Fear the Family (and other related parties)

Joe Kristan is a CPA at Roth & Company P.C.

Iabiz 20140129Judging by income tax law alone, Congress seems to think that "The Sopranos" provides the standard business model for family financial transactions. The tax code is full of special rules that punish transactions between family members, on the assumption that they can't do business without trying to pull a fast one on their tax filings. You can't accrue a deduction to a cash-basis relative, for example, and you can't deduct a loss on a sale to family

A Kansas City entrepreneur recently learned about another related party rule, good and hard.  

Gary Fish started a successful tech company, FishNet Security, described on its website as "the No. 1 provider of information security solutions that combine technology, services, support and training." From 1998 the company was operated as an S corporation, a common tax structure under which the earnings of the corporation are taxed directly on the owner's 1040.

In 2004, he got an opportunity to get some cash out of his investment.  While the technical details were a bit convoluted, for tax purposes it came down to having his S corporation contribute the operating business to a new corporation; a private equity group contributed cash.  Mr. Fish received some stock in the new corporation, along with $9,698,699 of the private equity cash. 

The formation of a new corporation is normally tax-free.  Internal Revenue Code Section 351 allows taxpayers to exchange appreciated assets for stock without recognizing gain, as long as the contributing parties own 80% or more of the company after the transaction. But the tax law triggers taxable gain to the extent a taxpayer receiving stock also receives "boot" -- cash or other non-stock property -- in the deal.  

As with many tech companies, the value of the business was mostly in its intangible assets -- its "goodwill." The new corporation was treated as buying goodwill. The tax law says purchased goodwill can be amortized for tax purposes over 15 years. And here is where things went bad for Mr. Fish.

When "goodwill" is sold, the tax law normally treats it as a capital gain. An obscure part of the Code, Section 1239, can change that result. If you sell anything that can be depreciated or amortized to a related party -- things like machinery, buildings, and, yes, goodwill -- Section 1239 makes the gain ordinary. The idea is to prevent a taxpayer from selling something to a relative at reduced capital gain rates and then getting depreciation deductions against ordinary income, which is taxed at higher rates. This would not be very a attractive trick for goodwill, where the capital gain tax is paid right away while the deductions are spread over 15 years, but nobody ever said the tax law has to make sense.

Among the related parties affected by Section 1239 are corporations where a taxpayer owns over 50% of the stock value. While the capital structure of the new corporation was complex, the Tax Court judge determined that Mr. Fish owned more than 50% of the value of its stock. As a result, the $9,698,699 of "boot" gain recognized on the goodwill transferred to the new corporation was ordinary income, not capital gain.

In 2005, capital gain was taxed at 15%, while the top ordinary income rate was 35% (current rates are 20% and 39.6%; if the Obamacare surtax applies, both rates are increased by another 3.8%). Using those rates, Section 1239 increases Mr. Fish's federal tax bill on the gain from $1,454,805 to $3,394,545 -- $1,939,740 of unhappiness, if it isn't overturned by a higher court.  

Does this mean you can never do business with relatives without, er, sleeping with the fishes, tax-wise? No. But, like Tony Soprano, you need to be very careful doing so. You should work very closely with your tax advisor when engaging in finance with friends and family, including friendly family-owned businesses. Mr. Fish could give you about $1,939,740 reasons why.  

Cite: Fish, T.C. Memo. 2013-270

Building referrals begins with developing the right state-of-mind

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Referralmindset (1)Just do it. Who can forget Nike’s wildly popular ad campaign created in the late 1980s? Such a simple, yet compelling statement. But in order to ‘do’ there needs to be knowhow - a starting point, a calculated plan. This is especially true in regard to building your business through referrals. At Rocket Referrals I speak with businesses daily that have made the decision to get serious about a referral strategy - but to many, it is just a black hole. Therefore, I felt it appropriate to share a very simple concept that is essentially the starting point to any strategy to gaining more referrals. It begins with a mindset for you - the business - and that of your customers.

The Approach

Finding the right approach to gaining referrals as a business means understanding why it is that your customers refer you to their friends and family. I get it; businesses want more referrals for several reasons - to help others, and to drop more coins in their piggy bank. But customers really do not care about adding mass to your bottom line. They do care, however, about improving the lives of their loved ones. Therefore, as a business, it is paramount that communication with customers regarding referrals focuses on the reason why they refer. In other words, don’t make it sound like they are doing you a favor - rather that you want to do them a favor by providing awe-inspiring service. This is the referral mindset for you, the business.

The Tactics

A quick tip on how to put a positive spin on the language: make your customers feel like they are part of a growing community or family. Keeping it personal and exclusive will ignite their emotional spark plugs and motivate them to actively refer you. An example would be to send a welcome card with a message including “would love to grow our family” and “extend our hand to your friends and family, we will take extra care”.

The next step is to actively develop a referral mindset in the heads of your customers - right from the get go. Using language that conveys the significance of referrals for your business, subtly, yet consistently, will ensure that you are referred when the time is right. In this approach it is very important to do so by only playing on the emotional reasons why people refer (to help others) that I highlighted above. There are a several ways you can engage your customers that will be effective - and it starts right after they sign up.

Send a welcome email with a couple sentences explaining how your business values referrals and that they are important in growth. Emphasize that this growth is important because you love to extend your service to their trusted ones, to extend your family. This will convey the message that you are referred often and therefore must be doing something right. Follow it up by saying you trust they will find reason to refer you in the near future, because you care that much about what they think of you.

Find a reason to follow up with your customers as often as possible. Each time, give them thanks and let them know you are here to help with anything they need. Remind them that you are interested in extending your service to their loved ones. Over time, referring you will become second nature to your best clients.

Are your employees listening to customers?

Kelly Sharp is the owner of Heart of Iowa Market Place

I went into a local furniture store not too long ago and I was very surprised by the reception I received.

I asked the clerk about a new mattress and it was as much what she didn't say as what she did that made me cringe as a store owner.

She didn't ask what I was looking for. She didn't ask how much I wanted to invest or what was important to me about this purchase. In fact, she didn't ask anything. Instead, her first words were, "Our cheapest is over here."

Those words were a big disservice to everyone on both sides of the transaction. They failed to take the customer's needs into account and they certainly cost the business a great deal of money sale after sale after sale.

Her words might as well have been, "I don't really care what you want." And, the assumption that a customer wants the cheapest product is insulting on many levels.

Customers are looking for value. But value doesn't mean the lowest possible price.

As the owner of a specialty retail store, the Heart of Iowa Market Place in Valley Junction, I know customers are very savvy. They know that true value is much more than finding the cheapest products around. They know that product quality, where products come from and the ethics of the people who provide them are important.

Above all, consumers want products that solve their problems or meet their needs. They want retailers that will help them accomplish that goal and make them feel like they are listening rather than just trying to sell them something.  

To do that, you need to slow down, ask questions and listen. Are your sales people asking the right questions and listening to your customers?

-Kelly Sharp

Brewery brews up green

Rob Smith is a principal at Architects Smith Metzger

Each year the Committee on the Environment (COTE) of the American Institute of Architects selects a list of Top Ten  “green buildings.” This blog post continues my series looking at some of the projects to see what is cutting edge in green design.

The Pearl Brewery Building in downtown San Antonio repurposes a warehouse for a mix of living and retail spaces. A very green move was to add a floor within the high bay warehouse to double the density without affecting the site.

The largest solar array in Texas covers the 30,000 square foot roof and provides 25% of the building's electrical demand. Kiosks allow users to see how much electricity the solar panels are generating and the building demand.

The project also addressed the amount of rain water that usually runs off of large commercial parking lots. Impervious materials were removed and materials letting water through were added as well as bio-swales and wetlands. This creates ways for water to be absorbed and never make it to the storm sewer. Iowa needs to do more of this!

Pearl brewery 2The greatest visible idea was to repurpose many items from the brewery. Large beer vats became cisterns to hold roof water for watering the landscape. Smaller tanks became planters. Even old beer cans were used to decorate studio room doors. Rather than throw things away on projects, we can find creative ways to reuse them!

Next up are trends in sustainable design. Stay tuned.

Send your thoughts to [email protected]

How to treat your website like a client

Katie Stocking is the owner of Happy Medium LLC.

Your website is generally the first impression potential clients, employees, or prospects have of your company. It’s obvious the first impression is incredibly important so why don’t more people take time to make sure their website is the exact impression they want to give?

One way to ensure you are prioritizing, is to treat your website as if it was a client. You treat your clients with the highest regard right? So why not your website with these tips:

1)   Check in on it – Generally speaking, if you go a while without hearing from or reaching out to a client, the relationship isn’t going to go anywhere or do much for either party. The same goes for your website. If you set it and forget it, what positive actions can you expect from it? Make sure you are checking your website. Set it as your default homepage in your browser so that it opens up whenever you open your web browser. It’s a very simple way to be constantly checking what is there (and if it’s working!)

2)   Update it – It’s of course important in your relationship with clients to not only check in on them and catch up – you also want to make sure to update them consistently of what is happening with the job they have hired you to do. This is vital with your website content, perhaps one of the most important tasks. I just opened a website today that featured their “holiday specials” smack dab in the middle of their homepage. The holidays were weeks ago and it looks just plain ridiculous to be still promoting them. It seems (to me as a consumer) the business is not organized enough to present itself properly – so how can they be organized enough with the service or product I’m considering purchasing from them? Don’t make people wonder what is (or isn’t) going on behind the scenes at your business. (Remember, first impressions are everything!)

3)   Invest in it – Clients like to be invested in. It commits them to you because they aren’t only spending money with you; you are spending money to be better for them. It becomes a partnership. My company, Happy Medium, builds websites. We always work with clients the best we can to meet their budget and website goals. There’s an old saying that goes “you get what you pay for,” which could not be truer for websites. You should definitely invest in your website. I always tell clients to try and figure out how much/many of their products they would need to sell to pay themselves back for any investment in their website updates. Generally it’s not much, if you have a good website that is the most current technology; you’re going to get leads because of it. Spend the money to make sure it’s right. If you get multiple proposals and a company is significantly under others, find out why. More than likely they are developing old technologies, which won’t do you any good.

4)   Realize its value – Like your clients, (hopefully) your website, although ideally ever-evolving, is with you for a really long time. If you completely ignore the value and potential it has to your business, you are going to miss out on a lot of business. Just look at your own life and how you do business. More than likely for a large amount of your purchases you refer to the Internet, either to find an address, research a product, or find who carries a product. If you’re looking online, so are other consumers. The value of your website is tremendous. Treat it that way.

Action item: Visit your website right now and find something that needs to be updated. Do it – then tweet me because I want to see! Let me know if you have any questions! @interactivekate


2014 Iowa Court of Appeals case addressing personal liability in an LLC


Matt McKinney is an attorney at BrownWinick Attorneys at Law.

On January 9, 2014, the Iowa Court of Appeals published its opinion in Northeast Iowa CO-OP., n/k/a Viafield v. Joel Lindaman et al., No. 3-1058 / 13-0297 January 9, 2014 (Full Opinion Here), an opinion addressing member liability in an Iowa limited liability company (“LLC”).

While the opinion addresses several legal issues, of particular note is a portion of the opinion that covers whether the plaintiff, Viafield, could pierce an LLC’s corporate veil and hold the defendant LLC member, Mr. Joel Lindaman ("Lindaman"), personally liable for the LLC’s debts.

At the trial court level, Viafield requested the Bremer County District Court disregard the LLC's corporate structure and hold the individual defendant, Lindaman, personally liable for the company's debts. The district court, however, rejected Viafield's argument and refused to pierce the LLC's corporate veil and hold Lindaman personally liable. On appeal and before assessing Viafield’s legal theories, the Iowa Court of Appeals acknowledged an LLC’s corporate veil (i.e. shield of personal liability protection) may be pierced in Iowa upon establishing one of six different factors:

Iowa courts may disregard a corporation’s existence if (1) it is undercapitalized, (2) it is without separate books, (3) its finances are not separated from individual finances, (4) it pays an individual’s obligations, (5) it is used to promote fraud or illegality, or (6) it is merely a sham.

Viafield, p. 17 (internal citations omitted).  

One of Viafield’s many arguments for piercing the LLC’s veil and holding Lindaman personally liable was that the LLC “did not hold meetings and no minutes exist.”  Viafield, p. 18.  Citing black letter Iowa law, the Iowa Court of Appeals recognized that under the facts of the case, the LLC’s failure to hold meetings and lack of corporate minutes did not require the court to pierce the LLC’s veil of protection and impose personal liability upon Lindaman for the LLC’s debts:  

Because the statute [Iowa Code Section 489.304(2)] specifically provides the failure to 'observe any particular formalities is not a ground for imposing liability on the members' for company debts, we are not persuaded [to pierce the corporate veil]. 

Id.  As evidenced by the excerpt above, despite the LLC’s failure to hold regular meetings and despite its failure to keep corporate minutes, the Iowa Court of Appeals refused to pierce the LLC’s veil and hold Lindaman personally liable for the LLC’s debts. It is important to note that this opinion only addresses Iowa law relating to LLCs, not corporations, and that each case is factually unique.

To learn more about piercing the corporate veil and personal liability protections afforded under Iowa law, see the business law articles linked below:

(1)  As an Owner, am I Liable for the Debts of my Iowa Limited Liability Company?

(2)  Holding A Corporation's Owners Personally Liable - Piercing the Corporate Veil in an Iowa Corporation.

(3)  Are Shareholders in Small Family Businesses Personally Liable for Business Debts and Liabilities? 

Great stories make even better referrals

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

People love stories. Okay, not all stories, but the fun, exciting, intriguing, inspiring, or otherwise entertaining variety. Because of the delight people find in passing information to others, storytime happens everywhere. Around water coolers, in barber shops, saunas, bar mitzvahs, you name it. As a business, you want to find yourself slipping into as many of these situations as possible. This happens by having an interesting story yourself. One about you or your business that is worth talking about - something memorable that your promoters will not feel awkward plugging into a conversation.

We already know that superb customer service and excellent products are essential to landing positive referrals. Nobody, in their right mind at least, would recommend a bad experience to others. We got that. But more often than not, your customers’ friends and family are not always in need of your products or services. Therefore, it is important to find a way of popping up in as many conversations as possible with a story that is remembered, so that when the time is right, your phone rings.

Find an interesting aspect about your business or yourself that is worth sharing and reserve it for your customers. Tell it as a story - a narrative with an intriguing plot. This will provide your promoters with more beef when they recommend you to others. Rather than just telling their friends “I have a really good agent, he takes care of me” - how boring - they could boast “My agent really takes care of me, you know, he used to be a pitcher for the Iowa Cubs and chose writing premiums over the big leagues”. With stories told by your promoters, you become memorable and are recalled when your services are needed. You will also pave the way to many more conversations because you are no longer colorless to talk about and linked to different areas of discussion.

For those of you who don’t have a nasty curveball, it’s OK. There are many ways you can tell your story that is noteworthy, you just need to find a creative slant. The truth is, people love doing business with actual humans rather than companies anyway. All great businesses have an interesting history of how they began, so start there.

Another approach could be to create unique experiences for your customers that are not advertised. I remember doing business with an auto shop that specialized in rebuilding transmissions. The owner stood behind his work to the extent of actually signing his name on the transmission itself before handing the keys back to the owner. This was never advertised, just disclosed to the client after the work was finished. This type of behavior is subtle, yet interesting enough to pass on to others. These experiences will fuel your promoters with stories to pass on to their friends and family. After all, you are doing them a favor by giving them something fun to talk about as they refer you to others.

Lessons from the 2013 holiday shopping season

Kelly Sharp is the owner of Heart of Iowa Market Place

You'd be forgiven if you're a bit confused after reading all the stories about the just-concluded holiday shopping season.

Some previews warned of a "bleak" season. Some post-season stories trumpeted an overall sales increase of 2.3 percent. Others reported foot traffic was down and that retailers only scored sales increases with over-sized discounts. And, who can forget the two biggest stories: the hackers who stole the credit card information of millions of customers and the last-minute flood of online orders that swamped UPS and Fed Ex and left so many shoppers hopping mad.

I have to admit the 2013 holiday sales season was a great one for my business, The Heart of Iowa Market Place, and I know a lot of other boutique retailers also did very well. There are a few lessons to be had, starting with the fact that when a lot of other retailers are zigging smart small retailers were zagging.

First, we didn't listen to those bleak forecasts. We focused on doing what we do best: Offering a unique experience that builds customer loyalty and keeps folks coming through the door. That's Lesson #1. (Remember to increase your odds of success with a well-executed marketing plan throughout the year.)

We recognized that because we give them something they can't get anywhere else, we weren't forced to offer ridiculous discounts to get people through the door. That keeps our profit margins healthy and keeps us in business. Everybody wins on that deal. That's Lesson #2.

We didn't make crazy promises about overnight delivery on Christmas Eve -- or even the day before -- like some of the "bigs" did. We stuck to our rule that you never promise what you can't deliver. That's Lesson #3.

As for Lesson #4, online sales are going to get bigger and bigger. There's just no two ways about it. So, no matter how big or small you are, you have to make sure every day that your online sales system is secure as Fort Knox.

Savvy retailers are already thinking about ways to have an even more successful 2014 holiday season. These four lessons are great places to start.

-Kelly Sharp

Office buildings can be super green too!

Rob Smith is a principal at Architects Smith Metzger

Each year the Committee on the Environment (COTE) of the American Institute of Architects selects a Top Ten  “green buildings”. This blog post continues my series looking at some of the projects to see what is cutting edge in green design.

Cote office 1The Clock Shadow Building in Milwaukee shows even a modest office building can be very sustainable. The designers wanted to construct a building and use as much salvaged materials from other buildings as possible. Salvaged wood siding, brick, cabinets, and steel panels account for 30% of the materials. That’s a lot!

Even in a dense urban environment, the building takes advantage of 27 wells below the building. Open land is not needed to take advantage of geothermal systems.  This allows the building to use 40% less energy than others.

Cote ofice 2Office buildings are perfect candidates to greatly reduce water consumption since the biggest use of water is flushing toilets.  Rainwater is collected on the “green” roof and held in a 15,000 gallon cistern. The building uses 50% less water than the typical office.

The large southern orientation features operable windows and sunscreens to keep out the sun in the summer and let it shine in during the winter.  Can you imagine a beautiful day at work with fresh air blowing in your window? 

The tenants are predominately non-profit groups and share common spaces such as conference rooms and waiting. Therefore, the building is smaller and uses less energy. The combined use of spaces also creates a community that can challenge each other to ride bikes and walk to work more often.

If you have an operable window in your office, let me know!

Send your thoughts to [email protected]

A Seller’s Nightmare


Logo only for phoenix


If you are thinking of selling or have not even considered it (yet) at some time you will receive an offer.  If the offer is good enough, you may decide to sell.   After all getting a great offer can be hard to turn down. 

Initially, everything will go well but things can get ugly when issues outside of your control take place:

1.  If it is a franchise, as part of the approval the buyer maybe required to make some very expensive upgrades and/or require an expensive and prolonged training period.

2.   The bank or franchisor may feel that the buyer is not financially qualified or has the required management expertise.

3.  The landlord may require a significant increase in rent.

4.  The bank requires the seller to provide some seller financing.

5.  The allocation of the sale price puts a tremendous tax burden on the seller.

6.  The buyer wants to work in the business before the closing.

7.  The buyer wants to keep the accounts receivable while the seller keeps the accounts payable.

8.   The seller is required to put a significant amount at closing in escrow for an extended period for various costs.

9.  A Phase 1 indicates that there is an environmental issue.

10.  The seller’s attorney is not experienced in business transactions and the buyer’s attorney is very experienced.

11.  The buyer is experienced and the seller is not.

Wishing you a successful 2014.

Steve Sink

[email protected]







Your 2014-friendly website

Katie Stocking is the owner of Happy Medium LLC.

For the 2013 holiday season, it was estimated that 33 percent of sales would be through online shopping. Post holidays it’s estimated a total of 40 percent of retail sales were made online (source: The Seattle Times). That is a 33 percent increase from 2012! If you are a retail business you can absolutely no longer ignore online sales if you want to stay relevant (or in business). 

This amount of online purchasing statistic should also be interesting even if your business is not retail or business to consumer. Hands down, if you take nothing else from it, realize people are looking more towards the online world for everything it has to offer. Convenience, price shopping, and reviews – does your website meet these standards? It’s the new year, make sure you don’t miss out on business in 2014.

Convenience – what is the status of your website? If you visit the site from your desktop – how does it look? Do the graphics look up to date, is the content up to date? If there are pixelated images and out-of-date content, your company is more than likely going to be judged in the same way. Your website is your storefront, keep it in shape. Once you view the site on a desktop – view it on a smart phone, a tablet, and any other devices you have. If the site doesn’t look nice or doesn’t stay user friendly on all platforms, it’s time for an upgrade. Currently 16% of all web traffic is through a mobile device (source: Mashable).  That number has continually doubled year to year; don’t miss out.

Price Shopping – This one is simple. we as consumers obviously want to pay the least amount possible for the products we want. Online shopping makes this possible. If your business doesn’t sell products online – would you consider price matching? Personally, I would shop locally if the local shop would price match (in the same way most retail giants do), what I found online. If you offer that service, the only place to tell people who are shopping online about it is on your website. Make sure your website is optimized to show up in consumer searches.

Reviews – One word: Amazon – the entire reason I personally started shopping on Amazon is because of the reviews. I don’t have to buy things and try them out myself and possibly mess with returning them. I can find the product on Amazon, read the thousands of reviews on it and then make a much more educated purchasing decision. In the same way whether you are retail or business to business - however I am doing business with you – I am more than likely going to search you online first. Make sure your reviews online are a true reflection of you. The best place to start is on your website, where you have full control.

Don’t wait until the end of this year to get your online storefront – your website – shining bright. Do it now – and you’ll be glad you did when the numbers come in next year that over half of all shopping is done online! 

Tweet me your thoughts @interactivekate!


How was your marketing in 2013?

A+You survived another year, the holidays have whizzed by and now everyone is ready to get back to work.

2014.  So many opportunities.  

But before we think about that, we need to make the time to look back on the last 12 months.

Pull out your marketing plan for ’13.  If you didn't have one, at least think through your marketing efforts.

  • What actually got done?
  • What worked?
  • Did you try to do too much and stretch yourself too thin?
  • Did you start off great but as soon as you got busy, your marketing efforts died on the vine?
  • Are you guilty of trying something once or twice and then declaring it a failure without giving it the time and room to bloom?
  • What never got off the ground? Is it still a viable idea or has its time passed?
  • What is the one thing that you’d planned on doing that you most regret not getting to? Is the opportunity still there?

Overall, what letter grade would you give your marketing efforts this year?

  • Did you meet your own objectives?
  • Did you protect your brand?
  • Did you build in marketing efforts that continued no matter how busy or overcommitted you became?

Use the following for criteria: effectiveness, consistency, frequency, and ROI. Then, average the grades. How’d you do?

Don’t get discouraged if you couldn’t give yourself an A or even a passing grade. The good news is, there is time to make an improvement as we look the new year. But I'm betting there are some insights on how you should move forward based on last year's performance.

Why not get out of the gate in the right direction by taking a glance backwards?

~ Drew McLellan, MMG's Top Dog

Children learn from their school building

Rob Smith is a principal at Architects Smith Metzger School pic 1

Each year the Committee on the Environment (COTE) of the American Institute of Architects selects a Top Ten “green buildings.” Today, we'll take a look at a school building that made the cut.

California-based Marin Country Day School attained the platinum level of LEED, which is the highest level. The school uses 20,000 Btu’s per square foot compared to the average school use of 110,000 Btu per square. Photovoltaic panels on the roof produces 13,000 Btu’s for a net use of 7,000 Btu per square foot. Sure it’s California but that is not much energy!

How does it do it? Walls of glass with deep overhangs keep the direct sun out of classrooms but let daylight in. Many classrooms don’t use the lights during the day.

A cooling tower evaporates water at night which costs less than energy-intensive, compressor-based air conditioning. The water is stored in a 15,000-gallon underground cistern, and is used to cool the slabs via radiant tubes. These same tubes also heat the buildings with the use of a condensing boiler.

Rainwater from the roof is collected and used to flush toilets and supplement the cooling system.

School pic 2The best part of the project is how it educates the students about energy usage. Each class is metered separately so students can see how they impact energy usage. An online monitoring system shows them how the solar panels, rainwater collection, and energy usage are all interconnected.

When we educate people about how each one of us impacts energy usage, we will become better users. What a better place to start than with young children!

Stay tuned for the next blog in this series, featuring information on a small urban office building.

Send your thoughts to [email protected]

Move From Reactive to Proactive PR in 2014: Here's How

Claire Celsi is the Director of Public Relations at Lessing-Flynn.

It seems that some companies just have good luck when it comes to getting attention in the Proactivemedia. You see a new article about them - sometimes every week. It can be frustrating to watch, especially if your company's story is just as compelling. Sometimes, you get lucky when a story falls on you, either through blind luck, or (unfortunately) a crisis occurs. Either way, you're stuck on the wrong side of the proactive PR equation.

What does it take to have a proactive PR program? Here are some basics to follow if your New Year's Resolution is to finally get ahead of the news.

1. Have a plan. This is basic PR 101. Companies who get a lot of publicity PLAN to get a lot of publicity. And they ususally don't sit around and wait for it to come to them. Your PR pro (on staff or agency) should be at the table for all your strategic planning sessions. Have that person listen for opportunities and incorporate those ideas into your plan. Ideally, even the smallest company should have something to offer at least once per month. So, that's 12 ideas.

2. Have something to say. Most companies have a lot going on, but are relatively reticient to talk about it publicly. Unless you are developing a new product that is going to rock your entire industry, or you're in the patent process, or in a silent period before a public stock offering - get out there and talk. Reporters like people who talk to them and tend to gravitate towards people who are willing to go on record with something new and different. If you're not willing to talk, reporters will move on to someone who is.

3. Don't spam reporters with stupid press releases. Your news releases should have a cogent idea and should be explained using very little jargon. Don't hide your lead in the fourth paragraph and make the reporter or editor fish for it. If an eighth grader cannot grasp your main idea after reading the news release, scrap it and start over.

4. Be transparent and proactive. This sounds like a really simple idea, but it's amazing how many companies (who should definitely know better), still decide it's a good idea to hide things for days and even weeks. If you don't tell your story - your way - first, then someone will most certainly tell it for you. And it will come out wrong. Ask Target. When the news came out about its recent Christmastime data breach, details from Target were scant so news outlets ran off the range with their own spin.

5. Be ready with additional information. After your news release is sent, be prepared to provide reporters with details. This might include photos, a quote, an annual report or other prepared information. If you're unprepared, you may not meet the reporter's deadline and cause her to move on to the next story.

6. Limit the fluff. Even lifestyle reporters will want to embelish the story in their own way. Don't add to much "opinion" and flowery, self-aggrandizing prose to your news release. That turns it from "news" to "National Enquirer" in a heartbeat. If you must sing your own praises to make a point, weave it into a quote.

7. Jump on spontaneous opportunities. Just because you're trying to be proacitve doesn't mean you shouldn't look for ways to break into the news cycle when appropriate. When a story breaks in the national media that has anything to do with your company's business, take the opportunity to reach out to national and local media to offer your opinion. Not only does this save time for a news outlet, but it helps to build relationships with reporters and producers who cover your industry.

Use the element of surprise to drive referrals

The best companies use surprises as a method of promoting their brand and inspiring customer loyalty. After all, it is hardwired in all of us to pick up on change– and as such, experiencing the unexpected conjures up emotions. Ka-Wham! A ramshackle car just backfired and you feel your ears move slightly and heart rate elevate. If not to startle per se, the most successful companies have discovered ways to invoke the same primal instincts in their customers– but have done so, delightfully. It does seem, however, that the ‘element of surprise’ has been used primarily by retail companies as a way to inspire repeat business. But for companies looking to use this powerful marketing tactic directly to increase referrals, and thus new business, keep reading.

First I would like to explore, just a little deeper, how surprises have such a positive impact on people. Scientists have recently used magnetic resonance imaging to determine that the part of the brain associated with pleasure really cares when you get something unexpected. Positive surprises provide a rush of dopamine and cause the happy center to light up like a Christmas tree. According to the study, Dr. Gregory Berns, professor of psychiatry at Emory University, stated: “If you get a present for your birthday, that’s nice. But you’ll like it a lot more if you get a present and it’s not your birthday.”

Now, it is crystal clear that by offering positive surprises to customers it will make them smile. Here is how it can be used to directly increase referrals. Send an unexpected and shareable gift to your best customers and ask that it is enjoyed with a friend or family member. The positive experience will resonate with your customers and transcend directly to their closest companions. The goal here is to make your already satisfied customers extra happy, and do so in a way that physically brings them in contact with people that trust them. “Oh, and by the way, where did you get that gift card?”

Starbucks_thanks1First identify who your best customers are. In an earlier post I mentioned the effectiveness of the Net Promoter Score survey in discovering your loyal customers. If you have not implemented the NPS you could also target customers that have given you a referral in the past, provided a testimonial, or openly expressed their gratitude for your service. Sending gifts only to those customers likely to refer will yield the highest ROI with this strategy.

So, what do you give them? At Rocket Referrals we have had great success when our clients give away gift cards to coffee shops. Again, the gift needs to be something that can be shared with others. This is the only way to encourage your happy customers to gather with your new potential clients. Besides, the caffeine might induce a little extra feel good– as long as it isn’t enjoyed on a Monday, right?

What's new in year-end tax planning

Joe Kristan is a CPA at Roth & Company P.C.

There are a few new twists to year-end planning this year. Some important tax breaks are scheduled to expire at the end of the year, and some new provisions affect how old tax planning tools can be used.  

Two key tax breaks for buying equipment are slated for big changes at year-end: "Section 179" and "50% bonus depreciation." Section 179 allows many taxpayers to fully deduct the cost of assets that would otherwise only be recovered over a period of years. The maximumm Section 179 deduction is scheduled to decline from $500,000 for tax years beginning in 2013 to $25,000 for years beginning in 2014. 

Bonus depreciation allows a 50% writeoff of otherwise depreciable property in many cases where Section 179 is unavailable. With few exceptions, it is scheduled to go away for assets placed in service after 2013. 

While there is a chance these breaks will be extended retroactively, how many of us want to place money on Congress doing something? To get either deduction, the property has to be "placed in service" by year-end. "Placed in service" means "in a condition or state of readiness and availablilty for a specifically assigned function." That means in the posession of the taxpayer on the premises where it will be used, and ready to go. It does not mean on-order, paid for, in a crate on the loading dock, or on a Fed-Ex truck somewhere.

Two old tax planning tools are affected by the 3.8% "Net Investment Income Tax" under Obamacare. This tax applies to individuals with incomes over $200,000 (single filers) or $250,000 (joint filers). It also applies to many taxable trusts. The two tools are prepaying income taxes and harvesting capital losses.  

Personal state income taxes are deductible in the year paid. (Iowa allows a deduction for federal income taxes). Estimating the tax due in April has long been in the tax planning toolkit. It has been less useful in recent years because it doesn't help taxpayers owing alternative minimum tax. But even if you have alternative minimum tax, prepaying state income taxes can reduce the net investment income tax.

Capital losses. Individuals are allowed to deduct capital losses to the extent of capital gains, plus $3,000 ($1,500 for married filing separate returns). If you have capital gains, and you have some losers in your portfolio, now is the time to sell them off. Just make sure you avoid the "wash sale" rules by not replacing the loss shares in the 30 days preceding or selling the loss sale. Also be sure to not sell to a related party, as those losses won't be deductible. Newly-issued regulations make these losses available to offset net investment income, to the extent they are otherwise deductible.

Year-end tax planning is very taxpayer-specific. You can't look at an article or post and know how to proceed. Without a projection of your taxable income for this year, you can hardly even start year-end tax planning. Once you have an idea where you stand, you can take a shot at your year-end planning. 

In any case, get together with your tax advisor before you make any year-end moves. There are other tools that might fit your needs, and there's enough at stake to make sure you do it right.

Shhh... Can your business keep a trade secret?


Matt McKinney is an attorney at BrownWinick Attorneys at Law.

It's no secret that trade secrets are often invaluable to Iowa businesses. Without adequate safeguards, however, your trade secret's protectable status, value, and the business it supports may cease to exist. Indeed, whether information (a formula, technique, process, customer list, etc.) qualifies as a trade secret under Iowa law, and thus receives legal protection, may hinge upon whether and how your business guards the secrecy of its valuable trade secret.  

One of the most iconic and frequently cited examples of a trade secret is the authentic Coca-Cola formula. Playing on the secrecy of their formula and the extremes to which they guard their valuable trade secret, Coca-Cola released this advertisement:


With the foregoing in mind, businesses and business owners often inquire whether their valuable information will receive legal protection as a trade secret in Iowa. In November 2010, the Iowa Court of Appeals published an opinion (Full Opinion Here) identifying six different factors a court may consider when determining whether information qualifies as a trade secret in Iowa. The six factors the Iowa court cited are: (1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken to guard the secrecy of the information; (4) the value of the information to the business and its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. As may be gathered from these factors, generally speaking, the more secret and valuable the information, the more likely it will receive protection under Iowa law.

So, in coming full circle, can your business keep a trade secret? To read more about trade secrets in Iowa, including the type of information (such as a formula, process, list, data, technique, etc.) that may qualify as a protectable trade secret, click Here.

Even your best customers may not be referring you

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

There is a prevailing theory among businesses that referrals are a natural byproduct of a superior product or service. That by exceeding expectations alone, referrals will make their way to their doorstep in the form of new business. It is true (as common sense would tell us) that positive word of mouth is abundant amid the best companies -- but research tells us that most of your best customers are not referring you. The problem unfortunately rests on the shoulders of the businesses themselves. The majority do not know the best way to turn their happy customers into referral sources. But thankfully there are a couple things you can do right away to start encouraging your best customers to refer you.

Understand the gap

Chances are, if you are a great company, then you are already gaining referrals via your best customers. But the gap between your referral sources and happy customers could be larger than you expected. A 2010 Economics of Loyalty study performed by Advisor Impact and Vanguard found that in the financial services industry 83% of satisfied customers reported a willingness to recommend services to others, but only 29% of customers actually do so. The best place to start in achieving more referrals is understanding that this gap exists, and that there are things you can do to convert the remaining 54% into active spokespeople.

Identify them

Fig1_NPSThe best way to get started is by identifying your best customers -- those that are willing to recommend you. When outlining a referral strategy, these are the people you will be reaching out to, so get to know them. We recommend performing the Net Promoter Score survey. It is easy to implement and from our experience, has a very high response rate. This quick metric is used by many of the nation's top companies including Southwest Airlines, Progressive, and Apple to name a few. It will give you an instant picture of who your promoters are and how you compare as a company to the rest of the industry in customer loyalty.

Make them feel good

Now that you know which customers are willing to recommend you, make an effort to communicate with them. Keep in touch with them in a way that makes them feel good. This can be accomplished as easily as making a phone call telling them you value their business. You could also write a personalized card telling them that you appreciate their loyalty and it has been a pleasure serving them over the years. The goal here is to keep your company in the front of their mind and synonymous with a good feeling, so that when the time comes to recommend you have given them every reason to do so.

Track them

Finally, it is important to stay on top of your referral sources and progress. Like any other area in a business, a referral strategy should be consistent and tracked over time. Keep a list of your customers that are willing to recommend and what efforts you have taken to communicate with them. You will be able to log the success of your strategy and adjust it over time. Most of all, make sure you are recording which customers are sending business your way. Thank your referral sources personally with a personalized card or phone call --they are much more likely to do so again! The best way to ascertain who is referring is by asking all new prospects “who referred you to us?” This alone will greatly enhance your long term strategy of gaining more referrals!

Marketing lessons from Rudolph

Rudolph-the-red-nosed-reindeerDrew McLellan is the Top Dog at McLellan Marketing Group

Sure, it's a Christmas classic… but have you really considered what marketing messages are woven into the classic Christmas story — Rudolph the Red Nosed Reindeer?

I didn't think so. Let's fix that mistake right now.

Marketing lesson #1:  You can't hide the truth.

Rudolph did not embrace the fact that he was different from all the other reindeer. He just wanted to have a cute little black nose and the chance to play some reindeer games.

You can fool people for a little while, but if you cannot walk the talk…don't say it in the first place. Your consumers know you're not perfect. They just want you to be straight about it.

Marketing lesson #2:  Never make assumptions about how your consumers feel.  Far better to ask directly.

One of the main reasons Rudolph took a hike was because he assumed Clarice wouldn't love him now that his nose so bright was common knowledge. Think of the grief he could have saved everyone if he had just checked in with her.

You are going to be hard pressed to find a more insightful marketing tool than a customer survey. Sometimes the news is tough to hear, but I guarantee you — you can make some simple changes to significantly increase your customer loyalty and retention.

Marketing lesson #3:  Your worst enemy can turn into your greatest ally.

Sure, the Abominable SnowMonster (or "The Bumble" as Yukon Cornelius called him) tried to eat his girlfriend, but Rudolph came to see him as a buddy — even letting him put the star atop the Christmas tree. All it took was someone (Hermey the elf) listening to the Bumble and finding his pain (tooth ache) to turn the grumbling beast into a helpful and happy pal.

When someone clearly dislikes or even hates your company, product or services' shortcomings, listen. If you really work towards understanding their perspective — you can not only save the relationship but you can turn that negative word of mouth risk into an advocate.

Marketing lesson #4:  Create raving fans and a community by giving first.

Rudolph didn't have to promise the Misfit Toys anything. At that moment, they couldn't help him. But with a generous heart, he promised them he'd try to find them good homes with children who would love them.

When you do something without regard for "re-payment" of any kind, you create value. When you create value, people keep coming back. When they do that, you begin to build a relationship and a sense of loyalty and no one has even tried to buy or sell yet. Which makes the selling a whole lot easier.

Marketing lesson #5:  When you find what makes you unique, it can be your ticket to new heights.

When Rudolph began to see his nose as an asset and recognized it was what set him apart from all the other reindeer, he suddenly got asked by Santa to take a leadership position.  From then on, it was his calling card. People told others about his nose and pretty soon, he was known from coast to coast. That's branding!

Companies like Apple and Disney rise to the top because they are proud of what makes them different. They don't try to be everything to everyone. They recognize that having a niche means you can create brand loyalty as opposed to being lost in a sea of sameness.

From all of us at McLellan Marketing Group -- wishing you a very happy holiday season!

~ Drew

Not your ordinary senior apartments

Merritt apartment 3Rob Smith is a principal at Architects Smith Metzger

Each year the Committee on the Environment (COTE) of the American Institute of Architects selects a Top Ten  “green buildings”. This and future blogs will review some of the projects to see what is cutting edge in green design.

Merritt Crossing Senior Apartments in Oakland, Calif., is not your ordinary senior housing. The building provides 70 apartments for seniors in the 30%-50% of the local median income and about half are for people previously homeless.  Yet the design is spectacular and not what one would expect for low income housing.

Merritt apartments 2Natural ventilation is important to seniors so the long and narrow building allows 85% of the spaces to be within 15 feet of an operable window. The floor-to-ceiling windows also let in plenty of natural light compared to the dinky windows many apartments get.

Green space is very important to seniors but with on-site parking requirements little exterior space remained. Lifts were provided in the lower level garage so cars could be stacked making way for a landscaped garden area.

A central high-efficiency hot water system is augmented with a roof top solar system which meets 70% of the hot water needs, something we don’t see often in Iowa. 

An array of solar panels also provides about 40% of the electrical energy for common areas such as lobbies, halls, and a community room.

All of this fits in with Des Moines Age Friendly City Initiative: attractive housing for seniors located near shopping and entertainment options.

Stay tuned for a school renovation and expansion project.

Send your thoughts to [email protected]

Selling or buying a convenience store

Steve Sink is the founder and managing partner of Phoenix Affiliates Ltd.

There are two types of convenience stores.  There are those with gas and those without gas.   

While there are variations from this generalization - i.e. with a car wash, full liquor and those with a fast food franchise - in both cases this is a very difficult business to run successfully. Owners work very long hours, weekends, nights and holidays. Most of the employees are paid a minimum wage and the employee turnover is very high. 

In addition, much of the business is done on a cash basis making, tracking and managing cash a priority.

General sale guidelines are:

C-stores with gas:
Sale price is based strictly on reported sales
       -15 to 30% if annual sales plus the cost of the inventory
       -2 to 3 times SDE (Seller Discretionary Earnings) plus the cost of the inventory
       -2 to 5 times SDE when real estate is involved
Profit Margins: 15%

C-stores without gas
Sale price is based strictly on reported sales
The sale price is:
       -15 to 35% if annual sales plus the cost of the inventory
       -1.5 to 2 times SDE (Seller Discretionary Earnings) plus the cost of the inventory
       -2 to 5 times SDE when real estate is involved
Profit Margins: 1 to 3%

Merry Christmas!

Steve Sink



[email protected]

Young and optimistic

-Kyle Oppenhuizen is a Business Record reporter and the 2014 president-elect of the Young Kyle mug Professionals Connection (YPC). 

I went to my first Young Professionals Connection event shortly after I moved to Des Moines in 2010. To tell you the truth, I’m not sure I remember what the event was, although I’m pretty sure it was a happy hour and I’m absolutely sure I left thinking there was little chance I’d get more involved in the organization.

Fast-forward three or so years, and here I am taking over as president-elect of YPC.

I’m also taking over as the Young Professionals blogger for IowaBiz. As a Business Record reporter, I have helped manage IowaBiz for a couple of years. One thing I always tell new bloggers is to keep the focus of their blog content on helping others; not promoting their organization. Yet here I am, writing my first blog, with the overwhelming desire to shout from the rooftops about how great YPC is.

So let’s get this out of the way.

I’m young, motivated and pretty much in love with Greater Des Moines. You can read why in a previous guest blog post here. There are so many opportunities to get involved in this area. Why have I chosen to make such a strong commitment to YPC?

Personally, the organization has given me a chance to connect, learn and grow in this community. Rewind again to 2010. Before I joined YPC, my life consisted of: Go to work at 8 a.m. Get off work at 5 p.m. Go home. Repeat.

I dragged my feet on getting involved in the community, or doing much of anything outside of work and driving up to Ames to watch Cyclones football and basketball (not that I’ve given that up).

Two things happened. One, as a writer at the Business Record, I got to see the accomplishments of other young professionals in the community. Most of them were part of YPC. Around that same time, the Forbes ranking came out. I wanted to be a part of that.

Two, great people, such as former YPC President Jason Wells, kept hounding me about getting more involved.

YPC became my way to make friends. It became my way to get involved in and connected to Des Moines, and helped me grow as a person and professional. Without YPC, I might not still be living in Des Moines.

Now is my chance to give back, and to do everything in my power to give other people the same experience. And ultimately, make Greater Des Moines a better place for all of us.

The good news is that YPC is a top-notch organization in this community that truly connects young professionals to everything Des Moines has to offer. The even better news is that we can and must do better. In the past year, we have sought and listened to specific feedback from our membership, and as a board, we spent eight hours with a consultant, Alan Feirer, to evaluate who we are as an organization. We are not resting on our laurels, and that is exciting.

I’m passionate about YPC. Hopefully you have found something you are equally passionate about to give your time to.

Moving forward, I hope to share with you lessons I’m learning as a young professional in this community in the hope that YPs and non-YPs alike can learn something. I like to learn, and I like to share what I’ve learned. Luckily, I have plenty of opportunities to draw experience from my reporting duties at the Business Record, my aforementioned role in YPC, and even through my everyday interests. Don’t be surprised when you see me share life lessons that I learn from watching Iowa State University football games. (No. 1: Never give up when times are tough. See how easy that was?)

Thank you for reading.

-Kyle Oppenhuizen

I welcome feedback and ideas. Email me, follow me on Twitter, or comment on this blog.

Email: [email protected]
Twitter: @KyleOppenhuizen

Email marketing tips for your business

Katie Stocking is the owner of Happy Medium LLC.

Every business needs a way to communicate with its customers. This is where traditional advertising – television ads, radio ads, newspaper ads, and billboards – comes in. Of course, there’s digital advertising, too – Google Adwords, display ads, video pre-roll ads, and others.

But what about email marketing? Everyone and their uncle has used email before, and people are quite used to the notion of hearing from businesses through that medium.

However, email is complicated. It’s not like a billboard ad where it’s there no matter what, and people who choose to see it will see it. Email has to jump through many digital gates before it arrives in your customer’s inbox. And once it gets there, it can be tricky to make the content look and act like you had intended.

Here are a few tips to get you started in the right direction:

Avoid the Spam Folder

First of all, you want to keep your subscriber list clean. This means making sure your customers are opting in to your email list (you didn’t add them to it without their permission) and that you send them email frequently enough that they remember they meant to sign up in the first place.

Email marketing company Mailchimp has a few best practices for lists.

Update it as often as you can. Keep your list clean, if you haven’t sent an email to this list in a few months, there’s a good chance your subscribers might forget they’re on the list or why they’re on the list. That could lead to a few unfortunate “unsubscribe” or “mark as spam” actions.

Treat It Like Any Other Form of Communication

You’ll often hear email marketing referred to as “e-blasts”. Try to avoid that term. If your company refers to communication with your customers as a “blast,” then you’ll likely start treating it like that. Who likes to be blasted in the face with a bunch of salesy info? Not a single person.

Email is one of the most personal forms of digital communication we have, so make it so. Deliver readable, worthwhile content to your subscribers in the form of an email or digital newsletter. Make it quick – nobody likes their time wasted – and make it feel personal.

Treating email marketing like a digital ad space isn’t what successful email marketing is about.

Think About Mobile

At a recent luncheon, AMA Iowa tweeted an interesting fact from a talk given by Gina LaMar-Nykerk:

“80.3% of consumers delete an email on their mobile phone if it doesn't look good.”

That, alone, is a huge eye-opener regarding subscriber behavior on mobile devices. Even back in 2011, studies showed a major increase in mobile email opens. It’s time to get on the mobile bandwagon!

Either optimize your email in a single-column, mobile-friendly fashion or develop a responsive email template which expands/contracts based on screen size. Your subscribers will love you for it.

Consider Handing it off to a Professional

“What kind of open-rate should I expect?”

“What should I do in order to stay out of my subscribers’ spam folders?”

“How do I target certain groups of people based on interests?”

“How do I design a responsive email?”

These are questions you might already have, and a company who regularly does email marketing should be able to answer them. Sometimes it’s worth the money to make sure email marketing happens the right way instead of dealing with the hassle trying to do it yourself.

An email marketing professional will be happy to help you manage your list; write punchy, succinct subject lines; and arrange your content to be the most readable and effective. They’ll help you stay out of the spam folder, and will reach your target audience. They can also assist with setting up a responsive, mobile-friendly email template so your emails look great on any device.

Finally, a professional can help you analyze your open rate, click rate, and other metrics to make your time spent on email marketing the most effective.

Whichever method you choose, make sure your business considers making email marketing a priority in the coming year.

Tweet me your thoughts @interactivekate!


Get to know Matt McKinney

Matt McKinney Iowa Attorney

Matt McKinney is an attorney at BrownWinick Attorneys at Law. This is his first post for IowaBiz.

My name is Matt McKinney. I am a trial attorney and government relations consultant that counsels business owners and entrepreneurs on how to protect their rights, navigate Iowa’s court system, and when necessary, traverse Iowa’s political theater.

Through future blog posts, my goal is to provide Iowa entrepreneurs and business owners with a unique perspective and insight into Iowa business law. From describing basic legal concepts that affect Iowa businesses to analyzing new business law cases and alerting readers to upcoming legislative changes, I hope to provide valuable content to our local business community. 

By way of background, I am a native Iowan that grew up on a family farm just outside of Booneville, Iowa. I dedicated four years at the University of Iowa to studying political science and entrepreneurship and immersed myself in the law at Creighton University School of Law, graduating cum laude. Following graduate school, I served as a prosecutor in Des Moines where I cut my teeth trying misdemeanor and felony cases with the Polk County Attorney’s Office. 

I was then called to the desert southwest where I litigated, almost exclusively, lawsuits on behalf of Arizona businesses, shareholders, officers and directors.  In 2010, my wife and I returned home to West Des Moines where I joined BrownWinick, a full-service law firm located downtown Des Moines.  

Outside of the office, I enjoy hitting the links, staying up on the latest technologies, and pawing around with our French Bulldog, "Judge."   

Should you have any questions, comments, or rotten tomatoes to throw my way, you can find me on BrownWinick’s website, or read more on my business law blog, CorporateDispute.com.

Email:  [email protected]

Phone:  515-242-2468



Law Firm Websitehttp://www.brownwinick.com/our-attorneys/matthewmckinney-A38.aspx


Leverage existing customers for referrals

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers. This is his first blog on IowaBiz.

Having spent a considerable amount of time working in 10 different states and across three continents, I realized that Iowa offers something truly remarkable -- a sense of community like nowhere else. Here, relationships are king.

The heartland ideology is woven into the threads of business as companies understand that in Iowa, perhaps more than anywhere else, the customer matters.

As a consequence, many local businesses excel in customer satisfaction. We get it here. But what most businesses have yet to understand is that for this very reason there is a substantial opportunity for new business via referrals. Therefore, my goal is as an IowaBiz blogger is to explore the topic of referral business for local Iowa companies. I am here to provide some useful information in the topic and to investigate the reasons why people refer, and strategies businesses can implement to actively increase their referral equity.

RR8I am a native of Iowa myself. Growing up in a small town, I began experiencing business through the eyes of a child observing my father’s local retail business. Even at such a young age I was able to understand the importance of word of mouth for a company’s growth. Following my education at Creighton University, I was the head of North American sales for a software company based out of Frankfurt, Germany. My early career took me all over Europe and North America.

At this point, I had a firm grasp of business from a sales and marketing perspective, but I was still missing part of the human aspect that I gained in the military. After several years in software, I served as intelligence officer in Afghanistan for the US Army. It was here that I really began to understand more of the psychology behind people and grasped social network theory. After my term ended in the Army I returned to Iowa to lead Rocket Referrals with my brother and cofounder Torey. We have developed software that automates many of the strategies I will talk through in later posts.

Most of the topics I discuss will be tactics that businesses can apply right away that will lead to an increase in referrals. I will reference personal experiences and research while tying each post into an overall strategy and investigating current trends in referral business.

Net zero buildings

Rob Smith is a principal at Architects Smith Metzger

The 2030 Challenge sets the goal for buildings to be carbon neutral by 2030. That means if it uses electricity or natural gas it must generate on site enough renewable energy such as wind or solar to offset the usage of carbon based energy.

Old buildingTo date, not many buildings have achieved that status. A renovation of an east side building for the home office of Modus hopes to join the small list of buildings that have achieved net zero status.

Justin Doyle, principal of Modus, says, “The trick to net zero buildings is to reduce your consumption of energy in three areas. The less you use the less you need to produce."

The three areas Justin focuses on are:

  • Plug loads. Everything from computers to cell phone chargers will be monitored.
  • Lighting. Provide one-half watt per square foot. That is equal to 50 watts in an office of 100 square feet.
  • HVAC. Operable windows will allow users to open windows when they want ventilation rather than a mechanical system constantly providing fresh air.  The system will not have much ductwork and instead use console units. Geothermal will also reduce energy usage.

The goal is to offset the energy usage with 17,500 square feet of photovoltaic panels on the roof, building canopy, and roofs over 60 parking stalls. If the system produces more electrical than needed, electricity will be put back into the grid. If the system cannot provide enough, electricity will be purchased.

Stay tuned as more and more buildings strive for net zero usage of fossil fuels.

Send your thoughts to [email protected]

It's not always easy, but looking ahead pays off

Kelly Sharp is the owner of Heart of Iowa Market Place

With the holiday shopping season in full swing, it's sometimes hard for small retailers to even catch their breaths, but these next six weeks are a very important time to evaluate your product selection, working relationships with your vendors and the effectiveness of your product sampling.

I've written about vendors and sampling before. My philosophy is simple: Sampling works. And, in a nutshell, I look to my vendors to work very closely with me.

The two go hand in hand.

It's fair to say my store, the Heart of Iowa Market Place, is a specialty retailer. And, just like other stores, we have a finite amount of shelf space. Without putting serious thought into each and every product that goes in my store, I'd be sacrificing precious shelf space -- and dollars. Between now and the new year, I'll keep a close eye on what sells, what doesn't and what I can do to make each product sell better so that I can make sure my 2014 inventory is the best it can be.

I have some great vendors, but I'm always going to evaluate how we work together and what we can do better. As I tell them, if your product is sitting on my shelves, neither of us are making money.

It's absolutely essential to have vendors who understand the big picture of your business and where their product fits into it. They also need to be marketing-oriented and will cross-promote my business through their website and other avenues.

Finally, if you haven't done product sampling before, there's no better time to start than today. If you have products that aren't moving, start sampling them. You'll be surprised at the results. If you have been sampling, now is the right time to consider whether tweaking your sampling strategy can create even bigger results. With everything else that going on during the hectic holiday season, it's never easy to look ahead to the next year. But, you'll be glad you did.

How do you build a brand?

Drew McLellan is the Top Dog at McLellan Marketing Group

I've had the good fortune, over my 25+ year career, to help many companies build their brand. Of course, that's just step one. Building a brand is the initial effort and in many ways the easiest effort. After all, you can say you are whatever you'd like to be.

The difficult part is actually becoming it.

That takes years of commitment and focus. Which is why most companies don't do it well. They start out great but when they have to actually live their brand and make the tough decisions that come along with that commitment -- their entusiasm wanes.

I get it -- the creating the brand is the fun part. But don't get so caught up in the fun that you forget there's a lot of work that is coming right behind it. And actually for me, that's really the fun stuff. To help bring a brand to life and to watch as an organization absorbs the brand into the very fiber of its culture and decisions is pretty cool stuff.

Want a peek at some of the fun of the early stages? Check out this infographic by the Palmer Agency. While it's a simplistic approach, it does point out some of the key ingredients. It's Friday -- why not pull together your team and see how you'd answer these questions?

~ Drew McLellan, McLellan Marketing Group's Top Dog

Branding questionaire

Forgot to turn off your computer?

An architect can do all one can to design a building to be sustainable. Integrate green products and systems that conserve energy and water. We also use elaborate computer programs to predict the future energy usage of a building.

All our predictions are based on many assumptions of the daily habits of the occupants.  Will they turn off their computer at night? Will they sneak in a heater under their desk and will it run all night? Will they operate the thermostat at 70 degrees or 72 degrees? All these can impact the overall energy use.

Energy modelingImagine if each department could view a dashboard showing their energy usage? Users could see firsthand the impact of turning off electrical devices each night for a month. Facility managers could see the effect of operating the building within recommended thermostat settings.

Software is coming to the market to do just that! In the future we will have that capability. Computers will be able to shut off your computer if you left it on or turn off your heater. Don’t know how but it’s coming. It’s the missing link in conserving energy.

Send your thoughts to [email protected]

Why deals do not close

Steve Sink is the founder and managing partner of Phoenix Affiliates Ltd.

Any number of things can derail a deal to buy or sell a business. Here are a few of them.


·         Do not have a valid reason for selling

·         Just testing the waters.

·         Unrealistic sale price

·         Lack of honesty.

·         Lack of or poor records.

·         Do not understand the tax consequences or legal issues.

·         Will not provide seller financing



·         The fear of ownership is greater than the urge for ownership

·         Do not understand the buying process

·         Are not willing to do the work required of an owner

·         Influence of factors opposed to the purchase of a business

·         Lack of capital

·         No relative management expertise

·         Lack of experienced advisors



·         Due diligence discovery problems

·         Bank or SBA requirement for seller financing

·         Advisors with little or no experience in transactions

·         Seller cannot provide the required documents

·         Government regulations

·         Overly aggressive advice by advisors resulting in roadblocks


Steve Sink

[email protected]

Certified Business Intermediary

Merger and Acquisition Master Intermediary

3 ways to screw up your next website

Editor's note: Josh Larson specializes in interactive design and SEO at Happy Medium LLC. He is filling in for Happy Medium Owner Katie Stocking. 

Launching a new website for your business doesn’t have to be complicated. But day in and day out, clients and web design companies alike do things that turn the process of building a website into a nightmare. 

Here are a few things that often happen during the website-building process. Each of these things will either make you or the web design company miserable, and each of them can easily be avoided.

1. Pay a ton of money to a company that doesn't do responsive design

The responsive web design movement has been around for a couple of years now, yet businesses are still paying web design companies their hard-earned money to develop a website that isn’t optimized for mobile devices.

This has to be frustrating for business-owners who think they’re getting a great deal as a web designer slaps a “fresh coat of paint” on their homepage. But the truth is that if your “brand new” site doesn’t look good on a non-desktop-sized screen, your website automatically becomes outdated. 

It doesn’t matter if the design looks great on paper, or if a visitor has a great experience using the website on a 27” iMac – as soon as someone tries to access the website on their phone or tablet, they’ll be pinching, zooming, and squinting their way off your website and to your competitor.

How do you avoid this? Be sure to pick a web design company with experience developing responsive websites or for the mobile platform specifically. Do yourself a favor and don’t waste your money elsewhere.

2. Don't ask the right questions beforehand

You’ve chosen your web design company, and you’re ready to get moving on the project. Now it’s time to sit back and relax – the site will be picture-perfect, right?

Hold the phone – how can you be sure everything will meet your expectations if you don’t voice any concerns before the process begins? Ask anything from the most basic questions (How will I edit content on my website?) to more complicated questions (How will the user be notified of a completed order on my e-commerce website?).

Thoroughly asking questions before the process begins can be a great exercise. These questions help you define what’s important to your business and help you make sure the website will reflect your values.

Not asking questions doesn’t mean you’ll get a terrible website – but without guidance and a good knowledge of your company’s priorities, a web design company could deliver a product that’s not what you’ve been dreaming up.

3. Micromanage your designers

At the other end of the spectrum, it is possible to get too involved and start subtracting from the product’s quality as a whole.

This point applies to more than just web design, but in any client services industry, there are always a handful of clients who insist on micromanaging every detail of the product.

Sure – as a business owner, it’s your money, and you ought to have a say in the end-product. But there are processes for doing exactly this – gathering your input and creative direction and relaying it to the right people in a way that doesn’t negatively affect the productivity of the team.

Jumping in and sticking your hands in every part of the process will do a couple of things (hint: none of them involve getting a “way better product!”). In the world of web design, you’ll undermine the efforts of the designers and developers who are trying to create the best possible product. As soon as you, a business owner, start telling professional designers and developers how to do their jobs, you start lowering the integrity of the product.

Micromanaging your designers will almost certainly lead toward a product that no one is happy with. If you’re trying to handle every detail of the process as a business owner, and the website doesn’t meet your expectations, you can’t blame the designer or the developer anymore – the failure is on your shoulders.

You’ve hired a web design company for a reason: They’re good at what they do. So let them do their jobs, and a better product will become of it.

Hopefully, you’ve been able to identify with some of these mistakes and you feel more prepared when it comes time to work on your company website.

Tweet with me at @itsahappymedium and share any tips you have for a client/company relationship during the website design process.

-- Josh

IRA is to startup funding as dynamite is to kindling

Joe Kristan is a CPA at Roth & Company P.C.

Equity is to startups like kindling is to a good campfire.  You might not get anything started without it. 

For many would-be entrepreneurs, retirement savings in an individual retirement account are the biggest potential source of startup funds. Yet getting money out of a traditional IRA triggers tax, and unless you are age 59 1/2 or older, a 10% early withdrawal penalty.

Some folks try to get around this problem by having the IRA itself be the equity investor. That can be a little like kindling a campfire with dynamite, as a Missouri man recently learned in Tax Court. 

The taxpayer, a Mr. Ellis, took about $320,000 from his 401(k) plan and rolled it into a self-directed IRA. He then had the IRA invest almost all of the funds in a new corporation (technically, an LLC that elected to be taxed as a corporation) in exchange for 98% ownership interest of the corporation. The corporation then went into business as a used car dealership, with the IRA owner as the general manager of the dealership.

The IRS said the result was a "prohibited transaction" that terminated the IRA, making the entire $320,000 of IRA assets immediately taxable. The Tax Court agreed:

In essence, Mr. Ellis formulated a plan in which he would use his retirement savings as startup capital for a used car business. Mr. Ellis would operate this business and use it as his primary source of income by paying himself compensation for his role in its day-to-day operation. Mr. Ellis effected this plan by establishing the used car business as an investment of his IRA, attempting to preserve the integrity of the IRA as a qualified retirement plan. However, this is precisely the kind of self-dealing that [the prohibited transaction rule] was enacted to prevent.

The results are hugely unpleasant: $163,123 in taxes and penalties.

The tax law is not generally friendly to retirement plans investing in active businesses.  There are cases where it can be done -- ESOPs, for example -- but it requires careful and well-advised planning, as the consequences of doing it wrong can be catastrophic. 

The tax laws are this way for a good reason: that money is supposed to be a nest egg, your cushion to land on when you stop working. Startups aren't exactly a widows-and-orphans kind of investment. If your retirement-funded start up goes bad, so do your retirement plans. They are at best a startup funding source of last-resort -- and if your business plan requires them, you might want to reconsider your business plan.

-Joe Kristan


Is your audience on 24/7?

TimemovementWhen I was growing up, my dad would get home from work around 6:00 pm.  He’d be carrying a briefcase and wearing a suit.  That was work dad. Once he walked in the door, he’d say hello and chat for a minute and then head upstairs to change.  When he came back downstairs in his jeans and casual shirt, he was home dad.  And for the most part, the two didn’t blend. 

There were no home computers back then and the only phone we owned had a really, really long cord so you might have a decent shot of having a private conversation if you stretched it as far as it would go.   Social norms dictated that my dad’s employees or boss didn’t call him at home unless there was a genuine emergency, so as a result, he rarely got work calls.

From what I could tell, that wasn’t unique to our house.  It was just how it was.

Contrast that with the results of a recent study done by Forbes (April 2012) that found that among senior decision makers the line between work and non-work time has all but been blurred away.

  • 52% say they receive information related to business decisions around-the-clock, including weekends.
  • 63% check work-related email every 1-2 hours during non-work hours.
  • 53% step away from dinner to deal with work-related issues.
  • 98% send work-related emails during the weekends or at night.

Only 3% of those surveyed said they did not interact with work-related email or have business conversations (via email, text or phone) while enjoying their vacation.

One fact that the study uncovered which gave me great hope -- there’s one period of time that most executives still protect and keep business from intruding.  Dinnertime with their families.

Interestingly, with execs staying connected throughout the workday, evening and weekends – they’re reporting that many business decisions are being made outside of business hours and outside the office.  59% of executives make 50% or more of their decisions at home or while traveling.

What I found most surprising about this study is that when asked how this uber connectivity made them feel, the executives overwhelmingly reacted in a positive way.  The word they used to describe how they felt about it was “empowered.”  They feel more in control and better prepared.

Today, professionals “toggle” between their personal and professional lives.   It’s not just a one-way street.  While they’re making business decisions from home, they’re also making personal decisions while at work.

What’s the takeaway from all of this for us, as marketers?

Work is no longer a nine to five proposition and we’ve got to factor that into how we communicate with our customers and prospects.   Today, work is more of a state of mind, rather than a state of time or place.

So timing your marketing efforts to coincide with the 9-5 workday is actually shortsighted. You are choosing the most crowded time for no real reason.  Your audience is connected and working pretty much all the time.

Even if you choose a less crowded time – you still have more competition than ever before.  Today, your target is not just doing one thing.   People have become master multitaskers.  We’re going to have to work harder to actually capture someone’s full attention.

This is another reason content marketing, social media and other “providing helpful information” marketing is rising to the top.  It also means that timely response has taken on a whole new meaning.  If they’re working on Saturday afternoon, do you think a reply by noon on Monday feels responsive?

You see – it’s not just “them” who is connected and working 24/7. It better be us too.


~ Drew McLellan, MMG's Top Dog



One man's trash is another man's treasure


Rob Smith is a principal at Architects Smith Metzger

A last effort after my house move was to organize my workbench. After sorting stuff I ended up with a box of coax, phone wire, speaker wire, plumber’s putty, and two white electrical switches. All of which I will never use.

I picked up the box and instinctively headed to the trash can. “Wait a minute” I said to myself, someone at the office certainly needs this stuff. The next day I offered my stuff to those much younger home owners, but alas, no one was interested. 

I headed to the office dumpster when someone mentioned Craig's List Des Moines. I took a picture and that evening at home posted a listing in the free category, “box of phone and speaker wires and more”. 

What happened next still amazes me. The next evening I checked to see if anyone was interested. To my delight I had 15 responses!!  They ranged from “I’ll take it” to asking the exact length of the coax or if there was an Ethernet cable in the box.

I decided to go with the first response who said they wanted the entire box. The time was 10:23 PM. Two hours after I made the post.

My stuff that I was going to throw away will have another life. I am now a believer that if you try, you can find a new home for your unwanted stuff.

Let me know interesting ways you have repurposed stuff rather than sending it to the landfill.

Send your thoughts to [email protected]

ESOP or employee-owned

Victor Aspengren is a vice president at Prairie Capital Advisors Inc.

A company has been transitioned to an employee stock ownership plan (ESOP). The company now has an ESOP, which is technically a defined contribution plan governed by ERISA. The challenge to the leaders in the company is: Do they promote the company as an ESOP or the fact they are employee owned?

In most ESOP companies, the terms ESOP and employee ownership are used freely to mean the same thing. This creates confusion to the employees. The simple fact is that the terms ESOP and employee ownership are not interchangeable. They are two distinctively different terms and how they are interpreted by employee owners is critical.

An ESOP is technically owned by the ESOP Trust, not the employees. Being an employee owner is tied to the culture of a company. Day to day decision making does not have to change at all. The only items where there is truly a vote are the following as related to IRC 409(e):

  • approval or disapproval of any corporate merger or consolidation
  • recapitalization

  • reclassification

  • liquidation

  • dissolution

  • sale of substantially all assets of a trade or business, or

  • such similar transaction as the Secretary may prescribe in regulations

Ultimately, even in these situations the ESOP trustee can override the vote based on their fiduciary role.

Companies that clearly differentiate the terms ESOP and employee owner have much stronger cultures. It requires a much higher level of training and education and requires a different type of leadership.  Employee ownership is about having input, being valued, and understanding the business through training and financial literacy.

The following is an example that illustrates this point: A new 25-year-old employee is hired. Is their interest focused on the ESOP or what it means to be an employee owner? The answer to this question will be directly linked to their tenure in the company. What's the right answer... what would the answer have been when you were 25?

-Victor Aspengren

Lessons learned from the Obamacare website launch

Katie Stocking is the owner of Happy Medium LLC.

In case you missed it, the new Healthcare.gov website was a spectacular failure.

Immediately after launch, the site was swarmed with hundreds of thousands of visitors. The traffic rendered the site useless for most people trying to enroll for health care, delivering a message like the one seen below:

(Sarah Kliff / Washington Post)

Other reports indicating the cost of the website have drawn more scrutiny to the buggy site: CGI Federal Inc., a Canadian-based company, won a $93 million contract to build the federal healthcare exchange.

Services like Facebook, Instagram, and Twitter have served millions of users before those companies even had that kind of funding. So how could such an expensive website fail so badly at launch time?

While the code to the site isn’t open-source and no one outside the Healthcare.gov IT Team knows for sure, a developer gave a few possible explanations for why the site has had trouble.

If you think about it, most web apps aren't immediately released to millions of users. Facebook and other huge services roll out new features over weeks and even months just so they can fix bugs along the way.

And in the case of Healthcare.gov, there are a ton of moving parts - grabbing data from other data hubs and sites to be able to determine whether the user is eligible in his or her state. If just one of those connections goes down or a server outside the realm of Healthcare.gov gets bogged down, it can seem like Healthcare.gov is at fault.

Does that make it OK for such an expensive and important site to fail from the start? Probably not. But it’s good to be aware of what happened, and you can take action for your own website and development projects to prevent similar failures.

What We Can Do

Obviously we don’t have huge traffic spikes to worry about, but we can prevent other bugs and site issues by doing plenty of testing beforehand. Make sure you spend quality time fine-tuning your website before sending it out to all your users.

This doesn’t mean NEVER launch your website – there will always be bugs – but just be conscious of the experience you’re giving your users. Remember, your website represents your brand and the type of company you are.

Finally, it’s important to remember that websites are living, breathing things. You shouldn’t just “launch it and leave it” – keep iterating, evaluating, and making changes based on what’s working and what’s not. Even with a limited budget, you can make a huge difference to your audience and your website users by continually improving things here and there – whether it be content or code.

Tweet me your thoughts at @interactivekate!


You can do anything you want, you just can't do everything you want

No matter what size your business is, there’s no substitute for focusing your time, energy and resources of what matters most.   

An important lesson I apply to my own business is summed up in the saying, “You can do anything you want; you just can’t do everything you want.”

Even some of the biggest names in retail have figured that out, though some of them figured it out too late. For small retailers, trying to do everything can be tempting but it’s a real recipe for trouble.

Too often, business owners think they are narrowing their opportunities for success by specializing in a specific area. In fact, just the opposite is true. The success of my business, the Heart of Iowa Market Place, depends not only on the niche we’ve captured but on letting people know we’re the leader in that niche.

Study your markets well. Look carefully at competitors and potential competitors. Select a niche where your business can thrive. And, tell your story with marketing that consistently reaches the right audience at the right times.

Be sure you're constantly focused on those things that make your business customer-focused, successful and profitable. If you do, you too will be able to accomplish anything you want.

How will you say thanks?


Drew McLellan is the Top Dog at McLellan Marketing Group

I just saw a meme on Facebook that said there were eight or nine Saturdays until Christmas. Yikes. It's hard to believe the holiday season is practically on top of us.

In the business world, the holiday season means client gift giving season. Most businesses start thinking about this honored tradition around December 1 -- when it's too late to get creative or do something special.

But it's only October 15th. You have a choice.  

Are you going to resort to the expected -- you know, a poinsetta, or a basket of fresh fruit or maybe some chocolates, or are you going to do something memorable that would stand out from all the other fruit baskets, chocolates and plants?

Don't get me wrong -- if you've been sending poinsettas for 20 years, you should keep doing it. Now, it's part of your brand's DNA and your client's expectations. There's nothing wrong with a more traditional gift, if it fits your brand. My point is -- actually give it some thought.

This isn't about the cost or the extravagence -- it's really about being memorable. What could you give your clients that would make them stop and take notice. What would capture the spirit of your relationship and the work you do together? What would tell them that you truly appreciate the opportunity to work with them?

The perfect gift could be anything from a charitable donation to a self-published book to anything in between. You'll know it when you think of it.

And that's my suggestion. Take the time to think of it.

~ Drew, MMG's Top Dog



Cordless vs. gas mower

Cordless mower

Rob Smith is a principal at Architects Smith Metzger

After my big move a month ago it is time for the garage sale to rid ourselves of all the stuff we don’t need. One of the items might be a Black and Decker cordless mower I bought several years ago.

Why did I make the switch? I learned that mowing your yard accounted for as much air pollution as driving your car 20 miles. I also did not have to run to the gas station in the middle of mowing.

If I moved quickly, I could mow my small lot of less than 1/3 acre with one charge. If it was wet or I waited an extra day when it was growing like crazy, I could not make it on one charge and it was back to the garage for a 12 hour charge. I also had to make sure I mowed often enough so the grass did not get too high. Once I let it grow too tall, and even with a full charge, it would not cut the grass.

Gas mowerNow I have a slightly larger yard and cannot mow on a single charge; it seems I’m either mowing or charging.  So, I bought a cordless to be sustainable and it no longer does the job. Now that the end of season sales have come along, I’m off to buy a gas mower for next year. Maybe the best thing to do is pay someone to mow my lawn!

If you have a small yard and want a cordless mower give me a holler.

[email protected]

Social media and the government shutdown

Katie Stocking is the owner of Happy Medium LLC.

If you’ve been under a rock you might not have noticed that our government has shut down. If you haven’t been under a rock, you’ve probably not only noticed, but it’s all you’ve been listening to, seeing, and talking about. The last time this happened was 17 years ago and the only social media around then was playing the Oregon Trail with your friends actually sitting next to you and socializing.

Now with this shutdown in 2013, and our immediate access to information, we’re much more informed, empowered, and actually quite funny. So how has this impacted the shutdown?

Remember the Today Show Orange Room I was telling you about? They told their viewers to use the hashtag #DearCongress and have had a huge response. Some people tried to make light of the situation:


Others are taking this opportunity and these platforms to make a statement. If you look through any of the trending hashtags for this topic (#dearcongress, #governmentshutdown, #shutdown) you will see several people are committing to not voting for any incumbents in the next election. Members of our congress obviously can’t read each and every tweet – but the power of mass messaging is also very difficult to ignore, especially when our government is set up to have our people have the actual power with their votes. There have also been many comments about Congress still getting paid through this shutdown and other government employees not getting paid because of it. Regardless of where you stand, there are others out there for you to connect with and discuss.

Then, most government agencies even carried out their shutdowns to their social media platforms:


What do you think? Can all of this chatter on social media actually have an affect on members of congress and their decision-making? Tweet me and tell me your opinion at @interactivekate and join the conversation! 


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