CEO's Notebook

How can we make our training programs more effective?
Try role-playing. Stan Frankenthaler, chef and president of Salamander Restaurant, in Cambridge, Mass., brings an element of the theater to his ongoing training sessions. Once a week waitpeople at the business act out scenarios such as medical emergencies and computer breakdowns. "Verbal instructions are often hit-or-miss," says Frankenthaler, whose restaurant reported more than $2 million in 1996 sales. "When the staff is actively involved in training, the lessons are more long lasting." Another payoff: group participation fosters camaraderie.

Mark Leavitt, president of MedicaLogic, in Beaverton, Oreg., uses skits to train not only employees but also customers. MedicaLogic, a $10-million company that makes electronic-medical-records software, holds half-day "clinic work-flow simulations." Groups of new employees (or a new client's medical-office staff) take turns playing doctor (or patient or receptionist) and responding to various illustrative crises. Leavitt says customers are better prepared for their first day with the system "because they've been through it before." Armed with a feel for medical-clinic life, employees can better design, sell, and service the product. --Stephanie Gruner and Christopher Caggiano

Cutting Tax Bills Through Deductions

According to a recent survey, one of small-business owners' biggest tax concerns is finding all the deductions for which they qualify. The study, conducted by Intuit, also revealed that small-company owners are spending 208 hours a year--or four hours a week, on average--maintaining business tax records. (Caveat: Keep in mind that Intuit, which commissioned the survey, is a financial-software company.) Check out the data below to see which deductions other entrepreneurs find most useful. --S.G.

My company's largest tax deduction-- Automobile: 18%
Business equipment: 46%
Advertising/ promotion: 26%
Entertainment/meals: 2%
Travel: 3%
Other: 5%

Source: Survey of 200 small-business owners with 20 or fewer employees, conducted by Intuit, San Diego, and David Michaelson & Associates Inc., New York City, October 1996.

What can I do to land a big customer?
Thomas Beggs, founder of market-research company Stat One Research, in Atlanta, regularly combs the local and national press for "help wanted" ads related to his field. In fact, Beggs, who is a part-time M.B.A. student, got his first Fortune 500 client by responding to an ad he found at his university's placement office for a paid internship. His theory: the ad indicated a need his business might be able to fill. Using the ad as an opening, Beggs followed up with faxes and phone calls until he got an order from the company. Though the contract was small, Beggs says it was a major milestone for Stat One Research, which had 1996 sales of about $100,000. --S.G.

How can I improve my presentations to potential investors?
Consider attending venture-capital fairs early on. That's the recommendation of Diane Vincent, a senior editor at Exam Master Corp., a publisher of medical-study tools in Middletown, Del. "Although our products were still in the development stage, we attended two fairs this past year: first a small one in Wilmington, and then the larger Mid-Atlantic Venture Fair, in Philadelphia," she explains. "The first one was like a dress rehearsal, because we got wonderful feedback about our business plan, including focused advice about what venture capitalists wanted to know about our management team. After that first fair, we didn't exactly change our business plan--but we clarified and streamlined it." The result: at the second fair, Vincent says, Exam Master caught the attention of some venture capitalists who want to follow its growth. --Jill Andresky Fraser

We're gearing up to challenge established competitors. Any tips?

Consider a focus group about their product or service, not yours. "Our competitor does very good business," says Paula Connaghan, cofounder of Weather or Not, a start-up retailer in Albany, Oreg., that specializes in outdoor fabrics. "We wanted to know what we could do better." Before Weather or Not put together its first catalog, the company held a focus group using its competitor's catalog. Weather or Not's two founders picked up valuable insights about what to imitate and what to improve. --S.G.

Banks keep turning my company down. Where can I turn?
Don't overlook capital sources with economic-development goals, such as local nonprofit or government groups. George Gering, president of $12-million George Industries, went that route last year after his 44-year-old Los Angeles metal-finishing business kept getting rejected by bankers. With the help of Jesus Arguelles, a local business financial adviser and professor, Gering explored nontraditional financing options that might fund his company's transition from military to commercial work. Gering eventually secured a $200,000 small-business-development loan from Los Angeles County--thanks in part to the county's interest in helping local military contractors diversify. That money enabled George Industries to qualify for a $400,000 loan backed by the U.S. Small Business Administration. --J.A.F.

Hot Tip
During her company's Monday morning staff meetings, Susan Groenwald, president of Barter Corp., in Oakbrook Terrace, Ill., asks employees to share examples of exemplary customer service that the company has provided. Afterward, the 51 workers at the barter network, which has net revenues of $3.6 million, vote for the example they think had the greatest impact on the company's customer service. The winner gets either a cash award or bartered goods. "Rehashing stories gives people a better idea of what good customer service looks like," says Groenwald. "It's also a fun way to start the week." And there's an additional payoff: the meetings arm the company's salespeople with real-life anecdotes to use when they're wooing potential clients. --S.G.

CEO Sound-off
What entrepreneurs are telling Inc. about tax season

" I'm not a grouch the whole month, but tax season is always a pain. There's so much to do, such as gathering all the records. We use an outside accounting firm, so there's a lot of schlepping of things back and forth. Luckily, thanks to our fiscal year-end, our corporate taxes are not due at the same time my personal taxes are. If you can space it out, it's a lot easier." --Owner, San Francisco coffee retailer

" Who does their own business taxes? Why would you do that? I don't even do my personal taxes, and they would probably take 30 seconds." --President, New Jersey advertising-specialties company

" If you do a little bit at a time during the year, it's not so bad. Besides, I give all the papers to my tax accountant and just say, 'Here.' I pay a lot of money for that privilege, but it makes the process simple." --Owner, New York City management-consulting company

Help! I can't find local people with the specialized skills I need.

David Minor, president of Minor's Landscape Services, in Fort Worth, took an aggressive direct-mail approach to fill two technical positions that required special qualifications. "It's difficult to recruit locally, especially when you need licensed irrigators," says Minor. "It's not like there's one on every street corner." He located a publication that lists people throughout Texas with such licenses and sent a letter explaining the job to everyone in the book. The landscape-maintenance company, which has more than $6.5 million in sales, quickly found more than 20 qualified candidates and filled the positions.

Richard McCarty, a principal of 25-person McCarty Architects, in Tupelo, Miss., has faced similar problems finding qualified architects in rural Mississippi. He gets good results with a lively direct-mail recruiting package sent nationwide to 40 chapters of a national architects' association. "It's hard to get people fired up about Tupelo," McCarty says. "We try to throw in something that will catch someone's eye and give an indication of the spirit of our firm." --S.G.


JESUS ARGUELLES, Arguelles Business Capital, 445 S. Figueroa St., Suite 2600, Los Angeles, CA 90071; 213-912-2009 94

BARTER CORP., Susan Groenwald, 18W100 22nd St., Oakbrook Terrace, IL 60181; 630-953-8100 94

EXAM MASTER, Diane Vincent, 500 Ethel Ct., Middletown, DE 19709-9410; 800-572-3627 94

GEORGE INDUSTRIES, George Gering, 4116 Whiteside St., Los Angeles, CA 90063; 213-264-6660 94

MCCARTY ARCHITECTS, Richard McCarty, P.O. Box 440, Tupelo, MS 38802 94

MEDICALOGIC, Mark Leavitt, 15400 NW Greenbrier Pkwy., Beaverton, OR 97006; 503-531-7000 94

MINOR'S LANDSCAPE SERVICES, David Minor, 2550 Berner St., Fort Worth, TX 76111; 817-740-9792 94

SALAMANDER RESTAURANT, Stan Frankenthaler, One Athenaeum St., Cambridge, MA 02142; 617-225-2121 94

STAT ONE RESEARCH, Thomas Beggs, 2285 Peachtree Rd. NE, Suite 222, Atlanta, GA 30309; 800-582-5200; 94

WEATHER OR NOT, Paula Connaghan, 2845 Pacific Blvd. SW, Albany, OR 97321; 541-924-1446 94