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Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Andrew Tellijohn
December 2003

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PROGRESS REPORT

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Dear Informer


Separate duties to guard
against financial fraud

By Beth Ewen

DEAR INFORMER: My neighbor has just been accused of embezzling, which has nothing to do with me but causes me to worry: How can I protect my company from financial fraud?

DEAR WORRIED: Great question, says Grant Young, given today’s environment of world-class companies crumbling because of financial shenanigans. Young is the partner-in-charge of Wipfli, a St. Paul-based accounting firm.

“In all businesses, including small businesses, the very most important thing is the separation or segregation of duties,” says Young. “In other words, the same person that writes the checks doesn’t sign the checks, and someone else should reconcile the bank account.”

First, split up the key duties in each of the three basic processes involving money: the revenue cycle, the payables cycle and the payroll cycle. That alone will go a long way toward protecting a company from fraud, Young says

Second, implement and enforce internal controls based on an assessment of your company’s risks and needs. Those vary by company. Examples might be two signatures on checks over a certain dollar amount, or executive approval acquisitions over a certain dollar amount.

In one company he knows, where long-standing fraud was recently discovered, someone in accounts payable set up fictitious companies and started cutting checks to those companies. How to stop it: Separate the approval of the expenditure from the expenditure itself.

Don’t let trust in individual employees stop you from taking these simple steps. “People think, ‘there’s good old Beth,’ and put all their trust in Beth, and don’t have internal controls,” Young says. “But someone needs to ask, ‘What are all these checks being made to Ewen Inc.?’ ” (Upsize Informer note: Young was using a fictitious example.)

Trust is too often misplaced, agrees Floyd Adelman, who runs the Inner Circle in Minnetonka, peer groups for business owners. Often that’s because the owner isn’t adept at financial matters and would just as soon leave them to someone else. At the very least, Adelman says, have all canceled checks sent to the owner’s home, in a sealed envelope. Owners should look through each one once a month, and ask the questions: Who is this vendor? What are we paying it for? Why does it cost this much?

Finally, Young says that business owners commonly believe that audits done by a certified public accounting firm will uncover fraud. “That is not necessarily the case,” he says. Rather, the objective of an audit is to certify that financial statements are fairly presented in all material respects. “The independent CPA is now — just now — required to consider fraud, but that is not the primary objective of the audit,” Young says. Unless you’re specifically hiring a CPA to do a risk/fraud assessment, don’t rely on an auditor for this function.

Floyd Adelman, Inner Circle: 952.935.5801; floydadelman@theinnercircle.com; www.theinnercircle.com

Grant Young, Wipfli: 651.636.6468; gyoung@wipfli.com; www.wipfli.com

REAL ESTATE

DEAR INFORMER: I keep hearing about other business owners getting great new office space because it’s a tenants’ market. But what can I do? My lease isn’t up for a while.

DEAR LEFT OUT: There’s no doubt that companies are getting deals on new space these days, with vacancy rates as high as they’ve been in a dozen years, says Dan Gleason, vice president of office brokerage at United Properties in Bloomington. But even companies with lease obligations remaining can get in on the action.

“Particularly for those that have one to two years left, the majority of landlords are open to negotiating on extensions,” Gleason says. The bigger the tenant, the more interested the landlord, of course, but any size tenant can try to lock into today’s good market rates by committing longer term to their space.

One option is negotiating a five-year lease, but with a termination option in three years. “Those are available in this market,” Gleason says. For growing companies that only want a three-year lease, some landlords who would never consider that before will today.

Gleason says business owners should take stock of their space, to see whether it projects the right image for customers, and offers the sought-after amenities for employees. He says many employers are forgetting the latter in these days of high unemployment, but the tide will turn and employees will again start voting with their feet, in part over their space.

Dan Gleason, United Properties: 952.893.8884;  dgleason@uproperties.com; www.uproperties.com

BRANDING

DEAR INFORMER: About half my employees want to change our company’s name, but a few are strong holdouts. How can I get a new name without causing war?

DEAR NAME CHANGE: It’s simple: Fire the holdouts! At least that’s what Informer was going to advise. Then she called on a wiser head, Jim MacLachlan, who runs Tartan Marketing in Maple Grove and offers this sage advice:

“Building consensus can be tough, especially if your name has been around awhile. Long-time employees will naturally have a nostalgic attachment to the name they’re familiar with. That’s human nature, but not necessarily good business.

“Try to identify the real reasons behind the resistance. Are your employees simply reacting negatively to change? If so, it’s your job to communicate why you need a new name — by clearly spelling out how it will help you be more successful. If you can identify solid business advantages, and employees understand what they are, they will be less adverse to a change, even though they might not be thrilled about it.

“If, on the other hand, employees object because they fear a new name could potentially harm future business or customer relationships, you’d be wise to hear them out. Don’t ignore the possibility that they might be right. Remember, the only reason to change your name is to enhance your business in the long term. Listen to what they have to say, then weigh the pros and cons logically, based on your vision for the future.

“In the end, don’t expect to get 100 percent buy-in. It’s your company, and you need to make the choices that are right for it — even when they aren’t popular. If you decide you need a new name, tell employees why, then change it. Yes, you want buy-in, but it’s not the sort of decision that should be up for a vote. Do your best to win employees over with a strong, clear, positive business rationale. It will be good practice to prepare you for communicating your name change outside your firm.”

Jim MacLachlan, Tartan Marketing: 763.391.7575; jim@tartanmarketing.com; www.tartanmarketing.com