November 2011 OFDealer by Alicia Ellis

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BIFMA September Numbers: Orders Up 1%; Shipments Up 8% Last month, the Business and Institutional Furniture Manufacturers Association (BIFMA) released its statistics for September and while the numbers managed to stay in the plus column, they showed the momentum of the past few months may be starting to slow. BIFMA said September orders were up just 1% compared to the same month last year, down from August’s 5% increase. September shipments increased 8% year-over-year, also down from last month’s 16% gain. September marked the first single-digit percentage increase in industry shipments since August 2010, noted industry analyst Budd Bugatch of the Raymond James investment house. Bugatch said the September numbers were “a bit below our expectations” and suggested prior year order growth comparisons will remain difficult for the next several months. He said order growth will likely hover around the flat line, plus or minus a few percent. The key macroeconomic determinants of office furniture consumption remain decidedly mixed, Bugatch contended. “Positively, corporate profits/balance sheets are strong; however, business confidence is waning and new hiring has been subdued,” he noted. In addition, Bugatch said that while new office construction appears to have stabilized somewhat, it seems unlikely to recover rapidly and the Architects’ Billing Index (a leading industry indicator) plunged to 46.9 in September after a rebound above 50 in August (Any score above 50 indicates an increase in billings). “Our positive industry thesis rests on our view that the broad economy will continue to ‘muddle through’ and will avoid a double dip recession. We continue to believe that the industry is in the early-to-mid innings of a mult-iyear expansion, though acknowledge that sustainable growth over the longer term will ultimately require better job growth and more significant net absorption of office space,” Bugatch said.

ECi Hosts Over 800 System Users at 2011 Connect Conference Dealer technology provider eCommerce Industries, makers of Team Design and the DDMS Furniture Module among other programs, hosted more than 800 attendees earlier this month at its Connect 2011 national user conference. Attendees came from 48 states and eight countries at the event which brought together systems users from all the business

Taking on New Products or Services: How Do You Know What Will Work? As this month’s cover story indicates, most dealers today have recognized the need to go beyond their traditional business model and many Simon De Groot of them have already added new products and services to strengthen their position as a total solutions provider for their customers. It’s a great idea, particularly when the core furniture product market remains stubbornly soft for many. But with such a broad range of new product and service options out there, how do you determine which ones make most sense for your own business? Earlier this year, consultant Jim Heilborn offered some answers to that question as part of an article he contributed to our April issue on developing a sustainable business model. It’s worth revisiting some of what he had to say in the context of this month’s cover story. Working from Jim’s points, here are some questions to ask about any new product/service opportunity you may be considering: Is there likely to be a long-term sustainable need for it? Do we have the internal resources—financial, facilities and equipment, personnel—to provide this product/service effectively? Does our staff have enough training to offer this product/ service? Do any aspects of the new offering hold outsourcing opportunities, to minimize our initial investment? How will it impact cash flow? How will it impact our current internal processes? Is there actually enough profit to make it worthwhile? What is the downside for our business to deciding not to pursue this particular product/service opportunity? Basic questions, maybe, but you absolutely need good answers for them all before proceeding if your new venture is going to meet expectations. Hopefully, some of the new avenues explored in this month’s cover story will spark a few ideas to consider for your own dealership. And if you’re not sure the time is right, perhaps you might want to ask what well may be the most important question of all: If I’m not looking for new product and/or service opportunities in these challenging times, how likely is it that my competition is?

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Industry News continued from page 3 sectors ECi serves. Also on display: 43 vendor partners of ECi, providing related products, programs and services. “Everyone involved with this conference had a great experience,” said Ron Books, president and CEO of ECi. “It was a huge success for our customers, our staff and the partners who participated.” Added Traci Johnson, ECi SVP of global marketing, “Another great benefit of the conference was the opportunity for our customers to connect with each other. They really enjoyed meeting fellow users of their software solutions and educating each other on best practices and problem solving.” The Connect conference provided attendees with in-depth training on their specific software and also a chance to learn about solutions that integrate with their software. Additionally, many attendees commented on how much they enjoyed meeting not only fellow users of their particular software, but also users of the other solutions ECi provides. “I think our customers were really amazed and delighted to discover the huge community of which they are a part,” continued Johnson. “I really enjoyed the three days I spent at the ECI Connect conference,” commented Mark Lorenson, network administrator at Herman Miller dealer Intereum in Plymouth, MN. “I was able to network with my peers, gain valuable knowledge about ECI and get a better understand about TeamDesign's vision for the future.”

New Study Finds More Mobile Workers Choosing to Work at the Office A new study released by Steelcase in partnership with CoreNet Global last month shows that even though technology and alternative work strategies are freeing people to work just about anywhere, the majority of employees are still choosing to work in the office. The study found that 86% of companies now offer alternative work strategies such as home offices, hoteling and mobile work, up from 50% in 2009. An additional 16% of respondents said they plan to implement an alternative work strategy this year. Despite the trend toward increasing mobility, however, nearly 50% of all organizations reported they have 10% or less of their employees regularly working remotely. Just 3% have half or more of their employees utilizing alternative workplace strategies. Seventy-two percent of respondents said they view the office as the best place to interact with colleagues, and 40% said the office provides access to much needed tools and technology. The survey also found organizations continue to rethink their real estate strategies to gain efficiencies and improve effectiveness. For most organizations, net usable space per employee now continued on page 6

DP3 Drawer Pull Family Grows Again! Our venerable DP3 drawer pull line continues to maintain its sophisticated appeal; it is subtle yet bold, sleek yet substantial. And now comes in a total of seven sizes! First offered in just one width, 1¼”, then 3” and 4”, a few years ago 6”, and now new sizes of 8”, 10”, and 12” wide. All seven sizes are in stock in seven ﬁnishes. Plus, we can do any width and any ﬁnish you may require. Please contact us and we’ll take care of it.

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Industry News continued from page 4 ranges from 150 to 225 square feet and nearly 55% of respondents plan to cut their current real estate portfolio by up to 10% this year alone. That number is up from 47% in 2009. In addition, 57% of respondents reported using their real estate savings to reconfigure team spaces and 41% reported accommodating alternative work settings such as cafes that provide the access to people and technology that workers want. The Steelcase/CoreNet survey was launched in March of 2011 and included respondents from a range of industries throughout North America and Europe.

Davies Office Refurbishing Becomes BIFMA-Certified In Albany, NY, Davies Office Refurbishing says it has become the first office remanufacturer ever to earn level Sustainability Certification from the Business and Institutional Furniture Manufacturers Association (BIFMA). Davies earned level Certification for its remanufactured Avenir and System 9000 panel system lines. “Incorporating the requirements of BIFMA level certification into our remanufacturing processes was nothing more than a logical step forward for an organization that has viewed being green as the foundation of our business for over 60 years,” commented company president Bill Davies.

Inscape Announces Executive Appointments Inscape Corporation recently announced the appointment of Rod Turgeon to the position of president and chief executive officer. Turgeon comes to Inscape from Xerox where he had a successful career that spanned over 20 years. He held several senior positions, including vice president of Xerox Global Services Canada; senior vice president, United States Solutions Group; vice president of strategy, business development and marketing, Xerox North America; and most recently, chief operating officer of the operations unit of Xerox Developing Markets in the Western Region. In addition, Madan Bhayana has stepped down as chairman of the board of Inscape. Doug Lord, also a long-time Xerox veteran, was elected to serve as the new chairman.

Brandeis University Sustainability Fund Receives $25,000 Gift from National Office Furniture

“To qualify for level certification, the BIFMA standard not only scores the product, but also its producing organization and facilities, for sustainability in four areas: Materials, Energy and Atmosphere, Human and Ecosystem Health, and Social Responsibility. At Davies Office Refurbishing, we’re committed to environmentally-responsible policies and practices in each of those areas and our status as the industry’s first remanufacturer to earn level certification reflects just how seriously we take that commitment.”

HPFI Introduces Second Life Program HPFI (High Point Furniture Industries) has introduced Second Life, a program designed to provide a solution for disposal of unwanted casegoods and seating while preserving the environment when no other avenue is available.

Brandeis University has received $25,000 from National Office Furniture under the manufacturer’s Gift of Inspiration for Education program.

Under the new program, HPFI will work with local charitable and non-profit organizations to help furniture find a Second Life.

National also announced the launch of its third annual $25,000 Gift of Inspiration for Healthcare to be awarded in early spring.

The program keeps used product out of landfills, assists important charitable groups accomplish goals, relieves businesses of additional liability and may present a tax benefit.

National started the Gift of Inspiration program in 2009 and has given away $110,000 since the program’s inception.

For more information or to discuss Second Life options, contact your local HPFI sales representative or visit the HPFI Online Marketing Center's Environmental & Sustainability link.

Brandeis University is National’s third Gift of Inspiration for Education winner and plans to use the money to boost its Student Sustainability Fund, a program in which students help implement projects to support a greener campus environment. continued on page 7

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Industry News continued from page 6 The Hon Company Adds Power and Data Management to Voi Desking System

The HON Company has added power and data management to its Voi desking system line. Whether a smaller desk system that requires a basic connection of 3-prong outlets for a laptop user or a larger, multi-station configuration that requires increased electrical capacity, the integration of power and data management enables Voi to provide and streamline connectivity in the most comprehensive way, the company said.

Management Changes at 20-20 Technologies 20-20 Technologies Inc. has announced a leadership change which it said was related to implementation of a comprehensive organization redesign initiated in conjunction with the company's latest strategic plan. The company announced the immediate departure of Craig Yamauchi as executive vicepresident, Americas. In the interim, CEO Jean-François Grou will personally lead the management team. "We have full confidence in the ability of our existing sales and services teams to manage day to day operations during the transition period. I made this decision with a long term perspective, as we anticipate sustained development of our business in the Americas," said Grou.

NeoCon East Show Success The ninth annual NeoCon East brought in 6,748 attendees and 267 exhibitors to the Baltimore Convention Center, November 2-3, 2011, once again making it a hugely successful show in the Mid-Atlantic region.

it was launched in 2003, which is indication of how important the Federal Government has become to many manufacturers,” said Mark Falanga, president, MMPI. “We continue to see growth in the number of attendees, with an eight percent increase over 2010, as well as the numbers of quality exhibitors. These numbers prove that the NeoCon East show is the largest and fastest growing commercial furnishings exposition on the East Coast.” Of the 267 exhibitors NeoCon East hosted, 189 were on the GSA schedule, more than any other NeoCon East show. This is the largest concentration of products and services for commercial interiors on the GSA schedule. The show also featured Government Interiors, which focused on products and services geared to federal government procurement specifiers, and a GSA Integrated Workplace Acquisition Center booth on the show floor to assist attendees. NeoCon East offered more than 30 CEU-accredited programs in 12 educational tracks. It also offered free 60-minute GSA-sponsored seminars. This year’s keynotes, Victor Olgyay, AIA of the Rocky Mountain Institute and Jhane Barnes, men’s fashion designer, and an innovator in contract and interior textiles, carpeting, eyewear, and office furniture, were hugely successful with standing room only attendance. NeoCon East 2012 will return October 17-18, 2012 to the Baltimore Convention Center.

Ice Edge Releases Experience Catalogs for ICE Ice Edge Business Solutions has introduced Experience Catalogs for its ICE 3D design and specification software. Experience Catalogs go beyond wireframe to offer a new way to add product catalogs into ICE, bringing interior layouts into virtual 3D environments. The new Experience Catalogs offer 3D product catalogs in monochromatic grayscale and sepia tones, for use in layout models. Products in ICE’s Experience Catalogs include full specification capabilities that allow for instant pricing, true-to-life interactive flythroughs and high quality renders. Experience Catalogs can be used solo in a layout or in conjunction with other manufacturers.

“NeoCon East has grown tremendously since NOVEMBER 2011

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news El Paso Dealer Patricia Holland-Branch Inducted Into Local Business Hall of Fame

an effective way to do just that last month, through its first annual Green Forum.

Our congratulations go to Facilities Connection CEO Patricia Holland-Branch, who last month was honored as a 2011 inductee into El Paso’s Business Hall of Fame. Inductees were selected by the board of directors of the local Junior Achievement organization, to recognize business leaders for their contributions to the local economy and the community at large.

Patricia Holland Branch and her husband Dave at her Business Hall of Patty founded the Haworth Fame awards ceremony dealership, originally known as PZH Contract Design, in 1987. Today, it positions itself as a “Global Modular Solutions and Systems integration company,” with an offering that includes program and project management, logistics management and installation services, modular walls and raised access floors, modular power and data cabling, integrated systems installation and more. “I was humbled and surprised by the honor, which traditionally has been awarded to larger companies in our region,” Patty said. “As a naturalized citizen of this great country, I have always had a deep sense of responsibility to making my community a better place to live, work and raise a family.” The dealership encourages community involvement for its entire team and supports several local not-for-profit organizations through contributions of furniture, design and services as well as financial support, Patty added.

Forrer Business Interiors Holds First Annual Green Forum

The two-day event offered architects and designers the opportunity to earn GBCI CEU credits to maintain their LEED credentials, with three back-to-back CEU courses. Topics included choosing the right materials, designing for sustainability and a case study presentation on a local project that combined historic preservation with LEED Platinum certification. The dealership reached out to the Wisconsin Green Building Alliance to help develop and market the event, further raising its profile with a key audience. “Our first Green Forum was not only an educational event, but also provided some outstanding networking opportunities for attendees,” reports Forrer’s Elizabeth Everson. “Feedback has been overwhelmingly positive and we’re already starting to plan for similar events for next year.”

RJE Business Interiors, Indiana Dealer, Hosts Fundraiser for Local Cancer Agency In Indianapolis last month, Knoll dealer RJE Business Interiors came up with an innovative way to give back to the community and strengthen their ties with the A&D community at the same time. They did so as hosts for The Red Event, an evening that provided an opportunity for local designers and architects to sell their handmade goods and food items, with 10 percent of the proceeds going to the Little Red Door, a local non-profit that provides support for people with cancer who lack financial means or adequate insurance. Also on the program: a silent auction with all proceeds benefiting the Little Red Door. The event drew some 150 attendees and raised about $4,000 for the cancer agency, reports RJE’s Sheryl Hudson. “This is the third year we’ve hosted The Red Event and it’s become a terrific networking opportunity,” she says. “It’s also a very effective way to give recognition to some talented designers and architects and support a very worthy cause.”

With the industry as competitive as it is today, finding opportunities to differentiate your dealership and position yourself as more than just a source of product has never been more important.

Indiana Dealer OfficeWorks Hosts ‘Great Start’ Event for Local Area Boys & Girls Club

In Milwaukee, WI, Steelcase dealer Forrer Business Interiors found

Also in the Indianapolis area last month, Herman Miller dealer OfficeWorks was also hard at work on a good cause. continued on page 9

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Dealer News continued from page 8 With a generous assist from 20 local A&D firms, the dealership hosted “Great Start,” a special event that provided children ranging from 5-13 years old with the opportunity to learn about careers in the world of architecture and design. The event was held in conjunction with Mitch’s Kids, a partnership created between Indiana Governor Mitch Daniels and the Boys and Girls Clubs of Indianapolis. Some 75 boys and girls spent the afternoon working on &D projects. “As a dealer,” says OfficeWorks’ Joyce Posson, “we’re always looking to build relationships with the A&D community and it’s even better when we can do that and help the community at the same time.”

San Francisco’s Pivot Interiors Acquires Workplace Resource, So Cal Dealer Bay area Herman Miller dealer Pivot Interiors has acquired Workplace Resource, another Herman Miller dealer with locations in Los Angeles, Orange County and La Mirada, CA.

NPP plans to lead with AIS systems furniture and will offer clients nationwide account and project management, asset management, design and space planning, warehouse delivery and installation services, storage programs, rental programs and more, the company said.

NBF Introduces Solutions for Healthcare Industry Milwaukee-based National Business Furniture (NBF) has expanded its product offering to include a wide range of furniture designed specifically for healthcare environments. “The healthcare category has been a good one for us all along, but customers wanted a wider selection of products,” explained Randy Farah, vice president of merchandising for NBF. “We’ve added more exam and patient room products and accessories to meet their needs,” said Farah. Furniture and equipment specific to healthcare facilities will be available through the NBF catalog, NBF.com, and outside sales channels. New categories include patient and exam room furniture, bariatric seating, carts and accessories.

The acquisition creates an alignment of expertise, resources and solutions to serve the major markets in California and makes Pivot the largest Herman Miller dealer in the state, the company said. "This is a natural progression for our vision of Pivot," said Pivot principals Harvey Vander Baan, Barbara Carlyle and Ken Baugh in a joint statement. "Our selection of Workplace Resource, and Ray Stromback to lead the operation, strengthens Pivot's ability to serve the California market and continues our strategy of diversified growth.”

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Ray Stromback, an office furniture veteran more than 30 years’ industry experience, has joined Pivot as a principal and head of its Southern California operations. "We are very excited to see Pivot Interiors expand into the Los Angeles marketplace," notes Curt Pullen, president of Herman Miller North America. "We have a great partnership with Pivot in the Bay Area and look forward to building the same level of teamwork with Ray Stromback and the team in Los Angeles."

UNIVIEW VISION® ± SEE THE DIFFERENCE verage as low as $7.45 per month per employee. nual coverage for routine eye examinations. nual allowannce ($130) for frames, lenses and/or contacts. ditional discounts of 15% to 40% on unlimited purchases of non-covered materials like extra pairs off glasses ± even after covered benefits are used up. cess to a broad, convenient, national nettwork of more than 44,000 providers and n provider locations including independent optomettrrists, ophthalm h ologists and national retail locations like:

Sequoia Office, Boston Area Dealer, Re-Brands as National Premier Partners Newton, MA-based Sequoia Office has announced a new identity as National Premier Partners and a new initiative designed to take its products and services to customers nationwide. Business operations began last month. Stew Frewald, principal, and new president Laurene Cedrone are joining forces for the new effort. “Our vision will be accomplished with our experienced design staff, our customer service team that is second to none, and our experienced sales team,” said Cedrone. NPP is staffed by a team that brings over 100 years of combined industry experience to the dealership, the company said. NOVEMBER 2011

Kathy Manolas 800.542.6672 kmanolas@iopfda.org

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OFDA Announces Plans for 2012 Dealer Strategies Conference in Las Vegas This year, OFDA raised the bar again with a highly successful 2011 Dealer Strategies Conference at the J.W. Marriott Starr Pass Resort & Spa in Tucson.

As a starting point, we are providing below a partial listing, in no particular order, of the ideas for 2012 breakout and general sessions that our 2011 attendees have suggested.

Conference attendance was up more than 50% from 2010 and participants’ comments and ratings on the education program in a post-conference survey were the highest in recent memory, with 95%+ rating the event “good” or “excellent.”

We invite you to add your thoughts on which topics are most pertinent and to provide the names of compelling industry and professional speakers you may have encountered recently. Addressing the new economy

So what’s the “encore” for 2012? OFDA decided to consult beyond its board of governors and invited all 2011 participants to vote for either a Las Vegas or convenient Chicago suburban resort location. The result: By popular acclaim, OFDA will hold its 2012 Dealer Strategies Conference at the new Cosmopolitan Hotel in Las Vegas on October 28-30. Please reserve these dates on your calendar now for an industry-wide event you will not want to miss!

Sales management and compensation topics

Based on input from 2011 conference participants and OFDA’s board, we are continuing to tweak our successful program format to further enhance the educational offerings, the networking opportunities, the convenience of attending and the overall conference experience for 2012.

Succession planning in the sales department

We will again launch the conference on a Sunday afternoon, maintain extensive networking and 90-minute breakout sessions throughout the schedule and include two morning keynote sessions on Monday and Tuesday (October 29 and 30). In deference to those who enjoy Halloween celebrations or need to accelerate a return to their businesses, the 2012 conference will be slightly more compact, concluding before lunch on Tuesday, October 30. With the additional travel convenience of our Las Vegas location, this should allow most attendees to avoid an additional overnight at our conference location if they wish. OFDA has formed a 2012 conference planning committee of 12 industry veterans that includes a diverse cross-section of dealers, installers and manufacturing company executives who are known for their creative ideas and willingness to contribute their experience and expertise to what is typically a several-month planning process.

Compensation/position descriptions for project managers Creating stronger dealer-manufacturer partnerships Managing joint dealer-manufacturer presentations to clients and bids

Re-invigorating veteran sales professionals The buying criteria of end-user decision makers in key vertical markets How to conduct great employee candidate interviews Recruiting and hiring from a “millennial’s” viewpoint Customer retention for ongoing project business Strategies and tactics to implement culture changes Inside sales vs. outside sales strategies Accountability strategies for sales vs. operations personnel Furniture installation operations Warehouse operations Strategies and formulas for open bid management Coaching difficult employees—when to/not to make the effort Rewarding employees/employment profit Sales negotiation training Further training on use of LinkedIn, integrating other social media continued on page 11

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OFDA News continued from page 10 Maintaining employee enthusiasm in “mature” dealerships

One-on-one financial review for dealers using OFDA benchmarks (by advance appointment)

Effective use of mobile technology

Strengthening dealer-service provider relationships.

Effective use of Revit and BIM Sales training—make it worthwhile to send sales people to this event How to position yourself as a successor, help key managers be considered by the manufacturer and current owner Business valuation workshop Deep-dive on best practices in selling and installing wall systems Vertical market sales and profit-boosting strategies, including ergonomic products Safety training Technology tools to manage service, delivery and financial management from individual work orders to large projects—where’s the FedEx type solution?

With breakfast and lunch included in the cost of admission, special discount pricing starting at $189 per night on rooms at the Cosmopolitan and great rates on flights to and from McCarran Airport, we’re betting that the 2012 Dealer Strategies Conference Las Vegas will be the most informative, productive and cost-effective conference ever. Conference registration and hotel reservations will be available after the first of the year. Whether you are a regular OFDA conference attendee or someone who has never attended but might consider, we would welcome any and all suggestions you have on how to make our 2012 event a “must attend” function for you! Just contact Chris Bates, OFDA president, at 703-549-9040, x 100 or cbates@ofdanet.org. For more information on www.ofdanet.org/conference.

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ProjectProfile:

A labor of

Love

for BKM By Alicia Ellis

If you’re lucky, there will be a few times in your career when you get a project that changes your life for the better. You’ll have the opportunity to get much more out of a project than you give and not just in terms of money. It will offer you inspiration, motivation, joy and self-satisfaction beyond your wildest imagination. Such was the case for the staff of BKM Total Office of Texas when they took on a project to furnish their local Dallas Ronald McDonald House (RMH), part of the Ronald McDonald House Charities organization which provides a “homeaway-from-home” at little to no cost for families of hospitalized children. Approached through a pre-existing relationship with the architectural firm who had designed RMH’s new 60,000 square foot building in the heart of the University of Texas Southwestern Medical District, BKM was asked to furnish 54 bedrooms, six transplant suites, a study loft, teen room, media room, dining space, activity room for small children, communal living room, administrative offices and even a game room. And, of course, they had to do it all on a limited budget. To keep costs low but still create a cohesive environment, BKM pulled out all the stops, calling in favors, searching for used product, getting donations from local companies, and enlisting its in-house team of skilled craftsmen to reupholster pieces and even create custom headboards, parson’s tables and mounted side tables.

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Project Profile continued from page 12 “I believe that our custom capabilities and resourcefulness played a huge factor in being given this project,” said Debbie Zarsk, senior account manager in charge of the RMH project. “We spent four to five months alone sourcing product to translate into a cost-conscious solution with the quality and aesthetic RMH was targeting.” Ultimately, the project was put together from a blend of new, refurbished and custom-produced pieces. For example: Administrative workstations are remanufactured Steelcase Montage panels and Universal components, complete with new paint, new playful panel fabric and new worksurfaces. Dining areas feature custom banquettes and children’s tables. A tween room sports a Moroccan-themed window treatment. A movie room offers reupholstered mobile lounge chairs repurposed from a corporate donor. Guest rooms received custom parson’s tables as well as custom-upholstered frame headboards. Custom-made cushions using sample fabrics donated from manufacturers added comfort to window seating. “We went far beyond typical office furniture for this project,” said Zarsk who was able to secure significant discounts on bean bag chairs, window hardware, exercise equipment and even an air hockey table. “Everyone—from the architect and clients to the vendors and installers—worked together on a collaborative effort for this worthy cause. If we couldn’t build it or refurbish it, we found it. RMH is a prime example of the success generated by integrated project delivery.” A smoothly run two week installation wrapped up the yearlong project, with BKM having saved RMH more than $100,000 from donations and discounted pricing. And when it opened to families with sick children being treated at area hospitals, the new RMH provided the perfect setting for hope and healing. “I’ve never been so challenged and yet so fulfilled in my career,” said Zarsk. “The project was embraced by everyone we contacted for help and everyone here at BKM. It was a true labor of love.”

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Status Updates: Your Audience is Waiting By Wayne Breitbarth Using the LinkedIn Status Update box to share pertinent business information is a strategy that will pay big dividends when used correctly. Note the emphasis on the word business in regards to status updates. That is not to suggest you should never use the Status Update box to share personal information or make personal requests, but strictly personal information should be kept to a minimum—or shared on Twitter or Facebook, where such material is not only expected but encouraged. The LinkedIn website states, “LinkedIn connects you to your trusted contacts and helps you exchange knowledge, ideas, and opportunities…” Exchanging knowledge and ideas with your network will build the trust that is necessary to create an atmosphere for positive collaboration and financially advantageous opportunities. You are able to share status updates either from your personal profile to your first-level connections or from your company page to your followers. The latter is a relatively new feature and allows your company to now have a voice as well. Follow these rules when using the Status Update Box, and you will be on your way to building strong professional relationships that will provide a steady stream of sales and referrals.

DO THIS: 1. Share links (using a URL shortener) to interesting articles, websites or video that individuals in your network might appreciate. Don't worry about whether all of your connections will find the information equally valuable. Use engaging words to grab the readers’ attention and encourage them to click the link. 2. Pose a question that could lead to solving a problem you have, like: "Does anyone know some good controller candidates?" One of my connections saved $20,000 in recruiting fees by posting an update like this a couple days before calling a recruiter. 3. Conduct an informal poll of your network relating to a topic of interest to you, such as: "What interest rates are you seeing for NOVEMBER 2011

lines of credit in the current environment?" 4. Mention a person or a situation that might be helpful to some of your connections; for instance, "I just met with John Jones from ABC Moving Company and found out they are saving companies lots of $$ on moving and relocation services." 5. Talk about an event you are attending or have attended to encourage involvement and/or questions about what you learned there. 6. If you are a job seeker, don't say, "Hey, I'm still looking for a job." Rather, mention job fairs you are attending, people you are interviewing with, networking events you are going to, etc. Remember—having your name show up on a consistent basis on your entire network's home page is extremely important whether you are in job-seeking mode or not. 7. Use the "Like" feature when you see a helpful update from one of your connections. This shares the update with your entire network and is a great way to give the writer of the helpful update exposure to your network that he/she wouldn't normally have. 8. Use the “Share” feature. Similar to the “Like” feature, your update is shared with your entire network. However, “Share” enables you to also share this information with your LinkedIn groups, your Twitter followers, directly to individual connections in the form of a LinkedIn message, and to others by entering email addresses.

DON'T DO THIS: 1. Mentioning personal information—like what you had for breakfast and the fact your dog is sick today—is unprofessional and suggests to your professional network that you don't really respect their time. 2. Continually talking about specific products and services takes people back to the days of big newspaper ads and screaming radio messages. If you constantly talk about the great prices you

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LinkedIn continued from page 15 have on your seating and cubicles, your audience may get turned off. This is not the purpose of social media, especially LinkedIn.

7. Don't waste your time reading updates from people who violate all of the above. By using the "Hide" function, you can stop an individual's status updates from showing up on your home page.

3. Avoid topics that might be sensitive to some of your audience. I am too embarrassed to even think about, let alone share, some of the items I see posted as status updates. You know what I mean. If your mother wouldn't want you talking about it, don't put it in your LinkedIn Status Box.

When you see an annoying status update and decide you do not want to see any further updates from this person, simply scroll over to the right side of the status update and unveil the word "Hide." Once you activate this function, you will be freed from receiving further updates from this individual.

4. Think twice before posting your physical whereabouts. I have heard several real-life examples of people's homes being broken into after putting out an "I-am-out-of-town" update. (Sorry, all you Foursquare users, but I had to share that.)

Follow these simple suggestions, and you will be on your way to being a model LinkedIn citizen whose position of respect and authority will pay big dividends.

5. The LinkedIn/Twitter interface is causing people to have too many LinkedIn updates as well as inappropriate updates. If you are using that interface, be selective about the updates you share between the two platforms. LinkedIn and Twitter are designed with different purposes and strategies. 6. The netiquette on LinkedIn is no more than a couple updates per day, whereas on Twitter you are expected to tweet many more times per day.

Wayne Breitbarth is an owner of M&M Office Interiors in Pewaukee, Wisconsin. Wayne began moonlighting as an unofficial LinkedIn trainer in early 2009 and has now led seminars for over 10,000 business professionals across the country. He was a featured speaker at last year's OFDA Dealer Strategies Conference and has recently released a book entitled The Power Formula for LinkedIn Success. Contact Wayne at wbreitbarth@mmoffice.com or by visiting www.linkedin.com/in/waynebreitbarth

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On the Path to New

PROFIT OPPORTUNITIES By Alicia Ellis

Over the years, OFDealer has written about many different vertical market opportunities for our readers. We’ve offered advice on growth segments like healthcare, government and education and highlighted dealers who have successfully targeted them. We’ve written about growing your green message, the transactional market and service opportunities. What we haven’t discussed up until now are product categories that dealers should be considering to not only gain some extra income but also to bolster their position as a total solutions provider to their clients. They range from easy add-ons to complex (but highly profitable) ventures that require strong commitment from the top and significant investment in people and infrastructure. In virtually all cases, they represent an opportunity to strengthen those all-important customer relationships and prevent competitors from finding a way to get a foot in the door. continued on page 18

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Cover continued from page 17 SURVEY SAYS...

Interiors, Inc. in Delta, CO, the decision to take on a new product segment is very much a joint effort.

In a survey conducted last month by OFDealer, we asked readers to comment on the new product categories that they’ve been exploring recently and asked for their perspective on the opportunities they offer.

Ninety percent of dealers surveyed reported they currently offer products in all of the following categories: Demountable Walls Specialty Seating Training Room Furnishings Computer Accessories Files & Storage Products Signage

More than half of dealers surveyed reported that they offer products in the following categories: Soundmasking – 66% Upholstery Cleaning – 65% Rental Furniture – 65% Decorative Accessories – 55%

Finally, fewer than half of the dealers responding reported a focus on the following categories:

“Our salespeople gather information about customers’ wants and needs and then we work with our manufacturers’ reps or a manufacturer directly,” said Hauerkamp. “And, because of our remote rural location, we often conduct extensive Internet searches for information.” “We usually look at the market opportunity with existing customers—is there a need and what are the resources/investment we must make to go into a new product offering or service,” said Matt Sveen, president of Intereum in Plymouth, MN. Sveen also pointed out the importance of looking at the anticipated ROI to determine the payback period relative to the investment. In addition, noted Ronald Mazany of Mazany Contract Interiors in Jamestown, NY, market area exclusivity is an important factor to consider. “As a company we discuss new opportunities together and offer the new products or services if we feel our customers will come to us for the items,” said Mazany. “With the economy being so tight in the last three years, all of our competitors have been selling their lines with little or no margin. The profit is very small on furniture, so we have chosen to focus on alternative products to offer our customers. Diversifying our offering has allowed us to grow our business.” According to the OFDealer survey, products currently generating the most interest as potential new sources of income included AV equipment, raised flooring, soundmasking and lighting.

Wall coverings – 35% Window Treatments – 40%

While the majority of dealers reported that the decision makers in non-office furniture related categories were the same as with office furniture sales, there are a few exceptions; especially when working within the design or construction industries.

Flooring – 47% Raised Flooring – 45% Lighting – 47% AV Equipment – 15% For some categories, interest among office furniture dealers depended on a dealership’s size and client base. In the wall coverings and window treatment categories, about half of the dealers surveyed said they had no interest in carrying these types of products, choosing instead to leave these to the interior design community. “Product offerings are generally brought to us by manufacturers' reps or by a direct mail/email from the manufacturer,” said Stan Vuckovich, president of KBM Workspace in San Jose, CA. “Suggestions also come from our salespeople, from industry literature and from customers.” According to Thomas Huerkamp, president of ProSpace

And, for 60% of those surveyed, dealers said they were able to rely on their salespeople to adequately handle the sale of new products to new and existing customers without having to rely on a dedicated salesperson.

SOLUTION-SAAVY... At Intereum, a product specialist is part of the team that focuses on architectural products. “These specialists are supported with design, project management, and client services,” Sveen explained. The Herman Miller dealer has been offering flooring and raised flooring over the past three years and is considering AV equipment as an extension of its services. continued on page 19

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Cover continued from page 18 “We compensate our salespeople well for selling these products to help overcome any concerns they may have about the risk of bringing a new product into their valued account,” he explains. “We have engaged our salespeople to focus on all of their existing accounts—we already have the relationship so it is easier to gain access for new products and services since they already know us and trust us.”

Going that extra mile to service and support all of their products in addition to office furniture has led to record sales at ProSpace over the past two years. Examples of how they’ve successfully marketed alternative product categories include: Providing free ergonomic evaluations to existing customers Training end-users on how to properly adjust office chairs

Mickey Spooner, president of Allstate Office Interiors in Hamilton, NJ, has a dedicated salesperson for flooring who has helped sales of carpet and tile grow by more than 20% in the past few years. In addition to Haworth and AIS, Allstate offers a variety of furniture and related products including demountable walls, decorative accessories and rental furniture. “We market Allstate as a single source solution,” says Spooner.

DEALER EVOLUTION... So too does ProSpace Interiors in Delta, CO. An independent office furniture dealer since 1968, ProSpace (formerly Office Furniture Design Center) offers a wide variety of products and services that have evolved over the years based on customer demand. “At ProSpace nobody is allowed to be untrained,” said ProSpace president Tom Huerkamp. Every one of the company’s 15 full-time employees is knowledgeable to some degree on all products offered, he added. ProSpace has expanded its offering over the years to include raised flooring, demountable walls, specialty seating, artwork, decorative accessories and signage in addition to supervising outsourced business to local flooring and window treatment providers, Huerkamp reported. Having previously employed an ergonomics specialist, ProSpace also offers ergonomic computer accessories like keyboard trays and monitor arms and workstations with sit/stand capabilities. Over the past two years, Prospace has also become actively involved in the sale of furnishing for outdoor spaces. “A few years ago a customer asked if we could furnish their outdoor patio and in my world, we never say no,” laughed Huerkamp. “More and more corporate spaces, hospitals and schools are incorporating outdoor spaces for networking and breaks. We found a great company with a good dealer program and have grown ever since. And, making the job even more lucrative, ProSpace purchased the machinery necessary to secure furniture in place.”

Not only selling planters for decorative purposes but hooking the customer up with a local nursery that can advise the client on what types of plans are best suited to the planter purchased and what type of soil to use to keep plants healthy In Toronto, Steelcase dealer Mayhew, with its four locations and 150 employees, has also implemented an effective total solutions approach. In addition to furnishings, Meyhew currently offers just about everything to furnish any size and type of office including wall coverings, window treatments, all types of flooring, demountable walls, decorative accessories, soundmasking and audiovisual equipment. “Over the course of our evolution as a business, we uncovered expanding client requirements and sought creative solutions to provide full service in their workplace,” said Andrew Healy, Mayhew’s vice president of operations. “We recognized that our suite of products and services needed to go beyond the traditional furniture offerings and saw opportunity to drive greater margin business and add value to our clients who were seeking these solutions in the workspace,” said Healy. “Most prominently, we saw and continue to see how technology has changed the way people work. We wanted to ensure we were progressive and that we could respond to the changing needs of our clients. Having integrated technology solutions and supporting services strongly advances our competitive edge.” Mayhew has actively embraced Steelcase’s integrated technology products including Mediascape collaborative furniture environments, ENO interactive white boards and the Room Wizard room scheduling system. They also have partnerships with suppliers like LG, a manufacturer of monitors, televisions and projectors, who further broaden the range of their product offerings and capabilities. “Specialty products and technology do require deeper training at times that while not a prerequisite for early client engagement are needed for closing deals and after-market service requirements,” said Healy. “Mayhew takes a consulcontinued on page 20

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Cover continued from page 19 tative approach to the marketplace and expects our salespeople to speak beyond mere product features and benefits. Our products business unit is an in-house contingent of experts in design, ergonomics, construction, furniture and related industries.”

For Schroeder Solutions, a Teknion and Global dealer based in Waukesha, WI, Logi-Sound is the soundmasking provider of choice. The company’s showroom or “Idea Center,” as they call it, is a key selling feature and allows clients to actually see the products offer installed and in use.

For Carrie Setliff, managing partner of Image Business Interiors (ibi), a Teknion dealer in Virginia Beach, VA, a foray into audiovisual equipment and soundmasking over the past two years is adding 15% to yearly revenues with margins that reach as high as 30%.

According to Schroeder president Scott Geirhahn, 1/8 of the company’s sales are attributed to walls, floor coverings, and acoustical solutions. With margins normally 6-9 points higher than other products and its own in-house installation team, these categories offer a lucrative opportunity to reach out to new and existing customers.

“ibi recognized the opportunity to not only increase profits but service the customer with the ‘One Stop Shop’ approach,” said Setliff. “In regards to AV, we have partnered with a local company and we sell their AV equipment and they sell our conference furniture on AV only projects. We each get a percentage from the other’s sales and our clients remain ours.” Setliff’s soundmasking solutions make for a great add-on to business, she reports. “The changing workplace footprint opens the door for the soundmasking sale to not only be an easy one, but a natural fit which makes good sense to the client,” said Setliff.

NOVEMBER 2011

Whether it’s trash receptacles, ergonomic accessories, soundmasking, flooring or demountable walls. It’s all about keeping your eyes open to your clients’ needs and finding a way to be the one that’s providing the solutions. Not only will your clients thank you through their continued support, but your company and your sales staff will thank you for providing new sources of income.

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C&S

ESOPs: Differences in

Corporation Environments

In last month’s article we discussed the basics of ESOPs, how they work, their advantages, their complications and possible disadvantages.

In addition, we looked at Steve Victoria, the sole owner of VECI, a 35-person office furniture dealership who, having weighed the pros and cons of ESOPs, decided with the help of his advisors, to pursue this exit strategy. Now, let’s take a look at some of the alternatives that Steve can pursue depending on how his dealership is structured (CCorporation or S-Corporation). We will primarily look at the tax treatment difference between the two different entities but before we do that, let’s just recap the ESOP basics from last month’s article. Also, remember that for the ESOP to be successful, it is actually an advantage if the dealership (if a C-Corp.) or its owners (if an S-Corp.) pay significant tax at maximum rates. That indicates significant earnings, a portion of which can be dedicated to supporting the ESOP. Also, recall that the biggest advantage for many owners is the fact that the purchase by an ESOP is accomplished via pre-tax instead of after-tax dollars, because funding for the payment of the stock purchase price comes from tax-deductible company contributions to the ESOP.

differences from other types of qualified retirement plans: ESOPs can borrow money. No other qualified retirement plan can borrow money. It would be considered a “prohibited transaction.” ESOPs can engage in transactions with “parties in interest,” unlike any other qualified plan. Who is included in “parties in interest”? Both the dealership itself and the dealer who owns it. ESOPs are allowed to invest primarily in the stock of the sponsoring company. Again, in other qualified plans this would be considered a “prohibited transaction.”

C-Corporation ESOPs Now, let’s get back to Steve Victoria, and let’s assume that Steve’s dealership is currently a C-Corporation. If Steve is interested in either a partial or a complete sale of his dealership interest, and if he is also interested in deferral of capital gains tax upon the sale of his ownership, then doing a CCorporation ESOP could work well for him. If properly implemented, IRS Code Section 1042 allows owners who sell their stock to an ESOP to defer tax consequences of any capital gains they realize.

What is an ESOP?

Section 1042 has a number of requirements which must be met for the tax deferral to be available. Steve has to have held his ownership interest for at least three years, and after the sale the ESOP must own at least 30% of the stock in VECI.

An ESOP is a qualified retirement plan, typically a profit sharing plan, that must invest primarily in the stock of the sponsoring employer. It is subject to a number of legal requirements. An ESOP has three key

One additional key requirement of IRS Section 1042 is that to achieve deferral of capital gains upon the sale of ownership, the proceeds must be reinvested in U.S. domestic equities (either stocks or bonds).

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OFDEALER

By Ken Steifler As long as the sales proceeds remain invested this way, no capital gains taxes on the sale to the ESOP will be due until the replacement investments are sold.

In addition, if replacement investments are held until death, then those U.S. equities would receive a step-up in tax basis, resulting in no taxation should the heirs turn around and sell the investments. Therefore, it is possible that Steve can sell VECI to the ESOP and never pay any taxes on the gains from the sale.

C-Corporations: Tax Considerations Contributions to the ESOP are tax deductible (principal and interest) ESOP sales proceeds are tax-free for shareholders, provided the rules of IRC Sec. 1042 are followed. In addition to being able to deduct ESOP contributions for tax purposes, VECI can also deduct dividends that are paid to the ESOP.

S-Corporation ESOPs Now, let’s take a look at how Steve’s situation would be different if the dealership were currently an S-Corporation (again, primarily from a tax treatment standpoint) and if we assume that Steve is planning for a 100% sale to the ESOP. In an S-Corporation, income taxes on profits are paid by the shareholders rather than by the S-Corporation itself. This yields an incredible benefit if all or part of the S-Corporation stock is sold to an ESOP. Since an ESOP is a tax exempt retirement trust under the IRS Tax Code, in a 100% sale the ESOP becomes the single shareholder of the company. continued on page 22 PAGE 21

ESOPs Continued from page 21 Combining an S-Corporation with the shareholder (i.e. the ESOP Trust), which is tax exempt, allows ALL the profits to be tax exempt, making VECI’s effective income tax rate zero! Therefore, the S-ESOP gets its advantage from having its income be tax-free, as compared to the C-ESOP, which gets a deduction for its contributions and dividends paid to the ESOP. An ESOP owned S-Corporation is effectively a tax-exempt for-profit business, and tax savings can fund a high percentage of the purchase price of the company’s stock.

S-Corporations: Tax Considerations S-Corporations do not pay tax at the corporate level, shareholders pay tax. ESOP Trust is exempt from income tax. Therefore, to the extent of the ESOP’s ownership, corporate earnings are tax free. Taxes are only paid by the employee-participants in the ESOP when they receive distributions from the ESOP plan.

Planning Issues There are some unique tax advantages to both the S-ESOP and the C-ESOP. You may be wondering if it is possible for Steve to have his cake and eat it, too? The answer is Yes! If Steve’s dealership is currently a C-Corporation, the ESOP can purchase Steve’s stock and he can take advantage of the Section 1042 tax deferral on capital gains from the stock sale if he meets the requirements. Following the stock purchase, the dealership can elect to convert from a C-Corporation to an S-Corporation, and from that point forward it has the tax shield of being owned by a tax exempt ESOP Trust. If Steve’s dealership is an S-Corporation, he could revoke his S election on December 31, 2011, then sell 100% of his dealership interest to the ESOP on January 2, 2012. If you take away anything from this article, it shoud be, “Don’t try this at home.” ESOPs require competent advisors to work through all these details, as well as the many other issues

that need to be analyzed and discussed before deciding to do an ESOP. In the right situation, an ESOP can be a terrific exit strategy for a dealer, but if the situation is not ideal, then an ESOP should not be pursued. DISCLAIMER: The information contained in this article is general in nature and is not legal advice. This article includes a compilation of content originally published by Business Enterprise Institute, Inc. ("BEI") and is used here with permission from BEI. Ken Stiefler, CExP is a member of the Business Enterprise Institute’s Network Of Exit Planning Professionals. For more information, contact Ken via email or visit www.theexitfactor.com ken@theexitfactor.com

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