B2b Illinois - August 31, 2008

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The Weekly Business-to-Business Forum Editor: Andrew Wheeler 815-929-5416 [email protected] B2B Illinois is a product of The Daily Journal Advertising Department.

Four Factors that will Continue Export Sector Surge Dr. Chris Kuehl | B2B contributor

There have been new records set in exporting every month for over two years, and in July, the United States even managed to make some inroads on its trade deficit. The reason for all this activity is obvious—a weaker dollar has meant that virtually every U.S. good is being sold overseas at a 30 percent discount. This helps manufacturers get past high tariff barriers, consumer resistance, and competition to build volume in foreign sales. Will the current U.S. export boom continue, even when the weak U.S. dollar recovers? Many ask, “What happens when the dollar starts to recover?”

Granted, this may take a while, but recently the Euro sank a little as analysts in Europe noted that its central bank is getting a little nervous about growth. So, will there be an export boom when the dollar regains some of its luster? Here are four key reasons why there will still be export growth, regardless of the relative Euro and dollar strength:

Energy Costs

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The current system of export trade is predicated on costs of transportation as they were 10 years ago. Those days are gone, which will place more emphasis on being closer to one's supply chain. That means U.S. manufacturers will see more business across the borders of the United States—both coming and going. The nations of Latin America will become more complete customers for the United States.

Increased Sophistication of U.S. Manufacturers Overseas Companies that started with some tradeshow and Internet orders have often taken this to the next level. There are sales organizations in place, contacts have been made, and overseas consumers now have experience and familiarity with U.S. products. The weak dollar allowed a foothold, and companies have leveraged it from there.

Changes among Foreign Manufacturers Changes have occurred in countries that have evolved as manufacturing bases. They are experiencing the challenges of development— higher inflation, shortage of qualified workers, shortage of management skill, and societal demands that could affect their competitiveness. The advantages that these countries once had in terms of production costs have been eroding, bringing these nations much closer to United States and European costs than before.

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global consumers are interested in and have the wherewithal to buy U.S.-made products. The old markets used to be confined mostly to Europe, but now there is demand from Latin America, South Asia, East Asia, and even parts of Africa. The ability of consumers in most of the world to afford U.S.-made products has expanded dramatically, and also created a whole new set of opportunities in countries that only played marginal export roles in the past.

Dr. Chris Kuehl is an economic analyst for the Fabricators & Manufacturers Association, Intl. (FMA) based in Rockford, Il.

With more money in overseas markets than there used to be,

Helping Local Business to Bloom: Governors State University’s CenterPoint and College of Business and Public Administration Eric Matanyi | B2B contributor

Bruce and Lee Ann Bultema had an exceptional spring season at their Beecher nursery, Windmill Acres. The plants they nurtured throughout the winter flew off the greenhouse shelves as customers from Kankakee to Orland Park and from Crown Point to Joliet sought both popular and hard-to-find bedding plants for their homes. As business bloomed, the duo recognized the need to expand. They visited The CenterPoint for Entrepreneurs at Governors State University seeking funding to help double their greenhouse space. As the CenterPoint consultants evaluated the business’ financial statements, they discovered that the Bultemas were having difficulty with their financial statements. A closer look revealed that the entrepreneurs had always managed their books by hand and weren’t able to successfully transfer the records into QuickBooks accounting software. In fact, the Bultemas didn’t know quite how their finances looked for the year. At the same time, Dr. Tony Fontana, accounting professor in the university’s College of Business and Public Administration,

approached the center when looking for a real-life project to use for his Cost Accounting class. Fontana had contacted CenterPoint on several previous occasions looking for projects for his upper level classes, and had become a strong proponent of the connection between CenterPoint and the college. “CenterPoint is a vital resource for the faculty and students of the business school. We’ve had great success exposing students to reallife experiences through collaboration with the center,” Fontana said. “They learn what accountants really do for their clients. In the past, some students have even found jobs through these projects. With CenterPoint’s reach in the community and their willingness to assist during the project, we’ve always had a great experience for the students and real value for the clients.” GSU students Babatunde Akintayo and Naveed Karim, with Fontana’s help, investigated and identified some of the accounting issues and even offered helpful hints on how to operate the business more efficiently. They helped the Bultemas make sense of QuickBooks and set up a system for costing inventory—which is difficult due to the long growing season and the somewhat hidden costs of growing product.

“It was exciting to really help a business by applying what we had learned in class. I really understand some of the accounting issues better because of the project,” said Babatunde. With their financial statements up to date, the CenterPoint counselors were able to prepare the Bultemas to approach a bank for financing. “The combination of CenterPoint’s resources and the assistance from Dr. Fontana’s students really helped us get a handle on our business. I’d still be trying to make sense of our finances if it wasn’t for them,” noted Bruce Bultema. Eric Matanyi is director of public affairs and marketing for GSU. For more information on The CenterPoint’s free business consulting services, call 708.534.4929 or visit www.centerpointgsu.com. Clients in Kankakee or Iroquois County interested in services can obtain information by calling Ken Crite of the Illinois SBDC at Kankakee Community College, at 815.802.8220.

Ask the Professor

Common Sense and Nonsense—What’s a Manager to Believe? Dr. Don Daake | B2B contributor

There is no shortage of business advice today. Daily, managers are bombarded with books, articles, training company brochures, and consultant proposals, all promising solutions to whatever ails their business. Eminent Stanford University Business Professors Jeffrey Pfeffer and Robert I. Sutton point out that, not only is there an abundance of advice, but that most of it is not really new or particularly useful. Pfeffer states “instead of being interested in what is new, we ought to be interested in what is true.” Sutton chimes in, “If you think that you have a new idea, you are wrong. Someone probably already had it. This idea isn’t original either. I stole it from someone else.” Pfeffer and Sutton estimate that there are over 30,000 business book titles in print and that 3,500 titles are added each year, in addition to the thousands of articles in journals, magazines and newspapers. As managers we habitually crave simple solutions to complex problems. Authors and consultants all seem to have their list of four, five, seven or even 10 recommendations that if we but follow will take us to Business Nirvana. Now that is not to say that managers don’t need fresh ideas and new perspectives, but as Pfeffer and Sutton point out, a lot of what is recommended is half-truth and simply non-sense. Much of the expert advice is contradictory. As a busi-

ness professor myself, and someone who earlier in my career developed hundreds of training programs that educated thousands of managers, I honestly believe that there is great value in learning and applying knowledge. But I agree with Pfeffer and Sutton that we must approach the myriad of suggestions with skepticism. Furthermore, we should demand evidence that what is being recommended actually works in the long-term. It is one thing to go to a motivation seminar, for example, and feel good for a day or two, but quite another to permanently change behavior or the culture of our organization. So how should you go about judging what is good and worthy of your time and attention? At the risk of falling into my own trap of giving a list, let me suggest four criteria that you can apply. 1. Consider the source. What is the background of the author or consultant? Do they have 30 years of experience, or one year of experience 30 times? Is the advice they are suggesting based on solid experience AND research, or is it just the latest fad? For example, the very readable and popular book Good to Great by Jim Collins was based on a multi-year research project and represents thousands of hours of research time. Thus it provides invaluable advice based on the type of evidence Pfeffer and Sutton condone. 2. Beware of any book, seminar, or article that provides easy

answers or “breakthroughs” that are claimed to be unique. Virtually all business advice needs to be placed in the context of what has already been proven to be true. 3. Pfeffer and Sutton suggest that rather than celebrating individuals and management gurus, we celebrate communities of smart people and collective brilliance. Judge the advice in light of what your colleagues, peers, and even competitors have found to work. 4. Look to advice that not only focuses on what works but clearly states what doesn’t work. Too often books and articles focus on what it takes to win. It is equally valuable to learn what it takes to avoid losing. In summary, when it comes to vetting the vast amount of ideas and advice available to us today, be vigilant and skeptical without becoming cynical.

Dr. Daake is a professor of business and director of the Donald H. Weber Leadership Center at Olivet Nazarene University. He can be reached at [email protected] or 815.939.5137.

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