Volume 4, No. 4
June 2008


Click Here to
Search for Jobs
In the Ann Arbor

Area Home Builders Look for Answers In A Struggling Market

Mike Gould
Small Business &
The Internet
"EOL: End of Life"

Mel Muskovitz
"Independent Contractor or Employee?"

Ann Arbor Area BUSINESS MONTHLY magazine brings the reader the latest business news and information important to the businesspeople in Washtenaw County. Each month articles cover real estate, legal, Internet, employee concerns and the climate of business in the greater Ann Arbor area. There is news about company employees and feature articles on local businesses. We cover business news from Ann Arbor, Chelsea, Dexter, Manchester, Milan, Saline, Whitmore Lake, and Ypsilanti.

Don't Go It Alone. . .
Assemble A Business Team

By Alex Harrison

Mark Baily, Vice President of Commercial
Banking, Bank of Ann Arbor
Mark Baily, Vice President of Commercial
Banking, Bank of Ann Arbor

Jeff knows cookies. For the last four years he has been managing his family's bakery in southern Illinois, which churns out over 75 dozen pink frosted sugar cookies every day-that's in addition to the other cakes, cookies, and pastries the business bakes daily for its loyal, small-town customers.

Now Jeff wants to move on from the bakery, and is preparing to start his own coffee/gelato shop a few towns away. He is determined to open for business as soon as possible, and is equally determined on running the show himself. "No banks, no marketing firms, no lawyers if I can help it," he said. "I just need crucial business decisions apart from solid counsel. Jeff's plan might sound extreme, but his story is real-a case study in small business venture that will unfold (or unravel) over the next several years.

But perhaps you can identify with his plight. You began your business with a great idea, service, or product. You were excited. You hit the ground running. Now it seems like you spend so much time struggling to keep the gears of your business in motion that you've lost that excitement. New ideas lay undeveloped. Chances for growth are passed up because you can't imagine where the necessary manpower or funds would come from. Never mind your 'ten year plan'; it's all you can do to make plans for this month. Whether your business is ten employees or two hundred, it is never easy-or wise-to go it alone.

Bob Kerschbaum of Great Lakes Training Associates
Bob Kerschbaum of Great Lakes Training Associates

The great news is that you don't have to. The Ann Arbor area houses a wealth of experts: accounting professionals, community banks, marketing firms, commercial insurance agents, business attorneys, training specialists and IT gurus. Each can play an invaluable role as a member of your business team.

Your community bank
Odds are you have at least one bank that you have been dealing with since the inception of your business. They helped you secure a loan, and assist you in everyday account transactions. Beyond those basic services, how would you say that relationship is going? When is the last time you sat down with your banker to discuss the overall financial health of your business? If it's been more than a year, you may be missing opportunities to help your business succeed and grow, says Mark Baily, Vice President of Commercial Banking at Bank of Ann Arbor.

"It is so easy for an entrepreneur to get caught up in the day to day that they forget or neglect those crucial points of contact," says Baily. "Every client has unique needs, but every business will benefit from getting together with their banker at least twice a year, more if they find themselves in a situation needing significant counsel. Let your banker know where you're at, highlighting news and change, and current strengths and weaknesses." Baily feels that it is in maintaining client relationships that community banks are strongest. They have an intimate understanding of the local economy and market, and strive to forge close, long term relationships with their clients. A closer relationship can translate directly into more focused financial management.

"Having an attentive banker as part of your team who can sit down with you to assess the company's financial position on a regular basis will allow him or her to see opportunities you may not be aware of; for example, the chance to redeploy funds in a way that would work to your advantage," says Baily. Your banker can help you put an excess of funds to use, perhaps in the form of an interest bearing sweep account, rather than having them sit in a standard checking account.

Your banker can also help you examine and plan for your long term financial future. At some point you will be ready for retirement-how will you manage the asset that is your business? "A close relationship with a community bank can assist in the areas of estate planning, an trust and investment support," says Baily. Casting a financial vision for your business is a healthy habit made easier with consistent support.

The Role of the CPA
You will experience periods of transition throughout the lifespan of your business: growth, the addition or loss of partners, perhaps even selling the company and moving on to another venture. Each transition brings with it an entire list of considerations and exploring tax ramifications is certainly a vital aspect of any impending change. Tax law becomes more complicated every year, and a trusted accountant can navigate you through these highly specialized issues. Cindy Cattran, CPA and partner at Wright Griffin Davis & Co. in Ann Arbor, feels strongly that accountants will work in your interest to make business easier.

"Every business starting up should consult with an accountant. They will have a better understanding of what their obligations are with the tax authorities and from a general business standpoint," says Cattran. "How much help they need as they go forward will depend on their level of expertise in financial reporting and tax reporting, the nature of their business, and their long term plans."

Cattran explains that accountants offer much more than just tax preparation. They can assist business owners with tax planning as well. "We meet with our clients during times of transition and can help them structure a given transaction in a way that results in the best tax benefits." Accountants can also help you find an efficient system for keeping financial records; an easy to use system will help you track many key data points that allow a busy owner to take the financial pulse of their business quickly. Additionally, accountants often deal with the intersection of finances and the law. A good accountant will be well networked within the community, and can connect you to reputable lawyers and bankers that can also serve as trusted members of your team.

Your Insurance Agent
Choosing insurance for your business can be a daunting task. How can you know with certainty how much (or how little) insurance you really need? The simple answer is that there is no simple answer. Insuring your business is no small project, and while you could spend hours of your work week piecing together a do-it-yourself business insurance plan, it makes much more sense to meet with an agent to determine the right formula for you. Don Hughes of Benz Insurance in Ann Arbor helps his business clients consolidate their insurance needs under one roof, where they will receive the quality of service needed when problems arise and claims are made.

Like the other experts we spoke with, Hughes recognizes that each business is different. "It makes more sense for businesses to approach insurance in an "a la carte" fashion, because the needs and liability of each business vary tremendously, even within the same industry," says Hughes. "An all encompassing policy is often unnecessary and very expensive."

Working with an independent agency can be to your advantage as well, as they represent many companies and can quickly compare rates to find that perfect mix of coverage, cost, and service. Hughes advises that business owners also benefit from a yearly or twice yearly status meeting with their insurance agent. "Those meetings are important, because while owners are busy running the company on a day to day level, it is easy for them to forget that those significant purchases or expansion projects they took on in the last year really can change the coverage that they need," he says. "Your agent knows the questions to ask at these regular meetings to keep you protected."

Sound Legal Counsel
Having a consistent source of legal counsel is not only necessary to protect your business, but this relationship can also be a source of practical advice that extends throughout the lifespan of your business. In reality, legal counsel is often considered a second or third tier service in terms of perceived necessity for a small business, according to Thomas Dew, Attorney for Berry Moorman Professional Corporation in Ann Arbor.

"Fees are usually the biggest deterrent, and start-up companies have demands on a limited amount of capital," says Dew. "In their mind they need to focus on other aspects of the business first. But the truth is that seeking legal counsel is very much like the old Fram oil filter marketing slogan, "you can pay me know or you can pay me later." In other words, a good lawyer can save you large expenses down the road by investing in a solid legal business structure right from the start.

At the most basic level, a business lawyer can help you decide how to structure your company-as a corporation, a limited liability company or partnership. An attorney can help a business navigate through various complicated legal documents such as leasing agreements, vendor agreements, the terms of your loan agreement, and covenants made with your bank. All of these documents can live on for the life of the company, so it is important that they are set up properly. Dew also helps his clients understand the need for a comprehensive office or company policy manual, which employees must read and agree to follow via a signed statement. Such documents ensure clarification between the employer and employee regarding a number of issues: pay, overtime, medical or personal leave, health insurance, disability insurance, and many others.

Your attorney can also provide some assistance in locating and securing capital. "There are also avenues to non-traditional sources of capital; angel investors, or venture capital firms that the client may not have knowledge of or access to," says Dew. "The sharp business attorney can serve as a gatekeeper to a certain experience to present the business plan to a non-traditional lender."

Building Your Team Through Training
Sales aren't what they used to be. Times are tight. Believe it or not, now is the perfect time to focus on training your staff and building them into more than just a group, but into a team. "It might seem counterintuitive from a budget standpoint, but there is no better time to dig in and train your staff than when things are moving slower," says Bob Kerschbaum, President of Great Lakes Training Associates. "Your bottom line is important, but a business must protect its largest assets-its people. The prevailing problem is that most often senior management fails to invest in the people they've hired."

This shortcoming occurs for many reasons, but from a practical standpoint it has much to do with the fact that training and human resource responsibilities often fall on the CEO, who already faces a full plate. This is precisely where a business can benefit from the expertise of a training and coaching professional like Kerschbaum. Training and coaching specialists meet with all levels of management and staff, beginning at the top, to get a feel for the real strengths and weaknesses of the group. "Often, employees can pinpoint exactly what the challenges or problems within the company are, but it takes a fresh set of eyes to present the solutions," says Kerschbaum.

The next step is for the training specialist to tailor programs that will address these challenges. Topics can vary widely, from honing project management skills, or conducting quality performance reviews, to communication and conflict resolution. There are many avenues to taking advantage of these services. For example, Kerschbaum offers a range of services, from "lunch and learn" programs, to intensive development of in-house training programs, retreats, and senior management consultation.

Investing in developing skills like communication or team building may sound frivolous, but Kerschbaum insists that these so called "soft skills" are needed more than ever. "Over the years, we've lost the meaning of what it means to be a team-for a company of employees and management to work towards a common goal, giving their all. But organizations that are investing effectively in training are going to have their managers, supervisors and employees operating at a higher level when the economy picks up again."

Make the Most of Your Marketing Strategy
Similar to the deficits businesses face in staff training and team building efforts, CEOs often struggle to take on their marketing strategy single-handedly, resulting in wasted time and resources. Marketing and communications firms are not only a wealth of ideas, they strive to make their business your business, understanding the products, services, and people that drive the identity of the company, says Jeff McCullagh, owner of McCullagh Creative in Ann Arbor. "A competitive marketing firm helps its client focus-to understand their own market and their products," says McCullagh. "They're often too close to their own products to have a real read on what the products offer and what the competitive advantages are. That's where a competitive marketing firm can help them out."

Marketing is yet another facet of your business where it pays, quite literally, to promote yourself when the economy is slow. "Your competitors may have diminished their visibility, but by maintaining your visibility rather than following suit, you are making a statement and maintaining an image in the minds of your prospects," explains McCullagh.

A close relationship with a reputable marketing/communications firm can also keep you aware of cost effective, cutting edge marketing tools that can help you capture more business. A marketing firm can set up an effective, targeted email/Internet campaign for example, which can work for even the tightest budgets. Additionally, explains McCullagh, "an experienced marketing firm can be involved in more than just helping a company get the brand out there, but in helping them ensure that their corporate set up will guarantee the success the program once it's launched."

IT Services
Carol Shulman, Principal at Shulman Clark Associates in Ann Arbor, says that many of their clients first approach them for IT services when they are in the midst of "a point of technological pain." That could mean any number of dilemmas; a computer running too slowly to accomplish needed tasks, a crashed system, or perhaps they have sought help elsewhere, unsuccessfully.

Information technology can be one of the most nebulous, confusing areas for a business owner to wrestle with. Partnering with a reputable IT firm can provide you with the crucial help you need, when you need it. "We don't do technology for technology's sake," says Shulman. "We go to great lengths to understand our clients' business, what their strategy is, their objectives, challenges, and their IT philosophy. And we endeavor to give them the best within that context."

This translates to providing service for anything in your office that is technology related: computer servers, networks, telephone service, wiring, internet service providers, web development and hosting to name a few. IT companies often provide managed services, where the business pays a monthly fee for a specific bundle of services. Often, this includes remote support, where the client allows the IT provider to link directly to your own computer from another location, tweaking problems and giving on-demand support. This time saving, budget-friendly service is a great way to supplement your current IT staff without hiring more full-time employees. Or, for the smaller business, companies like Shulman Clark can serve as your sole source of IT help. IT providers can also assist in developing strategic, custom software applications to help your business run at a new level of efficiency in terms of time and money.

Finding Your Team
Across the board, the experts we interviewed all agreed that the success of a business is rooted in a team of close advisors. It takes a certain level of wisdom to recognize your own strengths and weaknesses as a business owner; to focus on what your gifts are, and then hire professionals to fill in the gaps. Those we spoke to suggest that business owners take their time in finding the right advisors for each area of expertise-to interview and meet those whom you are considering in order to find someone you relate to well and feel will respond to you when you have a crucial need. A strong support base means that you never have to go it alone.