrepreneurs are people who “turn to self-employment because they are forced to by circumstances beyond their control.” Some people become entrepreneurs out of necessity; others begin businesses because they see an opportunity. As the economy continues to be bleak,
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necessity entrepreneurship will be a hot topic. A recent study conducted by the Kauffman Foundation called The Index of Entrepreneurial Activity, found that patterns provide some early evidence that necessity entrepreneurship is increasing and opportunity entrepreneurship is decreasing. And trends throughout history show self-employment increases during times of economic stress and flattens out during good economic times. These national trends are also being seen locally. “We are seeing more and more individuals who have been ‘forced’ into entrepreneurship because of changes in their employment resulting from the recession,” said Collins-Williams. “I expect that trend to continue and even increase in the coming year.” Collins-Williams noted that not
everyone turning to necessity entrepreneurship has lost a job. Some have simply had hours, pay or benefits cut and been forced to find new forms of income. In small communities it can be difficult for entrepreneurs and small businesses to find the assistance they need. Collins-Williams and the Regional Business Center dedicate time and resources to helping this sometimes forgotten group. Without these and similar programs, the small-business environment would be much different. According to the National Business Incubation Association (NBIA), 85 percent of businesses in business incubators are still in business after five years. Compare that to the 44 percent average after four years. Many don’t realize the impact that small businesses have on the American
economy. The Small Business Administration reports that small businesses represent 99.7 percent of all employer firms, employ just over half of all private sector employees, pay 44 percent of total U.S. private payroll and produce 13 times more patents per employee than large patenting firms. Necessity entrepreneurship is often overlooked but has a big impact. As our economy goes through ups and downs in the next few years, we will see the trend of necessity entrepreneurship change along with it, bringing new businesses and new opportunities. — Megan Horn is a marketing/public relations student assistant with the University of Northern Iowa’s Business and Community Services, a division of the College of Business Administration.
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 33
TOOLBOX: ENTREPRENEURS
Starting a business requires planning, solid advice By JOHN ENGLIN Certified Financial Planner, Investment Adviser Representative at Lincoln Savings Bank in Waterloo f you’ve ever fantasized about quitting your job and starting a business, you’re certainly not alone. However, it’s definitely not something to do on a whim — you’ll need time and good advice. A business startup requires parallel planning in advance for your business and personal finances. That’s because business owners — even those who are acquiring ongoing businesses or starting their own companies on the cheap — quickly find their business and personal finances are inextricably linked. That means that before you plan the business, plan your finances first. Here are some basic steps to consider right now:
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Get some advice first You need not one, but two sets of financial advice when starting a business. The first involves the viability of your business concept. You should understand your business idea inside and out before you launch and what your new company’s immediate and long-term cash needs will be. The second set of advice involves your own finances and how prepared you are for what will surely be a major lifestyle transition. Because new business owners frequently underestimate their new business’s expenses starting out, they can find themselves funding those business needs out-of-pocket. That means less money for day-to-day living expenses as well as long-term planning for retirement. That’s why it’s critical to consult a tax and financial expert such as a certified financial planner professional at the outset.
Get rid of your debts With the possible exception of mortgage debt, there’s very little “good debt” in the life of a businessperson. So while you’re researching your business concept and putting together your own financial plan, start cutting back and erasing as much credit card and adjustable-rate debt from your personal life as possible. The credit crisis is making it tough for any business owner — even experienced ones — to borrow money at attractive rates. You’ll have the most flexibility when you owe as little as possible.
Work on an emergency fund While it’s wise for everyone to have three to six months of cash set aside for basic living expenses in case they lose their job or face a medical emergency, emergency funds are particularly necessary for new business owners. Startups can be particularly expensive, and most businesses are not profitable from day one. Plan a more extensive emergency fund for yourself and for the business as well.
someone else. When you’re working for yourself, you become your own human resources department, and chances are you won’t be able to match your old employer’s buying power. If you support a family with these benefits or if you have particular health concerns, you need to price the out-of-pocket costs of such benefits before starting your own company — depending on the business and the cost of those benefits, you might want to rethink your plans.
Think about your legal business structure
Price disability coverage
Your personal financial situation and the kind of business you’re starting should determine the legal designation of your company. Before choosing a business structure, such as a sole proprietorship, S or C corporation, partnership, limited liability partnership (LLP) or limited liability company (LLC), owners should reflect on their business in the context of their overall financial life and ask themselves a series of questions: • Is the business going to be your primary source of personal wealth and daily cash flow? • Is it a side business? • Do you expect the business to fund your retirement? • Do you want it to provide other financial benefits? • Do you want to pass it on to family members or sell it to existing employees or outside buyers? The answers to these questions figure importantly into the decision, along with other key factors such as what type of business you’re starting, its risk factors, current tax laws, and regulations such as workman’s compensation.
Plan your health care and other basic benefits Automatic benefits are the plus side of working for
You might have short-term disability coverage as part of your current employee benefits, but that will likely end once you quit your job. You should price long-term disability coverage based on your present working salary so you can qualify for the highest possible benefit. Disability coverage is critical for self-employed people since they’re their own support system.
34 • IN BUSINESS
SPRING 2010 • GLOBE GAZETTE
TOOLBOX: ENTREPRENEURS
How you can make faster business decisions By BRUCE FREEMAN Scripps Howard News Service
ear Professor Bruce, I just opened a new office selling software to CPAs and realize it is important to move quickly in this competi tive business. But I’m not good at making fast deci sions. What’s the best way to make good choic es about marketing, products, new hires, and other services to help my business grow quickly? Answer: After conducting research on entrepreneurs, innovation and what it takes to grow a business, Theresa Welbourne, Ph.D., president and CEO of eePulse Inc., said that successful new business owners can make the best decisions by focusing on three main points: • First, maintain a positive attitude. Talk to other entrepreneurs and your customers on a regular basis so you know what is going on in your industry and the solu-
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tions you can offer. Keep your spirits high and your employees energized. You know your business best so trust your judgment and instincts. After all, these got you where you are now. • Second, when making decisions, it’s important to refer to overall vision, business goals and how your choices will affect those objectives. By having a solid business plan in place with specific milestones and budgets, it’s easier to make fast decisions. You can see where your company is now and how your choices will affect your current and future status. • Third, when your decisions involve others, it’s important to communicate your ideas and listen to feedback before making a choice. As you grow as an entrepreneur, you’ll acquire the skills necessary to make fast decisions and change quickly. And if your choices do
I protect myself from being scammed? What should I look out for? Bruce Freeman, The Small Business Answer: While countProfessor, is president of ProLine Commuless legitimate avenues nications, a marketing and public relations firm in Livingston, N.J., and author exist for connecting of “Birthing the Elephant” (Ten Speed investors and entreprePress). E-mail questions to Bruce@ neurs, so too do the SmallBusinessProf.com. unscrupulous individuals Freeman looking to take advantage of the situation. not work out you’ll know another. With commercial how to change course. For further informacredit increasingly diffiTo be successful in tion, please visit cult to come by, small today’s world, you have to www.eepulse.com. business owners and move quickly. Speed is entrepreneurs are turning Online loans essential. You have to to the Internet in search Dear Professor Bruce: I accept that some deciof an answer to their sions, made without ade- have been searching for a financial woes. quate knowledge, will be loan to expand my small “Unfortunately the business and have found less then perfect. But race to save one’s livelia lender online. How can then move on and make
About the Business Professor
hood often leads otherwise level-headed individuals to make unwise, spur-of-the-moment financial decisions,” said Rick Singer, co-founder and CEO of RaiseCapital.com. Singer offers these tips: • Beware of large upfront fees. Say no to unscrupulous brokers, investors and venture capitalists charging thousands of dollars in “start-up and processing costs” • Don’t be manipulated by the markets. Beware of Continued on next page
GLOBE GAZETTE • SPRING 2010
IN BUSINESS • 35
TOOLBOX: FINANCES
Raises or rebuilding? A business owner’s dilemma By JOYCE M. ROSENBERG AP Business Writer usiness is starting to creep upward at some small companies. And employees who have gone without raises or had their salaries cut over the past two years are hoping that more money coming in will lead to a raise in the near future. But owners who need to rebuild their businesses may not be able to give those raises. They may need to put the revenue toward equipment purchases they’ve had to put off. Or they may need to travel to more trade shows to prospect for new customers. It’s not an easy decision, especially in a company whose employees have sacrificed for the good of the company. “It’s a really tough call. You have to have a motivated work force,” said Jill McBride, who owns a six-person public relations firm, JZMcBride & Associates, in Cincinnati. She’s try-
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ing to decide whether to give raises or add staff as business improves. Human resources consultants advised owners during the recession to be open with employees about business and the challenges that their companies face. It’s no different now, when employees are hoping for raises that may not be forthcoming. McBride said she needs to decide whether to give raises or put new income into efforts to build the business. McBride said she gave bonuses rather than raises last year but didn’t cut anyone’s pay or the 401(k) match. And, “We didn’t let anyone go.” Now, she’s asking, if the company is better off adding a new person who can bring in new business rather than giving out raises. Amos Winbush III, CEO of New York-based CyberSynchs, said of not giving raises, “It’s not a decision I take lightly.”
Not only are the company’s 15 employees not getting pay increases but two went without a salary during the company’s first year in 2008, and CyberSynchs, which allows user to copy and store data from devices like cell phones, isn’t ready to repay them. Now that the recession is over and money is coming in, the company needs to expand. HR professionals say owners need to be sensitive to the fact that employees who have gone without raises are likely to feel some resentment if they see money going toward equipment or a new hire. So before an owner invests thousands of dollars in, say, a new server, he or she needs to let the staff know that raises won’t be forthcoming. And, an owner needs to explain to employees that they stand to ultimately benefit from the purchase. “If they can tie getting the server to increased productivity or ability to serve customers
that will result in a higher level of revenue,” employees are likely to accept the boss’s decision, said Rick Gibbs, a senior human resources specialist with Administaff, a Houstonbased company that provides HR outsourcing. Likewise, a new employee who can bring in more business will help generate income that can fund those raises. Gibbs also suggested telling staffers, “we need to get additional business before we loosen up the budget on salaries.” In that way, the boss is letting workers know that raises are still a priority, and that as business continues to pick up, they’ll be rewarded. Don Mallo, a vice president at Extensis, a Woodbridge, N.J.-based company that provides HR outsourcing, recommends that owners also explain what other steps the company took before making the wage freeze. For example,
what other expenses were cut. Owners should try to give employees some lead time before announcing that there won’t be any raises. So if you usually give raises in April, “don’t do it in the second week in March,” Mallo said, explaining that staffers need time, ideally two or three months, to prepare financially for a salary freeze. You may not be able to give staffers more money right now, but there are other benefits that won’t cost as much. And maybe they’ll cost the company nothing. Mallo noted that some staffers would rather have time than money. So creating a flextime policy or allowing them to telecommute on some days is likely to be well received. He also said that improving benefits like health insurance will also be appreciated. “It’s another way of showing concern for the employees,” he said.
PROFESSOR/From Page 34 stock scams, often featuring offers that merge an entrepreneur’s firm into a dormant shell company that’s already traded on the public market and strictly under someone else’s control. The shells are essentially dead, and if you don’t investigate before getting involved your company could end up dead, too. • Check backgrounds. Don’t be fooled by a fancy-looking Web page with eye-catching graphics and bold headlines. Verify the organization or individual’s true identity before progressing further. Legitimate brokers, for example, are always registered with the
state’s securities division or the National Association of Securities Dealers. • Avoid quick fixes. Real brokers go through the traditional steps of meeting face to face, mapping out a financing plan and taking the time and thought necessary to make the partnership work. • Use common sense. Never give out your bank account information to a questionable organization or individual, be wary of e-mails from outside the country, investigate any unusual offers or requests thoroughly, and report any suspicions of fraud to the appropriate authorities.
that involve up to five parties in every transaction. Such inefficiency accounts How to control fees for costly processing fees, from small purchases which typically range between Dear Professor Bruce: I own 1.5 percent to 4 percent of each a neighborhood hardware store debit- and credit-card purand get charged steep process- chase plus an additional 20 to ing fees each time a customer 30 cents that is charged every makes a small purchase with a time the merchant “swipes” a credit or debit card. Am I stuck card. with these costs? Or, are there Unfortunately, the only way alternatives? for businesses to completely Answer: Processing fees can avoid processing fees on small be a nightmare — especially items is to go “cash only” for when customers frequently use such purchases. credit and debit to make a high Fortunately, community number of small-value purbanks are beginning to offer chases. These fees are a result “mobile payments services” as of global processing networks a means of helping businesses For further information, visit www.raisecapital.com.
reduce overall processing costs. With such a service, merchants can accept payment for goods or services from customers whose cell phones are linked directly to their checking or debit accounts. This is a direct payment system that only involves the customer, the merchant and the bank. Because there are no middlemen involved, processing fees are relatively nonexistent, providing merchants with a means of significantly offsetting expenses associated with credit- and debit-card transactions.