[email protected]
Par 100 posts (V.I.P)
The views expressed in this publication are those of the writers and do not necessarily reflect the opinions of the Fairfax County Economic Development Authority. Copyright © 2005 FCEDA.
NETWORKING
Top 10 Networking Mistakes ........................................................................................................................ 2
FYI ........................................................................................................................................................... 2
FINANCIAL FOCUS
Zen and the Art of M&A .............................................................................................................................. 3
TECHNOLOGY
Employees—Leave Your Gadgets Home! ....................................................................................................... 4
BUSINESS VENTURES Fourth Quarter 2005
Integrated Marketing Communications—
An Effective, Comprehensive Approach
By Raul Danny Vargas, President, VARCom Solutions
Acritical part of marketing is communications—
and the most effective and
productive way of managing this effort
is through concept called Integrated
Marketing Communications (IMC).
But before we get too deep into the IMC process,
it is important to remind ourselves where it lays in
our overall marketing effort. We all remember the
four “Ps” from Marketing 101, but it is worth seeing
how they relate to the four “Cs” from the customer’s
perspective. The first “P” is product, but really this
is all about the customers’ needs and wants. Which
goods and services customers are looking for, what
are the features/benefits in demand, what might be
unfulfilled needs? The second “P” is price, but in fact,
this has more to do with the cost to the consumer.
What is their perception of value, how much are
they able/willing to spend? The third “P” is place
(or distribution), but what this means is the convenience
to the customer to obtain the product. Where
will it be sold, are there distribution channels, is the
process simple and secure? And last but not least, is
promotion, and you probably guessed, this is how we
communicate with our customers. To promote yourself
effectively, you need to understand your customers
and their perspectives.
There are many possible objectives for promoting
your organization—create awareness, stimulate demand,
identify prospects, retain customers, combat
the competition, etc. Whatever the objective,
a good rule of thumb is to remember that
your promotional efforts should capture the
customers’ attention, create interest, generate
a desire and define an action to satisfy
that desire—also known as
AIDA.
I n t e g r a t e d m a r k e t -
ing communications is
a way of looking at the
whole marketing process from the
viewpoint of the customer. It involves
the coordination of all promotional
Promotion
(Communication)
Place
(Convenience)
Product
(Customer)
Price
(Cost)
activities—media advertising, direct mail, personal
selling, sales promotion and public relations—to
produce a clear, unified, consistent and compelling
customer-focused message about the organizations
and its product. Databases, the Internet, and other
sources have enabled us to gather powerful information
quickly. Therefore, marketing communications
are less mass-market oriented (broadcast) and more
segment-oriented (narrowcast).
An effective IMC process comprises the following
steps:
• Identify the target audiences—This requires a
well thought out market segmentation and targeting
process which may include secondary and/or
primary market research.
• Determine the communications objectives—As
stated previously, this can range from generating
awareness to countering the competition.
• Design the messaging content—This is an absolutely
critical component. Effective messaging can
make or break a promotional effort.
• Select the means for communications.
• Define the mix of media, budget and priorities.
• Measure the effectiveness of the efforts.
Marketing communications comprises five broad categories:
personal selling, advertising, public relations,
direct marketing and sales promotions. Each has its
own set of pros and cons and can be accomplished
in a variety of ways. However, the key is to look
at the available options in a comprehensive way
and to ensure consistency throughout the
selected media.
The selection of communications
methods
is subject to a variety
of factors. The factors
that influence the selection and effectiveness
of a promotional mix include:
• Nature of the market (market size, geographic
scope, type of customer, etc.)
• Nature of the product (complexity of the product,
service requirements, etc.)
• Stage in the product life-cycle (earlier versus later
stages of the life cycle)
• Price (high versus low unit price)
• Funds available for promotion
This funding point is very relevant to all companies. Budgeting
is an essential function of the IMC process. The
following items impact the budget determinations:
• Percentage-of-sales method (a specified percentage
of either past or forecasted sales)
• Fixed-sum-per-unit method (predetermined dollar
amount for each unit sold or produced)
• Meeting competition method (match competitor’s
promotional outlays)
• Task-objective method (amount and type of promotional
spending needed to achieve promotional
objectives)
Execution of the IMC plan also involves an evaluation
process to ensure the effectiveness of the effort.
There are two basic measurement tools. One is direct
sales results in which you measure the effectiveness
by identifying the specific impact on sales revenue
for each dollar of promotional spending. The other
is an indirect evaluation where you focus on certain
measurable indicators of effectiveness.
Studies confirm that brand equity can be enhanced
by pursuing a strategy that integrates the various marketing
communications tools. While an IMC effort
requires some work up front, the benefit will make it
worthwhile. ■
Danny Vargas is president of VARCom Solutions (www.
varcom.com), a full-service marketing and sales consultancy
and training firm. For more information, contact him at 571-
434-8466 or [email protected].
Customers
Advertising
Publicity
Personal
Selling
Trade
Shows
Product
Placement
Etc., etc.,
etc.
Public
Relations
Branding
Sales
Promotion
Direct
Marketing
Interactive
Media
Sponsorship
NETWORKING
2
FAIRFAX COUNTY
ECONOMIC DEVELOPMENT AUTHORITY
8300 Boone Boulevard, Suite 450
Vienna, Virginia 22182-2633
Voice 703-790-0600 • Fax 703-893-1269
E-mail [email protected]
URL Welcome to Fairfax County, Virginia
The Fairfax County Economic Development Authority
(FCEDA) is an independent authority created under
state law, operating under the direction of seven
Commissioners appointed by the Fairfax County
Board of Supervisors. Its activities are funded
by Fairfax County.
COUNTY BOARD OF SUPERVISORS
Gerald E. Connolly, Chairman
Sharon Bulova, Vice Chairman
Joan DuBois • Michael R. Frey
Penelope A. Gross • Catherine M. Hudgins
Gerry W. Hyland • Dana Kauffman
Elaine McConnell • Linda Smyth
ECONOMIC DEVELOPMENT AUTHORITY
COMMISSIONERS
Steven Davis, Chairman
Michael S. Horwatt, Vice Chairman
Ron Johnson • Mike Lewis • Ann Rodriguez
Sudhakar Shenoy • William Soza
ECONOMIC DEVELOPMENT AUTHORITY STAFF
Gerald L. Gordon, President and Chief Executive Officer
Robin Fenner, Vice President, Management
Catherine W. Riley, Vice President, Marketing &
Director, International Marketing
Barbara Cohen, Director, Administration
Alan Fogg, Director, Communications
Anita Grazer, Director, National Marketing
Ivy G. Richards, Director, Market Research & Real Estate
Karen Smaw, Director, Small & Minority
Business Development
BUSINESS VENTURES PRODUCTION
Lucy Arrington, Editor
Vicki L. Serraino, Graphic Designer
The FCEDA assists businesses interested in locating,
relocating or expanding their commercial office or
industrial operations in Fairfax County. FCEDA’s
services are available on a confidential, no-cost basis.
Top 10 Networking Mistakes
BUSINESS VENTURES • Copyright © 2005 FCEDA
One of the fundamentals of developing
strong business relationships is how well
you communicate with people—whether
it is verbal, written or face-to-face.
Whatever the form of communication,
there are myths, mistakes, and misconceptions about
the do’s and don’ts of communication when trying to
build business relationships.
When meeting someone for the first time, one should
be very conscious of their behavior before, during and
after the conversation because your approach and
demeanor will be noticed second only to your appearance.
What, why and how you say something will
often determine the basis of your future relationship,
so try to avoid the top 10 networking mistakes.
1. Being too quiet
The worst mistake anyone can make when meeting
someone for the first time is being too quiet. Though
it’s often awkward to meet complete strangers, be confident,
make eye contact, give a firm handshake and
don’t appear nervous. If you seem like someone they
can trust, they may want to conduct business with you.
Remember, building alliances is about communicating,
so take part in the conversation.
By Melvin Murphy, Founder, Institute for Partnership Solutions, Inc.
2. Talking too much
It’s customary to contribute to the conversation at
networking events, but there is no need to share your
entire life’s history. Be just interesting enough to encourage
people to want to ask questions. Talking too
much often communicates that you care more about
yourself than in meeting others. Ask good questions,
reflect what others are talking about, and seem genuinely
interested in them as people.
3. Being too pretentious
Let’s face it: many people like to be seen with the
“who’s who” crowd. There are those people who are
always interested in associating with very important
or affluent people. We learn this through peer pressure
in grade school. Don’t feel the need to compete with
others or their peer groups. Interact with those around
whom you feel comfortable and confident and who
share similar personal and business interests.
4. Conducting a cross-examination
If you’ve ever watched television shows like Law and Order
or The Practice, then you’ve seen how trial lawyers drill
witnesses with questions. However, this is not a good
idea in a social environment. A rule of thumb is to ask
three questions of interest to whomever you’re conversing
with. This will allow the conversation to continue without
awkward periods of silence and confirm that you are
interested in them and not just talking about yourself.
5. Interrupting
We all know that interrupting shows bad manners. If
you want to talk with someone who is currently talking
with others, the best thing to do is stand near them
so that they may see you waiting. They will choose
whether and when to end the conversation. Excuse
yourself for interrupting and state your question or
introduce yourself. Never interrupt someone and then
pull him or her to the side to ask a question.
6. Having a bad attitude
So, you had a bad day? We all have them once and
awhile. Don’t take your bad attitude with you to a
social event or business meeting. It will show, and it
won’t work in your favor. If your temperament is going
to distract you from making valuable contacts, then
it is best not to attend the event at all. People always
remember when they have been mistreated regardless
of the circumstances and first impressions are lasting.
7. Refusing to pay
Say you have networked and landed an opportunity
to have lunch or dinner with a person you have been
trying to meet. Lunch has been scheduled, it goes
smoothly, and then the bill comes. Who pays? To make
a positive impression on your new alliance, make an
offer to pay for lunch. Though usually the person who
requested the meeting should offer to pay, if this doesn’t
happen you should at least offer. Always be prepared to
pay in case the other person has as a different practice
than you (or is from a different culture).
8. Defaming others
Even if you have news about someone that you and
a business acquaintance are talking about, don’t be
tempted to gossip. It’s a small world, and badmouthing
someone can only come back to haunt you. Follow the
rule of thumb your mother taught you, “If you can’t
say something nice, then don’t say anything at all.”
9. Bringing up argumentative topics
We all have opinions—some we feel very passionately
about. Be careful what you offer an opinion on, especially
during initial meetings with people you don’t know well
and especially if you don’t know where they stand on certain
issues. In general, avoid controversial subjects such as
morality, politics and religion. When it comes to stating
opinion in business settings, usually less is better.
10. Neglecting to follow-up
You’ve made the commitment to attend the event. You’ve
done your homework. You’ve made a connection. Now,
follow-up: This is where many people fail to conclude
their process of building productive relationships. Always
follow-up with a call, email or thank-you letter.
The Lesson
These pitfalls are easy to avoid with a little preparation
and savvy. In general, always think on your feet, follow
your intuition about what is appropriate conduct and
always be positive and energetic. These simple tips
can make the difference in how you are perceived
and whether you establish and expand on a group of
beneficial and profitable alliances. ■
Melvin Murphy is a speaker, seminar leader and author of
It’s Who You Know! Creating Mentor-Based Alliances and
Partnerships through Networking! For more information,
call 703-352-9114 or visit www.partnershipsolutions.net.
FYI . . .
. . . The Fairfax County Economic Development
Authority (FCEDA), in partnership with the Virginia
Department of Business Assistance (DBA) and the U.S.
Small Business Administration (SBA), conducts a monthly
workshop for individuals interested in starting a business
in Fairfax County. The workshop provides an overview
of start-up basics (licenses and permits); DBA workforce
service and training programs; and SBA resources,
financing and certification programs. Workshops are
held the first Tuesday of each month from 8:00–10:00
AM. There is no cost to attend, but pre-registration is
required. The 2006 schedule is: January 10, February 7,
March 7, April 4, May, 2, June 6, September 12, October
3 and November 7. To register, contact the FCEDA at
703-790-0600 or visit Welcome to Fairfax County, Virginia
workshop_form.htm.
. . . The FCEDA provides business counseling services
through an arrangement with the Service Corps of
Retired Executives (SCORE), an SBA initiative. Victor
Brown, the FCEDA resident SCORE counselor is available
the first, second and third Friday of every month at FCEDA
headquarters. Sessions are one hour in length, but follow-
up appointments may be set up as needed. For more
information or for an appointment, call 703-790-0600.
. . . The Fairfax County Department of Purchasing
& Supply Management Agency, Office of
Small Business sponsors a free monthly workshop,
“Selling to Fairfax County.” Attendees meet staff from
the county’s purchasing department, learn about the
county’s procurement process and discuss upcoming
contracting opportunities. The workshops are held at
the Fairfax County Government Center. For 2006 dates
and more information, call 703-324-3201.
FINANCIAL FOCUS
3
Zen and the Art of M&A
By John Casey, Director, Small Business Development Center, Mason Enterprise Center, George Mason University
Copyright © 2005 FCEDA • BUSINESS VENTURES
Mergers and acquisitions—or M&A—
can be a very confusing process to
small business owners looking to
sell their companies. What are the
different kinds of transactions? How
can you negotiate from a position of strength? What
is “due diligence” anyway? Below are a few frequently
asked questions, and answers, about mergers and
acquisitions.
What are some of the considerations
at the beginning of the process?
Set your goals early in the process and establish expectations.
Identify your top priorities and understand
what you want from deal. Position the transaction to
your advantage before the deal dynamic gets started.
Immediately correct the buyer if a portion of the
proposal is way out of bounds. Don’t agree to a predeal
“no-shop” clause unless an incredible preemptive
price is offered.
Focus on integration issues early on in the process. Ideally
there is “mutual integration” where the combined
entity keeps best practices, best people, best systems but
this is a rare occurrence. Often the end result is “dominant
integration” where the bigger gorilla drives the
integration. The results can sometimes be painful.
What do I need to know about the prospective
buyer?
Study and understand the needs of the buyer—do the
research. Is the acquiring company interested in your
company for diversification, expansion or a market
beachhead? Find out what motivates the CEO. Explore
the prospective buyer’s market vision, marketing
experience, technology, R&D interest and distribution
channels. Look at the company’s cash flow, profits
and sales. Find out what board/shareholder/investor
approval is required on the acquirer’s side and what is
their desired timeframe for completing deal.
How long does it take to consummate
an M&A deal?
Selling a company is difficult, extremely time consuming
and stressful. It requires serious focus. The amount
of time to close a deal varies, but remember that a deal
is not done until it is final and the check clears. Forty
percent of deals fail after a letter of intent (LOI) has
been signed and the mortality rate between LOI and
closing is nearly 50 percent. Everyone talks about synergies,
but 60 to 70 percent of acquisitions are considered
failures.
How do I negotiate from a position of
strength?
When dealing with a potential buyer it is important
to negotiate from a position of strength. Let the buyer
know if there have been other potential buyers in the
wings and that the decision to sell is a choice on your
part. Establish time limits on response periods for offers
and counter offers. Try to make progress at each
stage of the negotiating process. Make compromises
when you can and ask for concessions you don’t really
want or expect as a negotiating tactic. Rarely should
you accept the first offer or counteroffer. Finally, be
aware of unethical buyer strategies such as “walk away
artists” who contact you with a material change hours
before closing.
What materials should I pull together
when I decide to sell?
Any prospective buyer will want a wide-range of
information about your company. Prepare a packet
that includes a company history, an organizational
chart, promotional materials, a sampling of media
articles and senior employee bios. Potential buyers
will also want to see a client list, price list and a list of
stockholders/debt holders. Any agreements regarding
employment, licensing, leasing, joint ventures, private
label deals or royalty agreements will need to be made
available.
Financial documents needed can include a current
balance sheet and income statement, bank statements
(for at least three years), personal financial statements
for company executives, liabilities/debts, cash flow and
contingent and unrecorded liabilities.
The purchaser will also be interested in your company’s
business plan, market/competition analysis, intellectual
property owned by the company, any potential
lawsuits and current contracts.
What is needed to get the best possible
letter of intent?
The Letter of Intent is one of the most important
documents in the M&A process. It is vital to get allimportant
issues nailed down in the letter, especially
concerning valuation. Other items to have in the letter
include price and terms, form of consideration (cash,
stock, note), contingencies, and an earn-out clause.
Although an LOI is non-binding and some firms don’t
take it seriously, you should!
What is due diligence and how do I prepare
for it?
Due diligence basically is a thorough investigation of
the operation, management and finances of your company.
Audit your readiness for due diligence. Are there
any balance sheet or operational exposures? Perform
a business review and critique your own projections.
Strive to have only positive surprises. Be forthright but
don’t be forthcoming. Other tips include maintaining
a single point of communications, using a specific “war
room” for due diligence work and keeping three copies
of all paperwork.
Why should I read the acquisition
agreement carefully?
The acquisition agreement (AKA the Definitive Agreement)
can contain some heart-stopping surprises so
you should read and understand every provision
including the purchase term; due diligence/closing
period; warranties; covenants; conditions to closing
and indemnifications.
How much attention should I pay to
tax consequences?
The after-tax consideration you receive post-sale
should be a very, very high priority. Be sure to get some
expert advice on tax ramifications before you sign the
LOI. Different deal structures vary dramatically, so
you must have a clear focus on net proceeds out of the
proposed deal from the beginning. For example, if the
acquirer purchases your assets, they get a tax benefit. If
you own an S Corporation the picture is mixed—some
gains are taxed as ordinary income, some as capital
gains. Be aware of the type of acquisition: asset versus
stock. There are widely varying tax results depending
on the type of acquisition. Keep after-tax results in
mind at all times.
What is the difference between asset
sale versus stock sale?
In a sale of assets you, the seller, have certain advantages.
You can maintain some assets such as selected
patents, trademarks and licenses. You keep the corporate
name and preserve the corporate status for future
endeavors. Some of the disadvantages are double
taxation (corporate at the time of liquidity and then
individually as shareholders), a more complicated
deal as specific assets must be transferred and the
calculation of gain/loss is more involved, depending
on asset category.
If the proposed sale is stock only, the seller gains many
advantages, including a clean break from the old
company. All liabilities, known and unknown, pass
to the new owner. Calculation of capital gain on the
stock is less cumbersome.
Disadvantages include losing use of net operating
losses against future income elsewhere. Usually all the
assets are included in the deal and you lose use of the
corporate name and all trademarks.
What advisers should I enlist for my
side of the negotiation?
One of your primary advisers should be someone
with plenty of M&A experience who can help you
maximize deal velocity, deal value and deal success.
Most professional M&A advisers will ask for a retainer
plus success fees. Be sure the adviser doesn’t get success
fee until you receive the compensation from buyer.
You’ll also need an attorney and an accountant who
understand potential tax consequences.
How do I mitigate employee concerns
over change and instability?
A potential merger or acquisition can be an unsettling
time for many employees. Try to be open and communicative
as much as possible. Give employees an
honest assessment of the situation and try to involve
them in the integration process. Offer them assurances
and, if need be, incentives.
For more information, contact John Casey at
[email protected].
Selling a company is difficult,
extremely time consuming and
stressful. It requires serious
focus.
TECHNOLOGY
Fairfax County Economic Development Authority
8300 Boone Boulevard, Suite 450
Vienna, VA 22182-2633
Presorted Standard
U.S. Postage
PAID
Permit No. 6353
Merrifield, VA 22116
Employees—Leave Your Gadgets Home!
By Joseph D. Grandinetti, Jr., Founder, Technology Counselor
In this age of digital information, the electronic
files and records of a business have become one of
its most important assets. Thus, the organization,
retention and security of business records and documents
should be essential goals of a business.
Information security (InfoSec) professionals sum up their
objectives as “C-I-A” which stands for “Confidentiality—
Integrity—Availability.” “Confidentiality” requires
that only those persons authorized to access information
can do so. “Integrity” requires that only those persons
authorized to modify information be permitted to do
so. And, “availability” requires that every person who
is permitted access to information can do so without
interruption. The connection to document organization
and retention is obvious. For example, if documents have
unauthorized alterations, they have no integrity and are
of no value as records or as evidence in litigation.
What does this have to do with employees and their gadgets?
The integrity of a business’s computer network can
become compromised by employees’ use of seemingly innocent
electronics. Gadgets represent any electronic device
that can connect to a work PC and/or to the company’s
network. The ubiquitous USB connection allows devices
such as cell phones, digital cameras, digital music players,
and “thumb drives” to connect to work PCs and to each
other. Even the new Xbox360, whose primary purpose is to
play videogames, comes equipped with USB ports and can
accept connections with music players and digital cameras.
Even the digital cable box on the top of your TV is likely to
have a USB port. And I haven’t even mentioned the many
devices using Bluetooth technology to connect wirelessly.
Every year, these gadgets get more powerful, their operating
systems (software) get more complex and susceptible to
malicious code, their storage capacities increase and their
ability to interact with PCs and networks gets easier.
Many of these devices are designed to be small and portable
substitutes for PCs. It is natural that criminals and hackers
will try to access the information contained on them.
Hackers can plant code that can later be “awakened”
and used to exploit weaknesses in operating systems and
applications. For example, keystroke logger programs
can record a user’s keystrokes and send the record to the
hacker, who then looks for passwords and other personal
information. Reston-based iDefense, a Verisign company,
reported on November 15, 2005, “that hackers are on
pace to unleash a record-setting 6,191 keyloggers in 2005,
a 65 percent increase from the 3,753 keyloggers released
in 2004 and significantly more than the 300 in 2000.”
Other types of attacks may come from seemingly
innocuous activities such as playing music CDs on
the company computer. In November 2005, Sony
embarrassingly admitted that its “XCP copy protection”
encoded on 49 different music CDs had exposed
purchasers who had played the disks on their PCs to
serious security risks. The program embeds itself deep
into the hard drive and uses “rootkit” techniques to
hide itself. To compound the problem, the removal
tool provided by Sony reportedly worsened the risk.
These security risks create an unnecessary expense in
wasted IT personnel time that could be better used
elsewhere. Hackers are in a constant battle with InfoSec
personnel, and InfoSec personnel don’t always
win. A hacker needs only one victory to be successful.
Anything less than 100 percent for the InfoSec personnel
is failure. We also know that the “new” hacker is
no longer some lonely teen in his room looking for a
thrill, but is most likely a criminal looking to benefit
financially. Just like the burglar who looks for unlocked
doors, the criminal hacker looks for easy and unnoticed
entry. Many businesses protect against external intrusions
with firewalls and intrusion detection devices,
but sometimes the most vulnerable attack is from the
inside. Most systems are not looking for malicious code
planted via a work PC. That is where the employee
gadget comes into play.
Employees are the unlocked door. Employees do things at
the office they know they shouldn’t, like opening e-mails
from unknown sources. How else can one explain the
reprise of the Sober worm on November 21, 2005, hiding
in e-mails purportedly from the FBI or ones promising
photos of Paris Hilton. It is being called the worst attack
of the year. It has spread because e-mails containing prior
versions of the Sober worm were previously opened. The
already infected computers sent e-mails that were then
opened by curious recipients. If the offense does not occur
in the office, many times it will happen at home—where
the users make the rules. Then, when employees attach
their mobile devices to their personal PCs, the code can
migrate. Malicious “mobile” code has been reported and,
as mobile device operating systems get closer to that of
PCs, the likelihood of migration will increase.
Where does this leave us? Supervisors and managers
should be willing to set strict limits on gadget usage
in the office. Will that make us unpopular? Only if
we do not explain the reasons for the ban. In fact, a
little employee education may save the company and
its employees a lot of heartache (see “Employee Training—
The Most Important Security Measure,” “Business
Ventures,” 3rd Quarter 2005).
A strong document retention and security policy can
mitigate some of these concerns.When drafting policies,
take into account security considerations, including
employee training. It is currently popular to direct the
legal department to draft a document retention policy,
but lawyers usually base their policies on recent cases
and legal trends. More often than not, the interplay
between information security (C-I-A) and document
retention is overlooked. ■
Joseph D. Grandinetti, Jr. teaches information security principles,
law and ethics at Keller Graduate School of Management
and is the founder of Technology Counselor. For more
information, visit technologycounselor.com or contact
Joe at 703-218-4199 or [email protected].
NETWORKING
Top 10 Networking Mistakes ........................................................................................................................ 2
FYI ........................................................................................................................................................... 2
FINANCIAL FOCUS
Zen and the Art of M&A .............................................................................................................................. 3
TECHNOLOGY
Employees—Leave Your Gadgets Home! ....................................................................................................... 4
BUSINESS VENTURES Fourth Quarter 2005
Integrated Marketing Communications—
An Effective, Comprehensive Approach
By Raul Danny Vargas, President, VARCom Solutions
Acritical part of marketing is communications—
and the most effective and
productive way of managing this effort
is through concept called Integrated
Marketing Communications (IMC).
But before we get too deep into the IMC process,
it is important to remind ourselves where it lays in
our overall marketing effort. We all remember the
four “Ps” from Marketing 101, but it is worth seeing
how they relate to the four “Cs” from the customer’s
perspective. The first “P” is product, but really this
is all about the customers’ needs and wants. Which
goods and services customers are looking for, what
are the features/benefits in demand, what might be
unfulfilled needs? The second “P” is price, but in fact,
this has more to do with the cost to the consumer.
What is their perception of value, how much are
they able/willing to spend? The third “P” is place
(or distribution), but what this means is the convenience
to the customer to obtain the product. Where
will it be sold, are there distribution channels, is the
process simple and secure? And last but not least, is
promotion, and you probably guessed, this is how we
communicate with our customers. To promote yourself
effectively, you need to understand your customers
and their perspectives.
There are many possible objectives for promoting
your organization—create awareness, stimulate demand,
identify prospects, retain customers, combat
the competition, etc. Whatever the objective,
a good rule of thumb is to remember that
your promotional efforts should capture the
customers’ attention, create interest, generate
a desire and define an action to satisfy
that desire—also known as
AIDA.
I n t e g r a t e d m a r k e t -
ing communications is
a way of looking at the
whole marketing process from the
viewpoint of the customer. It involves
the coordination of all promotional
Promotion
(Communication)
Place
(Convenience)
Product
(Customer)
Price
(Cost)
activities—media advertising, direct mail, personal
selling, sales promotion and public relations—to
produce a clear, unified, consistent and compelling
customer-focused message about the organizations
and its product. Databases, the Internet, and other
sources have enabled us to gather powerful information
quickly. Therefore, marketing communications
are less mass-market oriented (broadcast) and more
segment-oriented (narrowcast).
An effective IMC process comprises the following
steps:
• Identify the target audiences—This requires a
well thought out market segmentation and targeting
process which may include secondary and/or
primary market research.
• Determine the communications objectives—As
stated previously, this can range from generating
awareness to countering the competition.
• Design the messaging content—This is an absolutely
critical component. Effective messaging can
make or break a promotional effort.
• Select the means for communications.
• Define the mix of media, budget and priorities.
• Measure the effectiveness of the efforts.
Marketing communications comprises five broad categories:
personal selling, advertising, public relations,
direct marketing and sales promotions. Each has its
own set of pros and cons and can be accomplished
in a variety of ways. However, the key is to look
at the available options in a comprehensive way
and to ensure consistency throughout the
selected media.
The selection of communications
methods
is subject to a variety
of factors. The factors
that influence the selection and effectiveness
of a promotional mix include:
• Nature of the market (market size, geographic
scope, type of customer, etc.)
• Nature of the product (complexity of the product,
service requirements, etc.)
• Stage in the product life-cycle (earlier versus later
stages of the life cycle)
• Price (high versus low unit price)
• Funds available for promotion
This funding point is very relevant to all companies. Budgeting
is an essential function of the IMC process. The
following items impact the budget determinations:
• Percentage-of-sales method (a specified percentage
of either past or forecasted sales)
• Fixed-sum-per-unit method (predetermined dollar
amount for each unit sold or produced)
• Meeting competition method (match competitor’s
promotional outlays)
• Task-objective method (amount and type of promotional
spending needed to achieve promotional
objectives)
Execution of the IMC plan also involves an evaluation
process to ensure the effectiveness of the effort.
There are two basic measurement tools. One is direct
sales results in which you measure the effectiveness
by identifying the specific impact on sales revenue
for each dollar of promotional spending. The other
is an indirect evaluation where you focus on certain
measurable indicators of effectiveness.
Studies confirm that brand equity can be enhanced
by pursuing a strategy that integrates the various marketing
communications tools. While an IMC effort
requires some work up front, the benefit will make it
worthwhile. ■
Danny Vargas is president of VARCom Solutions (www.
varcom.com), a full-service marketing and sales consultancy
and training firm. For more information, contact him at 571-
434-8466 or [email protected].
Customers
Advertising
Publicity
Personal
Selling
Trade
Shows
Product
Placement
Etc., etc.,
etc.
Public
Relations
Branding
Sales
Promotion
Direct
Marketing
Interactive
Media
Sponsorship
NETWORKING
2
FAIRFAX COUNTY
ECONOMIC DEVELOPMENT AUTHORITY
8300 Boone Boulevard, Suite 450
Vienna, Virginia 22182-2633
Voice 703-790-0600 • Fax 703-893-1269
E-mail [email protected]
URL Welcome to Fairfax County, Virginia
The Fairfax County Economic Development Authority
(FCEDA) is an independent authority created under
state law, operating under the direction of seven
Commissioners appointed by the Fairfax County
Board of Supervisors. Its activities are funded
by Fairfax County.
COUNTY BOARD OF SUPERVISORS
Gerald E. Connolly, Chairman
Sharon Bulova, Vice Chairman
Joan DuBois • Michael R. Frey
Penelope A. Gross • Catherine M. Hudgins
Gerry W. Hyland • Dana Kauffman
Elaine McConnell • Linda Smyth
ECONOMIC DEVELOPMENT AUTHORITY
COMMISSIONERS
Steven Davis, Chairman
Michael S. Horwatt, Vice Chairman
Ron Johnson • Mike Lewis • Ann Rodriguez
Sudhakar Shenoy • William Soza
ECONOMIC DEVELOPMENT AUTHORITY STAFF
Gerald L. Gordon, President and Chief Executive Officer
Robin Fenner, Vice President, Management
Catherine W. Riley, Vice President, Marketing &
Director, International Marketing
Barbara Cohen, Director, Administration
Alan Fogg, Director, Communications
Anita Grazer, Director, National Marketing
Ivy G. Richards, Director, Market Research & Real Estate
Karen Smaw, Director, Small & Minority
Business Development
BUSINESS VENTURES PRODUCTION
Lucy Arrington, Editor
Vicki L. Serraino, Graphic Designer
The FCEDA assists businesses interested in locating,
relocating or expanding their commercial office or
industrial operations in Fairfax County. FCEDA’s
services are available on a confidential, no-cost basis.
Top 10 Networking Mistakes
BUSINESS VENTURES • Copyright © 2005 FCEDA
One of the fundamentals of developing
strong business relationships is how well
you communicate with people—whether
it is verbal, written or face-to-face.
Whatever the form of communication,
there are myths, mistakes, and misconceptions about
the do’s and don’ts of communication when trying to
build business relationships.
When meeting someone for the first time, one should
be very conscious of their behavior before, during and
after the conversation because your approach and
demeanor will be noticed second only to your appearance.
What, why and how you say something will
often determine the basis of your future relationship,
so try to avoid the top 10 networking mistakes.
1. Being too quiet
The worst mistake anyone can make when meeting
someone for the first time is being too quiet. Though
it’s often awkward to meet complete strangers, be confident,
make eye contact, give a firm handshake and
don’t appear nervous. If you seem like someone they
can trust, they may want to conduct business with you.
Remember, building alliances is about communicating,
so take part in the conversation.
By Melvin Murphy, Founder, Institute for Partnership Solutions, Inc.
2. Talking too much
It’s customary to contribute to the conversation at
networking events, but there is no need to share your
entire life’s history. Be just interesting enough to encourage
people to want to ask questions. Talking too
much often communicates that you care more about
yourself than in meeting others. Ask good questions,
reflect what others are talking about, and seem genuinely
interested in them as people.
3. Being too pretentious
Let’s face it: many people like to be seen with the
“who’s who” crowd. There are those people who are
always interested in associating with very important
or affluent people. We learn this through peer pressure
in grade school. Don’t feel the need to compete with
others or their peer groups. Interact with those around
whom you feel comfortable and confident and who
share similar personal and business interests.
4. Conducting a cross-examination
If you’ve ever watched television shows like Law and Order
or The Practice, then you’ve seen how trial lawyers drill
witnesses with questions. However, this is not a good
idea in a social environment. A rule of thumb is to ask
three questions of interest to whomever you’re conversing
with. This will allow the conversation to continue without
awkward periods of silence and confirm that you are
interested in them and not just talking about yourself.
5. Interrupting
We all know that interrupting shows bad manners. If
you want to talk with someone who is currently talking
with others, the best thing to do is stand near them
so that they may see you waiting. They will choose
whether and when to end the conversation. Excuse
yourself for interrupting and state your question or
introduce yourself. Never interrupt someone and then
pull him or her to the side to ask a question.
6. Having a bad attitude
So, you had a bad day? We all have them once and
awhile. Don’t take your bad attitude with you to a
social event or business meeting. It will show, and it
won’t work in your favor. If your temperament is going
to distract you from making valuable contacts, then
it is best not to attend the event at all. People always
remember when they have been mistreated regardless
of the circumstances and first impressions are lasting.
7. Refusing to pay
Say you have networked and landed an opportunity
to have lunch or dinner with a person you have been
trying to meet. Lunch has been scheduled, it goes
smoothly, and then the bill comes. Who pays? To make
a positive impression on your new alliance, make an
offer to pay for lunch. Though usually the person who
requested the meeting should offer to pay, if this doesn’t
happen you should at least offer. Always be prepared to
pay in case the other person has as a different practice
than you (or is from a different culture).
8. Defaming others
Even if you have news about someone that you and
a business acquaintance are talking about, don’t be
tempted to gossip. It’s a small world, and badmouthing
someone can only come back to haunt you. Follow the
rule of thumb your mother taught you, “If you can’t
say something nice, then don’t say anything at all.”
9. Bringing up argumentative topics
We all have opinions—some we feel very passionately
about. Be careful what you offer an opinion on, especially
during initial meetings with people you don’t know well
and especially if you don’t know where they stand on certain
issues. In general, avoid controversial subjects such as
morality, politics and religion. When it comes to stating
opinion in business settings, usually less is better.
10. Neglecting to follow-up
You’ve made the commitment to attend the event. You’ve
done your homework. You’ve made a connection. Now,
follow-up: This is where many people fail to conclude
their process of building productive relationships. Always
follow-up with a call, email or thank-you letter.
The Lesson
These pitfalls are easy to avoid with a little preparation
and savvy. In general, always think on your feet, follow
your intuition about what is appropriate conduct and
always be positive and energetic. These simple tips
can make the difference in how you are perceived
and whether you establish and expand on a group of
beneficial and profitable alliances. ■
Melvin Murphy is a speaker, seminar leader and author of
It’s Who You Know! Creating Mentor-Based Alliances and
Partnerships through Networking! For more information,
call 703-352-9114 or visit www.partnershipsolutions.net.
FYI . . .
. . . The Fairfax County Economic Development
Authority (FCEDA), in partnership with the Virginia
Department of Business Assistance (DBA) and the U.S.
Small Business Administration (SBA), conducts a monthly
workshop for individuals interested in starting a business
in Fairfax County. The workshop provides an overview
of start-up basics (licenses and permits); DBA workforce
service and training programs; and SBA resources,
financing and certification programs. Workshops are
held the first Tuesday of each month from 8:00–10:00
AM. There is no cost to attend, but pre-registration is
required. The 2006 schedule is: January 10, February 7,
March 7, April 4, May, 2, June 6, September 12, October
3 and November 7. To register, contact the FCEDA at
703-790-0600 or visit Welcome to Fairfax County, Virginia
workshop_form.htm.
. . . The FCEDA provides business counseling services
through an arrangement with the Service Corps of
Retired Executives (SCORE), an SBA initiative. Victor
Brown, the FCEDA resident SCORE counselor is available
the first, second and third Friday of every month at FCEDA
headquarters. Sessions are one hour in length, but follow-
up appointments may be set up as needed. For more
information or for an appointment, call 703-790-0600.
. . . The Fairfax County Department of Purchasing
& Supply Management Agency, Office of
Small Business sponsors a free monthly workshop,
“Selling to Fairfax County.” Attendees meet staff from
the county’s purchasing department, learn about the
county’s procurement process and discuss upcoming
contracting opportunities. The workshops are held at
the Fairfax County Government Center. For 2006 dates
and more information, call 703-324-3201.
FINANCIAL FOCUS
3
Zen and the Art of M&A
By John Casey, Director, Small Business Development Center, Mason Enterprise Center, George Mason University
Copyright © 2005 FCEDA • BUSINESS VENTURES
Mergers and acquisitions—or M&A—
can be a very confusing process to
small business owners looking to
sell their companies. What are the
different kinds of transactions? How
can you negotiate from a position of strength? What
is “due diligence” anyway? Below are a few frequently
asked questions, and answers, about mergers and
acquisitions.
What are some of the considerations
at the beginning of the process?
Set your goals early in the process and establish expectations.
Identify your top priorities and understand
what you want from deal. Position the transaction to
your advantage before the deal dynamic gets started.
Immediately correct the buyer if a portion of the
proposal is way out of bounds. Don’t agree to a predeal
“no-shop” clause unless an incredible preemptive
price is offered.
Focus on integration issues early on in the process. Ideally
there is “mutual integration” where the combined
entity keeps best practices, best people, best systems but
this is a rare occurrence. Often the end result is “dominant
integration” where the bigger gorilla drives the
integration. The results can sometimes be painful.
What do I need to know about the prospective
buyer?
Study and understand the needs of the buyer—do the
research. Is the acquiring company interested in your
company for diversification, expansion or a market
beachhead? Find out what motivates the CEO. Explore
the prospective buyer’s market vision, marketing
experience, technology, R&D interest and distribution
channels. Look at the company’s cash flow, profits
and sales. Find out what board/shareholder/investor
approval is required on the acquirer’s side and what is
their desired timeframe for completing deal.
How long does it take to consummate
an M&A deal?
Selling a company is difficult, extremely time consuming
and stressful. It requires serious focus. The amount
of time to close a deal varies, but remember that a deal
is not done until it is final and the check clears. Forty
percent of deals fail after a letter of intent (LOI) has
been signed and the mortality rate between LOI and
closing is nearly 50 percent. Everyone talks about synergies,
but 60 to 70 percent of acquisitions are considered
failures.
How do I negotiate from a position of
strength?
When dealing with a potential buyer it is important
to negotiate from a position of strength. Let the buyer
know if there have been other potential buyers in the
wings and that the decision to sell is a choice on your
part. Establish time limits on response periods for offers
and counter offers. Try to make progress at each
stage of the negotiating process. Make compromises
when you can and ask for concessions you don’t really
want or expect as a negotiating tactic. Rarely should
you accept the first offer or counteroffer. Finally, be
aware of unethical buyer strategies such as “walk away
artists” who contact you with a material change hours
before closing.
What materials should I pull together
when I decide to sell?
Any prospective buyer will want a wide-range of
information about your company. Prepare a packet
that includes a company history, an organizational
chart, promotional materials, a sampling of media
articles and senior employee bios. Potential buyers
will also want to see a client list, price list and a list of
stockholders/debt holders. Any agreements regarding
employment, licensing, leasing, joint ventures, private
label deals or royalty agreements will need to be made
available.
Financial documents needed can include a current
balance sheet and income statement, bank statements
(for at least three years), personal financial statements
for company executives, liabilities/debts, cash flow and
contingent and unrecorded liabilities.
The purchaser will also be interested in your company’s
business plan, market/competition analysis, intellectual
property owned by the company, any potential
lawsuits and current contracts.
What is needed to get the best possible
letter of intent?
The Letter of Intent is one of the most important
documents in the M&A process. It is vital to get allimportant
issues nailed down in the letter, especially
concerning valuation. Other items to have in the letter
include price and terms, form of consideration (cash,
stock, note), contingencies, and an earn-out clause.
Although an LOI is non-binding and some firms don’t
take it seriously, you should!
What is due diligence and how do I prepare
for it?
Due diligence basically is a thorough investigation of
the operation, management and finances of your company.
Audit your readiness for due diligence. Are there
any balance sheet or operational exposures? Perform
a business review and critique your own projections.
Strive to have only positive surprises. Be forthright but
don’t be forthcoming. Other tips include maintaining
a single point of communications, using a specific “war
room” for due diligence work and keeping three copies
of all paperwork.
Why should I read the acquisition
agreement carefully?
The acquisition agreement (AKA the Definitive Agreement)
can contain some heart-stopping surprises so
you should read and understand every provision
including the purchase term; due diligence/closing
period; warranties; covenants; conditions to closing
and indemnifications.
How much attention should I pay to
tax consequences?
The after-tax consideration you receive post-sale
should be a very, very high priority. Be sure to get some
expert advice on tax ramifications before you sign the
LOI. Different deal structures vary dramatically, so
you must have a clear focus on net proceeds out of the
proposed deal from the beginning. For example, if the
acquirer purchases your assets, they get a tax benefit. If
you own an S Corporation the picture is mixed—some
gains are taxed as ordinary income, some as capital
gains. Be aware of the type of acquisition: asset versus
stock. There are widely varying tax results depending
on the type of acquisition. Keep after-tax results in
mind at all times.
What is the difference between asset
sale versus stock sale?
In a sale of assets you, the seller, have certain advantages.
You can maintain some assets such as selected
patents, trademarks and licenses. You keep the corporate
name and preserve the corporate status for future
endeavors. Some of the disadvantages are double
taxation (corporate at the time of liquidity and then
individually as shareholders), a more complicated
deal as specific assets must be transferred and the
calculation of gain/loss is more involved, depending
on asset category.
If the proposed sale is stock only, the seller gains many
advantages, including a clean break from the old
company. All liabilities, known and unknown, pass
to the new owner. Calculation of capital gain on the
stock is less cumbersome.
Disadvantages include losing use of net operating
losses against future income elsewhere. Usually all the
assets are included in the deal and you lose use of the
corporate name and all trademarks.
What advisers should I enlist for my
side of the negotiation?
One of your primary advisers should be someone
with plenty of M&A experience who can help you
maximize deal velocity, deal value and deal success.
Most professional M&A advisers will ask for a retainer
plus success fees. Be sure the adviser doesn’t get success
fee until you receive the compensation from buyer.
You’ll also need an attorney and an accountant who
understand potential tax consequences.
How do I mitigate employee concerns
over change and instability?
A potential merger or acquisition can be an unsettling
time for many employees. Try to be open and communicative
as much as possible. Give employees an
honest assessment of the situation and try to involve
them in the integration process. Offer them assurances
and, if need be, incentives.
For more information, contact John Casey at
[email protected].
Selling a company is difficult,
extremely time consuming and
stressful. It requires serious
focus.
TECHNOLOGY
Fairfax County Economic Development Authority
8300 Boone Boulevard, Suite 450
Vienna, VA 22182-2633
Presorted Standard
U.S. Postage
PAID
Permit No. 6353
Merrifield, VA 22116
Employees—Leave Your Gadgets Home!
By Joseph D. Grandinetti, Jr., Founder, Technology Counselor
In this age of digital information, the electronic
files and records of a business have become one of
its most important assets. Thus, the organization,
retention and security of business records and documents
should be essential goals of a business.
Information security (InfoSec) professionals sum up their
objectives as “C-I-A” which stands for “Confidentiality—
Integrity—Availability.” “Confidentiality” requires
that only those persons authorized to access information
can do so. “Integrity” requires that only those persons
authorized to modify information be permitted to do
so. And, “availability” requires that every person who
is permitted access to information can do so without
interruption. The connection to document organization
and retention is obvious. For example, if documents have
unauthorized alterations, they have no integrity and are
of no value as records or as evidence in litigation.
What does this have to do with employees and their gadgets?
The integrity of a business’s computer network can
become compromised by employees’ use of seemingly innocent
electronics. Gadgets represent any electronic device
that can connect to a work PC and/or to the company’s
network. The ubiquitous USB connection allows devices
such as cell phones, digital cameras, digital music players,
and “thumb drives” to connect to work PCs and to each
other. Even the new Xbox360, whose primary purpose is to
play videogames, comes equipped with USB ports and can
accept connections with music players and digital cameras.
Even the digital cable box on the top of your TV is likely to
have a USB port. And I haven’t even mentioned the many
devices using Bluetooth technology to connect wirelessly.
Every year, these gadgets get more powerful, their operating
systems (software) get more complex and susceptible to
malicious code, their storage capacities increase and their
ability to interact with PCs and networks gets easier.
Many of these devices are designed to be small and portable
substitutes for PCs. It is natural that criminals and hackers
will try to access the information contained on them.
Hackers can plant code that can later be “awakened”
and used to exploit weaknesses in operating systems and
applications. For example, keystroke logger programs
can record a user’s keystrokes and send the record to the
hacker, who then looks for passwords and other personal
information. Reston-based iDefense, a Verisign company,
reported on November 15, 2005, “that hackers are on
pace to unleash a record-setting 6,191 keyloggers in 2005,
a 65 percent increase from the 3,753 keyloggers released
in 2004 and significantly more than the 300 in 2000.”
Other types of attacks may come from seemingly
innocuous activities such as playing music CDs on
the company computer. In November 2005, Sony
embarrassingly admitted that its “XCP copy protection”
encoded on 49 different music CDs had exposed
purchasers who had played the disks on their PCs to
serious security risks. The program embeds itself deep
into the hard drive and uses “rootkit” techniques to
hide itself. To compound the problem, the removal
tool provided by Sony reportedly worsened the risk.
These security risks create an unnecessary expense in
wasted IT personnel time that could be better used
elsewhere. Hackers are in a constant battle with InfoSec
personnel, and InfoSec personnel don’t always
win. A hacker needs only one victory to be successful.
Anything less than 100 percent for the InfoSec personnel
is failure. We also know that the “new” hacker is
no longer some lonely teen in his room looking for a
thrill, but is most likely a criminal looking to benefit
financially. Just like the burglar who looks for unlocked
doors, the criminal hacker looks for easy and unnoticed
entry. Many businesses protect against external intrusions
with firewalls and intrusion detection devices,
but sometimes the most vulnerable attack is from the
inside. Most systems are not looking for malicious code
planted via a work PC. That is where the employee
gadget comes into play.
Employees are the unlocked door. Employees do things at
the office they know they shouldn’t, like opening e-mails
from unknown sources. How else can one explain the
reprise of the Sober worm on November 21, 2005, hiding
in e-mails purportedly from the FBI or ones promising
photos of Paris Hilton. It is being called the worst attack
of the year. It has spread because e-mails containing prior
versions of the Sober worm were previously opened. The
already infected computers sent e-mails that were then
opened by curious recipients. If the offense does not occur
in the office, many times it will happen at home—where
the users make the rules. Then, when employees attach
their mobile devices to their personal PCs, the code can
migrate. Malicious “mobile” code has been reported and,
as mobile device operating systems get closer to that of
PCs, the likelihood of migration will increase.
Where does this leave us? Supervisors and managers
should be willing to set strict limits on gadget usage
in the office. Will that make us unpopular? Only if
we do not explain the reasons for the ban. In fact, a
little employee education may save the company and
its employees a lot of heartache (see “Employee Training—
The Most Important Security Measure,” “Business
Ventures,” 3rd Quarter 2005).
A strong document retention and security policy can
mitigate some of these concerns.When drafting policies,
take into account security considerations, including
employee training. It is currently popular to direct the
legal department to draft a document retention policy,
but lawyers usually base their policies on recent cases
and legal trends. More often than not, the interplay
between information security (C-I-A) and document
retention is overlooked. ■
Joseph D. Grandinetti, Jr. teaches information security principles,
law and ethics at Keller Graduate School of Management
and is the founder of Technology Counselor. For more
information, visit technologycounselor.com or contact
Joe at 703-218-4199 or [email protected].