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?
When bad news happens, it’s best to drop all shoes at once
By Beth Ewen
DEAR INFORMER: I’m the president of a $3-million service company. The founders are in a court battle that is getting media attention, but is unrelated to the company’s operations. How can I keep the company out of this?
DEAR BAD NEWS: Just sit right down and tell the Informer all about it.
Sorry, I kicked into reporter mode rather than advice columnist mode. And that’s what all the other reporters out there will do, too. If there’s scuttlebutt at a local company, you can be sure the sharks are circling and the uglier it is the more they’ll care.
If you’ve got good relationships with reporters and producers, you’ll fare better, says Paul Maccabee, public relations guru at The Maccabee Group in Minneapolis. “It’s vital to build up what PR people call a reservoir of goodwill before the crisis occurs,” he says. When times are stable, take out for coffee key reporters who cover your industry.
“There’s no immunity from crisis,” Maccabee says. “You want to make sure that the first time you deal with the media, it’s not during the time of crisis.”
As for the claim that the founders’ problems have no bearing on the company, Maccabee’s skeptical. “The media have every right to inquire about anything having to do with the officials of the company,” Maccabee says. “That’s what the media do, and you just have to understand that’s the way the game is played.
“In business, everything comes down to trust in the post-Enron era, so I’m not sure I would take at face value that anything that involves the founders is unrelated.”
Don’t try to do frantic good news during bad news. “The media aren’t fooled,” Maccabee says. “So if you’re in a court battle, that’s not the time to unveil the new edition of your software.”
Remember the basics of crisis relations, which Maccabee says are to never lie, and to be as candid as you can be, up to the limits of what the lawyers tell you.
Above all, says Maccabee: “Get all the shoes to drop right away. One of the reasons things like Monica Lewinsky have two years’ worth of legs rather than two weeks’, is because the shoes keep on dropping.
“If there’s something messy, I would sit down with the reporters covering it, and I would lay out as much as possible at one time, so the reporter doesn’t have grist for a 10-part series. If it’s feasible, take your lumps in one fell swoop.”
He adds that a lot of companies, like a lot of politicians, believe that if they don’t tell a reporter something it’s less likely to come out. “But face it, reporters are good, it’s a competitive media environment,” Maccabee says. “If there’s something you pray will not come out, it will come out, and you might as well be the messenger and get it all out there at once.”
DEAR INFORMER:My boss runs a large family-owned company, and I think he’s underpaid. But his siblings and parents sit on the compensation committee. As an officer of the company, what should I do?
DEAR UNDERPAID: Family-business expert Allen Bettis has a cartoon. It shows a father, who’s chairman of board, and he’s saying to his children at a board meeting, “Since I think of us as a family, you should think of your salary as an allowance.”
That’s the problem with family-owned businesses and compensation, says Bettis, who owns Legacy Associates in Minneapolis.
First, think through your motivation for bringing up the topic, Bettis urges. You’ll get nowhere if you just want to do your boss a favor. Rather, the motivation should be that low compensation for the CEO is bad for the business. It may be discouraging to the chief executive, for example. Or maybe directors need to go outside the family for its next chief executive, and if that’s so they need to put a compensation system in place now that could attract outsiders.
Once you can name the problem, bring it to your boss with a recommendation. “If there aren’t outside directors it’s probably not the time to install them just now,” Bettis says. But the board might agree to talk to an outside adviser on family business compensation, or to study other models of compensation.
For sure, the board should spend time articulating its philosophy on family-member compensation, something it may have never addressed before. “Very often they have a philosophy that’s never been articulated and thought through so it’s not consistent. It may have developed at an earlier time,” he says.
Some family businesses pay based on market rate, or what the job would command for comparable businesses.
Other families take an “equal wealth” philosophy, with the idea that the long-range goal is to create equal wealth for each family member that’s invested in it. Bettis says this philosophy is common when parents have passed on the business to children.
“Parents out of love say we want to treat you all the same, therefore you should be paid the same,” Bettis says. “Over time, though, it almost always works out that one sibling, the president, has much greater responsibility than the others.” That person should get an additional bonus opportunity for growing wealth over time.
In still other family-owned companies family members will take lower than market rate salaries, but then the family as a group will benefit from extra perks.
Bettis says it’s always better in the long run to have a clear policy for compensation. He cites one company where a father hired his three sons with the idea that one would be president some day. In order to attract his sons, he paid them significantly more than market rate. Later the company needed to attract more outside managers. The sons’ pay was cut to be more in line with the market. Two sons left because they could do better outside; one stayed.
“That was a tough decision. It helped a lot that they had an outside board. But the net result is they now have a company with a compensation system that has a lot more stability for attracting and retaining talented people,” Bettis says.
DEAR INFORMER: I am well established with one line of business, which I’ve grown to about $5 million in annual revenue. Now I’ve developed a new product line, but I can’t decide what to call it.
DEAR NEW PRODUCT: Start a short-term product launch by thinking about the long-term future of your company, recommends Ann Garrity, president of The Garrity Group in St. Paul and a branding expert.
“It’s a marketing question, but it’s also a visioning question,” she says. “If this is just one in a series of products they hope to launch, they need to be putting their money into selling their brand of the company first…kind of like a Microsoft.”
With technology companies, especially, it’s important to brand the company first, then the products in line with that overall brand, because technology always changes. “They’ve already built a strong base,” Garrity says about our questioner. “As long as it’s going in the same direction they’ll be fine.”
That last statement is key. “The companies that do the best are the ones that ride the horse in the direction that the horse is going. Even if they’re bringing on another product, if it’s a product in the same category or meets the same client need, they do a lot better,” Garrity says.
