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The Business Journal-Milwaukee

November 14, 1992

A Bakery That's Generous With Its Own DoughBYLINE: Glenn Deutsch

SECTION: Vol 10; No 6; Sec 1; pg 1

LENGTH: 1730 words

DATELINE: Whitefish Bay; WI; US

On a cold Thursday afternoon, I'm slicing big hunks of warm bread for schoolchildren, some of whom actually lick their lips in anticipation.

I'm behind the counter at a Whitefish Bay store called Great Harvest Bread Co., where generosity is a way of doing business. The thick slices are free to one and all.

As a businessperson, maybe you're cringing at the idea of giving away something you could be making money on. Before I borrowed a Great Harvest T-shirt and handed slices of bread to strangers. I also imagined that giving away one's product. especially so much of it, so regularly, and to so many obviously well-nourished takers, would be annoy-ing,

Not at all. It's fun.

And evidently, it ain't bad business. Great Harvest has been handing out about 50 loaves worth of free slices--not to mention pounds of cookie pieces--every business day since December 1990.

And, remarkably, this generosity thing is happening at a franchise. Or The Unfranchise.

Great Harvest Franchising Inc. of Dillon, Mont., has 53 operations in 26 states. But after a year under the parent's wing, each location is allowed to pretty much go it alone. I was intrigued by a poster the franchisees, Jill and Rod Hall, wrote and display at their store at 5629 N. Lake Drive.

The headline asks: "What's the gimmick? Why the big free slices?"

"Some people think a business is just to make money, so naturally our breadboard is confusing," the poster says. "But we are a business for two reasons: to make money and to have fun. Either one alone wouldn't be enough. The day we stop making money, or it stops being fun, we quit."

NO WONDER BREAD CROWD

The recipe for the rest of the husband-and-wife team's business philosophy is one part Adam Smith, one part Crosby, one part Stills, one son named after Graham Nash, a daughter named Anna and a peck of Richard Bach.

"The breadboard is our fun. The cash register is our money," the poster continues.

"Every time some guy runs in, grabs a big slice, and runs outside smacking his lips, we seem to get more cus-tomers."

(I saw one of these guys, though I couldn't link him to any surge in sales. Wordlessly, he grabbed two hunks of cookie from the breadboard and hopped into a black Lexus.)

"We do ask just one little favor. Please take a slice, even if you're not hungry. Save it for later, or feed it to a hungry seagull-you won't hurt our feelings a bit (actually, some of our biggest fans are gulls!)"

If the store didn't make its own stoneground whole grain breads from scratch, milling a few bushels at a time from high-protein, low-moisture wheat from the Montana plains; if it didn't use honey or molasses as the only sweeteners; if

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it didn't bake without fats, oils or eggs; and if it didn't have a no-questions-asked money-back guarantee, no one would pay $ 2.35 to $ 4.25 for a loaf, or stop here for a free slice, either. At that rate, Wonder Bread is almost free.

But this is no Wonder Bread crowd, and four bar charts taped to a file cabinet in the Halls' basement office attest to that. Sales are almost uniformly going up. (They sell about 900 loaves each day.) And the Halls, who have territorial rights in the Milwaukee area, are scouting Wauwatosa and Elm Grove for a second location.

RISING EXPECTATIONS

So how did Rod Hall, an IBM executive. and Jill Hall, a business attorney, learn that if you're going to run a bread store. you might as well do it wholesomely?

A few years ago, while living in Minneapolis, they learned that a Great Harvest store they patronized was a fran-chise. Shortly after Rod was transferred to Milwaukee, they quit their jobs and put all their cash into the business.

"We both knew we wanted to get out of the corporate lifestyle." Rod says. "We wanted emotional and financial ownership, if you will."

"We have a real belief in the value of generosity," Jill adds. "The legal profession should be a serving profession. It isn't always, but this was a normal transition for me."

A customer recently told them that he likes to come into the store because it always seems like there's a party going on.

"That pretty much typifies what we're after," Rod says.

Their deal with Great Harvest Franchising was $ 20,000 upfront and 6 percent of gross sales as an ongoing royalty. The franchisor provided initial recipes, an equipment shop ping list, sample marketing materials like labels, six days' training at four stores, and oversight during their maiden week.

"They taught us how to make dough, to bake, how to run a business--all the basics," Rod says.

The mother company also publishes a monthly newsletter, in which franchisees share new recipes.

"It's a simple concept," Rod says. "After the first year, you run it the way you want to. The first year, you have to have a limited product line."

For the Halls, it's always been bread, plus oatmeal cookies. Hours are important to the Halls, as Graham is 3 years old and Anna just turned 1. Rod works about 45 hours a week; Jill, about 30. (Initially, he put in about 80.)

Simplicity also has a quality benefit.

"You can do really well with fewer people on the payroll," Rod says.

The Halls employ 18 people, about two-thirds of whom work full time.

And the simpler the business, "the wider the margins," he says.

IBM GUY MISSED HUMAN CONTACT

Rod, 35, doesn't look like someone who once sold mainframe computers. He has a trim build, wavy dirty-blond hair pulled back into a ponytail, blue eyes and a closely cropped beard with a touch of gray. He wears a thin hoop ear-ring in his left ear lobe. His Great Harvest T-shirt is tucked into blue jeans.

With equal energy, he explains the technical aspects of making bread and serves it to his customers. This reflects his former career at IBM and his growing-up years in the western Illinois farming community of Little York, population 250. Jill, from nearby Monmouth (they've known each other since they were 14), says Rod missed small-town thinking and human contact as a computer salesman to corporate clients.

In this business, this day, Rod generally defers to his 36-year-old wife and partner. a driven, green-eyed earth mother in long silver earrings, black tights and canvas slippers.

The store's selling area is done up in green, white and oak ("earth colors; it's an earthly business, as such," Jill says). Children's books and stuffed toys line a window bench. Loaner gallery art hangs on the walls, and at the back entrance is a bulletin board with employee photos, testimonials to the Halls from charitable organizations they gave bread to, and thank-you letters from grade-school children and teachers who have toured the operation.

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After I tour the place and get behind the counter, I can pick out the aroma of raisins over the molasses, cinnamon, yeast, onions and dill.

My first customers are two adolescents with crew cuts and Columbia ski jackets.

"Can I get you guys a slice?" Somehow it rolls off the tongue.

They both ask for honey whole wheat. Jill and Rod and Chip and Ernie watch as I hold down the round loaf with a white paper napkin. Using a 10-inch bread knife, I gently saw the first slice off the end and shift it onto the napkin, my hands never touching the bread. I hand the slice to one boy. who thanks me.

Now I cut a longer, slightly thinner piece for the second boy.

"Thicker," Jill says over my shoulder.

Slicing pieces about 1-1/2 inches thick in a herringbone pattern yields about 12 slices from each 2.2-pound loaf. The store's two breadboards hold samples of the six loaves for sale that day, plus a mound of cookie pieces.

Rod admonishes me to put the knife back behind the counter instead of leaving it on the breadboard: "Our health insurance and insurance agent would be quite nervous..."

A moment later, Jill sees one of the boys leaving with a bag of her bread and says, "That's a rarity." Outside, on the other side of the window, a woman apparently scolds him. "The mother is saying. 'I can't believe you bought a loaf of bread with your money,' " Jill interprets.

ONE OREGON HERB

Next come three girls, Ashley, a second-grader, and Amy and Alison, who are in the fourth grade. Ashley is adorable. She has short black hair, nearly almond eyes, and is missing her two front baby teeth. She diligently butters her piece while clutching a fallen oak leaf almost as big as the slice.

"Those kids when they're in their late 30s hopefully will remember when they were little and grew up in Whitefish Bay, and every day they got a big slice of bread here," Ron says.

"Sir, can I get you a slice over here?"

Jill is addressing a big bearded man.

"Oregon herb."

"Big seller."

He tastes. "I'll have one of those. One of whole wheat, one Oregon herb."

She also hands him a Thanksgiving schedule.

Another guy, on business here from Chicago, is reluctant to take a slice of each of two different breads, but Jill prods him: "You can take home what you don't eat."

He buys a loaf of something, handing over a $ 50 bill, and squeezes his two mostly eaten slices, really not much more than two large pieces of crust, into a waxpaper cookie bag that Jill has provided.

After a lull, business picks up again at about 5 p.m. I'm still enjoying the breadboard ceremony.

I see it as having three acts.

First: it feels good to gently press down on a springy round loaf of bread; that's a personal, tactile thing.

Then comes a performance: sawing the bread and moving it onto the napkin while someone watches.

Really, there is sharing, and whatever it is that feels good about that.

Of course, too much of a good thing, even sharing, is no good.

Truth be told, even though they've been in business for about two years now, and are planning a second location, some people fear Jill and Rod Hall are borderline shareaholics.

"Jill's parents, they have yet to come to grips with how much we give away," Rod says.

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Besides the 50 loaves' worth they hand out in slices, they give out another 40 to 50 loaves a day to the bread-card crowd, customers who can buy 10 and get one free.

"The only way to know if it's too much," Rod says, "is to look at ingredients as a percentage of our sales. Our ingre-dient costs are 25 to 30 percent of gross sales. If ingredients as a percentage of sales were too high, it might be because of the breadboard.

"If it got too high, we wouldn't stop giving away bread; we'd raise prices."

Copyright 1992 UMI Inc.;Copyright The Business Journal of Milwaukee Inc. 1992;

Business Dateline

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The Business Journal-Milwaukee

March 20, 1993

The art of mixing debits, credits and creativityBYLINE: Glenn Deutsch

SECTION: Vol 10; No 24; Sec 1; pg 1

LENGTH: 1205 words

DATELINE: Milwaukee; WI; US

Professional artists are businesspeople, especially in the weeks before April 15.

Whether you make pots or pop music or paintings, "it all leads to taxes," said Mary Shanahan-Spanic, bookkeeper for a local rock duo, Spanic Boys.

Make that Spanic Boys Inc., Milwaukee. The father-son band made famous on "Saturday Night Live" has incorpo-rated for tax, personal-liability and control reasons, and hired a new accountant to smooth the path toward S corporation status.

"Every child is an artist. The problem is how to remain an artist once he grows up," said the painter Pablo Picasso. And how to be a businessperson without letting numbers and taxes sap creativity, local artists and their accountants might add.

Incorporated or not, some professional artists regard themselves as proprietors of small businesses. But the particu-lars of their businesses create unique problems.

Take the Spanic Boys, modern rockabilly artists with four albums to their credit and a fifth in the works. Drawing on the legendary Sun Records sound, guitarists like Duane Eddy and the harmonies of the Everly Brothers, the Spanics produce more fun in Milwaukee than probably any other company, except for maybe Harley-Davidson Inc.

"Being a musician, I'm not too much into mathematics," said Spanic Boys co-founder and father Tom Spanic, a for-mer guitar teacher. "But it's better tax-wise to be incorporated."

For instance, he said, the Spanics recorded a radio commercial last year for Mello-Yello, the Coca-Cola Co. soda. They used the band's drummer and bassist, who technically are independent contractors.

Unless the band is incorporated, a commercial client like Coca-Cola might equally pay Spanic, son Ian, the drum-mer and the bassist, Spanic said.

"If two people built up a band, you're not going to find band members should get equal privileges," he said.

Tom Spanic may not be mathematical, but he minds the financial side of the business. Although the band's manager handles bookings, record contracts and other business matters, "financial problems are our own problems," Spanic said.

But he also knows when to call in experts.

"Tax time is our fight time," Spanic said, referring to his wife, Mary Shanahan-Spanic, who handles the band's bookkeeping besides holding a full-time job as executive director of West Allis Community Communications Corp., a public access cable station.

Mary Shanahan-Spanic will get a little tax relief this year in Richard Podraza, a Milwaukee accountant the Spanics expect to use more frequently than previous tax advisers.

"We're going to be paying the new accountant monthly," Tom Spanic said.

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Podraza said the Spanic Boys had gross receipts of about $ 170,000 in 1992, not including royalties from their pub-lishing company. which will become part of the new corporation.

Tom Spanic's mother, June Spanic, is the company's president. Mary Shanahan-Spanic is the band's treasurer. Tom and Ian are officers and the sole shareholders.

Tom and Ian are trying to agree now or certain stock restrictions, Podraza said.

"Other than the fact that they have royalties, their business is similar to other small businesses in a lot of ways." the accountant said.

THE ARTIST AS WHOLESALER

Although he works solo, Fred Stonehouse, a West Allis painter, also sees himself as a small business. As a whole-saler, actually.

Like many entrepreneurs still getting off the ground, he thanks his spouse for keeping body and soul together. His wife, Jennie, has earned the family's steady income as a line worker at two area manufacturing companies.

But Stonehouse's business is growing. He has gained a national following and had his own show recently at the Madison Art Center.

His art melds two wildly disparate styles --Haitian folk and early Renaissance. In some of his paintings, he letters in Latin or Spanish captions, taking off on traditional religious paintings. Madonna owns five of his works.

"When I'm talking to my accountant, I tend to think of myself pretty concretely as a small business," Stonehouse said. "Basically, I'm a wholesaler supplying retailers, who are the galleries."

Stonehouse claims entertainment expenses just like a salesperson.

"For me, it's a client or collector or dealer, but it's really the same as a wholesaler taking a retail distributor out to dinner," he said.

Artists only recently have begun seeing themselves as wholesalers, said Lloyd Herrold, a tax attorney with Walsh & Keating S.C., Milwaukee, and vice chairman of the Madison-based Wisconsin Arts Board.

"There's always been the question of whether an artist is driven by the business or creative end," he said. "Some-times it's a mix of both."

TAXING CREATIVITY

No matter what the motivation, "one of the first things you recommend to an artist is a decent accountant," said Will Rockett, a playwright and dean of the University of Wisconsin-Milwaukee School of Fine Arts.

This year, for instance, the U.S. Supreme Court cracked down on home-office deductions in a case about the focal point of a doctor's primary earnings.

That doesn't impact Stonehouse, whose studio is near his home. But the Spanic Boys' studio is in Tom and Mary's home.

"Before, if they rehearsed there, they could take a home deduction," Podraza said. "Now it's muddy. But because they do actual recording there, maybe at least (we'll be able to show) they have some money earned there."

Most other tax matters are more straightforward for artists.

"If you own your own equipment, you can amortize it over a period of time, or you can expense it out, depending on how much it cost," said Rockett, whose wife, Brooke Maroldi, is a video artist.

An artist's biggest tax problem can be estate planning, Herrold said. If a printmaker made thousands of prints and sold 10 percent in galleries at $ 100 each, Uncle Sam may say that pieces remaining in his shop at the time of his death also are worth $ 100 each--and tax the estate accordingly.

Some artists get around that by leaving charitable donations in their wills or by creating trusts.

When donating art for special events or other charitable causes, artists can deduct only the actual cost of producing a work, rather than its fair-market value.

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Some artists find that unfair--the charity can turn around and sell the work for fair-market value--so they might de-clare the wholesale value of the piece and hope they don't get audited.

An artist also can avoid leaving a legacy of high taxes by incorporating and giving shares of stock to family mem-bers.

When it comes to regular business operations, artists don't have to capitalize creative expenses. Instead, they can deduct expenses before they sell a work.

On the other hand, artists are not eligible for capital-gains treatment on the sale of their art. It's all treated as ordi-nary income.

That may hurt if President Bill Clinton gets his way and capital gains are locked in at 28 percent while other tax rates go up.

But some creative type in accounting probably will figure out how to work around that, too.

"There is nothing sinister in so arranging one's affairs as to keep taxes as low as possible," said Learned Hand, the legendary American jurist.

For some people, it's even an art.

Copyright 1993 UMI Inc.;Copyright The Business Journal of Milwaukee Inc. 1993;

Business Dateline

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The Business Journal-Milwaukee

October 2, 1993

Bending nature to their purpose: Constantinis twist twigs into rustic La Lune furnitureBYLINE: Glenn Deutsch

SECTION: Vol 10; No 52; Sec 1; pg 1

LENGTH: 1390 words

DATELINE: Milwaukee; WI; US

Mario and Catherine Constantini were just out of college, too young to know what they were doing, when they started a business in 1979. Since then, they've bent enough twigs into chairs to create a $ 1 million firm in Milwaukee's central city.

From the artsy neighborhood of Riverwest, the Constantinis' sell handmade, indoor-outdoor rustic furniture to homey folks like Ralph Lauren and Eddie Murphy and to businesses seeking a lodge look, like hotels, restaurants and clothiers.

The couple have had a few trends at their backs. They capitalized on the energy and resilience of their early 20s started in a time of easy credit and hit. upon that super marketing mix of ecological consciousness and conspicuous con-sumption that also has powered the sales of designer dungarees and glossy magazines that sell the dream of country liv-ing.

A roughly 10-year trend toward mix and-match furnishing, and away from buying sets, also has powered their sales.

But then, as the saying goes, luck is the residue of design. And while their sales growth has flattened since the white-collar recession, the Constantinis are betting this rustic-furniture cycle isn't over yet, but hedging their bet by di-versifying.

TRADING IN DREAMS

The couple met nearly 20 years ago while attending Marquette University. Cathy is from Janesville, majored in French and planned to become an international banker. Instead, she married the son of an immigrant upholsterer and now manages the books and public relations as vice president and equal owner of Mario Constantini Ltd. He's president.

Mario was 10 when he came to Milwaukee from Buenos Aires, Argentina. His father, Mario Sr., owns an uphol-stery shop in Greenfield. Mario dreamt of returning o Argentina to become an "airplane doctor" ho treats patients from village to village. He got as far as studying for his entrance exams.

The couple thought he could be an interior designer in the meanwhile. "Because we were naive enough, we thought we could start a business and I could go to medical school after that," Mario said. "Once we started, of course, it took up all of my time, and we liked it. I thought, 'It beats going to medical school.' "

They snared a $ 50,000 line of credit from a bank with no co-signer and no collateral. That experience they had was indirect Mario's work translating for his Spanish-speaking father on sales calls and working around the shop.

Cathy became the breadwinner, keeping a bank job for four years.

A DIFFERENT TWIST

Mario quickly ventured into designing sleek, white, contemporary furniture and showing it at a rented store on East Wisconsin Avenue. Then, to do something different, he designed a few rustic pieces.

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The look had been popular in America from about the turn of the century until the 1930s. Mario found inspiration in ancient Chinese root furniture and certain 18th and 19th century furniture, some of which was made with the bark still on.

He put his versions in the window.

The reactions he got were strong, including a receptive one from a manufacturers representative from Chicago. Or-ders led to a catalog and soon to reps across the United States.

The Constantinis say designer Ralph Lauren soon bought their work for two or three of his homes and for his stores, selling it under his own private label.

"He's been a very good client from day one, which gave us credibility," Mario said.

Mario's collection, whose trade name is La Lune, now includes more thin 600 chairs, cabinets, tables, beds and ac-cessories. Volume is about 70-30 residential commercial. Most homeowners, he said, use La Lune items to accent an-tiques or contemporary pieces.

Mario claims he was the first to sell a line of fine rustic furniture nationally, though as Lester Craft, editor of Furni-ture Today, a High Point, N.C., trade magazine says, The bent-twig look has always been around and will probably al-ways be around" as one of many specialty alternatives to the mass-made.

OPTING FOR FUNK

The couple purchased their present headquarters in 1986 for $ 135,000 from a former general contractor. Three buildings and property take up half a city block at 930 E. Burleigh S. They spent $ 45,000 in the first year alone on ren-ovation.

Friends and others had suggested they might be better off with a suburban factory. Mario said they chose the loca-tion "partly because we're funky people. We bought it was the right thing to do. We both feel very loyal to the city of Milwaukee." The couple and their children, ages 9, 7 and 4, also live in the city, near the University of Wisconsin-Mil-waukee.

Including some interior design work, the Constantinis say their annual gross sales have hovered around $ 1 million for about the last five years. Employment fluctuates, but they generally employ about 15 workers here and 10 in Mis-souri.

But sales growth has leveled off over the past 18 months or so. As Cathy said, the company grew fast in the '80s but, "in the 190s, it's harder. Much harder. The economy is weaker. Peoples' buying patterns are different."

Said Mario: "This time around, the downturn in the economy hit the white collar worker. That's our market."

The Constantinis are preparing to diversify in these tightfisted times. A line of upholstered furniture is in the works, and Mario may do more interior design.

And while they have little pricing flexibility, "we're making as conscious an appeal to a broader market as we can," Mario said. If you can't buy a $ 3,000 La Lune sofa, they will point out a La Lune chair selling for $ 200.

FIELD WORK

There's little raw material or finished stock in their two-story, 8,000-square foot Milwaukee warehouse--for cost, production and ecological reasons.

Rather, field workers pick the requisite prunings, bushes or trees after an order come in, harvesting at hundreds of sites in the Midwest, Kentucky and Missouri. Maps are overgrown with cycle notations and homegrown parts nomen-clature--"bendies," for instance, are a certain kind of twig used for a certain type of armoire.

"We spend about as much time picking as making," Mario said.

Mario likes to use young trees that fall to strip-harvesting papermakers but which cant be used in the mills. About half his stock comes from willow trees and shrubs that grow wild in the Midwest. Other woods include pine and cedar.

Sometimes the workers clear an entire field as n-kind payment for the 1 percent or 2 percent of the twigs and boughs Mario needs. They also learn when acreage is to be bulldozed or otherwise managed by state natural resources agents, and may rummage through the cuttings.

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The main reason for harvesting fresh, supple wood is that much of the furniture is made like baskets. Branches or twigs are bent and woven while stile green. The object then is kiln-dried, sanded and finished, and finally upholstered. Other items are made in jigs, and some parts are comely thanks to nature, like the back to a love seat on display in their office.

Water-based varnish is sprayed with a shower head type contraption inside a large steel tank, below which pumps and filters regenerate the varnish.

GIVING NATURE A HAND

One thing setting La Lune apart from its inspirations are steel reinforced, hand fitted joints. Hand-finishing of asymmetrical branches and twigs--much of it performed by immigrants who worked with similar basic tools in Mexican shoe factoriesmakes it seem as though the intricate chairs and sofas grew out of the ground.

Every piece gets a brass tag with La Lune's name on it, something Mario said clients have asked for, and which someday may make the pieces more valuable.

Like other successful artisans and designers who retain more confidence than legal counsel, the Constantinis have fended off knock-offs through new design and increasingly complicated production.

Knock-off artists are "difficult to police, expensive to chase," Mario noted.

While rustic furniture has had its ups and downs, "we think we're still on the upswing" in this cycle of rustic furni-ture popularity, Mario said.

Rustic furniture is becoming more visible, more popular as time goes on. I don't see it as a trendy line.

"There've been many times in history when furniture has been made this way. Fifty to 100 years from now, I want people to be shopping in an antique shop and say, "That's a La Lune piece."

Copyright 1993 UMI Inc.;Copyright The Business Journal of Milwaukee Inc. 1993;

Business Dateline

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The Business Journal-Milwaukee

January 23, 1993

Milwaukee's answer to 'Let's Make a Deal': Forum gives start-ups a way to appeal directly to investorsBYLINE: Glenn Deutsch

SECTION: Vol 10; No 16; Sec 1; pg 1

LENGTH: 1377 words

DATELINE: Milwaukee; WI; US

Most of them are not quite ready for prime time, but like the comics who get their starts at club open-mikes, the businesspeople spieling during Wisconsin Venture Network's monthly "Two-Minute Forum" get a taste of the business.

The business of business, that is. Since 1984, the organization's forum has been the only place in the Milwaukee area where you can walk in off the street and be heard by investors. While it mainly serves as a networking event and place where entrepreneurs can get free advice from consultants, rather than as a hotbed of financing, the forum nour-ishes the eternal hope that a good idea can become a good business.

"No matter what the economic conditions are, there are people with ideas who want to start new businesses and are looking for financing," said John Neis. vice president of Venture Investors of Wisconsin Inc., Madison and Milwaukee, which seeds early-stage start-up companies for research and development, high-tech products, biotechnology or medical technology.

Hope had better spring eternal, because seed money is the hardest venture capital to find.

Few venture capitalists lend to someone lacking a sales and earnings history. Moreover, caution has been the new byword for an industry that overdid things in the 1980s.

Nationally, venture capital disbursements began declining in 1987. By 1991, the industry showed its first decline in capital under management in more than a decade.

OUT IN THE COLD

The Midwest, which escaped the worst of the recession and which has many mature businesses and seasoned man-agers, is seen now as a hot spot of value for venture capitalists. Seven Midwest venture capital funds raised $ 488.5 mil-lion in 1992, up from $ 85 million raised by five Midwest funds in 1991, according to Private Equity Analyst, a West Newton, Mass., industry newsletter.

None were in Wisconsin. however, and none of the $ 2.55 billion raised for venture capital in the United States in 1992 was raised in Wisconsin, according to Michael Vachon, a senior writer at Venture Economics Publishing Co., New York City.

Firms in California, Massachusetts and New York raised 72.7 percent of the nation's venture capital last year. The year before, Wisconsin had only 0.77 percent of the nation's $ 32.87 billion in venture capital under management, slightly below the national per-capita average.

Also, Wisconsin was home to only eight of the nation's 640 venture-capital firms in 1991, according to Venture Capital Journal, an industry newsletter in New York City. For comparison, Minnesota had 17 venture capital firms and $ 487.47 million under management in 1991.

Why? Venture capitalists have congregated mostly around high-tech research cradles like Silicon Valley and the Massachusetts Institute of Technology. In the Midwest, Minneapolis and greater Chicago boast business communities that are more active and communicative than those in Milwaukee and around Wisconsin.

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"The way I'd characterize Wisconsin is that it's terribly deliberate about everything it does, which gives it staying power," said one local venture capitalist who asked not to be named. "On the other hand, not a whole lot of new ideas matter here, as you would find elsewhere."

BAD CHOICE OF NAMES

So the Wisconsin Venture Network (WVN) open-mike on the second Monday monthly is a small slice of a small fry. The group's name might even be a misnomer, said Andrew Sawyer Jr., executive vice president at Park Bank, Mil-waukee, and president of WVN: "It's more for the whole subculture of individuals and small firms that will invest in start-up companies. It's more of an entrepreneurial group than a venture capital group."

WVN has about 100 members, including attorneys, accountants, municipal officials and investors. It was founded about nine years ago by Kenneth Burgess, who sold his shopper newspaper empire to Journal Communications Inc.. and was modeled on a similar group in Stamford, Conn. Regular monthly meetings at the War Memorial Center began in June 1984.

Since then, an average of eight or nine people a month have made two-minute pitches. How many have raised capi-tal?

WVN doesn't keep a record, but "I would guess one or two a year are the ones we hear about. It may be four or five a year," said James Gormley, a corporate attorney at Davis & Kuelthau S.C., Milwaukee, who coordinates and emcees the forum.

This day, about half of the 80 attendees, who pay $ 15 with reservations or $ 20 at the door, were WVN members. The others were guests. Voluntary coaching for presenters began at 11 a.m.; schmoozing started at 11:30.

A buffet luncheon was at noon.

The forum started at 12:30 p.m. Gormley smoothly introduced it as "Milwaukee's answer to 'Let's Make a Deal.'"

A COUPLE OF BOBS

If you were looking for funds, you got two minutes. If you were job-or service-net-working, you got one minute.

Two of the presenters were men named Bob who were looking for jobs as business comptrollers or chief financial officers. One Bob mentioned he'd won temporary, part-time work as a result of speaking at the forum last month.

An automotive replacement-engine manufacturer said his 1-1/2-year-old firm was running "about break-even" and needed an investment of $ 150,000, adding hesitatingly: "incrementally or all at once." The throw-away line produced nervous laughter in the audience.

June Johnson, a retired college voice and opera teacher, recommended herself as a voice-training consultant.

"If you listen to Bill Clinton, he needs my help badly," she said to laughs.

A man offered to give up "substantial or all ownership" in his year-old plastic-products company, referring to sam-ples on a table.

"We have shipped $ 200,000, but we did not realize the start-up time. We're out of cash," he said.

Another entrepreneur, Peter Berneger of Hortonville, started with a joke:

"I'm starting my second business, and I vow to let the IRS know about this business."

He was looking for investors in Tri-O-Clean of Wisconsin Inc., a distributorship for a machine that injects ozone gas into commercial washing machines.

"It's better than hot water, and no detergent is needed," Bernegger said.

A few people went: "Hmmmph."

Bernegger gave details, and concluded about financing: "I took care of the first phase. The second phase is $ 300,000 for a substantial equity position."

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The third phase, Bernegger said later, will be raising another $ 300,000 or so to complete the purchase of the dis-tributorship from a Port St. Lucie, Fla. company. He's looking for silent or active partners and gave his business plan to two people from the forum, he said.

MAKING MATCHES

Linda Barkwill got up to sell her Thiensville executive search firm. Barkwill noted that MarketSearch Inc. had "over 12 years of continuing profitability and success, served over 33 Fortune 100s, has a nationally trademarked name, and did $ 1.5 million over the last five years."

She added that it had been fairly inactive over the past year because she was launching another business. She touted its database and office systems. but said she'd prefer to keep the office for the new business.

Her price: a "quite negotiable" $ 150,000. Barkwill said later that three people directly or indirectly approached her after the presentation to talk further about purchasing the business.

The last presenter, Thomas Walk of Waukesha, attested to the forum's matchmaking potential. His two-minute talk the previous month drew interest from Timothy Cowling, vice president of corporate finance at J.E. Liss & Co. Inc., a Milwaukee brokerage and investment banker.

Cowling said later he is writing a financial and organizational plan for Walk's company, T.H. Walk Co. Inc., which is doing business as Guardian Interlock of Wisconsin. Walk leases automotive ignition breath analyzers to convicted drunken drivers, and sets up related educational and testing systems as a representative for a Marietta, Ga., company.

"Tom has fire in his belly but he does not have the sort of view a general gets surveying the battlefield," Cowling said. "I am trying to give him that perspective."

Cowling envisions annual company revenues of about $ 1 million. With that kind of payoff, why take a chance on what's behind door No. 3?

Copyright 1993 UMI Inc.;Copyright The Business Journal of Milwaukee Inc. 1993;

Business Dateline

Page 14

The Business Journal-Milwaukee

July 17, 1993

CEOs under stress: How much is too much?BYLINE: Glenn Deutsch

SECTION: Vol 10; No 41; Sec 1; pg 2

LENGTH: 1299 words

DATELINE: Milwaukee; WI; US

After about 35 years in retailing, Stanton Bluestone knew he could handle the stress of ordering Christmas mer-chandise in July. And if he did feel anxious about that or some other decision, he could look back on a success and re-lax.

But Bluestone never had conquered a business reorganization, and the most stressful day of his life was the day a couple of years ago when his company filed Chapter 11 reorganization in U.S. Bankruptcy Court.

If you fail to sell a zillion shirts, "you can fix it," said Bluestone, president and chief executive officer of P.A. Bergner & Co., Milwaukee, the holding company for Boston Store and Carson Pirie Scott department stores. "But once you file for bankruptcy, you can't fix that. After we filed, it felt like, for a short period of time, I didn't know what would happen. It's just a very frightening thought."

He and his management team did come to grips with what was then a $ 900 million reorganization. To get a grip personally, Bluestone exercised more and made sure to keep up his corporate and charitable board memberships, which served as diversions. He also was lucky, he said, to lead a steady home life.

Not all company heads cope well when their company is stressed out, but interviews with area executives and con-sultants point to the ways heads of family-owned firms and publicly held concerns are exposed to, and handle, unusual sources of business stress like bankruptcy, layoffs and acquisitions.

According to Dean Fowler, an Elm Grove therapist and president of the Wisconsin chapter of the Institute of Man-agement Consultants, a chief executive hired to run a public company often is "a different type of person," one who through "natural selection" has proved to be better equipped to handle certain kinds of stress, than an entrepreneur at the helm of a family business.

Consider how chief executives approach firing or laying off workers, Fowler said.

"I see in a lot of large, publicly held companies I work with that the CEOs made it up the ranks because of their ability to make tough decisions and be somewhat detached," he said.

THORNY FAMILY ISSUES

A family business may carry the added weight of legacy, other thorny family issues, and maybe even an extended family of employees, he said.

In a downsizing, the head of a public company would evaluate the impact on employees and others, but wouldn't let the decision cause emotional distress, Fowler said.

"In a family business." he said, "the emotional stress often is very high."

An emotionally torn leader may find that one way to get out of stress is to not make a decision, he said, which can lead to further business problems.

With family firms especially, "I've seen that happen a lot." Fowler said.

Page 15

Kent Arney, a consultant at Douglas Jackson & Pierce, a Williams Bay debt-resolution firm, said small-business owners may suffer the added stress of embarrassment in a crisis. Creditors lead to collection attorneys, which can lead to lawsuits, and that attracts the attention of the media, bankers and investors-and maybe even neighbors.

"From the human side of it," Arney said, "they begin to crack."

One client, a restaurant owner with 22 creditors, feared phone calls: "The phone would ring and she didn't know if it was for a reservation or if it was a bill collector," Arney said.

"Obviously it's more stressful for the smaller company." he said. "They don't have the advantage of having a con-ference room full of people to handle different aspects of the problem. Normally in a small, family-owned business, you have at best two to three decision-makers, if that."

'TIE YOUR GUT IN A KNOT'

Communication is another source of stress in a business upheaval. It's part of what makes it lonely at the top.

Richard Kendro, who recently participated in a group that bought the assets of a Milwaukee machine-tool company and who is now its chairman, said he had to differentiate between "need to know" and "nice to know" information dur-ing negotiations, and then be "cautious and honest" in dealing with union and nonunion workers, banks and others.

To cope with that sort of stress, "you've got to tie your gut in a knot and sometimes just hold everything together," said Kendro, who also would confide in a friend and business associate.

"It's extremely important to have a confidant outside the workplace--maybe a fellow CEO in a different field," said Gordon Pederson, managing partner of Humber, Mundie & McClary, a firm of business psychologists in Milwaukee. "There has to be an ongoing mutual sharing of ideas, because a major stress is the loneliness of a chief executive spot."

A good home life also helps top executives balance themselves, said Ted Bruce, a Milwaukee psychotherapist and business consultant. He said two people under the same stress may react "very differently" depending on the support they get.

Elwood Kleaver Jr., president and chief executive officer since February of Milwaukee managed health care firm Care Network Inc., which has suffered about $ 10 million in losses and a host of other major problems over the last 15 months, agreed.

"I try to balance my life outside of work, primarily with family," he said.

Kleaver, a turnaround specialist, also echoed some other seemingly stress-resilient business heads who emphasized that they don't get bogged down in details.

"I try to limit myself to three significant issues at any one time," Kleaver said. "I expect one crisis a week, and I'm rarely disappointed."

As rah-rah as it sounds, self-proclaimed stress victors like Kleaver think positive.

"What I look for is the crisis to diminish in size and magnitude," Kleaver said. "That to me is a sign of improve-ment. My cup is always half full, and I'm still interested in where the rest of it is."

Meanwhile, does solving problems you didn't create pose any special stress? Yes and no, Kleaver said.

"I certainly do take a personal responsibility and an involvement for the employees who are here. And I rarely if ever blame someone else. History is history."

PERSONAL RISK

Unlike hired guns are company leaders with not only their livelihoods, but almost their entire financial resources at stake, said Mary Swentkofske, a principal in Summit Investment Management Ltd., Wauwatosa.

"Probably the executives under the greatest amount of stress are those with the greatest stake in their corporations," Swentkofske said, citing Gehl Co., West Bend, as an example.

The agricultural equipment firm lost almost $ 40 million in 1991 and 1992, lean years in that business, and has had to revise agreements with its lenders. In becoming president late last year, family member William Gehl was thrust into the role of helping to turn around a company with substantial family money invested.

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"There's a major commitment on the part of the family simply because they have a major stake," said Swentkofske, who said he is familiar with the Gehl family and the company's situation.

William Gehl, who owns 3 percent of the public company according to its 1993 proxy statement, declined to com-ment.

As difficult as firing employees for the head of a small, privately held company, is deciding their fate when a com-pany is acquired--especially one that's struggling. That's what Kendro faced when he was trying to acquire Wisconsin Drill Head, now Wisconsin Machine Tool Corp., Milwaukee.

As five months of negotiation were coming to a close, Kendro said he would wake up at 2 or 3 a.m. and fret. espe-cially about more than 100 jobs at stake.

But, he said, "you just take a deep breath and try to calm yourself by saying, 'I've done the best job I could and ev-erything will be OK; you're concerned about human beings.'

"And then it's amazing how with just a deep breath or two, you fall back asleep."

Copyright 1993 UMI Inc.;Copyright The Business Journal of Milwaukee Inc. 1993;

Business Dateline