This month we introduce some changes to Network to bring you answers more quickly. Inc. will now research every query we publish, seeking the advice of experts and smart CEOs. We know we won't find all the answers, though, so please continue to mail, fax, or call in your solutions. We'll print the best of them.

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Power of Suggestion
Our company is emphasizing cost containment, and we'd like to encourage employee suggestions. What can we do to encourage and reward participation?

Sidney Smith


Pacific Crown Financial

Coeur D'Alene, Idaho

If you want to use classic suggestion boxes, install them in high-traffic areas. Nearby, list suggested topics for employees to choose from: cost-cutting strategies, benefits, job sharing, and the like. Also post a schedule of monthly pickup and response times, as well as submission guidelines for 11th-hour brainstorms.

Many companies reward good suggestions with a flat bonus, but Melia Peavey, president of Peavey Electronics, a Meridian, Miss., guitar and amplifier maker with 2,000 employees (see "Hot Spots," Hands On, No. 02900842, February 1990), emphasizes the cost-containment goal by tying bonuses to savings. Each month Peavey's human-resources staff estimates the first-year savings of the 12 best suggestions. It awards the originators of the most creative and economical ideas 8% of total material and labor savings -- a minimum of $15, and the sky's the limit. Recently, $2,000 was handed out to one worker. Quite expectedly, suggestions poured in.

Harry Seifert, CEO of Winter Gardens Salad, in New Oxford, Pa. (see "Bad News," No. 04910451, April 1991), solicits suggestions through a system of quarterly forums. Individuals write down comments and suggestions during the preceding two weeks. Management sifts through the 30 or so entries for the top 10. When forum day arrives, production stops. Workers assemble in the plant (attendance runs about 90%), and Seifert introduces each suggestion, then invites the author to defend it and answer questions. Seifert implements the best suggestions. Others he passes on to supervisors. He shoots down bad ideas. His advice: "Don't do it unless you're willing and able to respond to every comment -- even if it's negative."

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Stock Options
In 1987 I purchased 12,000 shares of stock in two companies, trading on the pink sheets. The broker through whom I purchased the stocks has since gone out of business. How can I find out about my stock?

Vijay Khanchandani

Monmouth Junction, N.J.

Your broker should have told you what was happening to your stock, says Steve Mayle, consumer-affairs specialist at the Securities and Exchange Commission. Since he or she didn't, call the National Association of Securities Dealers (202-728-8000). District offices keep track of local broker liquidations and transfers. Normally, stocks are transferred to another broker. To find out about the companies you invested in, try the library first. Research librarians will consult the Financial Stock Guide (Financial Information, 201-332-5400) and other materials to determine the latest action on the stocks. If the companies are still in business or have closed recently, the SEC will provide copies of their most recent filings. If you have questions about just one or two companies, call the SEC at 202-272-7450. Otherwise, write to the SEC, Public Reference Branch, 450 Fifth St. NW, Washington, DC, 20549.

But work fast. The Securities Investor Protection Corp. (202-371-8300) will cover you for up to $100,000 in cash and $400,000 in securities lost when a broker goes out of business, but after 120 days, Mayle says, "you're out of luck."

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Lean on Us
I run a small furniture business. I and several other CEOs want to form a group to discuss problems and opportunities and to work together. What do we need to think about?

Jeffrey Wildes


Wildes Furniture

Georgetown, S.C.

Do you want the group to generate business, or do you want help solving business problems? Different focuses dictate different constituencies and processes.

Melissa Giovagnoli, the founder of the HAIMS Group, in Schaumburg, Ill., has been involved in several networking groups designed for business opportunities and built around an industry focus. It usually takes about a year or more to start bringing in strong leads or referrals that turn into solid business opportunities, she says. Be sure to keep track of good leads and where they come from. If a member isn't producing, the group should say so.

If instead you want the group to help solve business problems, look for a cross section of industries and a good mix of men and women of varying ages. Diversity means more perspectives on your problems. And share numbers. "To objectively mind someone else's business, you have to get to know his or her financial situation, challenges, employee problems, goals, objectives, and operating practices," says Marty Way, administrator of Calgary Tent & Awning, in Calgary, Alberta. Protect such disclosures by guaranteeing confidentiality.

Some tips: Schedule meetings for the same day each month. Make provisions to fax members or call meetings in an emergency. Write an agenda for each meeting. Meetings should last two and a half to three hours, in the morning, when interruptions are fewer.

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Credit Check
I run a small office-equipment and -supply distribution company. I hope to expand nationwide, and I worry about the creditworthiness of customers. What are the best inexpensive sources of credit information?

Dale Anderson


Southwest Business Supply

Mesa, Ariz.

The cheapest source is the company itself. Draw up your own credit form (or use a prefab from a local office-supply center) that requests banking references, credit history, and background of the customer's key officers. Always check references. And don't overlook the county courthouses: an individual's public record may include previous employers, delinquent tax obligations, and revoked city licenses. Business-expansion information may be gathered from the local economic-development office, the city clerk, or the chamber of commerce.

The National Association of Credit Managers (410-740-5560) offers educational programs, trade references, seminars, and publications. It will send you a free brochure of its services. Laura Smearman, director of publications, recommends The Art of Business Credit Investigation (Advanced Verification Service, 1991, 612-469-3196, $26.50), by Peggy Mound. It explains how to collect and verify credit information and includes an exhaustive list of resources.

More than 1,400 credit-reporting agencies offer more detailed information. Nearly all of them tap into the vast data banks of the three nationals: TRW, in Orange, Calif. (714-385-7000); Trans Union, in Chicago (312-258-1717); and Equi-fax/Credit Bureau, in Atlanta (404-885-8000). After paying an annual fee of $75 to $120, a member can get -- for a flat rate of $10 to $20 each, depending on the bureau and the company in question -- reports detailing items of public record; account activity; payment and loan histories; and tax liens.

TRW offers attractive rates for large volumes. If a client purchases at least 175 credit reports per year, TRW will charge roughly $17 per report. If you prefer to pay as you go, look into TRW's Business-to-Business Credit Report Service. (See "Dialing for Data," No. 03921092, March 1992.) For a $28 phone call (900-884-4879; or call 800-676-2879, and the charge will automatically be billed to your credit card), TRW will fax or express mail a company profile including bill-payment history, federal-government activity (such as Small Business Administration loans), Standard & Poor's financials if the company is publicly held, and the highest amount of credit extended to the company.

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Taking Credit
I'm about to start manufacturing an electronic device for car stereos, selling it through mail order. Because I have no storefront and little capital, banks won't give me a merchant credit-card account so I can accept charge orders. What can I do?

Daniel Sherron


Amprotector Systems

Altamonte Springs, Fla.

Fly-by-night companies can process a fortune in orders, never deliver, and disappear. Banks especially fear a mail-order start-up entrepreneur who doesn't own a home and hasn't set up a retail store, either of which would make a start-up look more permanent. Also, banks fear getting stuck with charge-backs when customers refuse to pay. Your high-priced product, and the specter of big charge-backs, must worry them. As Pamela Kelley, CEO of Rue de France, a mail-order retailer of French lace in Newport, R.I. (an Inc. 500 company in 1988 and 1989), says, "No one steals credit cards to buy lace curtains, but people do to buy stereo equipment."

Even so, Kelley had trouble getting an account when she started, in 1982. She suggests you try local banks "where there's still a human being in residence." And before you accept no for an answer, ask for the bank's criteria. A bank may, for instance, accept a home-based merchant who owns the home or who will place money in a certificate of deposit at the bank.

Dave Fokos, president of Icon Acoustics, in Billerica, Mass. (see "Sound Strategy," No. 05910461, May 1991), paged through the phone book until he found a cooperative small bank. When that bank failed, he searched and found another one. That one was taken over by a bank that didn't want to handle merchant accounts. Now Fokos has contacted an independent sales and service organization (ISO) to see if it can set up a better relationship.

An ISO sells merchant accounts for banks. The bank still handles the account and assumes the risk. Merchants pay a fee to the ISO on top of the bank's fee. That's not all they pay. Some ISOs make money by renting terminals to merchants. Terminals should cost less than $300 to buy, but some ISOs gouge merchants, renting terminals for thousands per year.

Unscrupulous ISOs have signed up mail-order businesses, then misrepresented them to the bank as retailers. When the bank finds out the truth, it terminates the account, blackballing the merchant. Meanwhile, the merchant is locked into the expensive lease for the terminal. Before signing with an ISO, check its lease provisions carefully, and ask clients if they're happy with its service.

Desperate start-ups sometimes ask established companies that have merchant accounts to process transactions for them, although Visa and MasterCard regulations, and some states' laws, prohibit it. Its cost -- perhaps 8% of the billings -- may also be prohibitive.

For $350, Larry Schwartz's National Association of Credit Card Merchants (407-737-7500) matches mail-order clients with friendly banks. Schwartz says that if a client meets his requirements, "we'll never turn our back on it." But he doesn't guarantee he'll find a match or how much you'll have to pay a bank.

John Cali, a business-resource publisher who sells by mail order, has written a 50-page booklet, Strategies for Getting Charge Card Merchant Status at Your Bank (800-392-9445, $21.95). The booklet makes a good introduction for people who have just butted their heads against banks' reluctance.

If nothing works, Kelley suggests you place your product in a kindred catalog and let the catalog company worry about credit-card orders. Grey House Publishing, in Lakeville, Conn. (203-435-0868), publishes a $135 directory of mail-order-catalog companies.

-- Reported by Michael P. Cronin, Christopher Caggiano, and Karen E. Carney n