SBT Editor
A few weeks ago, SBT co-publisher Dan Meyer and I had the pleasure of sitting before a group of UW-Whitewater students who presented the findings of an in-depth survey they undertook for Small Business Times.
The presentation struck us on two fronts. First, we were pleased by the professionalism and maturity shown by the students. Second, we were strongly encouraged by the survey results which show an overwhelming support for SBT and its small business focus.
We learned that you love sales and marketing advice and profiles of successful business people and their operations.
The information, coupled with a “branding” project we’re going through, will be instrumental in setting SBT’s direction this year and beyond.
Thanks to all who took the time to respond to the survey.

When 100 mph winds roared through southeastern Wisconsin May 31, approximately 175,000 customers of the Wisconsin Electric Power Co. woke up to no power that Sunday.
Without electrical service, everyday commerce ground to a halt. Images of retailers sitting outside their darkened stores were a stark reminder of how critical a reliable supply of electricity is to business and residential consumers alike.
Even though the storm was an isolated event, the issue of a reliable supply of energy has blown into Wisconsin like an ill wind that portends disaster – one which is slower in coming but every bit as potentially devastating from an economic standpoint.
Historically, Wisconsin has enjoyed some of the lowest electric rates in the country. And, just as important, a consistent, reliable flow of energy.
The state’s preferred energy status has helped to lure a substantial number of Illinois companies across the border to Kenosha, Walworth and Racine counties in search of lower electric rates.
Low rates and reliable power also serve to keep existing Wisconsin businesses from moving elsewhere.
However, an archaic regulatory model based on a century-old monopoly system currently threatens to put our low-cost energy supply in jeopardy.
Caught at the center of this tangled web is industry, which can no longer rely on a consistent flow of energy on hot summer days. On four occasions last July and August, WEPCO asked customers to conserve electricity as supplies grew tight. A total of 25,000 residential customers and 2,300 major industrial and other large customers were asked to cut back on their power use during peak periods of demand.
While businesses on both coasts are used to brownouts or rolling blackouts, the prospect here is almost unthinkable. Only twice before in its history had WEPCO been forced to ask its customers to restrict power consumption.
A survey last year by the Metropolitan Milwaukee Association of Commerce (MMAC) showed that energy reliability was one of the top business concerns.
At a crossroads
Wisconsin finds itself at an energy crossroads, says Eric Schenker, a retired University of Wisconsin-Milwaukee Business School dean. In effect, it boils down to a “pay me now or pay me later” scenario, says Schenker, who has taken up the free market cause on behalf of the MMAC. Wisconsin can pay higher energy rates now or pay later, Schenker says, with the cost being lost economic development opportunities if the decision to build new power generation and transmission is continually put on hold while the debate over what to do wears on.
Decisions that are made now and in the coming years will have a lot to say about the future of our reliable energy supply, which has been the backbone of our economy. But greater reliability will cost more in the short run, Schenker says.
While business owners want energy reliability, they are among the first to cry foul when their energy rates go up as they did when WEPCO was recently granted a 12.3% increase by the PSC to upgrade its generation and transmission to provide better electric power reliability. [Most of the rate increase can be traced to the operating troubles of the Point Beach plant.] But even with the increase, Wisconsin will still have lower rates than most metropolitan areas across the US, Schenker points out.
The fact is, Wisconsin currently imports 15% of its energy. There is not enough generating capacity in the state, and not enough transmission lines to import power from outside the state.
Last summer’s brownouts came about as the result of a not-so-unique set of problems which are afflicting utilities around the country.
For starters, the temporary shutdown of the Point Beach nuclear reactor along Lake Michigan created a power shortage. To the south, the available energy Wisconsin typically depended on dried up, as Illinois goliath Commonwealth Edison shut down some of its own problematic nuclear plants. Meanwhile, to the west, there were not enough existing transmission lines to import power when Wisconsin’s power grid maxed out.
That scenario could repeat itself again this summer, as power shortages caused by nuclear plant shutdowns in Illinois, Michigan and Ontario could put a strain on Wisconsin’s transmission system.
What has become clear in recent years is Wisconsin has too few power plants for its overall energy needs, an uncertain future tied to its two existing nuclear plants, and not enough power lines to carry needed power into the state.
The politics of dancing around the issue
While the solution seems simple – to build more generation and transmission – there are plenty of obstacles standing in the way. The question over how to best manage electric utilities is a seemingly endless political debate which tends to bog down in the minutae that are like tiles in the complex mosaic that make up the big picture of energy reliability.
Then there is the cumbersome environmental permitting process which makes it hard to get anything done – four years for a new transmission line and seven years or more to build a power plant.
Also, there is a myopic tendency on the part of some to look at the issue only within the confines of the state’s borders, says Bill Harvey, president of Madison-based Alliant Corp./Wisconsin Power & Light Co., which became the first Wisconsin utility allowed to merge with two out-of-state utilities in Iowa earlier this year. Rather, those involved in restructuring the utility industry here must view the North Central US as an interconnected regional whole, Harvey says.
A principle obstacle, to date, has been the regulatory stance of the Wisconsin Public Service Commission, which regulates utilities and requires an exhaustive advance planning process when a utility decides it wants to build a power plant or site a transmission line.
By the time utilities complete their advance plans, the market shifts and the plans are no longer valid, points out State Rep. Tim Hoven (R-Port Washington), chairman of the Utility Oversight Committee, which passed a bill this year that could go a long way to streamline the planning and approval process.
Frustrated with the PSC’s apparent unwillingness to take on the brave new world of energy deregulation, Gov. Tommy Thompson appointed Green Bay attorney Joe Mettner as head of the PSC earlier this year. Insiders say Mettner has a fundamental understanding of the complexities, and is more likely to embrace a market-based solution than his predecessor, Cheryl Parrino, who was steeped in the old-line, government-first stance of the PSC.
“Given the healthy state of this economy, there is no reason why anyone ought to have their lives disrupted by a shortage of electricity.”
– Bill Harvey,
Alliant Corp./Wisconsin Power & Light
While Wisconsin still enjoys low rates, it would be short-sighted to credit the watchdog role of the PSC and the Citizen’s Utility Board, points out Alliant’s Harvey. One of the reasons the rates are low, he says, is that ratepayers are not funding new or expanded plants.
So, while Wisconsin still has low rates, it is stuck with a growing reliability problem with no real consensus about how to address the issue.
“We’ve spent the last few years just trying to decide if life was changing,” observes Dave Parker, a utility industry analayst for Robert W. Baird & Co. in Milwaukee. “The PSC postponed a decision [on deregulation in 1997], and decided to study it for another couple of years. Life has been so darn good here for so long that people hesitate to change.”
A deregulated, free-market approach would have addressed the state’s current energy reliability woes much more quickly than the old command and control government regulatory model, Alliant’s Harvey says.
“Given the healthy state of this economy, there is no reason why anyone, anywhere ought to have their business or personal lives disrupted because of a potential shortage of electricity,” Harvey says.
The free-market solution
In the last two years, the effects of hanging on to an outdated regulatory structure are apparent. Wisconsin utilities have earned an average of 7.6% per share compared to the national industry average of 23.9% per share, and a Midwest utility average of 30%.
Over the previous 50 years, Wisconsin was as a national leader in regulation of its public utilities and in the performance of those utilities. But now, Wisconsin has fallen behind the rest of the nation in addressing its energy future and the effects are apparent. Investors are moving their money to other Midwestern utilities which do not operate under the same constraints.
Even though a new energy reliability bill (AB-940) that passed the legislature is a step in the right direction, current laws do not go far enough to allow Wisconsin utilities to compete in a more open market environment, UWM’s Schenker says. Current rules set up extreme measures that make it impossible for Wisconsin utilities to build needed power plants. The laws, in effect, handcuff Wisconsin utilities, allowing out-of-state companies the opportunity to come here and profit by building power plants and by selling the electricity to Wisconsin utilities, Schenker says. That, he says, will not keep electric rates low. But it will serve to hold down the returns of Wisconsin utilities, making them unattractive to investors.
To restore the financial strength of Wisconsin utilities, the state needs to implement a free-market environment in which utilties can fairly compete, Schenker says. That will allow the utilities to use their own vast experience to maximize profitability.
Out of the ongoing debate, a mandate emerged late last year to streamline the planning and approval process with the ultimate goal of energy reliability. The outcome of that effort is Assembly Bill 940, which replaces the lengthy advance plan process with a strategic energy assessment, which would enable power companies to move faster on building new infrastructure, especially on smaller generation facilities.
AB-940 could also pave the way for a so-called Independent System Operator (ISO). The ISO would serve as a traffic cop to regulate the flow of energy outside of the self-serving interests of the utility companies. In an ideal deregulated world, with an ISO in place, cheap power could be “wheeled” on the network from a far-away plant in a place like Idaho to a business here requesting the service.
But the prospect of a deregulated marketplace is at least five years away, Harvey believes.
In the meantime, don’t expect the state’s big utilities to build additional generating capacaity until the free-market debate is resolved, Harvey believes. Building new plants now will only complicate the sticky matter of stranded costs, and who gets stuck paying for them.
Instead, look for wholesale merchant plants to fill the energy gap, Harvey says. Those plants built by independent ventures from outside the state will be gas-fired, and range from 85 to 175 megawatts per unit. Simple cycle combustion turbine plants can be constructed for $200 to $250 per installed kilowatt. Those plants are designed for peak periods when more power is required.
One of those quasi-independent power producers, LS Power Co., built a smaller 236 megawatt plant in Whitewater. LS Power turns around and sells the energy it produces to WEPCO. Another small-scale plant operates in the Green Bay area, and sells the power to Wisconsin Public Service Co.
Those gas-fired plants can be added in smaller increments, and can be constructed faster with less difficulty in siting. They are environmentally palatable, as they do not produce noxious materials the way coal-fired plants do, nor do they present the safety and operating problems of a nuclear reactor. They also use less water, do not require a railroad line, and are smaller in scale than traditional power plants.
What needs to happen now is for opposing factions to get on the same page, Baird’s Parker and Alliant’s Harvey both agree. Parker says politicians, regulators and businesses need to start operating from the same playbook.
What will bring those opposing factions together is customers, who could care less about the finer points of the electric power debate, Harvey says.
“Customers are interested in having the electic system meet their needs as they see them, and not as some monopoly, government regulator or special interest group sees them,” Harvey says. “Customers are going to say ‘Enough is enough, give us the energy we need at a price we are willing to pay.'”
That’s why customers will embrace a free-market approach as the ultimate solution to the state’s energy reliability problem.
July 1998 Small Business Times, Milwaukee

Whitewater’s location, amenities favored by employers
Location, location, location.
Businesses and home owners are looking for it. The City of Whitewater – straddling the Walworth-Jefferson county border – has it.
While it doesn’t lie along an interstate highway, the city’s location halfway between Madison and Milwaukee, and relatively close to the Chicago-area, has made it attractive to businesses. The favorable location is complemented by a University of Wisconsin system campus with a highly regarded business school.
All of those factors helped lead the city along U.S. Highway 12 and State Highway 59/89 to record economic development in 1997. More than 850 jobs and 500,000 square feet were developed within the city’s business park. Not bad for a city of just over 13,000 people.
But development like that doesn’t just happen overnight. In Whitewater’s case, the struggle to grow began in the 1970s when the city’s wastewater treatment facility reached its maximum capacity. Once a new, larger facility was completed in 1979-1980, a group of business leaders got together and proposed that the city buy land and develop a business park.
But fear of overdevelopment led to a referendum on expansion and voters banned further development until it could be studied. The two sides eventually met to iron out their differences and formed the Whitewater Community Development Authority, a quasi-private, quasi-governmental organization. It became WCDA’s job to develop and run the business park, with the city council holding ultimate governing authority.
WCDA pioneered the development of commercial, industrial and residential areas, according to James Caldwell, president of First Citizens State Bank of Whitewater and a founding director and chairman of WCDA.
From the start, WCDA was dedicated to developing a quality park which includes having landscaping, curbs and strong covenants to keep the park upscale.
“Corporate customers are even more fussy than private homeowners in making the financial commitment to a development,” Caldwell notes.
Once the infrastructure of the park was in place, WCDA had to find its first tenant. It turned out to be Perlman-Rocque, the sole distributor of McDonald’s restaurant products in Wisconsin, northern Illinois and Michigan. Once Perlman-Rocque moved in 1986, that got the ball rolling and it hasn’t stopped since.
The attention to the details in the park has paid off. The park has grown from the initial 40 acres to 540 acres with potential to expand if necessary, according to Michael Stumpf, WCDA’s director.
Husco International, which manufactures hydraulic systems for the automotive and construction industries, is in the process of completing a 42,000-square-foot facility in the Whitewater business park.
Jim Gannon, CFO of Husco, noted several factors involved in choosing Whitewater. Whitewater is within a reasonable driving distance from Husco’s plant in Waukesha, management liked the park, and Gannon likes the fact that the city has a university located there.
“The university can provide us with temporary and part-time employees,” Gannon says. “Second, it can provide our employees with continuing education.”
The quality of life is also enhanced by cultural programs presented by the university, Gannon notes. Other businesses that are expanding or relocating to Whitewater also mentioned Whitewater’s student-workers. But many companies, including Husco and Generac, which began operations in its new 135,000-square-foot facility in January, also had workers commuting from Whitewater to their facilities in Waukesha.
The exportation of Whitewater workers was due, in part, to the lack of jobs within the city. The increase in job opportunities is keeping more Whitewater residents in town. That’s one reason it’s easier to find workers in Whitewater than in some other Wisconsin communities, according to Stumpf.
The one problem Whitewater is experiencing, and other communities wish they had, is the lack of residential developments within the city to house the new workers. Three developers, whom Stumpf declined to identify, are actively pursuing sites in the city. Stumpf anticipates that one or possibly two of the contenders will be announcing their plans for residential developments within the next two months.
Another key draw for businesses considering expansion or relocation is WCDA’s willingness to put together financial packages for business owners.
Eco-Tech, Inc., a plastics recycler based in McHenry, Ill., is relocating its operations to Whitewater primarily because of the $450,000 in state and local funding WCDA helped put together for the company’s move and expansion, according to Eco-Tech’s president and CEO, Joe Sadlier.
Eco-Tech will be moving 35 jobs into a 50,000-square-foot facility in August. A total of 20-25 jobs will be available once the company moves. Sadlier expects to increase the total number of employees to 90 by the year 2000.
Too much development stalled the city’s growth in the early ’80s. That scenario repeating itself 15 years later appears unlikely.
“We’ve got more than enough capacity in our municipal water systems to accommodate a city twice the size of Whitewater without having to do any major upgrades to our utilities,” WCDA’s Stumpf says.
Caldwell anticipates that once additional housing becomes available, the city will see an increase in retail outlets as well.
“The job creates a stream of revenue to the individual,” he says. “Then they (employees) look to move here, then retail grows. It’s an economic circle.”
July 1998 Small Business Times, Milwaukee

Position: President, Tushaus Computer Services; President, Advance Cabling Solutions
Location: 10437 Innovation Dr., Suite 247, Wauwatosa (Technology Innovation Center, Milwaukee County Research Park)
URL: www.tushaus.com
First job: Golf caddy, Bluemound Country Club
Most satisfying career-related accomplishments: Leading the growth of two companies with nearly 90 people for the past five years; meeting Bill Gates
Most admired persons: father; Bill Gates
Family: wife, Laura and 3-year-old daughter Miranda
Education: Brookfield East High School; University of Wisconsin-Milwaukee
Hometown: Milwaukee
Currently reading: Inside the Tornado, Geoffrey Moore
Interests/hobbies: computers, movies
Supported organizations: YMCA, United Way, Young Entrepreneurs’ Organization
Words of Wisdom: “Whether you think you can or you think you can’t, you’re right!” – Henry Ford

The following loan guarantees have been approved by the U.S. Small Business Administration during May:
Aquatic Emporium/The Fish Store, 374 W. Main St., Waukesha 53186, $87,000, Waukesha State Bank;
Classic Tool and Machine Co., 2201 W. Bender Rd., #3, Glendale 53209, $75,000, Port Washington State Bank;
Dominos Pizza, 5100 Washington Ave., Racine, $119,000, Firstar Bank Milwaukee;
Elburg, Inc., 910 West Blvd., Racine 53405, $550,000, The Money Store Investment Corp.;
Fast Foot, N80 W14962 Appleton Ave., Menomonee Falls 53051, $42,250, First National Bank of Hartford;
Fort Handy Pantry, 1012 Whitewater Ave., Fort Atkinson 53538, $465,000, Citizens State Bank & Trust;
Grisby’s Child Development Center, 2856 N. 41st St., Milwaukee 53210, $45,000, Norwest Bank Wisconsin;
Koenig Custom Concrete Corp., 410 McKee Ct., Fort Atkinson 53538, $80,000, Citizens State Bank & Trust;
Lares Fashions, 261 W. Main St., Waukesha 53186, $50,400, Waukesha State Bank;
Mahuta Tool Corp., N182 W19137 Bunsen Dr., Germantown 53022, $299,000, Wisconsin Business Development Finance Corp.;
The Original Gallery Co., 609 Milwaukee St., Delafield 53018, $27,000, Waukesha State Bank;
Pistol Pete’s Pub II, 16755 W. Lisbon Rd., Brookfield 53005, $223,000, Wisconsin Business Development Finance Corp.;
Priya Corp., N96 W17500 County Line Rd., Germantown 53022, $255,000, AT&T Small Business Lending Corp.;
Pull Together Publications, Inc., 5150 N. 32nd St., Milwaukee 53209, $125,000, First National Bank;
Roth Chiropractic, LLC, 64 N. Main St., Fond du Lac 54935, $45,000, National Exchange Bank & Trust;
SGLA, LLC, 105 Industrial Dr., Lake Mills 53551, $700,000, The Greenwoods State Bank;
Sheboygan Family Restaurant, 2704 S. Business Dr., Sheboygan 53081, $550,000, Community Bank;
SPS Productions, LLC, 10437 Innovation Dr., Wauwatosa 53226, $73,000, Southern Commerce Bank;
The Cat Doctor, 236 N. Water St., Milwaukee 53202, $241,500, The Money Store Investment Corp.;
Unimex, LLC, 13095 W. Foxwood Dr., New Berlin 53151, $150,000, Ridgestone Bank;
Wisconsin Tool & Abrasives, Inc., 2107 N. 18th St., Sheboygan 53081, $89,500, Community Bank.
MEDC loans
A $106,000 loan from the Milwaukee Economic Development Commission will help a Milwaukee-based fund-raising firm finance the purchase of a new facility in the city for expanded operations.
Professionally Speaking, Inc., (PSI) will use the MEDC loan to purchase a 10,000-square-foot building at 3942 N. 76th St., just south of the Capitol Drive intersection, and move its telemarketing operation from its current site at 10012 W. Capitol Dr. It owns that Capitol Drive building.
PSI is a professional fund-raising company that handles direct mail and telemarketing campaigns for a variety of non-profit organizations.
The new location will provide benefits to both the company and residents as it minimizes traffic issues and provide PSI workers an easier commute by bus, city officials say.
The company, which will continue its administrative functions on Capitol Drive, employs 210 full-time people and expects to add 75 more full-time.
Participating in the $425,000 project is Investors Bank.
MEDC’s loan committee also approved financing for four other business projects at its June meeting.
Vincent G. Lubsey, M.D., located at 5231 W. Villard Ave., received a $149,000 Target Loan to help expand his family patient practice. Lubsey, whose practice has expanded substantially, has been a practicing physician in the city for 20 years.
When a 12,000 square-foot property with an attached house and three-car garage across the street from Lubsey’s practice became available, Lubsey decided to purchase and remodel it to accommodate his growing practice.
The new building will accommodate 10 examination rooms, a breakroom for employees, chart room and storage, an administration office, and a larger waiting area. Lubsey has four other doctors interested in practicing full- or part-time to assist with clients. Their fields include OB/GYN, internal medicine, general practice, and surgery.
Firstar Bank is also participating in the $406,000 project.
Lubsey’s practice also obtained a $48,100 state Minority Business Development Fund loan, a $3,400 state Minority Business Development Fund grant and a $12,500 state Job Creation Program grant. That financing was approved at the May 19 meeting of the MBDF board.
Lubsey’s practice expects to add up to 16 jobs with the expansion project. Two of those positions will be filled with state Division of Vocational Rehabilitation clients with disabilities.
Urban Foot Care Center, located at 3915 W. Capitol Dr., received an $85,000 Target Loan to assist in expansion and improvements at its current site. Funds will be used for the purchase of equipment and continued use as a medical facility and office for Urban Foot Care Clinic.
Urban Foot Care Center, a foot-care medical operation that provides general podiatry care, currently employs three full-time and expects to add two full-time workers.
Firstar Bank is also participating in the $212,000 project.
Environmental Innovations, Inc., a technical rebuilder that recycles laser printer and fax toner cartridges, would like to expand its operation with a $62,500 MEDC loan. It would use the funds to help it purchase a 12,000-square-foot building at 9600 W. Flagg Ave. The business currently leases 4,000 square feet of space at 111 W. Olive St.
Environmental Innovations, the third largest toner cartridge remanufacturer in the state, expects to increase employment by adding five full-time positions.
The firm currently has more than 350 accounts. Some of its major accounts include Miller Brewing, Marquette Medical Systems, Allen-Bradley and Wisconsin Electric Power Co.
Park Bank is also participating in the $250,000 venture.
Precision Restoration Co., Inc., received a $46,250 loan to purchase a 4,600-square-foot building on a .74-acre site at 5315 N. Lovers Lane Rd. to meet expansion needs of its growing business.
Jeff Wesolaski, president of Precision Restoration and a third generation mason, handles masonry repairs and cleaning, tuckpointing, special coatings for concrete surfaces, caulking, waterproofing, and chimneys, and concrete removal and replacement for the company.
Precision Restoration expects to add two full-time employees.
M&I Marshall & Ilsley Bank participated in the $185,000 project.
State Financing
Two southeastern Wisconsin firms are among six companies which will share more than $1 million in Wisconsin Development Fund awards and $238,000 in Minority Business Development Fund loans and grants.
General Converters and Assemblers, of Racine, was awarded a Customized Labor Training grant of up to $125,000.
The company, founded in 1974, is a minority-owned firm that has procured a major contract to be a tier supplier for General Motors. The company will die-cast foam insulation for mufflers and catalytic converters.
Over the next two years, General Converters and Assemblers will spend $2.35 million to acquire the space and equipment to service the contract. It will train 50 new and 185 existing workers in order to obtain ISO 9000 and QSO 9000 certification.
The CLT grant will leverage $159,000 in additional investment.
General Converters and Assemblers also received a $100,000 loan from the state’s Minority Business Development Fund. Those funds will help the firm finance the purchase of new equipment, which will be housed in a 53,000-square-foot building the firm is buying. An additional $2.25 million in other investments was noted in the MBDF package.
Simplicity Manufacturing, of Port Washington, won a $225,000 Customized Labor Training grant. The firm produces lawn and garden equipment, including mowers, chipper/shredders, tillers and snow throwers.
The company is in the process of investing $16.7 million to upgrade its equipment and production process to take better advantages of technological advances. Over the next two years, it will train 439 current employees.
The grant will leverage $815,168 in private investment.
Armando’s Landscape Co., of Big Bend in Waukesha County, obtained a $35,000 Minority Business Development Fund loan. The firm intends to expand its operation by growing some of its nursery stock and purchasing additional stock in bulk from wholesalers. It will use the loan to finance inventory and equipment. The project is expected to create 10 jobs and leverage $15,000 in additional investment.
July 1998 Small Business Times, Milwaukee

You can capitalize on your unique market strengths through niche market development. In order to do that, you must define what you do in such a way that it creates a niche that did not exist.
It’s not easy, but try to answer the following questions with as many perspectives as you can:
1) From our customers’ viewpoint, what are they actually buying from us?
If you make labels, your customers may be buying an identification benefit. Can you think of other places where identification is needed but is not currently being provided?
2) What is the outcome of using our product or service?
Instead of objectively looking at your service or product, try to identify what it does. If you are a printer, are you really in the communications business? If you are a boat builder, are you really in the vanity business?
3) What is gained by using our product or service by our customers?
Are you really in the convenience business by making kitchen appliances? If you sell insurance, are you really in the family protection business?
The above process has been called “reinventing your organization.” Use the information gained to search for ways to create market niches that only you can service. Small to medium-size businesses can thrive because they are – or should be – flexible enough to identify and serve niche markets.
– William Kraemer

Canned’ manufacturing software is cheaper in the long run
When the term “make or buy” is used in a manufacturing context, it generally concerns a decision to produce a part or to buy it from a supplier.
But the make-or-buy decision we are reporting on is the decision by a manufacturer to either purchase “canned” software or to write its own programs for production and inventory control.
Recently, we were referred to a manufacturer that was just beginning to assemble its products rather than subcontracting the assembly. Previously it had contracted out its manufacturing and assembly. But due to quality and delivery problems, it decided to start doing the assembly itself.
The issue we were asked to look at was the inventory levels. The firm’s banker was concerned because of its ever-increasing borrowing needs to support its inventory and receivables. The banker was even more concerned that its move to assemble its own products would further inflate inventory.
The first step in any consulting assignment is to ascertain the facts of the situation. So we proceeded to talk with the owners to gather the facts. One of our first questions was very revealing: How many times was the firm turning its inventory? The firm asked us to clarify the question.
We explained that “inventory turns” was a standard measure used to determine how efficiently a company moves product from the raw material stage to a completed sale. In this firm’s case, raw material would be the piece parts it buys from its suppliers. We explained that inventory turns is computed by dividing the total dollars of inventory into either total annual sales or total annual cost of good sold, with total cost of goods divided by inventory dollars being the better measure.
We stated that industry associations or trade publications often publish industry financial statistics that would provide the firm with a benchmark for inventory turns. When we had to explain that basic concept, we knew that we were dealing with a prospect that was not sophisticated in inventory management.
We looked at the firm’s numbers and found that it was turning its inventory 3.95 times per year, or every 92 days. Those numbers suggested that there was a lot of room to improve performance and reduce inventory. That is exactly why we were there and why the firm’s banker was concerned.
Next we asked to see the systems the firm had been designing to manage its inventory. The firm related how it had found a group of college grads to network its computers. The company was using the same group to help it write programs using Microsoft Access for inventory control and purchasing.
We asked to see a bill-of-materials for one of its products, which listed the components going into a final assembly. What we got was a 13-page, 381-item listing of every component for one of its final product assemblies.
That listing told us two things. First, the company had little concept of what a bill-of-materials was. Second, when it entered a production order for a certain number of finished units, it was probably ordering components based on the in-process time to assemble the finished product, rather than on the in-process time necessary to make the subassemblies and the final assemblies. That would mean that some components would arrive before they were needed and others would arrive late.
One of the most basic components of a “canned” manufacturing package is the bill-of-materials processor. The bill-of-materials processor links individual piece-parts to form assemblies and subassemblies in a tree structure that, when all levels are included, will represent the finished product.
A manufacturing package will use the bill-of-materials structure for determining the timing of ordering components, aggregating component orders across several different models, accumulating costs, and performing several other processes that will help to control and manage the manufacturing cycle. Our prospect had yet to discover that key concept.
After spending about two hours explaining the firm’s situation, the prospect asked for our initial impressions of what should be done.
“Stop re-inventing the wheel. Stop trying to program a production and inventory control system. In the long run you will spend more money programing your proprietary system and end up with a system which is not as good as what you can buy in ‘canned’ manufacturing software,” we said.
From its viewpoint, the problem with our solution was both a cost and management-effort problem. Our solution had a bigger up-front cost for buying the software versus its smaller ongoing cost for writing the programs as it went along. Second, installing a whole new system would have been a revolutionary change because it would have included all of its systems from general ledger to payables to purchasing.
Form our viewpoint, the problem with the firm’s solution was that the long-run costs were far greater and the long-run benefits were far smaller than it could achieve with software that was designed as an integrated package.
Integration is another key point that we stress in making this decision. Since “canned” packages are designed as integrated suites of applications, many benefits are realized in a company’s financial systems.
Purchases and receivings flow smoothly into accounts payable. Labor costs are collected and reported on parts and assemblies. Those in turn flow into the general ledger for the preparation of the financial statements. Integrated systems increase the accuracy and timeliness of the financial reporting.
Our experience is that over the life of a computer software system, you cannot make (write) a better, cheaper system than you can buy. Companies that choose to make their own software are choosing to take the cheaper, easier way in the short run. But in the long run, they’re not better off.
Stay tuned to a future article to find out what our prospect decides.
Further information on the manufacturing software purchase decision is available on our web site: http://www.execpc.com/~devitt/
Michael Devitt is president of Devitt Consulting Group in Shorewood.
July 1998 Small Business Times, Milwaukee

The $170 million Midwest Express Center will be more than twice the size of the city’s existing convention facility.
Currently being built in two phases, it will occupy four blocks in downtown Milwaukee between Wisconsin Avenue and Kilbourn Avenue and Fourth and Sixth Streets.
The facility will be three stories tall with the second floor spanning Wells Street, which will divide the facility at ground level. One skywalk will connect the Midwest Express Center to the Hyatt Hotel on the mezzanine level and another skywalk on the first floor will connect to the Milwaukee Hilton.
Phase I:
Phase I of construction, which covers two city blocks, began Feb. 14, 1996. It will be completed this month, and will include a 37,506 square-foot ballroom, 32 first-floor and mezzanine-level meeting rooms and two-thirds of the exhibition hall (approximately 125,180 square-feet).
Phase II:
Phase II, which is scheduled to begin in the fall, will include the removal of the current Wisconsin Center facilities (formerly known as MECCA) and the extension of the Midwest Express Center over Wells Street. When completed in December 1999, the entire exhibit hall will measure 188,695 square feet.
Exhibit hall:
The Midwest Express Center’s entire exhibit hall will measure 188,695 gross square feet (gsf). Phase I of construction offers 125,180 gsf of exhibit space designed to industry standards with 30-foot ceilings. It will be divisible into three halls, which also can be combined, measuring 63,060 gsf, 31,005 gsf and 31,115 gsf. Phase II of construction will add 63,115 gsf to the exhibit hall.
Ballroom:
The Midwest Express Center’s ballroom is located on the first floor of the facility. It measures 37,506 gsf with 30-foot ceilings. It will be able to accommodate 3,150 diners at 6-foot round tables or can be divided into four smaller rooms.
Meeting rooms:
The first floor and mezzanine level will have meeting rooms of 8,280 gsf, 6,210 gsf and 5,192 gsf. Those rooms will be capable of being partitioned to provide up to 28 meeting and breakout rooms. In addition, the facility’s ballroom also will be able to be divided into four meeting rooms, for a total of 32 available meeting rooms.
Technology:
The Midwest Express Center is equipped with T-1 Internet cables as well as other technological advances, including fiber optics, satellite links, electronic signs, barcode readers, automated billing and imaging systems, and state-of-the-art security control systems.
Loading docks:
Sixteen loading docks and three drive-in ramps on the building’s west side will offer access to the exhibit hall floor. Three docks will be equipped with levelers and the remainder of the docks will have leveling plates.
Utilities:
Electric/utility boxes for most conventional exhibitor needs will be installed in the exhibit hall floor on a 30×30-foot grid. Gas connections will be located at the pillars at 90×90-foot intervals. In addition, air, water and drain connections will be available, as well as high-voltage power supplies.
The ballroom will be equipped to handle large theatrical or corporate presentations, with ample power for PA’s, lights and lasers. All rooms will have complete sound and lighting systems, cable and telephone connections and substantial power supplies, in addition to equipment for video conferencing, multimedia presentations and other communications uses.
Architecture:
The Midwest Express design makes reference to architectural themes in Milwaukee’s historic buildings. But the dominance of glass brings it well beyond the confines of those architectural types. Interior lobby spaces will be lofty and well-lit with two levels of balcony concourses above the main floor.
Public art:
More than $1 million has been allocated for art to be integrated into the Midwest Express Center and object art – art work commissioned for placement after completion of the facility.
Connections:
2.7 miles of skywalks will connect the Midwest Express Center to:

Years ago, after making what I thought was a great advertising proposal to a local restaurant owner, I sat back and smiled, thinking “He’s going to buy.”
He didn’t.
Instead, he pulled the tablecloth out on me. “Let me talk to my partner, ” he said. “Give me a call next week.”
He had an objection, gave me a put-off, and I had no sale.
Before you can effectively overcome an objection, you’ve got to uncover what it really is. At the restaurant, I hadn’t asked enough questions up front. Did he have any partners, or anyone else who made buying decisions? Was that even the real issue?
The “partner” was a delay statement. Almost every time a sale is lost or delayed, the prospect just isn’t convinced that doing business with you is worth the pricetag. With my restaurant client, I needed to go back and ask more questions. It was the only way I could find the hidden objection.
The first step is almost always to get more information. The less you know, the less likely you’ll make the sale.
What does that customer use now? Who at the company uses it? And how could you fill a need or increase the customer’s satisfaction?
Asking questions is one of the most inexpensive – and under-used – tools in your sales arsenal. Before you start talking product, service or price, make sure you’ve uncovered all of the prospect’s needs, wants and concerns.
The next step is persistence. It takes up to five calls to close a sale. That includes time for rapport-building, product or service positioning, and overcoming initial concerns. Most salespeople give up on a prospect after only two calls. Naturally, if the prospect is now buying from one of your competitors, the prospect will have to be convinced to try you.
Dropping the ball too soon means future sales and continued growth will be lost. Persistence is essential. Today, with your prospects’ lives moving faster than ever before, a sales presentation must be more concisely matched to a prospect’s needs, or you’ll lose his or her attention to something else.
When you’re put off, it will often come in the form of a general objection, like, “Let me talk to my partners or committee.” The real objection could be that he or she didn’t match you, your company and the person’s satisfaction together quickly enough. And once your plan is shelved, you’ll have to work even harder to get it back into motion.
Even then, objections will remain. Handle them as you would any question about your product or service, but never as an attack that needs to be defended.
A lot of objections today don’t fit the old textbook profiles. They’re general sounding and harder to pinpoint, like an “unsold partner” or committee. Very few prospects will say, “Sure I’ll buy, now let’s go convince my boss.” In real life, it’s easier on the client’s part to “put you on hold.” Then it’s up to you as a sales professional to uncover the hidden objection and re-present your case.
Help fill your prospects’ needs by uncovering more of their hidden concerns, and you’re on your way to a new sale … and a lasting partnership.
Joe Guertin is president of Joseph Guertin & Associates, an Oak Creek-based speaking, training and coaching firm.
Your comments are welcome at 414-762-2450, or jguertin@tcccom.net
Ten Tips:
For Uncovering Hidden Objections
1 Ask more questions up front
It pays to know timelines, budgets and other decision-makers
2 Don’t pounce on objections
Objections aren’t attacks, but requests for clarification
3 Classify the importance of the objection
Ask, “Aside from that, what’s most important to you (and your staff)?”
4 Isolate the objection as the only objection
Ask, “If that weren’t a problem, would you go ahead with it?”
5 Address the objection succinctly
Explain your case, or use it to negotiate
6 Get them involved in the solution
Try putting the prospect in your shoes. Ask what he or she would do.
7 Test the waters
Once you answer the objection, Ask, “Does that answer your questions?”
8 Be aware of “inside objections”
Learn about the prospect’s buying policies and hierarchy
9 Make more links
Get to know the prospect’s decision-influencers
10 Brainstorm common objections
With colleagues, managers or co-workers
July 1998 Small Business Times, Milwaukee

Sales training doesn’t work unless you’re involved
Over small talk at a backyard barbecue, Al, a salesman for a large California technology company, told me that in the last six months his employer had spent nearly $1 million on sales training.
I asked if it did any good. His reply was blunt: “No, it was a waste of money.”
The content was OK, said Al, the instructors compelling, and the materials were professional. There were even separate programs to teach managers and executives how to reinforce the training for the troops.
The problem, Al said, was that no one knew how to make it come alive. They soon fell back into old habits, while senior management was under the illusion that the program was being implemented.
I asked Al why no one said anything.
“Are you kidding?” he responded. “Our vice president of sales had asked the president for a million dollars for sales training. Who’s going to stand up and say this was a wasted investment?”
I hear this lament from executives and business owners regularly: “We spend fortunes on sales training, yet our salespeople don’t improve. Three months after the training, our salespeople are still not selling value, they’re still not getting to executives, they’re still chasing bad deals, and they’re still getting stuck with gatekeepers.”
Sales training is a $100 million industry – and, as the example above shows, it doesn’t work!
You know the drill: Pull all the salespeople together with a high-energy instructor and a cheerleading speech from senior management, and send them off three days later with a bulging three-ring binder and an implementation worksheet. The evaluations that people fill out praising the trainer are a beauty contest – giving points for being interesting, not for meaningful content. Research indicates that, on average, 20% of training participants retain 20% of what was trained. That’s a 4% payback.
For specific skills such as presentation, writing or communications, traditional training is fine. But transforming the sales force from the Vendor/Problem-Solver level to the Business Resource level requires a radically different approach, not just improved selling techniques. It requires a complete change of mindset – in the sales organization and across the corporation. The problem with traditional sales training isn’t flawed content, it’s a flawed training model.
So what’s an executive or business owner to do? Here are six recommendations:
1. Start with the right raw material by hiring smart. A “salesy” personality and a lot of product smarts aren’t enough. Staff your sales force with people who demonstrate business acumen, organizational savvy, and the potential and desire to be executive credible. How confident are you that the training firm you hire can support your assessment efforts and assist in staff evaluation?
2. View sales as a core process in your company. Is your company’s success or survival inextricably linked to the effectiveness of your sales force? If the answer is no, and your sales force exists mostly to explain your products and services, then fine: pump your salespeople with product smarts and good communication skills. But if the answer is affirmative, you need to recognize selling as a core process – no different from manufacturing or distribution – from which your company derives significant competitive advantage, and invest in sales as if your company’s future depended on it.
3. Make sure the new sales methodology you’re considering is truly a process, deals specifically with the complex sale, and offers concrete how-to’s. Most sales training imparts concepts, techniques, even gimmicks to persuade a prospect to choose the salesperson’s product or service. Handling more complex accounts is usually an afterthought. So consider closely whether the proposed training content will truly reposition your salespeople as a business resource in your customer’s eyes. Does the material reflect a coherent process or merely a grab-bag of ideas, techniques and concepts? Does it address the complex sale? And are there process skills that fundamentally change the mind-set of your sales force, right down to the very words they use with customers and prospects?
4. Insist that the training firm go into the field to show your salespeople how to implement the process. This is perhaps the most radical departure from traditional training, but it’s an essential step if salespeople are to truly internalize the new methodology.
An illustration: When I made a joint call with a client salesman, Bob, we had planned to close the call by suggesting a meeting with the contact’s boss. Knowing this contact was a likely gatekeeper, we had crafted our phrasing carefully in advance to avoid triggering his gatekeeper instincts.
But when Bob phrased the request in his own words, the contact recoiled. “I would prefer that you wouldn’t do that,” he said. I quickly jumped in, used the exact wording we had worked out before, and managed to soften him to the point that he said it would be fine to contact his boss, but he couldn’t help us – which was the outcome we wanted.
A difference between the right wording and the almost right wording fundamentally changed the message – and the outcome. Yet when Bob and I discussed the scene later, he thought he had said essentially the same thing I had. If I hadn’t been on the call with him, he would have concluded the process didn’t work.
That’s why any training consultant should recommend implementing the new process alongside your salespeople in the field. Forget protests that the training company doesn’t understand your product or service well enough; they don’t need to in order to implement a true Business Resource-oriented sales methodology.
5. Take a hard look at your own internal cultural barriers to the transformation you want to make. The most prevalent barriers are incentive compensation and corporate America’s obsession with short-term results. Too many companies tell their sales forces to develop long-term strategic business relationships with large customers, yet turn the screws for quarterly, monthly, or even daily numbers.
Other barriers can include organizational structure or the way accounts are allocated. But few companies are able to diagnose their own cultural deficiencies. Size up the outside firm you’re considering to see if it has the horsepower to assess your own barriers, the guts to get in your face and tell you what they are, and the know-how to help you eliminate them.
6. Expect that some of your people will not survive the transformation to Business Resource selling. The kind of DNA-level change that we’re talking about does not agree with every constitution, and the required transformation is too dramatic for everyone to survive. As an executive or business owner, it will be your job to re-deploy those who aren’t cut out for it.
Jerry Stapleton is president of the IBS Group, a large-account sales consulting firm based in Brookfield. He can be reached via telephone at 414-784-0812.
July 1998 Small Business Times, Milwaukee

Identify your purpose in the event planning process
If you’re planning a meeting or special event for your business, you might want to ask yourself why.
Not that you want to talk yourself out of the event.
Rather, you need to know the underlying reason for the meeting if it’s to be truly successful, say area meeting and event planners.
“When I start working with a client, I ask them, ‘What do you want to accomplish?’,” says Lynn Johnson, who runs AccessPoint, Inc., a meeting and event planning business, in Menomonee Falls.
A great majority of businesses don’t have a clear idea of event purpose going into an initial planning session, observes Johnson, who also coordinates the office of the Wisconsin chapter of Meeting Professionals International.
Pat Berg, of Meet Milwaukee, Inc., in Fox Point, agrees. “First decide what your purpose is,” she says.
Thus, a large part of what meeting and event planners do for businesses is help clarify purpose. That not only helps set the direction of the event, but it also helps in gauging success.
“It’s important to focus on results,” says Linda Jackson Cocroft, president of I Am Events in Shorewood. “What is the anticipated outcome of hosting your meeting or event?”
Once you’ve determined your objective and you start looking for venues like a banquet room, don’t just look at the amenities the facilities have to offer, advises Janet Sperstad, a certified meeting planner and past president of the Wisconsin chapter of Meeting Planners International, a Menomonee Falls-based group.
“Look at the people who service the facility,” she advises, noting that while a facility may look great, the people who support it may not be up to par. “The people make the most impact.”
Facilities, for their part, will also be looking at your value to their establishments. Jim Lynch, director of sales for the Milwaukee Hyatt, notes that hotels and other such facilities that offer meeting space are interested in maximizing their participation. That includes room nights and food and beverage service.
If you want all the meeting space but don’t need to reserve hotel nights, the facility might rather offer the space to someone who will use room nights.
Lynch also touts the value of working with a professional meeting planner. It makes the whole process easier for all parties, he says.
“We know all the pitfalls,” says Meet Milwaukee’s Berg.
With all the pitfalls avoided, how do you know whether your event was a success? Meeting planners have a process to determine return-on-investment, says AccessPoint’s Johnson. That’s all incumbent, however, on having a clear picture of what you wanted to accomplish. “A lot of times, they say they had a good time, but you need to look far more closely at it than that,” Johnson says. In some situations, sales meetings, for example, you can watch for sales increases.
And, adds Jackson Cocroft, don’t forget the marketing value of a meeting or event. She notes the words of California planning guru David Nilson, “Events are marketing tools that identify and attract potential customers or others who can impact the bottom line.”
July 1998 Small Business Times, Milwaukee

Pocket-size PDAs replace organizers, notebook computers for many tasks
When Apple first introduced the Newton personal digital assistant five years ago, savvy technology users turned up their noses at the pocket-size device.
Problems with character recognition when the user scrawled notes on a screen with a special pen led many to conclude the device was a waste of time.
But that was then and this is now.
While Apple abandoned the Newton this spring, the technology lives on in its more successful predecessor, the 3Com PalmPilot, a much-improved version that offers many of the same features of a notebook computer and the carry-along convenience of a pocket organizer.
What the PalmPilot or the IBM WorkPad PC Companion do is lower the total cost of ownership for a business by offering the power of personal computing for $200 to $500, versus the cost of a notebook computer at $5,500 for the new full-feature Apple G-3 to $2,300 on the low end.
“PDAs are becoming the day-in, day-out workhorse machines,” notes Daniel Kelliher, sales manager for H.H. West Company’s modern business technology division in Milwaukee.
“The idea is to lower your cost of purchase with a PDA and still have access to all the things that you used the laptop for,” Kelliher says.
Five months ago, Harley-Davidson’s Chris Bernauer replaced his Franklin planner with a PalmPilot, which weighs 2.8 ounces and measures 3 inches by 4-3/4 inches, and 5/8 of an inch thick. The 28-year-old senior project engineer has realized significant gains, as he can easily keep track of appointments, make to-do lists and take notes during meetings – all with the drag and drop ease of a desktop computer.
Outside the office, Bernauer pulls up a screen which shows his weekly calendar. If his schedule changes, he can drag and drop an item into the appropriate spot. The PalmPilot also allows Bernauer to carry important phone numbers with him.
“It’s just a lot cleaner and more convenient than my Franklin planner,” Bernauer says. “I can carry around my entire life in my shirt pocket.”
At the Gordon Flesch Co. in West Allis, branch manager Kelly Moran has the majority of his sales force using PalmPilots out in the field. What the PalmPilot does is allow a salesperson to call up a customer database on the spot and update it.
“You don’t have to worry about powering it up or booting it up,” Moran says. “It’s a time saver because of its size.”
At the end of the day, when Moran returns to the office he “hot-syncs” all of the information he entered into his PalmPilot into his desktop computer. This is done by placing the device in a cradle which is connected to the computer.
“I was having scheduling conflicts in the field, trying to remember what my appointments were,” Moran says. “Now I don’t have to remember, I just data-sync.”
What makes today’s PDA more effective than the Newton of old is the cottage industry of software programs and hardware add-ons that have sprung up around it.
Lotus software called Easy Sync allows users to pass data back and forth between their PDA and desktop. River Run Software’s Mail on the Run synchronizes e-mail, schedules and contact information.
Also, Microsoft’s development of a stable operating platform for PDAs called Windows CE has helped solidify the PalmPilot’s functionality, Kelliher says.
In the past, there was a misguided effort to duplicate desktop functions in the hand-held devices, says Tony Reese, an information services manager for Harley-Davidson. What makes today’s PalmPilot more effective is that it does not try to mirror the features of the desktop, but complements them instead, Reese says. One example: you can download your e-mail remotely via the PalmPilot.
Right now, with about 100 people within Harley-Davidson’s executive ranks using the PalmPilot, Reese preaches the functionality of the technology to anyone who will listen.
“Anyone who is using a paper-based organizer should consider doing this,” Reese says. “I think it’s fantastic.”
The three principal gains Reese has realized from his PalmPilot are: 1) Convenience and portability (opportunities are no longer lost). 2) Ease of use. The operating system is very “thin.” That means the device is always on, and information you have entered in saves automatically. 3) The computer-enabled function, which allows the user to quickly find things that he would have to search for manually in a paper-based organizer.
Beyond those uses, the PDA allows you to perform desktop functions like surfing the Internet. Recently, AvantGo Inc. introduced the delivery of daily news and business stories. That requires that the PalmPilot user has an Internet connection, and sufficient memory to download. That shouldn’t be a problem for a majority of users, particularly those with the new PalmPilotIII, which has 2 megabytes of memory.
At this point, most PalmPilot users are a technologically-savvy bunch who have a lifestyle that warrants its use. But as more people see the advantages of PDA over laptops, use will increase, H.H. West’s Kelliher says.
“For international travelers, when you go through customs, you have to totally take out and take apart your laptop,” Kelliher adds. “With the PDA, you can zip through customs so much easier than if you are lugging around a laptop.”
Another advantage is the customized applications which drive the PalmPilot are so small that they typically require 30-second downloads to your PC, and then a transfer to your PalmPilot, Reese adds. [The utilities are added to your PC.]
For more information, go to www.palmzone.com.
July 1998 Small Business Times, Milwaukee