SBM April 2011 by St. Louis Small Business Monthly

SBM

ST. LOUIS

The Source for Business Owners

Small Business Monthly

St. Louis’ Most Reliable Companies How to Get Money from Friends and Family How to Be Your Brand

april 2011

ST. Louis’ TOP YOUNG ENTREPRENEURS

what they have that you don’t*

* Hint: It ain’t just youth.

Lending to small businesses is a #1 priority for us Commercial Real Estate Rates as low as

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Visit your local U.S. Bank today and we’ll help you get the type of credit solutions you need to grow your business. Cathy Filanda Busines Banking 314-418-2340 usbank.com

*All applications are subject to normal credit approval. Advertised rate is as of 3/29/11 and subject to change daily. Call your business banking expert for current rates and terms. The rate assumes automatic payment from a U.S. Bank Business Checking Account. Standard fees apply. Refinance of existing U.S. Bank business loans are excluded. Member FDIC.

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hen Steve Phillips, owner of Phillips Furniture, needed assistance with financing for a new building, he turned to EDC Small Business Finance and its SBA 504 Loan Program. “We had a very good relationship with Citizens “The (504) process was National Bank,” Phillips said. “Our banker at Citizens introduced us to the EDC.” seamless. There were Phillips was looking for approval for his loan and he didn’t want to spend countless hours no bumps in the road. away from his business during the process. “The process was seamless,” he said of working with the EDC. “It was done very well and very professionally. There were no bumps in the road. It was non-eventful, which is how you want the process to be.”

It was non-eventful, which is how you want the process to be.”

Said Phillips, “The 504 allowed us to take a portion of the total loan and, because of its low interest rate versus the traditional lender’s rate, make it much more affordable. Plus, the SBA offered 20 years of protection, which was very important to me.” The EDC also made the process easy for Jim Mason, owner of Bridgeton and Chesterfield Carstar. “My experience has always been with Doug Schell (EDC), and it’s always been a piece of cake,” said Mason, who is using the 504 funds to expand his Bridgeton location. “Doug makes it user-friendly and gets it done. There is no paperwork, but they do it all. All we do is the application, and they take it from there. Doug might have a lot of paperwork on his end, but he never passed it on to me. It’s not a complicated process. Doug makes it easy.”

The EDC and the 504 Loan The SBA 504 Loan Program enables growing businesses to secure long term, fixed rate financing when making a fixed asset acquisition. EDC Small Business Finance is a Certified Development Company (“CDC”) that helps promote economic development throughout the State of Missouri as well as to the Illinois counties of Jersey, Madison, St. Clair, Monroe, Bond, and Clinton. According to Doug Schell, Vice President at EDC, the biggest misconception when it comes to the 504 is the time commitment. “We actually only need the same information that an applicant would give their banker,” Schell said. “EDC takes care of preparing the application from the information provided and then we sit down with the borrower, go over it for accuracy and get their signature. The EDC takes care of the rest.” The EDC is now one of the top 504 lenders in the region. Schell believes that is because of the organization’s background. “We have a very experienced staff at the EDC. Mark Diliberto and I have a combined 24 years of working with the 504 loan program. Our closer, Debbie Wissmann, has been closing 504 loans for over 14 years.” Who is right for a 504 loan? “If you are a small business looking to acquire real estate or interested in reducing your costs of buying fixed assets, like machinery and equipment, then the 504 is worth looking into,” Schell said. The EDC, as a non-profit enterprise, is interested in what is best for your small business. If the circumstances are such that the 504 may not be the best option for you at this time, we will tell you and help you find the right fit.”

How the Program Works Each 504 Loan package has three elements:

1. The borrower provides a minimum of 10% of the project total. (Start-up companies and special use facilities will require 15-20%). 2. The EDC lends a maximum of 40% of the Project total (up to $5 million). 3. A private lender, usually a bank, lends the balance of the project’s total cost (typically 50%).

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The interest rate on the 504 loan is fixed and is generally a little above the rate of 5-year or 10-year Treasury Bonds. The maturity is 10 or 20 years. The interest rate on the bank loan is negotiated by the borrower and typically is floating.

Mark Diliberto and Doug Schell are ready to help you with a 504 Loan today.

EDC Small Business Finance 4 ST. LOUIS SMALL BUSINESS MONTHLY /April 2011

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SBM

ST. LOUIS

The Source for Business Owners

Contents

Small Business Monthly april 2011

April 2011

Ron Ameln, president 314-569-0076, ext. 102 ron@sbmon.com

ADVERTISING pat coates, vice president 314-569-0076, ext. 109 pat@sbmon.com tina dumay, sales consultant 314-569-0076, ext. 106 tina@sbmon.com EDITORIAL jeremy nulik, creative energy officer 314-569-0076, ext. 108 jeremy@sbmon.com

JULIA paulus, editor/writer 314-569-0076, ext. 107 julia@sbmon.com

PHOTOGRAPHY BILL SAWALICH, Barlow Productions 314-994-9990 info@barlowpro.com SUBSCRIPTIONS $21.50 for 12 issues. Online: http://store.sbmon.com Pat Coates 314-569-0076, ext. 109 pat@sbmon.com Our Editorial Focus Our country was founded by visionaries who believed in free enterprise through individual determination. We support that spirit and hold that the future of our area lies in the growth and development of small businesses and the efforts of entrepreneurs. We are dedicated to supporting and promoting that growth. St. Louis Small Business Monthly is St. Louis’ locally owned business publication, bringing business tips, strategies and analysis to the presidents, CEOs, owners and top executives of 18,000 businesses in the St. Louis Metropolitan region. SBM, founded in 1988, publishes every month and also provides information at www.SBMon.com and through a variety of business-related forums and events. St. Louis Small Business Inc. 2451 Executive Dr., Suite 109 St. Charles, MO 63303 314-569-0076 314-432-7016 fax www.sbmon.com www.stlouisbusinessexpo.com info@sbmon.com © St. Louis Small Business Monthly 2011. All rights reservered. FOUNDEd by Katie Muchnick & Bill Schneider 1988 Judy Meador Owner & Publisher 1991-2007

Taran Hensley, Mom’s Originals

Cover Story

17 Top Young Entrepreneurs Each year SBM features the area’s Top Young Entrepreneurs. With passion and drive, each of 2011s Top Young Entrepreneurs began building their businesses despite inexperience or a down economy. Find out what keeps these owners enthused about entrepreneurship every day.

Features

26 Financing Your Business

Can’t get funded by a traditional lender? Find out how to finance your business through family and friends. Also, learn how local county organizations and credit unions can support your business.

Departments & Columns 6 Editor’s Letter 8 Board of Directors 8 Hiring Smart 9 Sales Moves 9 Ask The Banker 10 High Voltage Marketing 10 Marketing Works 12 Book Review 12 What I Learned 12 Practically Legal 14 Best in Business 16 Special Report: Technology 34 Stick Yourself Out There 34 Small Business Success 35 Value Proposition 35 It’s Your Biz 36 Business to Business 37 Calendar 38 Time with the Boss ABOUT THE COVER Cover photo by Bill Sawalich, Barlow Productions.

EDITOR’S LETTER BY JEREMY NULIK

Not Youth Alone...

eing chronologically young is a fleeting condition. So fleeting that we humans have taken absurd actions to re-experience it – conquests, trophy spouses and City Slickers. However, “young” also has a negative connotation. In the context of business, some view it as a synonym for naïve. Even Homer points out, “In youth and beauty, wisdom is but rare!” This idea hinges on a correlation between experience and wisdom – the more experiences you have, the wiser (and thusly more successful) you will be. At the ripe old age of 18, the distinction between experience and wisdom was made clear to me. I was sitting in the office of Al Carius (head men’s cross country and track coach at North Central College) who is easily one of the most successful coaches in the history of coaching (45 years of coaching, a combined 21 national championships, Sports Illustrated Coach of the Century). During my first meeting with Al, I was making the decision as to where I would spend my college years. I knew I wanted to run competitively and, since I was aware of Al’s success, I thought I would impress him with a desktop-published flyer of my personal best times from high school. All of my experience was there in front of him in beautiful (yet rustic) Papyrus font. He didn’t even look at it. Flipping it over, he leans toward me and asks, “Do you love to run?” “Sure,” I say. “We run twice a day here - once early in the morning and again in the afternoon. Do you love to run that much?” he asks. Let’s see, what’s the right answer? “Yeah. I think so,” I say. “Good. Because, I don’t care how good your times are. If you don’t love to run, you won’t make it here,” he says. What struck me was how little he cared about what I had done. But, Al had seen the same experiences from hundreds of young men Nothing but love. Jeff (left) and for over 30 years. My past meant little. While he dismissed my experi- Randy Vines, owners of STL-Style, are unapologetic lovers of St. Louis. Their ence, he also empowered me to make a decision, a wise one, based personal passion fuels their creativity on nothing more than being honest about what I love and having and business growth. the courage to follow it. So, even in my youth, I could be wise. (Of course, I decided to compete there, but that is another column.) What Homer says is true, “In youth and beauty, wisdom is but rare!” And it is this rarity, a coupling of wisdom and youth, that has lead to the success for the North Central Cross Country and Track program and this convergence that we honor with our Top Young Entrepreneurs section (expertly penned by the young and wise Julia Paulus on page 17). It is in this section that you will encounter rarities such as Jeff and Randy Vines, coowners of STL-Style, an extremely local t-shirt design company. There is no distinguishing between where their passion for St. Louis ends and their business begins. “We are local and committed to the city,” says Randy. “We didn’t set out to become rich. We were inspired by our love for the city and want to make it an even better place to live. We remain active in outside regional and national organizations and use our company as a platform for city advocacy.” Their courage to follow their passion has allowed their business to grow and, most recently, to expand to a larger storefront on Cherokee Street. This wisdom to follow what you love may seem hackneyed. However, there is nothing rational about entrepreneurship. It is putting your ass on the line. And it is the unabashedly irrational that we hope to inspire with this year’s Top Young Entrepreneurs. What do you love? Send it to jeremy@sbmon.com. n

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Tom Ruwitch, p. 10

Money follows passions, not the other way around.

David Siteman Garland, p. 19

Small businesses have spent the past two years bracing their businesses and reacting to the economic tides. With the economy headed toward recovery and with interest rates at historic lows, now is the time to consider restricting their debt so they can be poised to take advantage of new business opportunities.

Shelly Nischbach, p. 31

Rewards should be freely bestowed throughout the year. That helps keep your team motivated. Sincere and public recognition of team members who have made significant contributions to the company is always appreciated. Who doesn’t like being acknowledged for a job well done?

Susan Solovic, p. 35

6 ST. LOUIS SMALL BUSINESS MONTHLY / apRil 2011

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ST. LOUIS SMALL BUSINESS MONTHLY / april 2011 7

HIRING SMART

BOARD OF DIRECTORS

How do I keep my cash flow level? Why Did You Get into this Line of Work? Each month Susan Martin dissects a typical interview question and offers employers tips for hiring smart.

Interview question: Why did you get into this line of work? Why ask: Probing an applicant’s career interests and ambitions will give insight into the individual’s motivation and conviction regarding her field of work as well as the position in question. Follow-up questions: Start with broad questions that can’t be answered with a simple yes or no. Ask increasingly specific questions that reveal detail and get at the truth behind the initial answer. “Why did you major in _____ rather than _____?” “What aspect of your work life do you feel passionate about?” “What aspects of your career have not lived up to your expectations?” What to listen for: Focus on the candidate’s reasons for choosing his field of work. Are the reasons compatible with his successive work experiences and with the requirements of the position? Does he show enthusiasm when describing previous jobs? Do the applicant’s questions about the open position reflect a sincere interest in the job, or do the questions simply indicate a desire to get a foot in the door? Answers to these questions may be clues about how long the candidate will be happy to stick around as an employee.

Over the course of the year, there is an ebb and flow to my business’ sales and subsequently its revenue. Our peak season is from May through September, and the rest of the year it is difficult to find business in our direct area of expertise. I know most businesses have a natural cycle with ups and downs in sales throughout the year. But what I am wondering is how I can run my business to keep up cash flow. How do I make my cash flow more level throughout the year? THE ANSWER FROM THE EXPERTS

Diversification. You have to find something to do with the tools and resources that are available for your primary season of income to keep the investment. Whatever it may be, producing income (cash) of some sort is necessary, or your tools and resources will eat you. We have had to find niche places to keep equipment working so that you can have cash-producing jobs up to 12 months of the year. The other issue we have found in this economy is payment terms. We have lost over $200,000 in the last two years to contractors filing bankruptcy and bad debt. Don’t let people get into you because of past reputations. At this point in the game, as it has been for many years, cash is king! –Jeff Hansen, Hansen’s Tree Service

Susan Martin (susan.martin@ aaimea.org) is member answer center coordinator for AAIM Employers’ Association 8 ST. LOUIS SMALL BUSINESS MONTHLY / april 2011

Increasing revenue and decreasing costs will improve cash flow. A good start is to prepare an annual budget, cash flow analysis and break-even analysis to determine cash needs outside of “peak season.” Then look for ways to expand “peak season,” e.g., another line of business to lengthen the season. Can you pre-bill/presell for the following year like a lawn service? Will vendors provide special credit terms? If peak-season net earnings generate enough cash, set some aside for slower months. Are you saving or reinvesting for expenses in slower months? Do you earn enough to cover expenses in slower months? If not, consider revamping your business model/plan. Examine expenses and look for operating efficiencies and ways to minimize costs. Analyze your pricing model. Is your gross profit sufficient? Is your volume high enough to support a cycle of five months? Addressing these questions will help you identify opportunities to level your cash flow. –Robin Bell, Brown Smith Wallace LLC

“A good start is to prepare an annual budget, cash flow analysis and breakeven analysis to determine cash needs outside of ‘peak season’.” –Robin Bell

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SALES MOVES BY JEFFREY GITOMER

ASK THE BANKER

Preparing for the Coming Sales Surge

re things getting (slightly) better? Are your sales (finally) on the increase? It seems as though there’s a slight sales surge going on, but no one’s talking about it much – probably because no one wants to jinx it. The economy is still fragile; the world is even more fragile; and with elections taking focus, politicians of all sorts are finally realizing that jobs and small businesses are the priority. That only took three years. I believe that there’s going to be at least two years of feast – that there will finally be some semblance of economic recovery for those affected. (It’s important to note that many businesses have thrived through these times.) Question: Will you get your fair share of this economic surge? Answer: Only if you’re ready. One notch more ready than your competition. Reality: Most companies (maybe you) cut everything and everyone. Time to get a new mental outlook for what’s ahead. Challenge: What are you doing to prepare for the years ahead so that you can take full advantage of the sales surge? Here are the 10.5 things you need to do as the economy begins to rebound: 1. Make certain everyone’s attitude has shifted to positive. Not just salespeople’s. Everyone’s. If you make a big sale and the customer calls for help and gets a grump in accounting or shipping, you lose. 2. Maintain pricing to the best of your ability, even if your competitors discount. Price pressure has lowered your profit for the past three years. Enough! Get back to profitability. Anyone who continues to bow to price pressures in these next two years the way he or she did in the past two years is a fool. As a seller’s market finally emerges, it’s time to hold price and let quality and service shine, let delivery and availability shine, and let value and relationship shine. 3. Be prepared to tell the customer

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what you can do, not what you can’t do. It’s a new day. People are calling – they want to buy and need help. Say yes! 4. Train everyone to be able to answer every question from a customer. The new world is immediate. Make certain everyone can help whoever calls. 5. Be service-ready, not just sales-ready. Starting with a yes! attitude, make certain all employees who talk with customers are both friendly and helpful. 6. Use the words “thank you” when an order is received and after an ordered is delivered. And deliver them with sincerity. 7. Become active in all aspects of business social media to communicate customer value, not just your sales offerings. Give your customers a chance to talk with you on Facebook. Make certain you link with important people on LinkedIn. Share short value messages with your network on Twitter. Post testimonial, training and other noteworthy videos on YouTube. Social media for business is no longer an option. Buy and read my new book “Social BOOM!” 8. Create a weekly email magazine that has even more value messages. Proactively send it to every customer. 9. Make certain upper management has complete buy-in and gives support both verbally and monetarily to what will amount to a culture shift. Make more certain that a video communication of this buy-in is distributed to everyone.

10. Employ new technology in everything, especially sales. Create mobile apps and faster ways for people to buy from you. Make it easier to do business with you. 24/7 is not an option. It’s your new hours. 24-7-365 is the new 9-5. Just because your office or store is closed doesn’t mean the customer will wait for you to open before purchasing. 10.5. This sales surge is all about you, not about your company. It’s about your attitude, your ability to serve, your knowledge, your technology, and your ability to express yourself in a positive, engaging way. Whatever you do to get ready, do not go “back to the basics.” They are dead and gone. Move ahead to the Internet, business social media, service that rocks, and sincere appreciation for business. Move ahead to relationships, value, and loyalty. The sales surge is coming, and you’re either riding the wave on a surfboard or waiting for your boss to buy you one. Don’t wait! The wave may be shorter than you think. n

Move ahead to the Internet, business social media, service that rocks, and sincere appreciation for business.

Jeffrey Gitomer is the author of “The Little Book of Leadership” and “Social BOOM!” President of Charlotte, N.C.-based Buy Gitomer, he gives seminars, runs annual sales meetings, and conducts Internet training programs on selling and customer service at www.trainone.com. He can be reached at 704-333-1112 or salesman@ gitomer.com.

How Can I Avoid Being Nickel-andDimed? The more small-business products you use with a bank, the more you’ll save in fees. Having several products bundled together will not only reduce or offset fees but also help you manage your business more effectively. For instance: • Are you using online services? Online banking is a must if you want to access and manage your business accounts at any time. Think of the convenience of being able to transfer money between accounts 24 hours a day, seven days a week. And you’ll have the ability to view account balances and details day or night. With online bill pay you can receive and pay bills anytime, anywhere. • Have you considered remote deposit? Using special software and a desktop scanner, you can scan customer checks and then transmit them to your checking account using a secure Internet connection. It’s a great way to generate cash flow all day rather than making a trip to the bank when you find the time. • Have you ever wished you could collect payments from your customers faster? You can with lockbox payment processing. And don’t forget credit card products that can eliminate the need for petty cash funds or the use of personal credit cards to pay for business expenses. Having the right bank products and services that fit the needs of your small business can help you operate your business more efficiently and remain competitive while saving you money! n Sandy Washington (sandy@ commercebank.com) is senior vice president, small business banking at Commerce Bank.

ST. LOUIS SMALL BUSINESS MONTHLY / april 2011 9

HIGH VOLTAGE MARKETING by TOM RUWITCH

Marketing Works by Brian Schwartz, Dan Klein & David Meyer

Design Integrated Marketing to Work with Your Media Integrated marketing is all the buzz these days. To thrive in the 21st century, you have to communicate across multiple media platforms – print, the web, email, social media and more. Some businesses do this well, but many that try are failing. The reason? They take the square peg that worked in one medium and try to integrate it into the round hole of another. Many businesses use advertisements designed for print, save them as digital images and send them as emails. The email looks fine – when recipients see the image, but most email software hides images by default. When they first open the email, recipients see a blank space. Plus, spam filters tend to prefer emails that combine raw text and images, not emails that have one big image. Another example: A business runs a banner advertisement in a newspaper’s iPhone edition. Click the banner and you jump to the business’s home page, which has not been designed to display on mobile screens. On the phone, the text is illegible. Plus, the site’s main content area is a slide show that uses Flash technology. Apple’s iPhone and iPad don’t display Flash, so readers using the world’s most popular phone and tablet will see a big blank space. When sending emails, create content designed for email software, not for print display. When advertising on mobile sites, link to a page you’ve designed for display on mobile devices. Then you’ll be well on your way to a successful integrated marketing campaign. n Tom Ruwitch (tom@marketvolt.com) runs MarketVolt, (www.marketvolt.com), an interactive marketing agency.

The man behind the brand. Scott Mosby (black shirt), owner of Mosby Building Arts, has been the host of KMOX Home Improvement Show for 14 years. By giving first to the community, Mosby has been able to leverage his personal brand into a bump in his company’s bottom line.

When You Are the Brand

t seems that more individuals are conscious about their personal brand, and how it affects their business. So, this month we’ve decided to feature someone we feel does a great job of representing not just himself, but his entire company. Scott Mosby, president of Mosby Building Arts has been a fixture (sorry) in the home maintenance industry for years - hosting a weekly call-in show on KMOX for 14 years, speaking publicly, writing regular blog posts, and now connecting with consumers through social media. Dan: This is one of those instances when the business owner is inseparable from the brand. For better or worse (in Scott’s case…better), they’re as much a part of the brand as the logo and the products or services they offer. David: To be effective at this, an owner needs to be both highly relatable and trustworthy as an expert (think Dave Thomas, the late owner of Wendy’s), or such an exaggerated character that they break through the clutter (more like Becky, queen of carpets). Brian: An owner that is the face of the

10 ST. LOUIS SMALL BUSINESS MONTHLY / apRil 2011

brand can be a great marketing tool, but it’s not completely without risk. How will the company handle it when the owner dies (Dave Sinclair Automotive)? What if they do something in their private life that injures the integrity or continuity of the brand (how did Ray and Deanna Vinson’s very public divorce effect American Equity Mortgage)? But, executed properly and consistently, an owner/spokesperson boots sales and is cost-effective.

get calls directly relating to show topics, and Scott has built a great awareness over the years.

Dan: Scott does a great job…especially when he’s on the radio or interacting with a live audience at a public speaking event. It’s clear to everyone that he’s not just an expert, but he cares a lot about home building and remodeling.

Brian: No matter what the specific subject is, Scott’s attention to detail and his key messages are the same. It doesn’t matter if it’s a leaky basement, an energy-efficient addition, or a custom home; think the project through, and do it right the first time.

David: I think it’s a sign of confidence and success how freely he shares his expertise and passion. I’ve listened to his radio show pretty regularly, and I’ve never heard him try to drum up business directly. Instead, he’s giving free advice to people in need of an expert opinion. He’s giving of himself and building trust with every listener. Brian: After speaking with their sales staff, we know that Scott’s brand definitely helps the business. They regularly

Dan: This undoubtedly helps with their pricing and ability to close a sale. Prospective customers are less concerned about the price when they know and trust the person they’re doing business with. It’s not a question of cost; it becomes a question of quality and confidence.

David: The company is consistent with this messaging in everything they do… whether it’s their website, paid advertising or public speaking. Dan: Just like any other form of marketing, the key is to have a plan, execute it… and be consistent in your messaging. Success happens over time, not overnight. n Dan Klein, David Meyer and Brian Schwartz (www.wearespoke.com) are partners at Spoke Marketing. WWW.SBMON.COM

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ST. LOUIS SMALL BUSINESS MONTHLY /ApRil 2011 11

PRACTICALLY LEGAL by CHRIS KELLEHER

what i learned JEFF GERMANN

Give Lawyers a Piece of Your Mind Have you ever wanted to give a lawyer a piece of your mind and not get sued? Now, courtesy of The Missouri Bar’s Business Law Committee, business owners can do exactly that. Go to http://www.mobar.org/business/ and take the short and anonymous survey that will give The Missouri Bar a piece of your mind on such topics as: •Are lawyers too costly for business owners? •Does your business lawyer handle your matters fairly, timely and efficiently? •If you ever had to go to court, how would you rate the cost-effectiveness and timeliness of the legal services provided? In addition to the specific questions, the survey gives you ample opportunity to write in your ideas on how lawyers can better help business owners both inside and outside of court. Because the chair of the Business Law Committee is a very close personal friend of mine, I will summarize the responses received from business owners across the state in an upcoming column. What are you waiting for? Give lawyers a piece of your mind! n Chris Kelleher (Kelleher@ TheLawFirmForBusinesses.com) is the founder and president of The Law Firm For Businesses PC.

I was working in the health care field and so was Cindy Brown, my business partner. We found out that Shred-it was a franchise, and we knew that there was a need for patient privacy. So we took a leap of faith. As part of the franchise agreement, they gave us the ability to use their brand, some operational manuals and two weeks of training at their then corporate office. Then, we had to go out and presale accounts before we even had trucks or any services to offer. In the beginning, the sales were consultative. No one knew why you needed to shred documents or the advantages of what we had to offer. Now people understand identity theft and other dangers, but there is more competition from other players in the market. It was three years before we really knew that we were going to make it. Our financing was just about to run out when we suddenly made a turn to profitability. Cindy and I have been business partners for 12 years. Trust is huge. We both know each other’s strengths and

12 ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011

weaknesses. We have open communication in our relationship. And we complement each other in terms of our capabilities.

Jeff Germann Shred-it Founded 1998 26 employees

As told to Jeremy Nulik

There is a lot to running a small business, so don’t try to do everything yourself. Pour yourself into your hiring process and get your team in place. Find good people and let them do their jobs. When you are constantly trying to do everything, it is to the detriment of your company. You have to stay hungry. There’s always someone entering the market. Startups have tenacity, so you have to keep that same excitement. We remind ourselves every morning in the sales meeting. If you don’t get the sale someone else will. Success is right around the corner if you have the effort and proper team. Don’t give up before you turn the corner. A lot of people don’t have the stomach to start, so commit to the risk you took. n

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Thanks To 504 Loan From RMI, Entrepreneur Can ‘Invest In The Growth’ Of His Company When John Keane was working on getting a loan for the construction of a new office building for the Keane Insurance Group and KIG Healthcare Solutions, he, like many other business owners working to secure the right loan package, began to run into obstacles. As the number of obstacles increased, so did the costs and project timeline for his new building. “As the costs increased, I worked with my primary lender to put up additional equity and collateral to support the project,” says Keane. “My banker, Daniel Wacker from Montgomery Bank, suggested that an SBA 504 loan might be a helpful resource by allowing me to refinance the property and have the bank release some of the previously pledged collateral.” Following his banker’s advice, Keane actively pursued a 504 loan. And when Keane’s banker made a second suggestion to contact RMI as a partner in securing a 504, he again took him up on his advice. “My lender had worked with RMI before and had a good experience with them,” says Keane. “We began working with RMI and quickly had a SBA commitment.”

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John Keane

504 Loan Program On top of RMI working well with the SBA, Keane found The 504 loan program is a additional benefits to partnering with RMI’s professionals. “I long-term financing tool appreciated the way they took the time to know my business for economic developand my project, responded quickly to my needs and were able ment within a commuto get me an SBA commitment,” he says. “They also treated nity. The 504 Program me with respect, always giving me an honest assessment of provides small businesses loan application process and allowed my bank to release back requiring “brick and to me a significant amount of collateral.” Overall, Keane says mortar” financing with that his loan deal may not have been possible without the RMI long-term, fixed-rate fipiece of the puzzle. “In the end, because of the reduced equity nancing to acquire major fixed assets for expanrequirements, I was able to invest more in the growth of my RMI is a financial resource businesses sion orfor modernization. company,” he says. “We now have an office that is tailored to and communities. We specialize in 504 Loans, our needs and that works well for us.” which provide long-term, fixed-rate financing

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BEST IN BUSINESS 2011

Best in Reliability

e asked SBM readers, "Who are the most reliable companies to do business with in St. Louis?" The following firms were nominated as the Best in Reliability. Make sure you check out the Awards page at www.sbmon.com to stay up to date with other Best in Business nominations for 2011.

14 ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011

COMPANY NAME

CONTACT INFORMATION

Abeles & Hoffman P.C.

314.991.4770 | 9666 Olive Blvd., Ste. 625 St. Louis 63132 | www.ahcpa.com

Affinity Law Group

314.872.3333 | 755 S. New Ballas Rd., Ste. 140 St. Louis 63141 | www.affinitylawgrp.com

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314.432.2002 | 9666 Olive Blvd., Ste. 710 St. Louis 63132 | www.bergman-schraier.com

Blackwell Professional Support Services Inc.

9378 Olive Blvd., Ste. 330 St. Louis 63132 | www.blackwellinc.com

Castle Mortgage

314.997.8999 | 1 Cityplace Dr., Ste. 510 St. Louis 63141

Cord Moving and Storage

314.291.7440 | 4101 Rider Trail North St. Louis 63045 | www.cordmoving.com

Datotel, LLC

314.241.9101 | 710 N. Tucker Blvd., Ste. 400 St. Louis 63101 | www.datotel.com

Douglas Group

314.991.5150 | 731 Frontenac Square St. Louis 63131 | www.douglasgroup.net

Facilitec

314.428.4900 | 11550 Page Service Dr. St. Louis 63146 | www.facilitec-stl.com

Ferguson Consulting

636.728.4400 | 1350 Timberlake Manor Pkwy., Ste. 450 Chesterfield 63017 | www.fergusonconsultinginc.com

Hoffman Bricker & Adams PC

314.579.2464 | 12977 North Forty Dr., Ste. 309 St. Louis 63141 | www.hba-cpa.net

Huber Ring Helm & Co PC

314.962.0300 | 1600 S. Brentwood Blvd., Ste. 600 St. Louis 63144 | www.hrh-advantage.com

Kemp Auto Museum

636.537.1718 | 16955 Chesterfield Airport Rd. Chesterfield 63005 | www.kempautomuseum.org

Kenricks Meat & Catering

314.631.2440 | 4324 Weber Rd. St. Louis 63123 | www.kenricks.com

Kiefer Bonfanti & Co., LLP

314.432.6700 | 701 Emerson Rd., Ste. 201 Creve Coeur 63141 | www.kieferbonfanti.com

McGuire Moving and Storage

314.241.0600 | 8645 South Broadway St. Louis 63111 | www.mcguiremoving.com

Midwest BankCentre

314.631.5500 | 2191 Lemay Ferry Rd. St. Louis 63125 | www.midwestbankcentre.com

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314.588.1212 | 906 Olive St., Ste. 1100 St. Louis 63101 | www.nextgen-is.com

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314.842.3316 | 8352 Watson Rd. St. Louis 63119 | www.orlandogardens.com

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314.721.0607 | 8000 Maryland Ave., Ste. 245 Clayton 63105 | www.rlhulett.com

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Thompson Coburn

314.552.6000 | One US Bank Plaza St. Louis 63101 | www.thompsoncoburn.com

Universal Business Supply

314.298.0153 | 4344 Rider Trail North St. Louis 63045 | www.universalbusinesssupply.com

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ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011 15

SPECIAL REPORT: TECHNOLOGY

Part 2 of 2

Managing Your Software: Are You Legal?

he best way to prevent software piracy within your own organization is to have a good prevention policy in place. The most common place that software piracy takes place is with the end user. These are your employees and, most of the time, they are not aware of the risks, liabilities and the financial risk that they are putting your business under when it comes to software piracy. Here are the five most common practices that are actually software piracy: No. 1: Using one licensed copy and loading it on multiple computers. One example of this would be Microsoft Office that is purchased at a retail outlet, and then loaded on multiple systems within your office. This would be illegal. Another example would be OEM (original equipment manufacturer) verses Open License. OEM software is licensed to the computer. Not to the individual or company, but to the actual system. And if that system is decommissioned, the license is decommissioned at the same time. It cannot be moved to another computer. Open licensing is licensed to the company or organization, and it can be moved from one computer to another, but it cannot be loaded more times than the licenses purchased under the open license agreement. No. 2: Making copies of disks for installation or distribution would be considered a violation of software licensing. However, most license agreements allow you to make one copy of the disks for disaster recovery purposes only. Software companies are also now making software downloadable if you have valid license keys. In most cases you have to call the software vendors in order to reinstall software using the same license keys.

by scott M. lewis

No. 3: Upgrading software without actually owning a licensed copy of the software. This type of software piracy is very prevalent on the Internet. An example would be someone offering Microsoft Office for $49.99. I can guarantee you that this is an illegal copy of the software, and it is most likely an upgrade version of the software. Common sense in software licensing is your best guide. If you can get a $500 software package for $49, it should be a clue that something is not right. No. 4: Using academic or other restricted or nonretail software without a license for commercial use. We see this a lot with companies that have in-house training rooms. They will purchase an academic version of the software, because they are training. Academic software is for schools, colleges and other educational businesses that are licensed for academic use software. Commercial companies do not qualify for academic software. No. 5: Swapping disks in or outside the workplace. You cannot take software that is licensed to your business and load it on your home computer without purchasing another license for your home computer. It is also illegal to bring software that is loaded on your home computer into your business without purchasing another license. Most of the software violations are due to people not fully understanding software licensing. And software is easy to transport from work to home and vice versa. Most of these activities are easily confused with legitimate activity, but nonetheless all these activities are illegal and can cost your business in licensing costs, fines and loss of profit made with illegal software.

16 ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011

Make sure you aren't committing one of these common errors. Using one licensed copy on multiple computers. Making copies of disks for installation. Upgrading software without actually owning a licensed copy of the software. Using academic or other restricted or nonretail software without a license for commercial use. Swapping disks in or outside the workplace. 8 Basic Tips for Purchasing Software: •Only purchase software from reputable vendors. Be very wary of auction sites, online discount retailers and email solicitations. •Common sense - If the price is too good, it is illegal. •If the software has a handwritten label, it is illegal. Software companies do not hand write labels. •Legitimate software vendors will not offer to make backup copies of your disks. •Be aware of software that is sold using the terms Academic, NFR (Not for Resell) or CD-R. •If someone try’s to sell you a compilation of software on a single disk, that is illegal. Legitimate software vendors do not do this. •Protect yourself; do not give out your credit card number over the Internet unless it is a secure transaction. •If you think you are or have been a victim of software piracy, report it to the BSA (Business Software Alliance). Software piracy costs the US economy billions of dollars each year. It is a serious

problem, and it costs jobs and drives up costs for legitimate software users. This is why software developers and manufacturers take software piracy very seriously. They do prosecute violators, and the financial penalties and fines far outweigh the cost of the software. Business owners are not only putting their businesses at risk for intrusion or illegal use of their computer systems, they are also risking jail time, and the loss of profit made with the use of illegal software. Follow these common sense approaches to reduce your risk. n Scott Lewis is the President and CEO of Winning Technologies Group of Companies. The Winning Technologies Group of companies is made up of Winning Technologies, Xpress Host, Lingo Communications, and Investigative Protection Services. Scott has more than 27 years of experience in the technology industry, is a nationally recognized speaker on technology subjects such as Collocation, Security, CIO level Management, Data and Voice Communications and Best Practices related to the management of technology resources.

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COVER STORY / TOP YOUNG ENTREPRENEURS

Why this business owner is happier than you WORDS BY JULIA PAULUS / PHOTOS BY BILL SAWALICH

hat started out a few years ago as a simple blog project for Angela Ortmann has now evolved into a full-fledged, fast-growing business, STLwinegirl, a wine consulting and event planning company. By ruthlessly sticking to her passion, she has created success and, more importantly, she looks forward to each day and the many challenges that the entrepreneurial life brings. Ortmann and the other Top Young Entrepreneurs in this section exemplify a kind of brash and raw entrepreneurship. Traditionally, St. Louis is seen as a region that is afraid of change. But, Ortmann and our other Top Young Entrepreneurs are bucking that trend by unapologetically following their passion and showing a penchant for business that is usually reserved for their elder colleagues. Take a look at our area's entrepreneurial rising stars and spark your passion.

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18 ST. LOUIS SMALL BUSINESS MONTHLY / april 2011

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COVER STORY Kevin Tibbs & Tim BarKlage / BETTER LIFE

hen neighbors and childhood friends Kevin Tibbs (a formulation chemist) and Tim Barklage (an IT developer with an entrepreneurial spirit) formed a company, it was for reasons that are close to home. “Kevin and I both had our first kids within months of each other,” says Barklage. “When Jillian and Rachel started crawling around, we became very concerned about the chemicals in our homes. In 2008, after lamenting over how poorly the ‘green’ cleaners in my house were performing, Kevin decided to see if he could make a truly safe and effective household cleaner. We presented the prototypes

to the local Whole Foods. They loved them, and a couple of months later, we quit our jobs and have been at it ever since.” Tibbs and Barklage read, researched and talked to other entrepreneurs while getting Better Life off the ground but in the end believe success will come by sticking to the reasons they got started in the first place. “Often, timely advice from a peer can help you avoid a painful mistake or prevent you from reinventing the wheel,” says Tibbs. “However, in the end it is your company and your passion, and deep down, you know what is best for your company.”

david siteman garland / THE RISE TO THE TOP

hree years ago when David Siteman Garland decided to combine his passion for interviewing and media with his all-encompassing journalism experience, the result was The Rise to the Top, a young and hip TV show that would feature a variety of guests and segments. Garland produced the show himself, gradually earned sponsors and built an audience. “The original concept was more traditional TV for 36 episodes, which is three seasons,” he says. “The momentum, not surprisingly so, was online. As of 2011, we are online only. I am still producing it myself. We are using Skype for the interviews. This is great because it eliminates any geographical and time limitations. We have quickly built

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a global audience and regularly gets over 120,000 downloads and views a month.” Garland believes focusing on his core talent of in-depth interviews has been one of his best. “I love interviewing and telling stories,” he says. “That’s the focus, and with that, views are up, sponsorships are up, I am happier and more opportunities will arise.” Focusing on interviewing maintains Garland’s philosophy of putting passion first. “Money follows passions, not the other way around,” he says.

ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011 19

COVER STORY

Kelly Hamilton / ALIVE MEDIA GROUP

elly Hamilton describes her leap into entrepreneurship as a “right place, right time, right people situation.” Although neither Hamilton nor her business partners had backgrounds in journalism, they found each other and an opportunity to start publishing a niche magazine devoted to promoting health. Thanks to those serendipitous circumstances, St. Louis’ ALIVE Media Group, LLC was created in 2003. “If we listened to everyone else, we may have been too intimidated to start,” says Hamilton. Now, listening to their supporters is a major part of how Hamilton

ANGELA ORTMANN / STLwinegirl

and her partners have grown ALIVE from a once bi-monthly educational piece to a well-known publication and media agency. “For us the smartest thing has been listening to people who we respect in the community and listening to ourselves,” says Hamilton. “It’s also the way we approach things with employees. We have 15 people on staff now. They are young and energetic. We listen and let them take part in creating the business today.” Part of ALIVE’s business today includes hosting 35 events a year. “To us, it’s not just about publishing,” says Hamilton. “We love engaging the community.”

20 ST. LOUIS SMALL BUSINESS MONTHLY / april 2011

n 2003, Angela Ortmann, a self described risk taker, decided she wanted to move to San Francisco, a Mecca of food and wine. So, she did. While in San Francisco, Ortmann immersed herself in all things epicurean. She worked in top restaurants and became certified as a Sommelier, or wine steward. By 2007 Ortmann was pulled back to St. Louis due to family obligations, but her love for food and wine did not waver. “I worked in a few local restaurants and hotels, including Monarch and the Ritz Carlton, but I really wanted to do something that sparked the passion for food and wine that I felt while I was in California,”

she says. Ortmann found an outlet in her blog. “People started reading my blog and making requests for wine lists and private tastings,” she says. Just as Ortmann made the decision to move across the country, she decided to follow her passion and start her business, STLwinegirl, through which she hosts events, consults for restaurants, manages social media for culinary outlets and contributes to Feast Magazine. “People often think wine is intimidating,” says Ortmann. “Food and wine can be fun and that’s what I want people to know. My goal is to teach people to get over the hump and be a risk taker too.”

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Top Young Entrepreneur Alumni St. Louisâ&#x20AC;&#x2122;s Top Young Entrepreneurs Class of 2010 Derek Weber

goBrandgo 314-754-8712 www.goBRANDgo.com

goBrandgo! is an integrated marketing firm that specializes in bringing online and offline marketing elements together to accomplish a goal. We empowwer our clients to build better businesses.

Class of 2010 Pantone 369

Class of 2007 Nathan Stooke Wisper ISP 314-754-7402 618-206-4190

www.WisperISP.com

Wisper provides high-speed wireless Internet in St. Louis, MO and the extended MetroEast area. Wisper is not for everyone just those that expect service from their Internet Service Provider. Wireless is what we do...Service is our Passion.

Class of 2008

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JoAnna Dettmann tSunela 314-721-8813 www.tSunela.com

tSunela is an Internet Marketing agency that specializes in Search Engine Optimization, Paid Search Advertising, Online Media Planning and Buying, Web Analytics and Social Media Marketing. The company is headquartered in St. Louis, Missouri with another office located in Portland, Oregon.

Ryan Mortland

MB is an IT Support Company in St. Louis that offers IT consulting services, www.mbconsultinggroup.com including network management services, outsourcing IT services, IT network management and managed services.

MB Consulting Group 314-725-3584

www.slbdf.com | vtvolpe@slb d f . c o m | 314.402.3538 Saint Louis Business Development Fund (SLBDF) co-invests with Saint Louis Private Fund in selected, growing companies in Missouri and Illinois that demonstrate significant potential for success and view the Fundsâ&#x20AC;&#x2122; investment as an attractive alternative to venture capital or other forms of equity investments. SLBDF is a private, for-profit corporation owned by 28 St. Louis area banks, St. Louis County Economic Council, St. Louis Development Corporation, and Economic Development Center of St. Charles County.

St. Louis Biofuels, LLC manufactures biodiesel fuel from soybean oil, animal fats and recycled vegetable oils and expanded with an investment from Saint Louis Business Development Fund.

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ST. LOUIS SMALL BUSINESS MONTHLY / April 2011 21

COVER STORY

Jeremy Jacobs / FITNESS PLUS

n 1999, when Jeremy Jacobs was home from college he started working for his father’s business, Fitness Plus, as a tech doing repairs on exercise equipment. At the same time, he was doing work in web development and programming at which he was selftaught. Four years later, Jacobs, who always loved a challenge, combined his two areas of work when he recognized an opportunity to expand Fitness Plus. “Over the years, we grew an inventory of parts,” says Jacobs. “In 2003 I convinced my dad to start a second e-commerce company to sell the parts. Prior to starting this, the customer had to go directly to the manufac-

turer for a part. The idea was to become a middle man and give the customer another option. We launched the site in 2004, and it has been growing like crazy since.” Jacobs’ idea certainly paid off. Fitness Plus experienced an 816% growth rate from 2006 to 2009 and was named as part of the Inc. 500. “When we started the e-commerce it was a side business,” says Jacobs. “The primary business was still doing repairs. It took two years for the parts to become bigger. In 2007 we merged the companies back into one. Today the repair side is still active but it’s less than 5% of what were doing annually.”

Jay Siefert / STUDIO ELEMENT

rowing up, Jay Siefert was always into sports and exercise. In college, he made the decision to follow his passion of fitness and health. He continued on this path in his professional career, working as a personal trainer at several facilities. “I believe that if you stick with your passions in life, your chances of success and happiness dramatically increase,” says Siefert. Beyond being a trainer, Siefert was also always passionate about developing his own facility that offered growth for staff and high caliber trainers for his clientele. “I did a ton of research - analyzing the industry, mentoring under some very successful local business people and figuring out exactly what St. Louis wanted in a personal training studio,” he says.

22 ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011

When Siefert knew he could start an even better facility, he went for it, creating Studio Element Personal Training in 2007. Siefert is focused on building and maintaining Studio Element and is always looking for ways to distinguish it from other facilities. “We really strive to encompass the team approach,” he says. “My entire staff has exercise science degrees and each has specialties that we all learn from. When you workout at Studio Element, you are really getting the combined knowledge of 10 people.”

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TARAN HENSLEY / MOM’S ORIGINALS brad Cassity / CURAS, INC.

or Brad Cassity, IT was an accidental career. While studying biochemistry in college, Cassity was asked to develop a website for the lab where he worked. Then the chemistry lab recruited him to do its website. “One day, when I was feeling especially sick of the chemical smells, I realized that technology was something that came natural to me, and that I had fallen into my calling,” he says. Since he entered the IT industry, Cassity always had the goal of running his own practice. So when he saw the need in the marketplace for an IT company that specialized in medical practices and electronic health records, he knew the time was right. Two years ago, four days before his 30th birthday, Cassity and his business partner started Curas, a reseller of eClinicalworks software. Today Cassity and his partner have grown their business from just themselves to 18 employees. Cassity attributes much of this growth to the strength in their partnership and looks forward to continuing the forward momentum they have established. “Now that we have a healthy company, we need to transition from building a new company to strategic thinking for growth and development, all while keeping the business healthy,” he says.

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aran Hensley lives her life by the quote her dad has always said to her: “If opportunity doesn’t knock, build a door.” So when Hensley was downsized from her corporate job as a marketing specialist, she kept her father’s advice. She saw an opportunity in helping her mom, Jody, turn her hobby of making gourmet pretzels into a business. “We shook hands, and I took the initiative to take on the sales and marketing since my mom had the product,” says Hensley. After spending most of the first year branding and building out the Mom’s Originals production facility, Hensley continued to expand in the arenas it does business. “Of

course we have our online sales, but we also do a lot of corporate gifting. We work with the food service industry as well as wholesalers and retailers,” she says. Our national exposure continues to grow throughout all of these and we are always welcoming new additions, such as our growth in the Gift Basket industry.” Hensley has also grown her team, what she refers to as the MOI family, to 12 full and part-time employees. “The smartest thing we have done as a business is bringing in the right people, for the right job, at the right time,” she says.

ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011 23

COVER STORY Jason SHUPP / FERGUSON ROOFING

s a child, Jason Shupp’s father dragged him and his brother to work in the family business. Tasks like painting a fence, cleaning the warehouse and canvassing flyers were common. During high school summers, when Shupp and brother were strong enough, their dad had them work on roofing crews. This is how Shupp learned his family business, Ferguson Roofing. Near his 30th birthday, Shupp rejoined the family business to continue the third generation, bringing with him new ideas to expand and continue the company’s success. “Our company started as a ‘ma and pa’ company run out of my grandparents home,” he says. “Our reputation for honesty and quality started with them.

When my parents got involved, a corporate infrastructure and branding campaign were introduced to set up for and support the growing business. And we had begun to diversify our services then. The family business feel was always maintained, though. My brother and I are charged with transitioning the business to adapt with the increasing demands of our customer base.” Shupp now concentrates on developing a new sales platform and utilization of technology while expanding the existing departments and service geography. “These changes have to be done without conflicting with our core values that have led to our success for several decades,” he says.

Jeff & Randy Vines / STL-STYLE

eff and Randy Vines, twin brothers who grew up in Creve Coeur, have always been proud of St. Louis. So when they returned from Bradley University, they began to take part in urban activism, joining groups like Metropolis St. Louis and looking for ways to promote the city. “We made a simple ‘STL’ tshirt,” says Randy. “We would go to neighborhood meetings, and people would ask about where we got our shirts.” The brothers followed the interest garnered in their shirts and started STL-Style, which has both a retail line of “STL” shirts and a custom side. They went into the business full time in 2010, sticking with their ideals and opening a storefront on Cherokee St. “The visibility has been great, and it is consistent with our mission for the city,” says Randy. “Saturdays are about people in the neighborhood coming 24 ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011

together and creating a vital corner in an up-and-coming neighborhood. It gives us street cred, and you can’t beat that. We love being a part of the fabric of the city.” The Vine brothers plan to grow their business while staying committed to the city. “We didn’t set out to become rich,” says Randy. “We were inspired by our love for the city and want to make it an even better place to live.”

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financing your business

Getting Financed Through Family and Friends Find Out the Benefits and Risks Involved with Accepting Funding from a Family Member or Friend.

sking a family member or friend to invest in your business can be a tricky situation. Definite perks, such as avoiding a tedious application process, as well as dangers, such as putting a personal relationship at risk, come with the territory. So when funding your business through what’s commonly referred to as “FFF” investors, or family, friends and fools, it’s best to prepare yourself and your investors by knowing all the nuances involved. The overarching idea when seeking financing through family members or friends is that these individuals are most likely not professional investors like bankers, angels or venture capitalists, so it is important to be up-front from the start. “Entrepreneurs must be extremely open and honest about what they do because the FFF group is not sophisticated investors,” says Pete Peters, executive director of InnovateVMS. “I can’t think of anything worse than taking money from a family member, not being up-front about every possibility and then losing it.” One way to ensure that your family member or friend gets all the right information is to assume that he or she will not be asking the right questions during the pitch. “Because they are not sophisticated investors, entrepreneurs must be transparent about the possible downside of investing right away,” says Peters. “This can be extremely difficult. When you have accredited investors, they understand that they might lose the cash they invest. The FFF investors need to be told this.”

by julia paulus

Beyond being up-front about the possible downside, business owners need to be prepared with a business plan and realistic projections. “Be honest in your assessment of your business,” says Peters. “Often with companies like biotech companies, they say they are going to be a billion-dollar business. Angels, bankers and VCs know how rare billion-dollar businesses are, but FFFs don’t. So it is important to be realistic when assessing your business’s potential with them.” Once you have the correct mind-set and information to make a pitch, Jerome Katz, Coleman Foundation Chair in Entrepreneurship at Saint Louis University and director of the Billiken Angels Network, suggests following three simple steps when approaching a family member or friend for financing: Step 1: Determine how much money you want. Step 2: Determine how you want it. Do you want a debt (loan), equity or gift? Step 3: Determine how you are going to pay it back. If it’s a loan, what interest will it have? Know the current interest rates. Prime would be a great deal. If it’s equity, how much ownership will they have, and how will you buy back the stock? And do they have any voting rights? If it’s a gift, don’t just leave it at that. You must write a note, sign it and date it, so that the fact that it’s a gift is clear and on record. And when giving and receiving a gift, make sure to consider the amount and tax consequences. Peters agrees that keeping records of

26 ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011

all financing received from friends and family and the terms of the financing is a must. “It might be less formal, but you still need all of your documentation

together,” says Peters. “When a major investor comes, you need to have spelled out what happened with your financing six to eight months ago.” n

Legal Implications of Financing Through Family and Friends and How to Best Protect Yourself

ccording to Joseph Soraghan, principal at Danna McKitrick PC, the risk of financing from family and friends is twofold. “On the civil side, the investor who can show the investment was unsuitable and that they did not understand the risks involved can sue,” he says. “If they sue and you lose, they will get their money back plus interest. And this usually only happens when the company is bankrupt. Even if you have incorporated, the owner is liable and will have to pay with their personal assets if necessary.” The best way to protect against civil suits like this is to have as few prospective investors as possible. “The greater their level of wealth, the less risk there is for a suit,” says Soraghan. “Before contacting any prospective investor,

entrepreneurs should find something out about the prospective investor. I tell people in St. Louis to think, ‘Do they live in Ladue or St. Ann?’ ‘Do they drive a new Lexus or a 1990 Chevy?’ ‘Do they dress sharply?’ ‘Do they talk about making investments or wealth management?’ Then you will have reasonable grounds to believe the prospect has the financial ability to bear the risk and the investment expertise to understand the risk of the investment.” On the criminal side, the state securities commission and the federal Securities and Exchange Commission can bring action against the company. “They can issue orders admonishing the company and its owner,” says Soraghan. “Sometimes this is serious enough to shut down the company.”n

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ST. LOUIS SMALL BUSINESS MONTHLY / april 2011 27

Finding Capital From Your Credit Union

The Better Way To Bank Your Business

by Laura Woods of 1st Financial Federal Credit Union As we experience one of the most stressful economic downfalls of our generation, many small business owners have found themselves completely unable to attain credit to either get their business going or keep their endeavors afloat. However, in light of these economic changes, many have found the undiscovered resources of commercial banking and lending at their local credit union.

“I have been working with Marty for the past year and he has now closed approaching $1,500,000 in loans for our business. His diligence from start to finish is second to none. Our success in 2010 would not be accounted for without the assistance of Marty.” -Mike Hopson, Arch Properties, LLC

Credit Unions are cooperative, not-for-profit financial institutions, owned and controlled by the people who use its services, the members. Credit Unions serve groups that share something in common, such as where they work, live, or go to church. In 1935, when credit unions were helping Americans through the Great Depression, the treasurer of a Midwestern credit union said that credit unions were “not for profit, not for charity, but for service,” and that philosophy of “People Helping People” holds true today at 1st Financial Federal Credit Union.

“Marty Kinder of 1st Financial Federal Credit Union has been my commercial real estate loan officer for over a year. He has, along with his professional staff, enabled me to acquire property with relative ease. I would recommend to anyone use Marty for your borrowing needs.” - Tom Scott, Tulane Holdings

Although credit unions offer all of the same products and services as large conglomerate banks, there are several intricate differences between how credit unions and banks operate. Like credit unions, banks accept deposits and make loans - but unlike credit unions, they are owned by groups of stockholders whose interests include earning a healthy return on their investments. Credit unions return profits to member-owners in the form of lower rates on loans and higher dividends on deposit products. Credit unions are not-for-profit financial cooperatives, owned and controlled by its member-owners. The challenge for many credit unions is making local businesses aware of the business services they provide. “Once business owners learn what we can offer them, it’s a perfect match,” said Marty Kinder, Business Banking Manager at 1st Financial Federal Credit Union. “Many business owners are surprised to see how much the credit union can save them on their commercial lending products.” For many years, credit unions only offered personal banking accounts. It wasn’t until recently that credit unions realized the need to extend their services to include business products and services. 1st Financial Federal Credit Union in St. Louis and St. Charles began offering business banking accounts out of necessity to keep up with members’ needs. “Many of our business accounts came directly from members conducting their business through their personal accounts,” said Kinder. “They were happy with the level of service they received from us and they didn’t want to add another financial institution to their busy lives.” Many of the credit unions that offer business banking in the St. Louis area cater to small and medium businesses. Best of all, many credit unions are also SBA (Small Business Administration) approved lenders. For many small to medium businesses, this is the best way to find capital for their lending needs. Frank Nelson, CEO of 1st Financial Federal Credit Union, notes “We offer something that has been lacking in the small business community for the last decade or so. As more banks merge and tighten their lending standards, the small business owner has been getting lost in the shuffle. We’re here, we listen; we’re rooted in the community, and the success of local businesses is important to us. Without a healthy, thriving business community, our neighborhoods suffer, and we suffer. We live here, we work here, it is our life.”

“We offer something that has been lacking in the small business community for the last decade or so.”

For many business owners, the choice between banks and credit unions is clear. Mike Hopson of Arch Properties, LLC recently stated “I have been working with Marty for the past year and he is now approaching $1,500,000 in loans closed for our business. His diligence from start to finish is second to none. Our success in 2010 would not be accounted for without the assistance of Marty. Hopefully we will be able to continue closing transactions in the years to come.” He went on to say, “1st Financial Federal Credit Union and Marty have been a joy to work with and we appreciate all their help.” Just because credit unions represent smaller market share than banks, doesn’t mean

Marty Kinder Business Banking Manager 1st Financial Federal Credit Union • Loan amounts based on your business needs • Competitive rates with few fees • Fast, efficient funding • Personalized terms designed for you

636-916-8300 www.TheBetterWaytoBank.org A full service financial institution dedicated to serving the community since 1968. Serving the counties of St. Charles, St. Louis and the City of St. Louis, Missouri. Membership eligibility required.

they aren’t competitive. Credit unions offer the same business banking savings and loan products as their local banking counterparts. Combine credit unions’ local presence and quite often, credit unions offer more flexibility for business owners. Tom Scott of Tulane Holdings recently said, “Marty Kinder of 1st financial Federal Credit Union has been my commercial real estate loan officer for over a year. He has, along with his professional staff, enabled me to acquire property with relative ease. I would recommend using Marty for your borrowing needs.” The local ties are what make the decision process quick. Kinder states, “We’re not as limited in our decision-making for commercial lending. We don’t turn down small business requests simply because it doesn’t meet a list of predetermined criteria from a national office headquartered out of state. We are part of the community and we want to ensure our local businesses get the support they need to maintain their business in our community.” “Credit unions have really stepped up to help local businesses in the past 10 years,” added Kinder. “We are not just a great place for a personal checking account and an auto loan. We can be the ultimate banking solution for business owners.” So the next time you are looking for a place to finance your business needs, remember to visit your locally owned credit union such as 1st Financial Federal Credit Union. Funds are insured to $250,000 by the National Credit Union Administration (NCUA), an agency of the U.S. Government. For more information about 1st Financial Federal Credit Union, visit www.TheBetterWaytoBank.org or contact Marty Kinder, Business Banking Manager at 636-916-8333.

financing your business

Seeking Financing? Find Out What Our Region Has to Offer A Side-by-Side Comparison of the Boost and 504 Loan Programs.

f you are a business owner seeking a loan in today’s marketplace, knowing all your options will bring you one step closer. In the St. Louis region, entrepreneurs will discover opportunities for financing that are provided by St. Louis and St. Charles counties. These loan programs include the traditional 504 loan program provided by the Economic Development Center (EDC) of St. Charles as well as alternatives to it such as the Boost loan program from the St. Louis County Economic Council (SLCEC). “The 504 loan program is specifically designed to allow existing and new companies access to long-term capital to finance the acquisition of fixed assets such as land, buildings, machinery and equipment,” says Doug Schell, vice president, EDC Small Business Finance. “The EDC partners with the borrower’s financial institution to provide up to 90% financing for a fixed asset project under a 50% bank, 40% EDC and 10% owner’s equity split.” Schell says the small-business owner benefits from the 40% portion provided by the EDC/U.S. Small Business Administration (SBA) through the 504 on a long-term fixed rate (10 or 20 years). “That gives the business owner cost controls they otherwise would not achieve,” he says. Similar to the EDC’s long-standing 504 loan program is the much newer Boost loan program started by St. Louis County last fall. “It is a 504 look-alike program,” says Richard Palank, senior vice president of the St. Louis County Economic Council. “The major difference is with the structure. Boost, like the 504, is still a 50%, 40%, 10% structure. But instead of the 40% being SBA-guaranteed like in the 504, the 40% in the Boost program is a loan from the St. Louis County Economic Council.” According to Palank, part of the reason for creating the Boost program was that the SBA has increased the number of restrictions on who can receive a 504 loan over the years. “I created Boost for those who are not eligible for the 504 or for those who don’t want it,” he says. To learn more about how one of these loan programs might fulfill your small business’s financial needs, read on.

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by julia paulus

A Quick Q&A with Doug Schell on the EDC’s 504 Loan Program Who can apply for funding from the 504 program? Typically any for-profit business is eligible to receive 504 funding. There are certain conditions, including but not limited to: • The asset(s) being financed must be at least 51% owner-occupied. • Located in the United States – the EDC can process applications for businesses anywhere in the state of Missouri and in the six counties in Illinois that make up the St. Louis Metropolitan Statistical Area. • Have a net worth under $15 million and average net income over the two years of less than $5 million. What qualities and credentials does your ideal candidate for a loan possess? There really is no “ideal” candidate. We are available to help anyone who is eligible under the SBA guidelines and will try to help them if at all possible. What is the process to gain funding through the 504 loan program? The key factor is we need a bank commitment letter from the participating lender before we can submit the request to the SBA. From a timing standpoint, it usually takes two to four weeks to process the application and obtain approval from the SBA once we have the bank’s commitment letter and our completed application. What is your average loan amount? What is the maximum amount awarded? The 504 program average loan amount nationwide is $550,000, with the highest available loan to any one customer capped at $5 million or $5.5 million for a manufacturer.

A Quick Q&A with Richard Palank on the SLCEC’s Boost Loan Program Who can apply for funding from the Boost program? Any St. Louis County-based business who wants fixedasset financing for something like a building or heavy equipment. What qualities and credentials does your ideal candidate for a loan possess? The ability to pay us back is most important, so we will look at every candidate’s financials. We will screen their credit and look over their business performance. What is the process to gain funding through the Boost program? We do the same initial due diligence as happens with the SBA’s 504 loan program. First the application has to be approved at staff level, and then it goes to our committee for approval by a board of directors. Once the committee approves the Boost loan, we are ready to close. So the process to gaining funding is much faster with the Boost program. What is your average loan amount? What is the maximum amount awarded? We are very flexible. There is no minimum. There is a maximum of $500,000. The first loan we gave was for the maximum amount. The second was for $53,000 – a very small loan. And we just closed on a loan for a Dunkin’ Donuts for $288,000. What advice would you give to an entrepreneur or small-business owner seeking funding through the Boost program? Call Steve in our office at 314-615-7681, and have a quick conversation. That way the applicant doesn’t waste their time finding out if the program is right for them. n

What advice would you give to an entrepreneur or small-business owner seeking funding through the 504 loan program? Just contact our office to discuss all the potential alternatives and what vehicle might be best for them – including the 504. ST. LOUIS SMALL BUSINESS MONTHLY / april 2011 29

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Concord Bank’s Old School Practices Help Local Business Owners Weary of the Cold Shoulder With Local Decision Making Approach, Concord Bank Is Lending Millions And Helping More And More Businesses

latest in banking technology is paying off for Concord Bank and for their customers. Over the past couple years when most banks were scaling back and tightening credit, they had millions of dollars in increases of loan activity.

There was a time in this country when the neighborhood bank was as much of a pillar of the community as the local hardware store and post office. It was where you went to learn about the economy and to get counsel on investments.

“Our loan committee does not meet in St. Paul, MN, or Charlotte, NC,” says Feraro. “We meet every Thursday morning in St. Louis, so the decision process is fast. If you come in and are willing to stand behind your ideas and have conviction, we try our best to make it work.”

Somewhere along the way, though, things changed. People stopped coming in to the lobby. Getting a loan became more about your credit score than your character or conviction.

This has been great news to some local business owners who have been rejected by other banks for loans or lines of credit. “We were able to help one woman who was turned away by a bank she had been with for many years,” says Richard Cook, executive vice president and chief lending officer at Concord Bank. “We were able to turn around a loan request within 24 hours. We gave her a yes and she got the cash she needed.”

However, one local bank is taking a stand against this cold shoulder approach. “The most important part of our business is regular face-to-face contact with our customers…even when they don’t need anything from us,” says Tony Feraro, CEO of Concord Bank, a one-branch bank in Concord Village. “Banks today use a lot of technology like remote deposit and check scanning, and we embrace that. But, we also have extended our hours and made a small café in our lobby so our customers can come in and talk. We don’t want to just be your lender. We want to be your banker.” So far, this coupling of relationship-based, old school practices and the

30 ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011

“Fashion trends have come and gone and three downturns have occurred since I got into banking,” says Feraro. “We know how to help people through all kinds of issues. We are open and ready to be their banker.” 1240 Tesson Ferry Rd. St. Louis, MO 63128 314.843.7770 www.concordbank.com

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financing your business

Refinancing Your Business’s Recovery For Many St. Louis Small Businesses, Refinancing Now May Open a Door to New Business Opportunities.

any small businesses in St. Louis have done an incredible job managing business through a tough economy. They spent the past two years hunkered down, making tough decisions. They kept a keen eye on managing what they had to pay versus what they wanted. They reduced inventory levels. They guarded their cash. They honed their management practices to be quicker and more nimble. Small businesses stayed alert and ready as they waited for the glimmer of economic hope that may have finally appeared on the horizon. For the first time since 2008, smallbusiness owners are showing a more optimistic view about their cash flow, capital spending and revenues. And now, as economic indicators point toward a recovery, is the time to turn that glimmer of hope into a spark of opportunity. The first step toward opportunity starts with a critical look at the balance sheet, especially how debt—credit cards, equipment loans, and mortgage obligations— can be restructured. Look at Loans and Leases Interest rates are at historic lows, but that does not necessarily mean small-business owners should refinance their business mortgages. While equipment costs remained relatively flat, real estate values have not weathered the storm as well. Now may or may not be a good time for those who already own to refinance. Now may be a good time to buy versus lease. WWW.SBMON.COM

by Shelly NiscHbach

For those who currently own, if they have more than 20% equity in their property compared with debt, interest rates are working in their favor to refinance. If there is excess equity in the property, now may be a good time to consolidate some short-term, working capital debt into a long-term amortization. This will enable owners to have new working capital available to expand their business. However, that equity position may have changed in the last two years based upon when the property was purchased and how the market has affected its value. For instance, a commercial property in St. Louis may have been purchased three years ago for $1 million at a 6.5% interest rate. With an average decline of commercial property values of roughly 10%, today’s market puts the value of that commercial building at $900,000. If not enough equity was compiled to counter the devaluation and bring the loan-tovalue ratio back up to 80%, refinancing may not be an available solution. Possible options: Pay down the principal to 80% loan-to-value, or make up the difference with cash before refinancing. Lower property values are not all bad news. If buying a building is in the business growth plan, now may be the time to fast-track purchasing plans. Low interest rates, affordable property and a strong company financial condition could help owners acquire more property than they may have been able to afford a couple of years ago.

Crunch Credit So, what happens if owners are not in a position to refinance and/or consolidate debt? The same logic that works for personal debt applies to business debt: Make the minimum payments on all debt, and use extra cash flow to retire the highinterest obligations first. Consolidating, refinancing, and paying down that high-interest debt should be a priority and can help small businesses regain control over their cash. U.S. Small Business Administration loans can help, as long as the borrower is the business. Some business owners resorted to utilizing personal credit cards in crunch time. However, refinancing consumer debt into the business obligation is not an eligible use of proceeds unless each card purchase or advance can be clearly documented as a business purpose. Capitalize on Opportunities Small businesses have spent the past two years bracing their businesses and reacting to the economic tides. With the economy headed toward recovery and with interest rates at historic lows, now is the time to consider restricting their debt so they can be poised to take advantage of new business opportunities. n Shelly Nischbach is senior vice president at UMB Bank and has more than 22 years of experience managing banking services for businesses and consumers in St. Louis. Contact Nischbach by calling 314-612-8217 or e-mailing michelle.nischbach@umb.com.

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ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011 31

Inspiring Entrepreneurs Find your place to grow

Mercury:

Mentoring Helped Mercury Overcome its Greatest Challenge by Julia Paulus Just one year after launching Mercury Communication and Construction, the business was presented with its greatest challenge as a small business – September 11. That is when Mercury owner Julie Steis found St. Louis Enterprise Centers, a small business incubator. “St. Mercury’s sister/brother owners: Louis Enterprise Julie and Jeff Steis. Centers was a huge help,” she said. “After 9/11, we were almost going to have to close the doors and the Enterprise Centers helped us in a number of ways.” The Enterprise Centers connected Mercury Communications with a mentor, enabling Steis to diversify and get the company back on its feet. Through the mentoring, her company was able to succeed even when the wireless industry was weak. The low overhead and flexibility in the amount of space available to small businesses was also beneficial. “We were looking for an office that would allow us to be more established. The incubator had warehousing and office space available, which was a perfect fit for our new business.” By 2006, Steis had turned the business around, and, today, Mercury has 30 employees and revenue totaling $9 million. Just last month, Steis earned the ranks of St. Louis’ Top Women Business Owners.

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32 ST. LOUIS SMALL BUSINESS MONTHLY / april 2011

Financing your business

Strengthening Your Business with Credit Union Assistance

ave you ever wished your financial institution were doing more for your business – by saving you time and improving your bottom line? If so, joining a credit union may be a good move for you. The main advantage of credit unions is that they are not-for-profit organizations. They are financial cooperatives, and their members are also their owners. Therefore, rather than working to increase profits for stockholders, credit unions work to provide better services for their members. This generally leads to lower loan rates, higher interest rates and fewer fees for the individuals and businesses that belong to credit unions. Why a Business Should Join a Credit Union Credit unions typically provide a more personal touch with their members – and businesses are no exception. Typically, business owners receive personal attention from a local relationship manager who attends to their specific needs. Companies also receive competitive pricing on business products and services. The employees of those companies also receive many benefits. Credit unions provide direct deposit for payroll, great rates for residential mortgages and auto loans, lower closing costs, and a multitude of other valuable services. Business Loans Credit unions have the capability to do a wide variety of loans of varying sizes. The types of loans credit unions can offer include commercial real estate loans, term loans, Small Business Administration loans, working capital loans, equipment loans and lines of credit. In addition, some credit unions have programs that facilitate commercial equipment leases and commercial and fleet vehicle leases. Business loans at credit unions can have substantial advantages over those available at other financial institutions. Loan decisions are usually made locally. This gives the credit union flexibility with structure and pricing and speeds up the approval process. Closing costs are usually lower, and rates average below those offered by other financial institutions for similar products. Cash Management Resources and Deposit Services Many credit unions provide products to support cash management from the convenience of a business’s office, such as business debit and credit cards (even some with rewards), credit card processing services, automatic transfers,

by jason peach

and ACH debits and credits. Credit unions may also offer remote deposit services, which allow you to process checks and deposit them in minutes – right from your desk. It’s a valuable tool that can help save you both time and money. Credit unions also offer many deposit services, including checking accounts, savings accounts, money market accounts and certificates of deposit. Convenience Services Convenience services is another area where credit unions are competitive. Many participate in shared branching, which enables members to make transactions at more than 4,500 credit union branch locations across the country – 250 in St. Louis alone. And because most credit unions belong to an ATM network, they can offer free ATM access at tens of thousands of ATMs nationwide. Like other financial institutions, many credit unions offer free online and mobile account access with bill pay capabilities. Joining a Credit Union A business can join a credit union if one of its owners, principals or officers qualifies for membership. Each credit union has its own criteria for membership. Often a person simply needs to live or work in a particular location. Other times, the person’s employer or type of occupation determines whether he or she is eligible for credit union membership. Often, having an immediate family member who qualifies to join a credit union means an individual is also eligible for membership. To join a credit union, you simply need to open an account. Credit unions typically have accounts with low minimums and no fees, so qualified people and businesses can easily join. Once a company or individual becomes a credit union member, he can continue membership for the rest of his life, even if he moves or his employment status changes. By offering highly personal service, competitive products, and services with better rates and fewer fees, credit unions have proved to be a viable alternative for businesses that are looking for a different financial services partner – one that can truly help them save time and money, thereby improving their bottom line. n Jason Peach is chief financial officer for West Community Credit Union (westcommunitycu.org). WWW.SBMON.COM

DIRECTORY ACCESS TO CAPITAL

Region’s Bank:

St. Louis, MO 63105 www.heartland-bank.com Phone: 314-512-8888 Locally owned for over 120 years, Heartland Bank offers a full range of personal banking, business banking and wealth management financial solutions.

Arsenal Credit Union 8651 Watson Road St. Louis, MO 63119 314-919-1060 www.arsenalcu.org We are locally owned and operated and have money to lend your small business to help it grow and flourish. See us for other financial products and services geared toward small businesses, including checking accounts, debit cards, remote deposit and electronic payment processing. The Business Bank of St. Louis 8000 Maryland Avenue, Suite 100 Clayton, MO 63105 314-721-8003 www.bbstl.com We are a full-service commercial lender offering flexible financing solutions for most lines of business including Real Estate, Commercial and Industrial and Professional Services. Our local decision-making capability facilitates a quicker turnaround time and a higher level of personalized service. Commerce Bank www.commercebank.com 314-746-5210 Commerce offers big help for small business. From loans and lines of credit to credit card processing and checking accounts, we offer products and services to help manage your personal and business finances more efficiently. Electro Savings Credit Union Pat Pettey 1805 Craigshire Drive St. Louis, MO 63146 (314) 434-6470 ext. 1406 ppettey@escu.org www.ElectroSavings.com Electro Savings Credit Union has been locally owned by our members since 1941 with offices in Maryland Heights, Wildwood, Manchester and South County. We offer a full range of business loans, accounts and merchant services, including commercial property loans, secured lines of credit, equipment and fleet financing, business credit cards, customer financing programs, business checking, savings, money market and certificate of deposit accounts, as well as merchant services and remote deposit capture. Membership eligibility applies to businesses located in St. Louis City, St. Louis, St. Charles, Jefferson and Franklin counties in Missouri and Jersey, Madison, Monroe and St. Clair counties in Illinois.

Heartland Bank 212 S. Central Avenue WWW.SBMON.COM

RMI “Building Success With 504 Loans” 3324 Emerald Lane Jefferson City, Mo 65109 www.rmiinc.org 800-234-4971 Fixed rate financing (typically below market) for fixed assets. Also, fixed rate microloans for working capital and fixed assets. Royal Banks of Missouri Mitch Baden 314-212-1500 www.royalbanksofmo.com A locally owned and operated Saint Louis Community Bank. As one of the premiere commercial real estate organizations in the city, Royal Banks continues to serve hundreds of businesses in the Saint Louis area. The company continues to support the community through involvement in many organizations such as the Business Consortium Fund; the leading lending organization to minority businesses, Olive Business Association and Downtown St. Louis Inc.

Supporting Owners In the Year Of Small Business Regions Bank has always been a proponent and supporter of small business as a Main Street, community bank. In a recent study, the U.S. Small Business Administration ranked Regions third among large U.S. banks behind only two national credit card companies. “We are a top traditional bank for lending to small businesses,” says Chris McCoy, a business banking executive with Regions. “We have a long track record of doing so. Overall the SBA study results show how committed Regions is to small business.” And this year, Regions hopes to work with even more small businesses in what the bank believes will “We have grown be the year of small loan balances business. “The U.S. in each of the economy suffered past three three years of the years.” worst market downChris McCoy, Regions Bank turn since the Great Depression,” says McCoy. “By the end of 2010 we started seeing signs of recovery. Small businesses are the engine that will pull us out of the downturn through business growth and job expansion.”

Simple and reliable Simple and reliable has always been a good way to has always been a good way to go. To help small business grow and create new jobs, Regions specially trains its relationship managers to work with and understand all customers’ businesses. “Our relationship managers discuss the operating process and cash flow cycle with each business owner to identify their specific cash and asset management needs,” says McCoy.

Small Business Growth Corp. Clay Lindhorst Two City Place Drive, Suite 200 St. Louis, MO 63141 Lindhorst@growthcorp.com Another benefit to business owners who chose Regions is working 314-409-6909 At Regions, know lender. our customers a banking experience www.GrowthCorp.com with an SBA we preferred “We get want a preferred approval process that’s for person Growth Corp’s 504 Loan Program helps providewe know At Regions, our customers want a banking experience that’s personal, loans,” says McCoy. “It speeds up the time frame from the pointhelpful of the and secure. And when you bank with us, that’s exactly what you’ll get. We’re businesses with better access to money for expanloan application is filled out to SBA approval.” sion than would otherwise be available through and secure. And when you bank with us, that’s exactly what you’ll get. We’re dedicated conventional financing. A Non-profit CDC, toAnd sound banking practices that are effective in any environment – so you can in an economic environment where the perception is that credit Growth Corp is the Largest & Most Experienced is tough that to obtain, Regionsinisany lending to small businesses. “Inreach the St. SBA Lender in the Midwest. to sound banking practices are effective environment – so you can for

your goals withBusiness more peace of mind. Most of all, we’re dedicated to putting Louis area, the Banking group has grown loan balances in each

U.S. Bank of the pastofthree years. relationship managers your goals with more peace mind. MostAnd of because all, we’reour dedicated to putting youhave first.a 314-418-2340 Come understanding see what overof8 the million customers acrosswe16 states have already www.usbank.com better business’ operations, have an increased U.S. Bancorp and our subsidiaries provide a what over Come see 8 million across 16 havethat already discovered success rate customers in making business loanstates decisions are favorable for – comprehensive selection of premium financial with Regions, it’s time to expect more. each individual business.” products and services to individuals, businesses, withand Regions, nonprofit organizations, institutions govern- it’s time to expect more. ment entities. West Community Credit Union www.westcommunitycu.org 636-720-2400 Description: West Community offers a complete suite of money-saving products and services to help your business succeed. Let us help with competitive loans, high-rate savings products, business debit and credit cards, remote deposit, credit card | 1.800.regions processing and more.

ST. LOUIS SMALL BUSINESS MONTHLY / april 2011 33

dis

STICK YOURSELF OUT THERE by SCOTT GINSBERG

sMALL bUSINESS sUCCESS by bILL cOLLIER

How to Make People Feel Essential

Thank God for Entrepreneurs

UsE THeSe TACTICS TO begin practicing Essentialism, and make your people feel inspired.

see how entrepreneurs continue to make business happen.

“The few who do are the envy of the many who only watch.” - Jim Rohn

f you want the people who matter most to show up in full voice, work their hearts out for you and spread the organizational love like a fever, then you have to make them feel essential. Are you a practitioner of essentialism? If not, try these ideas: 1. Decide how you want to leave people. Approachability is about how people experience themselves in relation to you. And though you can’t control people’s emotions – outside of manipulation, punishment and coercion – what you can do is be more intentional in how you

questions. Because it’s not just about being askable – it’s about how quickly you let people know you’re searching for an answer. Second, responses. Because it’s not just what you say – it’s about how long you make people wait before they hear it. Third, troubles. Because it’s not just about fixing the problem – it’s about how well you communicate to people as you fix it. Without that kind of “speed sensibility,” your people end up suffering in silence. And instead of feeling essential – they feel evaded. Do you return calls more quickly than your competitors? 3. Preserve people’s fingerprints. As an artist, I make a conscious effort to alert people Remember: Making when they’ve inspired my work. people feel important isn’t Not with a thank-you note. Not with a one-word text message. important. What matters is And not with some insincere that they feel essential. compliment they forget by lunch. I physically gift them a copy of the finished product they helped created. Whether it’s a book, an article or walk away from them. For example: Want a limited-edition art piece, I want them to to leave people laughing? Help them evoke own it. Forever. Because it wouldn’t have the humor in their own lives. Want to leave come into existence without them, and people inspired? Enable them to give birth to they deserve to see it live. Now, notice I their own realizations. Want to leave people said “gift” – not “give.” Huge difference. heard? Reflect their reality by taking. Your If you want to make people feel essential, challenge is twofold: First, to identify the don’t gift expecting reciprocation – gift to baseline emotion you want to leave people let people to know their words have weight. with. Second: To remind yourself of that Learn how to thank or get out. How do you emotion on a daily basis. When you walk out pay homage to the voices that shape you? of a room, how does it change? Remember: Making people feel important 2. The speed of the response is the isn’t that important. response. Marshall McLuhan was right: What matters is that they feel essential. The medium is the message. And when you That you honor their essence as a huhold a leadership position, that principle man being. n seeps its way into everything you do – especially now. Because culturally, “good, fast Scott Ginsberg (scott@hellomynameisscott. and cheap” has been replaced by “perfect, com), aka “The Nametag Guy,” is an author, now and free.” How are you adapting to a speaker, an award-winning blogger and the that shift? Here are three examples: First, creator/producer of NametagTV.com. 34 ST. LOUIS SMALL BUSINESS MONTHLY / apRil 2011

s much as I enjoy being an entrepreneur myself, I feel so very fortunate and privileged to spend a significant amount of my time working with other business owners. The best part always is hearing about the entrepreneurial journey – the startup, the progress to date and future plans. Each story is unique, of course, but some of the common themes include enthusiasm, optimism, persistence and a clear vision of the future. Those things – especially optimism – are in stark contrast to the 24/7 drumbeat of doom and gloom provided by the broadcast media. Yes, things have definitely been tough these last few years. But even in the darkest of times, newscasters seemed to go out of their way to avoid talking about anything positive. You want the real news? Talk with a small-business owner. Here’s what you’ll hear: Business is going on. Many small businesses have done well during this recession. I’ve heard firsthand about record revenues and profits, acquisitions, hiring, and new offices opened. Recently I had the good fortune to spend a couple of hours with a local entrepreneur, enjoying cold beers and talking business. His business was up last year, and he’s expecting another 10% growth this year. He told me all sorts of things about his operation. How he started. About his employees’ bonus payouts from last year. About his social relationships with his most important customers. How he gets more business by staying on friendly terms with his competitors. At every turn, his eyes lit up as if he were talking about his children. There was no missing – or denying – the genuine enthusiasm this guy has for being

a small-business owner. Two things he said that I found especially noteworthy: “It’s not all about the money.” And, “It’s fun.” I believe him on both counts. If you spent time with him, you would too. Like him, many entrepreneurs make it a game – to see how successful they can be despite the economy, the challenges, the naysayers, the mainstream news, their negative relatives, politicians and the “woe is me” crowd. Most entrepreneurs are family-oriented, common-sense, hardworking people. They’re the kinds of people who built this country and who will get our country back on the right track. “Success to me is not about money or status or fame; it’s about finding a livelihood that brings me joy and self-sufficiency and a sense of contributing to the world.” –Anita Roddick, founder of The Body Shop “The cover-your-butt mentality of the workplace will get you only so far. The follow-your-gut mentality of the entrepreneur has the potential to take you anywhere you want to go or run you right out of business – but it’s a whole lot more fun, don’t you think?” –Bill Rancic, winner of Donald Trump’s “The Apprentice” It’s not all about the money. And it is fun. Thank God for entrepreneurs. n Bill Collier (billcollier@greatgame.com) is the author of “How to Succeed as a Small Business Owner … and Still Have a Life” and is the St. Louis area coach for The Great Game of Business. He helps businesses use open book management to teach their employees to think and act like owners. He can be reached at 314-221-8558.

WWW.SBMON.COM

value proposition by dave driscoll

it’s your biz by susan wilson solovic

Exiting to Your Life Beyond Business?

Rewarding Employees in a Down Economy

why Getting out of your business may not be as easy as you think.

learn to recognize your outstanding team members without breaking the bank.

ou own a business. That business consumes most of your time and attention. The eventual sale or transfer of that business is a significant line item in your retirement plan. You need to find the most effective way to maximize the value of your business and minimize the amount of taxes you pay. It’s that simple – and that complicated! You can’t know how much money you need from the transfer of your business if you don’t know what you want your Life Beyond Business to look like! I also discussed the need to build a solid foundation now to support the long-term value of your business. There is one final element to a successful transition, however. You need to create a detailed plan to enable you to maximize the value of your business now so you can realize your dream tomorrow. You need to identify the variables involved in your transition and create a plan to address each effectively. Exiting your business is a big deal, the biggest deal of your life and one that holds the key to your future personal and financial security. Remember, the sale or transfer of your business represents the monetization of your life’s work – your retirement. So, what’s next? It’s time to get down to the nitty-gritty, to begin the process of laying the groundwork now for your transition in the future. In the coming months, I’ll address each of the following steps to creating your successful transition plan: •Clarification of your objectives. When do you plan to transfer out of your business? To whom do you expect to transfer your business? •Maximization and protection of business value. You can increase the value of your business by focusing on those elements that give your business value – your unique “Value Drivers.” You must WWW.SBMON.COM

maximize those drivers, reduce your tax liabilities and protect the value of your business from creditors. •Ownership transfer to third party. Perhaps your best course is to sell to a competitor, private equity or an investor group. You need to determine how to best position your business for the sale: Define the process and identify the risks. •Ownership transfer to insider. You may want to transfer your business to family or sell to a key employee. What are the risks of transferring to those who don’t have the cash to buy? •Business continuity planning. What happens to all these plans and to your business if you die or become disabled? How can you protect the value of your life’s work? •Personal wealth and estate planning. It is important to assemble a team of professionals who can coordinate your business transition plan with your estate plan for the beneficiaries of your estate. There’s a lot to think about as you plan your transition from your business. The sooner you begin the process, the more time you will have to make sure all the pieces are in place to ensure your successful exit from your business. Many owners neglect to step back and assess where they want to be and how to get there! When the time comes to consider their transition out of the business, one comment I often hear is, “If I’d only known how difficult it would be to exit my business, I would have started the planning years ago.” It’s time to begin planning your transition. Let’s get started! n Dave Driscoll is owner of Life Beyond Business. He brings experience, value building, process and understanding to owners of businesses from Main Street to Middle Market. Reach him at DDriscoll@LifeBeyondBusiness.com or 314-303-5600.

s small businesses have struggled in the down economy the past couple of years, it has been difficult to reward employees with raises and/or bonuses. In fact, many small firms found it necessary to cut employee salaries, perks and benefits in order to survive financially. Though there are indications that things are picking up, it’s still tough out there. So how can you reward employees for outstanding performance without breaking the bank? First, remember that most employees are motivated as much, if not more, by recognition as they are by cash. I know many people who make a good salary and regularly qualify for bonuses, but they are miserable in their jobs. On the other hand, I know talented individuals who work for less money than they might earn elsewhere because they enjoy their work environment. Rewards should be freely bestowed throughout the year. That helps keep your team motivated. Sincere and public recognition of team members who have made significant contributions to the company is always appreciated. Who doesn’t like being acknowledged for a job well done? If monetary rewards are out of the question, consider the gift of time. Give high-performing employees an extra day off,

or allow them to work a flexible schedule. You may want to consider offering the opportunity to telecommute for all or part of the workweek. Rewards and recognitions don’t have to be doled out at specific times. Be spontaneous and fun. And don’t do the same thing all the time. For example, bring a massage therapist into the office as a special reward, or have an outstanding employee’s car washed on site. Small gifts bring big smiles as a thankyou for a job well done. A gift card to a favorite restaurant or spa could be a nice treat. Tickets to a sporting event or theater performance are also a nice way to say thank you. Remember, you can get discounted certificates on many websites so you don’t have to pay full price. Most employees understand the current economic climate and will appreciate your creative efforts to recognize their contributions. n Susan Wilson Solovic is an award-winning entrepreneur and journalist, best-selling author, media personality and attorney. Her radio show, “It’s Your Biz with Susan Solovic” airs in multiple markets. She is the CEO of ItsYourBiz. com (formerly SBTV.com) and Susan Solovic Media, susan@itsyourbiz.com..

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38 ST. LOUIS SMALL BUSINESS MONTHLY / ApRil 2011

Website: www.gcfrog.com, www.myprintshoponline.com, www.realestatepostcardsonline.com Industry: printing, direct mail, graphic design, promotional products Education: Bachelor of Science, civil engineering, University of MissouriColumbia Family: Wife, Mary; three kids: Adam, 27, Lucy, 21, Sam, 14 What is your mission? To be one of the top printing and direct mail companies in the industry.

have a long way to go, but their system has inspired me. What’s the hottest trend in your industry, and are you going to jump on board? Internet marketing, and yes, I am already on board. I have been for seven years.

What was your first job? Painting houses (worked for myself).

What’s the hardest part of your job? Dealing with constant price pressure in the marketplace. Everyone wants it cheaper, and loyalty is gone.

What was your worst job? Dishwasher at Denny’s (was my first job working for someone else).

What’s the best part? Reading the testimonials and hearing the compliments from satisfied clients.

What led you to your industry? By accident. I wanted to own my own business after three years with Procter & Gamble after college. (I worked as an engineer for them.) I had an opportunity to work for my ex-father-in-law as a salesman in his small printing business in 1989. I had originally intended to buy him out when he retired. But after three years with him I decided I would rather strike out on my own sooner. So I gave up a very lucrative position to work out of my basement, alone, and start Graphic Connections.

What’s the best advice you’ve ever received? Always watch your overhead.

What was the smartest thing your company did in the past year? Focus on vertical marketing. In other words, develop specific printing programs for specific industries, such as real estate. We also have purchased five different small printing companies over the last five years, which has really helped to shore up sales in a down economic period. Who is your industry role model? www.PrintingforLess.com. I read an article about how they got into Internet marketing and used their model to do the same. We

What’s your favorite place in St. Louis? St. Albans golf course. What book is on your nightstand? The Bible. What has made you successful in your industry and in St. Louis? I have never rested on past accomplishments. I am always looking to the future and anticipating potential problems and opportunities. As far as St. Louis, I have always been an honest, straight shooter. No fancy sales talk. I focus on solving problems and let the chips fall where they may. That works well in St. Louis and, really, anywhere. What do you like to do in your free time? I enjoy golf, coaching and attending my son’s sporting events, playing guitar and singing, and construction projects. n

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Get more done with reliable business Internet that offers speeds up to 25 Mbps—faster than the phone company’s fastest DSL offering . Plus, stay well-connected with business Phone that includes Unlimited Long Distance and essential calling features. And be more informed with business TV that provides a range of crystal-clear channels and digital music. †

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©2011 Charter Communications. Offer available to new customers only. *40% savings includes 25Mbps Internet, one Phone line with unlimited long distance and Solution or Solution Plus Features Package, and Private View TV with a 12-month agreement. **Free installation applies to standard installation (a $148 value). Charges may apply for complex installation and additional outlets. Offer subject to change, expires 7/31/2011 and cannot be combined with other promotions. †Compared to standard DSL speeds offered on att.com and Verizon. com as of 1/3/2011. ††Local phone service required to receive Unlimited Long Distance (ULD) and applies only to calls within the US, Puerto Rico and Canada. Usage monitored for improper use and abuse, and Charter may move customer to another long-distance plan or may restrict or cancel customer’s service. All services provided are subject to the terms of the subscriber’s agreement/applicable tariff. Restrictions apply. Call for details. ‡View Charter-Business.com/guarantee for details about the 30-day customer satisfaction guarantee.