Founded in 1984, CMA focuses on filling top jobs in the financial services industry -- a cyclical business that in recent years has been booming due to the difficulty in finding good candidates. To protect itself from future downturns, as well as expand its services to existing clients and appeal to a larger client base, earlier this year the company started two affiliates: One provides general management consulting, the other "disaster recovery," such as help with phone systems and computers. The company staffed the new divisions with a few of its 40 current employees and hired 10 new people. Revenues hit $7 million last year. CMA expects the new affiliates will help triple revenues within five years.
For other companies that want to branch out by adding new services or expanding their market niche, Breuers makes some suggestions:
1. Stick with what you know. Pursue a niche within your industry, and use your strengths.
2. Don't rush or tackle too much at one time. Breuers says it took her company about a year to be sure it made sense to diversify. Make a new business plan, and remember to occasionally take a step back and look at that original strategy and philosophy to be sure you're not straying from your path.
3. Communicate internally and get employee support. Get them excited, and make sure they know why the company is expanding and where it is headed. "The strength of the team behind you is better than going out by yourself," Breuers says.
4. Formally relaunch the company. Let current clients know what your plans are with mailings or phone calls. Utilize existing contacts and clients, and take advantage of the reputation you've already built.
5. Appeal to a broader client base. If you plan to create a new division, the key, she says, is to "recognize the equity of the parent company" and capitalize on the original name. Use it in addition to the new name on business cards and other printed material.
Enterprise Bonds: Money to Grow
Florida Development Finance Corp. (FDFC), an Enterprise Florida affiliate, recently issued $7.83 million of Enterprise Bonds to finance the expansion of four Florida companies: G.G. Schmitt & Sons in Bradenton, Vutec Corp. in Pompano Beach, Central Farms Ltd. in Opa Locka and Sunshine State Christian Homes in Tavares.
Enterprise Bonds help Florida small and mid-size manufacturers and not-for-profits get money they need to grow. The bonds offer financing at 30% below the prime lending rate -- about 5.61% for the recent bond offering -- and can be used to fund the purchase of land, buildings and equipment needed for the business expansion. Typically, eligible companies must be profitable, at least 4 years old and show growth potential, says William Jones, director of capital programs for Enterprise Florida.
The loans range from $500,000 to $2 million, and borrowers must be able to secure a letter of credit from an FDFC participating bank. SunTrust supported this offering; SouthTrust, SunTrust, First Union and NationsBank have supported prior offerings.
Since the program began in 1998, 10 companies have split nearly $18 million raised by Enterprise Bonds. FDFC generally has a bond issue every three months: One is scheduled for November and applications were due by Sept. 30; another issue is anticipated for February. Interested companies can contact Enterprise Florida Capital Programs at 407/316-4646 or visit its website (www.floridabusiness.com).
Internet Auctions, Take Two
In a new twist on Internet auctions, USBid is helping Fortune 500 electronics firms sell their excess inventory.
Just as eBay has revolutionized how individuals sell everything from Fiesta china to World's Fair collectibles, Melbourne-based USBid is changing the way big electronics firms get rid of excess inventory. Instead of selling it to a liquidator for 10 cents on the dollar or, worse yet, writing it off, electronics manufacturers and distributors are tripling their take to 35% or 40% of original value by auctioning it.
USBid, founded in November 1998, expects to sell more than $3 million worth of electronic components this year for clients such as Harris Corp., Hewlett Packard and Hitachi Semiconductor. The company expects to turn a profit by the fourth quarter of 2000. Citing a study by Forrester Research that projects a total business-to-business auction market of $52.6 billion by 2002, USBid (www.usbid.com) projects a huge ramp up in sales volume to $1 billion in the next five years. "Our biggest challenge is being able to keep up with the pace that this business is capable of growing," says John Ormesher, vice president of marketing.
USBid co-founder and software consultant Jerome Pepin came up with the auction idea, but initially promoted it to electronics manufacturers as a do-it-yourself software solution. Their response: We love the idea, but hate the thought of doing it ourselves. So Pepin and Thomas Dalton, a sales consultant for high-tech companies such as Lucent Technologies and Harris Corp., invested $300,000 to launch the auction site themselves.
Buyers, who are typically small electronics distributors, pay no fee or commission and receive a warranty on the goods. Sellers pay nothing to list products, but hand over to USBid 5% to 25% of the final auction price. As with most auction sites, USBid never takes physical control of the products. Unlike eBay and other consumer auction sites, though, USBid does briefly put the merchandise on its books and report product sales as company revenue.
USBid isn't restricting its business to electronic components. It recently formed a partnership with a chemicals e-commerce company and will begin auctioning industrial chemicals.
Last January, USBid made a pitch for growth capital at the Florida Venture Forum's venture capital conference in Coral Gables. A group of out-of-state angel investors with ties to the electronics industry recently bought into the concept, investing $1.2 million. In June, technology veteran Gary Heyes, formerly president of Providence, R.I.-based American Silicon Products, signed on as president of USBid. Now the company is scouting for $8 million to $10 million in venture capital to fund growth until it takes the plunge with a Wall Street initial public offering. Says Ormescher, "That's the game plan."
At Your Convenience -- In a bid to make small business counseling more accessible to all Floridians, the state's Small Business Development Centers (SBDCs) have set up new, innovative programs for people who can't easily visit SBDC offices. The University of North Florida (904/620-2476 or www.sbdc.unf.edu) and the University of South Florida (813/905-5800 or www.coba.usf.edu/centers/sbdc/) offer free, online counseling. Florida A&M University's SBDC offers a "circuit rider" program that provides in-person counseling and training outside of its Leon County home base. Assistance is available in Apalachicola, Bristol, Perry, Quincy, Madison, Crawfordville and Monticello. For more information, call 850/599-3407.
Doing It Right -- The U.S. Federal Trade Commission, which enforces many federal antitrust and consumer protection laws, offers a number of free publications of interest to small businesses. Topics include "Advertising and Marketing on the Internet: The Rules of the Road," "A Business Checklist for Direct Marketers," "Frequently Asked Advertising Questions: A Guide for Small Business" and "A Businessperson's Guide to Federal Warranty Law." For a list of publications or to download full-text versions, go to the FTC's website (www.ftc.gov/ftc/business.htm). To order by mail, send your name, company, address, and telephone and fax numbers along with a list of requested publications to: Consumer Response Center, Federal Trade Commission, 600 Pennsylvania, NW, Room H-130, Washington, DC 20580-0001.
Must-Have Web Bookmarks
by Edwin Bailey
If questions arise during the course of running your business, finding the answers on the Web can be frustrating and usually involves taking time to separate the good from the bad. Simple queries in Yahoo!, Infoseek, HotBot, Dogpile or other search engines can turn up hundreds of sites, but results typically range from useful to downright irrelevant. For help with many of the issues facing small business owners, the following short list of websites should be of tremendous value:
Biz Pro Web (www.bizproweb.com)
Biz Pro has put together a large, well-organized set of links to sites of specific interest to small business owners. Topics range from accounting to website development, and Biz Pro Web's library of business and professional websites describes each site and what a user will find there.
Small Business Administration (www.sba.gov)
Every small business should have this site bookmarked. Granted, the SBA has one of the less attractive interfaces in the group, but much of the information available on its website is second-to-none.
SCORE (www.score.org)
An SBA partner, the Service Corps of Retired Executives offers an easily navigable site with plenty of "how to" information. In addition, SCORE offers e-mail counseling services -- at no cost. Businesspeople can ask for advice or information on any number or topics, and a SCORE counselor will reply personally via e-mail. All questions must be submitted through SCORE's website.
@Brint.com (www.brint.com)
This site provides archived articles from national business publications on numerous subjects, including small business financing, regulations, insurance, employment and business-related technologies. Because of its cluttered interface, @Brint.com is a little daunting at first, but it's worth the wade.
ZDNet Software Library -- Small Business (www.zdnet.com/swlib/business.html)
Whether a business needs virtual sticky notes or advanced time-tracking software, ZDNet offers shareware and commercial demos for download. Many demos have expiration dates -- which means they'll stop working soon after you've learned to use them and have become dependent on them -- and some are full versions that do not allow users to save data. Trying out a software demo is a good alternative to purchasing a full version then discovering that it doesn't suit your needs. And a simple, inexpensive shareware version of an application is often all a business needs to perform basic functions, such as unzipping compressed files or maintaining a very simple database. In addition to ZDNet, CNET (www.download.com) and Jumbo.com (www.jumbo.com) also offer extensive, searchable libraries of downloadable business software.
Multimedia Marketing: Cooking up a CD-ROM
Multimedia presentations, catalogs and sales tools -- even cookbooks -- are becoming increasingly popular on CD-ROM. Multimedia combines pictures, text, music, voice and video into a presentation that can be far more appealing than a slide show. And it's not just for businesses with money to burn anymore.
The Junior League of Boca Raton offers its newest cookbook, entitled "Savor the Moment," on a multimedia CD-ROM, for example. According to the chapter's website, JLBR members sold 3,500 copies before production.
Cendyn Corp. (www.cendyn.com) of Boca Raton, the developer of the JLBR cookbook on CD as well as the league's website, produces multimedia CDs for big and small organizations. "It can be very affordable," says Robin Deyo, a VP at Cendyn Corp. "The JLBR cookbook includes different party settings made into a show, with professional voiceovers, integrated music and video and menu retrieval."
Deyo estimates the cost of developing a CD at between $5,000 and $50,000 or more, depending on how many bells and whistles a client wants. "A simple screensaver or smaller production can be had for under $10,000," says Deyo. Physical replication and packaging of CDs has become less expensive, too.
"A lot of our clients are ad agencies and PR firms who are outsourcing the work because their clients requested a multimedia CD," Deyo says,"and in order to be full-service, the firms offer those options. They aren't often set up to do it themselves."
Off-the-shelf software packages such as Macromedia Director give users the ability to create multimedia presentations of their own, then get the CDs replicated and packaged. The learning curve on such programs, especially for higher-end functions, tends to be steep, however.
For examples of multimedia, visit Macromedia's website (www.macromedia.com). And the Junior League cookbook (in both CD-ROM, $14.95, and print, $28.95) can be ordered from the JLBR website (www.jlbr.org).
Employer Alert: Report New Hires!
Although it has been a year since Florida began requiring employers to report all new employees, many small businesses still aren't familiar with the law. "We believe there's a lot of people who don't know," about the reporting requirement, says Carol Emfinger, project manager for the Florida New Hire Reporting Office.
Since October 1, 1998, the Florida Department of Revenue has been using the information to track "deadbeat" parents who owe child support. Also, the Florida Department of Labor and Employment Security may use the information to detect unemployment and workers' compensation fraud. A few details:
Who needs to report?
ALL Florida employers must report. This includes private businesses, non-profit organizations, labor groups and governmental entities.
Employers must report all new and rehired employees who are required to fill out a W-4 form. This includes full-time, part-time, temporary, seasonal and student workers.
Are any employees exempt from the law?
An employer doesn't have to report federal and state law enforcement "operatives" when they are involved in intelligence and counter-intelligence.
You must report within 20 days of the hire date.
A New Hire Report must include the employee's name, address, Social Security number and date of hire. If available, include date of birth. Employers also must provide their business' legal name, mailing address and Federal Employee Identification Number. The payroll address and the Florida unemployment compensation number are optional.
How do I report?
In Florida, reporting is handled by the Florida New Hire Reporting Office. You may report electronically on the Internet (www.fl-newhire.com), by mail (Florida New Hire, PO Box 6500, Tallahassee, FL 32314-6500) or fax (1-888-854-4762). For more information or to obtain forms, call 1-888-854-4791.