Many other southeastern Wisconsin companies are adjusting to the “new normal” business climate with a variety of strategies.

Bartering for dollars

When cash flow is tight, many companies have turned to an old-fashioned bartering system for the products and services they need.

Susan Falk, president of The Falk Group Public Relations, moved into new office space in Milwaukee’s Third Ward this summer. Cash flow for new office furniture was scarce, so Falk bartered with Milwaukee-based Schroeder Solutions in exchange for public relations services.

“I paid the movers and the employees for their labor expenses and installation, but the furniture was sold to us in exchange for our PR services,” Falk said. “It was very helpful, considering money is moving like molasses … Times are tough and money is tight, so forming some unique and creative partnerships with companies and coming up with creative ways to do business can really help keep business moving. Barter makes it so you can continue business as usual.

The Falk Group has also done barter in exchange for web development services and concierge cleaning service. Falk is in bartering talks with her accountant and even receives deals on services from her personal hair stylist in exchange for some exposure work.

“It’s a benefit to both parties, and it keeps businesses moving forward,” Falk said. “It is important to treat those partnerships the same you would a paying client, but it is something that at least for the short- to mid-range term we will continue to do.”

Capitalizing on this old trend that has become hip again, International Monetary Systems is a New Berlin-based company that supports a sophisticated form of bartering for businesses on a worldwide basis. IMS has more than 2,000 member clients in Wisconsin alone and over 18,000 member clients across the country and Canada.

Member companies receive trade dollars in exchange for their products or services that they can use to purchase products or services their company needs.

“We are creating a currency here. It becomes a very obvious, very viable option for businesses that generate a lot of excess capacity,” said Don Mardak, chief executive officer of IMS. “They can trade or swap that excess capacity, (time for companies who provide services), for some common need. With the use of trade dollars they can do it at any time.”

— Alysha Schertz



Make a strategic acquisition

The recession dampened the mergers and acquisitions market that had reached record-setting highs between 2002 and 2007.

The current market conditions favor strategic buyers that have a significant amount of available cash, which minimizes their need for bank financing or avoids it altogether.

“For the foreseeable future, strategic buyers will have the advantage because of the (difficulty in getting) access to capital and pressure from shareholders to show growth,” said John Beagle, managing director with the Milwaukee-based investment banking firm Grace Matthews Inc. “In a difficult organic growth environment, acquisitions are a low-risk way to grow.”

Strategic buyers have made several noteworthy acquisitions in Wisconsin in recent months, including: Merge Healthcare Inc.’s acquisition of Washington-based Confirma Inc.; Mach One Corp.’s acquisition of Atlanta-based White Hat Brands LLC; Actuant Corp.’s sale of its Acme Aerospace business to TransDigm Group Inc. of Cleveland, Ohio; and Bemis Co. Inc.’s purchase of the Food Americas operations of Alcan Packaging.

Many companies are selling at lower valuations in today’s market, which will likely continue for several years, said Howard Lanser, director of mergers and acquisitions with Robert W. Baird & Co.

“At the peak (several years ago) the market was fueling high valuations with debt levels exceeding six times EBITDA in industrial companies, some of the highest levels we’ve seen in some time,” he said. “The market has scaled back and the ceiling is around four times today. In the new reality, valuations have come down off their peak. They’ll rebound but will not go back to where they were anytime soon.”

Paul Stewart, partner in Milwaukee-based PS Capital Partners LLC, a private equity firm, said buyers in the foreseeable future will have one common element: “Cash will remain king. Those who have it will be the folks who can move forward with acquisitions in the near term.”

— Eric Decker



Hold the line on your prices

During the recession, Muskego-based manufacturer InPro Corp. instituted several cost-cutting measures but resisted the pressure to reduce its prices.

“I will tell you one thing we learned (during the recession),” said InPro president Phil Ziegler. “Even under a much higher level of pressure to cut price, we’ve done an excellent job of maintaining our margins. It’s easy to cut your prices to land the deal, but it will take years to get it back, if you ever do. We just keep delivering quality product and top-flight customer service, which allows us to stand firm on price.”

But what if your competitors are slashing their prices?

“As usual in hard times, we have seen the normal reactions,” said Gregg Eisenhardt, president of Waukesha-based Good Electric Inc. “Our true blue loyal customers are out shopping prices instead of just having us do the work. Then they come back to us to match low bid from companies they don’t know. They know us, the great service and reasonable prices, but shop to try to save more money because the market is so bad. That, coupled with slashed margins, really makes it hard to survive.”

InPro refuses to play the price-cutting game.

“Let them go,” InPro spokesman Evan Bane said. “That’s what we’ve done. We let the deal go. Let (the competitor) give their product away and then later try to go back to the customer and demand a higher price. Good luck with that. You’ve lowered the bar.”

If your company delivers a high-quality, consistent product with great service, your customers will find that the price is worth it, Bane said.

— Andrew Weiland



Be flexible

Many manufacturers have had to become more flexible to retain clients and capture new business in the recession.

For Milwaukee-based Max Weiss Co. Inc., a metal bending and fabrication shop that specializes in oversized pieces, that has meant adopting much shorter lead times, said Dan Weiss, president of the company.

“Last year, we were running one-and-a-half to two weeks lead time, and we were losing some work because we couldn’t deliver it fast enough,” Weiss said. “Now that we’re not having as much work, we’re needing to focus on shortening lead times. We’re getting jobs today that are as short as two days.”

Sanborn Tube Sales of Wisconsin Inc., a Brookfield metal tube and parts distributor, has also been forced to deal with its clients’ changing sales orders, said John Topetzes, president of the company.

For Sanborn Tube, that has meant carrying larger amounts of inventory.

“For so many companies today, inventory is an evil word,” Topetzes said. “We buy larger quantities from the mills, keep the inventory here and ship to customers as they need.”

Central Office Systems Corp., a Waukesha-based copier supplier and service company, is also positioning itself for future growth by being flexible. In the last several months, the company has found repossessed office equipment in northern Illinois and Michigan, which it was able to purchase at significantly discounted prices.

“The leasing companies did not want this nearly new equipment,” said Arthur Flater, president of the company. “We began offering repossessed devices to our clients as an option to a brand new system. This gave us a price advantage in our marketplace that no competitor was able to match.”

— Eric Decker



Introduce new products

Earlier this year, Milwaukee’s Lakefront Brewery Inc., introduced Wheat Monkey Ale, which has helped the craft brewer boost sales during the recession. The company also has been helped by the late 2008 acquisition of Miller Brands-Milwaukee LLC by Beer Capitol Distributing Inc.

Beer Capitol has been distributing Lakefront’s beer since 1994, said Russ Kilsch, president, owner and founder of the brewery.

In August, Klisch oversaw the installation of two 100-barrel tanks in the brewery, which replaced older 30-barrel tanks.

By installing the larger tanks, which cost $20,000 each, Lakefront will be able to maintain production in its existing facility near Milwaukee’s Riverwest neighborhood for the next three to five years, Klisch said.

“We’ve doubled in size over the last three years, and I think we’ll double again in the next three years,” he said. “I’m at about 13,000 barrels (in annual production). I think in a couple of years, we’ll be at 25,000. I’ll take these new tanks with me to the next place – this is part of the new building that I can take with me.”

— Eric Decker



Hold on to your key performers

In the booming economy earlier in this decade, top talent was at a premium. Employers fiercely competed for the best and the brightest, and talented people often held the trump card in many industries.

The balance of power shifted in the recession to become an “employer’s market,” according to Dan Nelson Jr., president of Nelson Schmidt in Milwaukee.

Still, companies are advised to do what they need to do to keep their top performers, even if the job market is not robust, Nelson said.

“The job market has changed, at least temporarily, with the pendulum swinging from a model where the competition was for employees to one where the competition is for jobs. This shift moves the balance of power from the employee to the employer,” Schmidt said. “That said, there will always be competition for the best and the brightest talent. Employers must always avoid any perception that their company is exploiting a tight job market at the expense of their staff and employee morale.”

— Steve Jagler



Jump into social media

The early evolution of social media has created many opportunities for companies during a time when budgets are tight, but sales and connections still must be made.

Joe Woelfle opened Blatz Market & Liquor in October of 2008. During his first few months, he utilized several traditional media outlets and received mixed results.

“It soon became evident that a lot of my customers were coming from social media outlets,” Woelfle said. “I (began using) my Facebook fan page to invite friends and fans to my beer tastings, and the place would be packed.”

Woelfle also blogs about the beer he has in his store and keeps customers up to date on daily happenings through Twitter.

“For me, Twitter has also been an excellent outlet for building customer relationships,” he said. “I know about people’s jobs or favorite beers or what’s important to them before they even step foot in the door.”

According to Woelfle, sales generated from social media outlets accounted for more than 10 percent of his August revenues.

Catral Doyle Creative Co. in Milwaukee also is finding strategic opportunities for its clients in social media.

Erin Jende, senior account executive at the company, said, “We have been able to survive by pushing ahead and staying in front of what is most appealing in this time frame and staying on top of up-and-coming trends in video, social media and beyond.”

— Alysha Schertz



Form strategic partnerships

Many companies are filling gaps in their services by forming strategic partnerships.

Lori Highby, president of Keystone Click, a Milwaukee-based internet marketing firm, recently partnered with Marie Branovan, owner of A. Branovan Company in Milwaukee.

“I started my business in the middle of 2008,” Highby said. “It was a challenging time for me, I knew Marie outside of work and after talking we decided that we had something to offer each other.””

Highby and Branovan work together as an extension of each other’s sales teams, Highby said. “I will go to a client who is looking for all around help in marketing and now I can offer them an even more complete package beyond resources that I could offer through my company, and Marie is able to go out and do the same thing.”

— Alysha Schertz



Nurture (and keep) the clients you have

For many firms, the recession created an urgency to build on existing business relationships to keep the lights on while the search for new business became more difficult.

“The most important thing that I’ve learned, and also coach to clients, is that relationships take on greater importance in a challenging economy,” said Gail Sideman, owner of Fox Point-based Publiside Personal Publicity. “Many of us lost sight of such values when business was fluid. It’s imperative that we continue to nurture our current and potential clients/customers as well as relationships with people in other industries and within our communities. Regardless of how much technology we have in our lives, business will be awarded to and exchanged among people we know, like and trust. That never gets old.”

— Andrew Weiland



Go green

Construction industry experts say the proliferation of environmentally friendly “green” buildings is not just a fad. More building owners and tenants want green buildings because they reduce energy costs. Perhaps more than ever businesses are looking for ways to reduce costs and the rising cost of energy remains a concern.

“Technology and modern management systems are working hard to eliminate waste in every way imaginable,” said Steve Chamberlin, a construction industry consultant and owner of Brookfield-based ChamberlinGroup LLC. “An increased emphasis is being placed on balancing initial costs with all of the long-term costs associated with how a facility looks and performs over the long haul. Environmentally conscious approaches that were just catching on 10 years ago are now becoming the norm.”

Improving old buildings with modern systems, including HVAC, lighting and water, reduces energy costs, and building owners typically see a return on their investment to upgrade their buildings in just one to two years, said John Hunzinger, owner and president of Brookfield-based Hunzinger Construction Co.

“It just makes practical economic sense to look at these things with existing buildings,” he said. “There is much that can be done when you look at improving the old technology in buildings.”

In addition, many in the construction industry are keeping an eye on the federal government in anticipation of increased regulation mandating energy efficient building systems.

— Andrew Weiland



Don’t forget about the community

Without losing focus on business survival strategies during the recession, Scott Gierhahn, president of New Berlin-based Schroeder Solutions and the Schroeder Companies, and his employees have tried even harder to give back to the community.

“We have always been pretty good about our community involvement, but I would say that because of the stress of the economy our employees have ramped up their volunteer and giving efforts,” Gierhahn said. “It’s a time when I think a lot of companies have disappeared from the chambers, Rotaries or boards, and have lessened their giving to make budgets.”

Charitable giving is even more important during an economic downturn, Gierhahn said.

“The more you give, the more you get in times like these, and we think it’s important to remember that,” he said.

— Alysha Schertz

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