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November 2011 OFDealer

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OFDealer's November 2011 issue from the Office Furniture Dealers Alliance

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six matching mesh & fabric colors!

BIFMA September Numbers: Orders Up 1%;Shipments Up 8%Last month, the Business and Institutional Furniture Manufac-turers Association (BIFMA) released its statistics for Septemberand while the numbers managed to stay in the plus column,they showed the momentum of the past few months may bestarting to slow.

BIFMA said September orders were up just 1% compared tothe same month last year, down from August’s 5% increase.September shipments increased 8% year-over-year, also downfrom last month’s 16% gain.

September marked the first single-digit percentage increase inindustry shipments since August 2010, noted industry analystBudd Bugatch of the Raymond James investment house.

Bugatch said the September numbers were “a bit below our ex-pectations” and suggested prior year order growth comparisonswill remain difficult for the next several months. He said order growthwill likely hover around the flat line, plus or minus a few percent.

The key macroeconomic determinants of office furniture con-sumption remain decidedly mixed, Bugatch contended. “Posi-tively, corporate profits/balance sheets are strong; however,business confidence is waning and new hiring has been sub-dued,” he noted.

In addition, Bugatch said that while new office construction ap-pears to have stabilized somewhat, it seems unlikely to recoverrapidly and the Architects’ Billing Index (a leading industry indi-cator) plunged to 46.9 in September after a rebound above 50in August (Any score above 50 indicates an increase in billings).

“Our positive industry thesis rests on our view that the broadeconomy will continue to ‘muddle through’ and will avoid a dou-ble dip recession. We continue to believe that the industry is inthe early-to-mid innings of a mult-iyear expansion, though acknowledge that sustainable growth over the longer term willultimately require better job growth and more significant netabsorption of office space,” Bugatch said.

ECi Hosts Over 800 System Users at 2011 Connect ConferenceDealer technology provider eCommerce Industries, makers ofTeam Design and the DDMS Furniture Module among other pro-grams, hosted more than 800 attendees earlier this month at itsConnect 2011 national user conference.

Attendees came from 48 states and eight countries at the eventwhich brought together systems users from all the business

continued on page X

Taking on New Products orServices: How Do You Know WhatWill Work?As this month’s cover story indicates, most deal-ers today have recognized the need to go be-yond their traditional business model and many

of them have already added new products andservices to strengthen their position as a total solutions provider fortheir customers.

It’s a great idea, particularly when the core furniture product marketremains stubbornly soft for many. But with such a broad range ofnew product and service options out there, how do you determinewhich ones make most sense for your own business?

Earlier this year, consultant Jim Heilborn offered some answers to thatquestion as part of an article he contributed to our April issue on devel-oping a sustainable business model. It’s worth revisiting some of whathe had to say in the context of this month’s cover story.

Working from Jim’s points, here are some questions to ask aboutany new product/service opportunity you may be considering:

� Is there likely to be a long-term sustainable need for it?

� Do we have the internal resources—financial, facilities and equipment, personnel—to provide this product/serviceeffectively?

� Does our staff have enough training to offer this product/service?

� Do any aspects of the new offering hold outsourcing oppor-tunities, to minimize our initial investment?

� How will it impact cash flow?

� How will it impact our current internal processes?

� Is there actually enough profit to make it worthwhile?

� What is the downside for our business to deciding not to pur-sue this particular product/service opportunity?

Basic questions, maybe, but you absolutely need good answers forthem all before proceeding if your new venture is going to meet ex-pectations.

Hopefully, some of the new avenues explored in this month’s coverstory will spark a few ideas to consider for your own dealership. Andif you’re not sure the time is right, perhaps you might want to askwhat well may be the most important question of all: If I’m not look-ing for new product and/or service opportunities in these challeng-ing times, how likely is it that my competition is?

NOVEMBER 2011 OFDEALER PAGE 3

continued on page 4

Simon De Groot

Industry News continued from page 3

NOVEMBER 2011 OFDEALER PAGE 4

sectors ECi serves. Also on display: 43 vendor partners of ECi, pro-viding related products, programs and services.

“Everyone involved with this conference had a great experience,” saidRon Books, president and CEO of ECi. “It was a huge success for ourcustomers, our staff and the partners who participated.”

Added Traci Johnson, ECi SVP of global marketing, “Another greatbenefit of the conference was the opportunity for our customers toconnect with each other. They really enjoyed meeting fellow users oftheir software solutions and educating each other on best practicesand problem solving.”

The Connect conference provided attendees with in-depth training ontheir specific software and also a chance to learn about solutions thatintegrate with their software. Additionally, many attendees commentedon how much they enjoyed meeting not only fellow users of their par-ticular software, but also users of the other solutions ECi provides. “Ithink our customers were really amazed and delighted to discover thehuge community of which they are a part,” continued Johnson.

“I really enjoyed the three days I spent at the ECI Connect confer-ence,” commented Mark Lorenson, network administrator at Her-man Miller dealer Intereum in Plymouth, MN. “I was able to networkwith my peers, gain valuable knowledge about ECI and get a betterunderstand about TeamDesign's vision for the future.”

New Study Finds More Mobile Workers Choosing toWork at the OfficeA new study released by Steelcase in partnership with CoreNet Globallast month shows that even though technology and alternative workstrategies are freeing people to work just about anywhere, the majorityof employees are still choosing to work in the office.

The study found that 86% of companies now offer alternative workstrategies such as home offices, hoteling and mobile work, up from50% in 2009.

An additional 16% of respondents said they plan to implement analternative work strategy this year.

Despite the trend toward increasing mobility, however, nearly 50%of all organizations reported they have 10% or less of their employ-ees regularly working remotely. Just 3% have half or more of theiremployees utilizing alternative workplace strategies.

Seventy-two percent of respondents said they view the office asthe best place to interact with colleagues, and 40% said the officeprovides access to much needed tools and technology.

The survey also found organizations continue to rethink their real estatestrategies to gain efficiencies and improve effectiveness.

For most organizations, net usable space per employee now

“ F I N E A R C H I T E C T U R A L H A R D W A R E F O R Y O U R F I N E F U R N I T U R E ” ®

w w w . m o c k e t t . c o m 8 0 0 - 5 2 3 - 12 6 9

Our venerable DP3 drawer pull line continues to maintain its sophisticated appeal; it is subtle yet bold, sleek yet substantial. And now comes in a total of seven sizes!First offered in just one width, 1¼”, then 3” and 4”, a few years ago 6”, and now new sizes of 8”, 10”, and 12” wide.All seven sizes are in stock in seven finishes. Plus, we can do any width and any finish you may require. Please contact us and we’ll take care of it.

DP3 Drawer Pull Family Grows Again!

continued on page 6

ranges from 150 to 225 square feet and nearly 55% of respondentsplan to cut their current real estate portfolio by up to 10% this yearalone. That number is up from 47% in 2009.

In addition, 57% of respondents reported using their real estatesavings to reconfigure team spaces and 41% reported accommo-dating alternative work settings such as cafes that provide the ac-cess to people and technology that workers want.

The Steelcase/CoreNet survey was launched in March of 2011 andincluded respondents from a range of industries throughout NorthAmerica and Europe.

Davies Office Refurbishing Becomes BIFMA-Certified In Albany, NY, Davies Office Refurbishing says it has become the firstoffice remanufacturer ever to earn level Sustainability Certification fromthe Business and Institutional Furniture Manufacturers Association(BIFMA).

Davies earned level Certification for its remanufactured Avenir andSystem 9000 panel system lines.

“Incorporating the requirements of BIFMA level certification intoour remanufacturing processes was nothing more than a logicalstep forward for an organization that has viewed being green asthe foundation of our business for over 60 years,” commentedcompany president Bill Davies.

“To qualify for level certification, the BIFMA standard not only scoresthe product, but also its producing organization and facilities, for sus-tainability in four areas: Materials, Energy and Atmosphere, Humanand Ecosystem Health, and Social Responsibility. At Davies OfficeRefurbishing, we’re committed to environmentally-responsible poli-cies and practices in each of those areas and our status as the in-dustry’s first remanufacturer to earn level certification reflects just howseriously we take that commitment.”

HPFI Introduces Second Life ProgramHPFI (High Point Furniture Industries) has introduced Second Life,a program designed to provide a solution for disposal of unwantedcasegoods and seating while preserving the environment when noother avenue is available.

Under the new program, HPFI will work with local charitable andnon-profit organizations to help furniture find a Second Life.

The program keeps used product out of landfills, assists importantcharitable groups accomplish goals, relieves businesses of addi-tional liability and may present a tax benefit.

For more information or to discuss Second Life options, contactyour local HPFI sales representative or visit the HPFI Online Mar-keting Center's Environmental & Sustainability link.

Inscape Announces Executive AppointmentsInscape Corporation recently an-nounced the appointment of Rod Tur-geon to the position of president andchief executive officer.

Turgeon comes to Inscape from Xeroxwhere he had a successful career thatspanned over 20 years. He held sev-eral senior positions, including vicepresident of Xerox Global ServicesCanada; senior vice president, UnitedStates Solutions Group; vice presi-

dent of strategy, business development and marketing, XeroxNorth America; and most recently, chief operating officer of the op-erations unit of Xerox Developing Markets in the Western Region.

In addition, Madan Bhayana has stepped down as chairman of theboard of Inscape. Doug Lord, also a long-time Xerox veteran, waselected to serve as the new chairman.

Brandeis University Sustainability Fund Receives$25,000 Gift from National Office Furniture

Brandeis University has received $25,000 from National Office Furniture under the manufacturer’s Gift of Inspiration for Educationprogram.

National also announced the launch of its third annual $25,000 Giftof Inspiration for Healthcare to be awarded in early spring.

National started the Gift of Inspiration program in 2009 and hasgiven away $110,000 since the program’s inception.

Brandeis University is National’s third Gift of Inspiration for Educa-tion winner and plans to use the money to boost its Student Sus-tainability Fund, a program in which students help implementprojects to support a greener campus environment.

Industry News continued from page 4

NOVEMBER 2011 OFDEALER PAGE 6

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The Hon Company Adds Power andData Management to Voi DeskingSystem

The HON Company has added power and datamanagement to its Voi desking system line.

Whether a smaller desk system that requires abasic connection of 3-prong outlets for a laptopuser or a larger, multi-station configuration that re-quires increased electrical capacity, the integra-tion of power and data management enables Voito provide and streamline connectivity in the mostcomprehensive way, the company said.

Management Changes at 20-20Technologies20-20 Technologies Inc. has announced a lead-ership change which it said was related to im-plementation of a comprehensive organizationredesign initiated in conjunction with the com-pany's latest strategic plan.

The company announced the immediate de-parture of Craig Yamauchi as executive vice-president, Americas. In the interim, CEOJean-François Grou will personally lead themanagement team.

"We have full confidence in the ability of our ex-isting sales and services teams to manage dayto day operations during the transition period.I made this decision with a long term perspec-tive, as we anticipate sustained developmentof our business in the Americas," said Grou.

NeoCon East Show SuccessThe ninth annual NeoCon East brought in 6,748attendees and 267 exhibitors to the BaltimoreConvention Center, November 2-3, 2011, onceagain making it a hugely successful show in theMid-Atlantic region.

“NeoCon East has grown tremendously since

it was launched in 2003, which is indication ofhow important the Federal Government hasbecome to many manufacturers,” said MarkFalanga, president, MMPI. “We continue to seegrowth in the number of attendees, with aneight percent increase over 2010, as well as thenumbers of quality exhibitors. These numbersprove that the NeoCon East show is the largestand fastest growing commercial furnishings ex-position on the East Coast.”

Of the 267 exhibitors NeoCon East hosted, 189were on the GSA schedule, more than any otherNeoCon East show. This is the largest concentra-tion of products and services for commercial in-teriors on the GSA schedule. The show alsofeatured Government Interiors, which focused onproducts and services geared to federal govern-ment procurement specifiers, and a GSA Inte-grated Workplace Acquisition Center booth on theshow floor to assist attendees.

NeoCon East offered more than 30 CEU-ac-credited programs in 12 educational tracks. Italso offered free 60-minute GSA-sponsoredseminars. This year’s keynotes, Victor Olgyay,AIA of the Rocky Mountain Institute and JhaneBarnes, men’s fashion designer, and an inno-vator in contract and interior textiles, carpeting,eyewear, and office furniture, were hugely suc-cessful with standing room only attendance.

NeoCon East 2012 will return October 17-18,2012 to the Baltimore Convention Center.

Ice Edge Releases ExperienceCatalogs for ICEIce Edge Business Solutions has introducedExperience Catalogs for its ICE 3D design andspecification software. Experience Catalogs gobeyond wireframe to offer a new way to addproduct catalogs into ICE, bringing interior lay-outs into virtual 3D environments.

The new Experience Catalogs offer 3D productcatalogs in monochromatic grayscale andsepia tones, for use in layout models.

Products in ICE’s Experience Catalogs includefull specification capabilities that allow for in-stant pricing, true-to-life interactive fly-throughs and high quality renders. ExperienceCatalogs can be used solo in a layout or in con-junction with other manufacturers.

Industry News continued from page 6

NOVEMBER 2011 OFDEALER PAGE 7

El Paso Dealer Patricia Holland-Branch InductedInto Local Business Hall of Fame

Our congratulations go to Facilities Connection CEOPatricia Holland-Branch, wholast month was honored as a2011 inductee into El Paso’sBusiness Hall of Fame.

Inductees were selected bythe board of directors of thelocal Junior Achievement or-ganization, to recognize busi-ness leaders for theircontributions to the localeconomy and the communityat large.

Patty founded the Haworthdealership, originally known

as PZH Contract Design, in 1987. Today, it positions itself as a“Global Modular Solutions and Systems integration company,” withan offering that includes program and project management, logis-tics management and installation services, modular walls andraised access floors, modular power and data cabling, integratedsystems installation and more.

“I was humbled and surprised by the honor, which traditionally hasbeen awarded to larger companies in our region,” Patty said. “Asa naturalized citizen of this great country, I have always had a deepsense of responsibility to making my community a better place tolive, work and raise a family.”

The dealership encourages community involvement for its entireteam and supports several local not-for-profit organizationsthrough contributions of furniture, design and services as well asfinancial support, Patty added.

Forrer Business Interiors Holds First Annual Green ForumWith the industry as competitive as it is today, finding opportunitiesto differentiate your dealership and position yourself as more thanjust a source of product has never been more important.

In Milwaukee, WI, Steelcase dealer Forrer Business Interiors found

an effective way to do just that last month, through its first annualGreen Forum.

The two-day event offered architects and designers the opportunityto earn GBCI CEU credits to maintain their LEED credentials, withthree back-to-back CEU courses.

Topics included choosing the right materials, designing for sustain-ability and a case study presentation on a local project that com-bined historic preservation with LEED Platinum certification.

The dealership reached out to the Wisconsin Green Building Al-liance to help develop and market the event, further raising its pro-file with a key audience.

“Our first Green Forum was not only an educational event, but alsoprovided some outstanding networking opportunities for atten-dees,” reports Forrer’s Elizabeth Everson. “Feedback has beenoverwhelmingly positive and we’re already starting to plan for sim-ilar events for next year.”

RJE Business Interiors, Indiana Dealer, HostsFundraiser for Local Cancer AgencyIn Indianapolis last month, Knoll dealer RJE Business Interiorscame up with an innovative way to give back to the community andstrengthen their ties with the A&D community at the same time.

They did so as hosts for The Red Event, an evening that provided anopportunity for local designers and architects to sell their handmadegoods and food items, with 10 percent of the proceeds going to theLittle Red Door, a local non-profit that provides support for peoplewith cancer who lack financial means or adequate insurance.

Also on the program: a silent auction with all proceeds benefitingthe Little Red Door.

The event drew some 150 attendees and raised about $4,000 forthe cancer agency, reports RJE’s Sheryl Hudson.

“This is the third year we’ve hosted The Red Event and it’s becomea terrific networking opportunity,” she says. “It’s also a very effec-tive way to give recognition to some talented designers and archi-tects and support a very worthy cause.”

Indiana Dealer OfficeWorks Hosts ‘Great Start’Event for Local Area Boys & Girls ClubAlso in the Indianapolis area last month, Herman Miller dealer OfficeWorks was also hard at work on a good cause.

NOVEMBER 2011 OFDEALER PAGE 8

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news

Patricia Holland Branch and herhusband Dave at her Business Hall ofFame awards ceremony

With a generous assist from 20 local A&D firms, the dealershiphosted “Great Start,” a special event that provided children rangingfrom 5-13 years old with the opportunity to learn about careers inthe world of architecture and design.

The event was held in conjunction with Mitch’s Kids, a partnershipcreated between Indiana Governor Mitch Daniels and the Boys andGirls Clubs of Indianapolis.

Some 75 boys and girls spent the afternoon working on &D projects.

“As a dealer,” says OfficeWorks’ Joyce Posson, “we’re alwayslooking to build relationships with the A&D community and it’s evenbetter when we can do that and help the community at the sametime.”

San Francisco’s Pivot Interiors Acquires WorkplaceResource, So Cal DealerBay area Herman Miller dealer Pivot Interiors has acquired Work-place Resource, another Herman Miller dealer with locations in LosAngeles, Orange County and La Mirada, CA.

The acquisition creates an alignment of expertise, resources andsolutions to serve the major markets in California and makes Pivotthe largest Herman Miller dealer in the state, the company said.

"This is a natural progression for our vision of Pivot," said Pivotprincipals Harvey Vander Baan, Barbara Carlyle and Ken Baugh ina joint statement. "Our selection of Workplace Resource, and RayStromback to lead the operation, strengthens Pivot's ability toserve the California market and continues our strategy of diversifiedgrowth.”

Ray Stromback, an office furniture veteran more than 30 years’industry experience, has joined Pivot as a principal and head of itsSouthern California operations.

"We are very excited to see Pivot Interiors expand into the Los Angeles marketplace," notes Curt Pullen, president of HermanMiller North America. "We have a great partnership with Pivot inthe Bay Area and look forward to building the same level of team-work with Ray Stromback and the team in Los Angeles."

Sequoia Office, Boston Area Dealer, Re-Brands asNational Premier Partners Newton, MA-based Sequoia Office has announced a new identityas National Premier Partners and a new initiative designed to takeits products and services to customers nationwide. Business operations began last month.

Stew Frewald, principal, and new president Laurene Cedrone arejoining forces for the new effort. “Our vision will be accomplishedwith our experienced design staff, our customer service team thatis second to none, and our experienced sales team,” said Cedrone.

NPP is staffed by a team that brings over 100 years of combined industry experience to the dealership, the company said.

NPP plans to lead with AIS systems furniture and will offer clients na-tionwide account and project management, asset management, de-sign and space planning, warehouse delivery and installationservices, storage programs, rental programs and more, the companysaid.

NBF Introduces Solutions for Healthcare IndustryMilwaukee-based National Business Furniture (NBF) has expandedits product offering to include a wide range of furniture designedspecifically for healthcare environments.

“The healthcare category has been a good one for us all along, butcustomers wanted a wider selection of products,” explained RandyFarah, vice president of merchandising for NBF. “We’ve addedmore exam and patient room products and accessories to meettheir needs,” said Farah.

Furniture and equipment specific to healthcare facilities will beavailable through the NBF catalog, NBF.com, and outside saleschannels. New categories include patient and exam room furniture,bariatric seating, carts and accessories.

Got News?E-mail Alicia.

Dealer News continued from page 8

NOVEMBER 2011 OFDEALER PAGE 9

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This year, OFDA raised the bar again with a highly successful 2011Dealer Strategies Conference at the J.W. Marriott Starr Pass Resort& Spa in Tucson.

Conference attendance was up more than 50% from 2010 andparticipants’ comments and ratings on the education program in apost-conference survey were the highest in recent memory, with95%+ rating the event “good” or “excellent.”

So what’s the “encore” for 2012? OFDA decided to consult beyondits board of governors and invited all 2011 participants to vote foreither a Las Vegas or convenient Chicago suburban resort location.The result: By popular acclaim, OFDA will hold its 2012 DealerStrategies Conference at the new Cosmopolitan Hotel in Las Vegason October 28-30. Please reserve these dates on your calendarnow for an industry-wide event you will not want to miss!

Based on input from 2011 conference participants and OFDA’sboard, we are continuing to tweak our successful program formatto further enhance the educational offerings, the networking op-portunities, the convenience of attending and the overall confer-ence experience for 2012.

We will again launch the conference on a Sunday afternoon, main-tain extensive networking and 90-minute breakout sessionsthroughout the schedule and include two morning keynote ses-sions on Monday and Tuesday (October 29 and 30).

In deference to those who enjoy Halloween celebrations or needto accelerate a return to their businesses, the 2012 conference willbe slightly more compact, concluding before lunch on Tuesday,October 30.

With the additional travel convenience of our Las Vegas location, thisshould allow most attendees to avoid an additional overnight at ourconference location if they wish.

OFDA has formed a 2012 conference planning committee of 12industry veterans that includes a diverse cross-section of dealers,installers and manufacturing company executives who are knownfor their creative ideas and willingness to contribute their experi-ence and expertise to what is typically a several-month planningprocess.

As a starting point, we are providing below a partial listing, in no par-ticular order, of the ideas for 2012 breakout and general sessions thatour 2011 attendees have suggested.

We invite you to add your thoughts on which topics are most pertinent and to provide the names of compelling industry and professional speakers you may have encountered recently.

� Addressing the new economy

� Sales management and compensation topics

� Compensation/position descriptions for projectmanagers

� Creating stronger dealer-manufacturer partnerships

� Managing joint dealer-manufacturer presentations toclients and bids

� Succession planning in the sales department

� Re-invigorating veteran sales professionals

� The buying criteria of end-user decision makers in keyvertical markets

� How to conduct great employee candidate interviews

� Recruiting and hiring from a “millennial’s” viewpoint

� Customer retention for ongoing project business

� Strategies and tactics to implement culture changes

� Inside sales vs. outside sales strategies

� Accountability strategies for sales vs. operationspersonnel

� Furniture installation operations

� Warehouse operations

� Strategies and formulas for open bid management

� Coaching difficult employees—when to/not to make theeffort

� Rewarding employees/employment profit

� Sales negotiation training

� Further training on use of LinkedIn, integrating othersocial media

NOVEMBER 2011 OFDEALER PAGE 10

continued on page 11

OFDA Announces Plans for 2012 Dealer Strategies Conference in Las Vegas

OFDA News continued from page 10

NOVEMBER 2011 OFDEALER PAGE 11

� Maintaining employee enthusiasm in “mature”dealerships

� Effective use of mobile technology

� Effective use of Revit and BIM

� Sales training—make it worthwhile to send sales peopleto this event

� How to position yourself as a successor, help keymanagers be considered by the manufacturer andcurrent owner

� Business valuation workshop

� Deep-dive on best practices in selling and installing wallsystems

� Vertical market sales and profit-boosting strategies,including ergonomic products

� Safety training

� Technology tools to manage service, delivery andfinancial management from individual work orders tolarge projects—where’s the FedEx type solution?

� Managing and motivating your people; wealth throughrecognition

� One-on-one financial review for dealers using OFDAbenchmarks (by advance appointment)

� Strengthening dealer-service provider relationships.

With breakfast and lunch included in the cost of admission, specialdiscount pricing starting at $189 per night on rooms at the Cos-mopolitan and great rates on flights to and from McCarran Airport,we’re betting that the 2012 Dealer Strategies Conference LasVegas will be the most informative, productive and cost-effectiveconference ever.

Conference registration and hotel reservations will be availableafter the first of the year.

Whether you are a regular OFDA conference attendee or someonewho has never attended but might consider, we would welcomeany and all suggestions you have on how to make our 2012 eventa “must attend” function for you! Just contact Chris Bates, OFDApresident, at 703-549-9040, x 100 or [email protected].

For more information on the 2012 conference, visitwww.ofdanet.org/conference.

Never has Style been so AffordableCombine our 2 Series & 2 Lite Series to meet every Projects Design & Budget

AtTheOffice.com

By Alicia Ellis

If you’re lucky, there will be a few times in your career whenyou get a project that changes your life for the better.

You’ll have the opportunity to get much more out of a projectthan you give and not just in terms of money. It will offer youinspiration, motivation, joy and self-satisfaction beyond yourwildest imagination.

Such was the case for the staff of BKM Total Office of Texaswhen they took on a project to furnish their local DallasRonald McDonald House (RMH), part of the Ronald McDon-ald House Charities organization which provides a “home-away-from-home” at little to no cost for families ofhospitalized children.

Approached through a pre-existing relationship with the ar-chitectural firm who had designed RMH’s new 60,000square foot building in the heart of the University of TexasSouthwestern Medical District, BKM was asked to furnish54 bedrooms, six transplant suites, a study loft, teen room,media room, dining space, activity room for small children,communal living room, administrative offices and even agame room. And, of course, they had to do it all on a limitedbudget.

To keep costs low but still create a cohesive environment,BKM pulled out all the stops, calling in favors, searching forused product, getting donations from local companies, andenlisting its in-house team of skilled craftsmen to reupholsterpieces and even create custom headboards, parson’s tablesand mounted side tables.

NOVEMBER 2011 OFDEALER PAGE 12

continued on page 13

ProjectProfile:

LoveA labor

of

for BKM

“I believe that our custom capabilities and resourcefulnessplayed a huge factor in being given this project,” said Deb-bie Zarsk, senior account manager in charge of the RMHproject. “We spent four to five months alone sourcing prod-uct to translate into a cost-conscious solution with the qual-ity and aesthetic RMH was targeting.”

Ultimately, the project was put together from a blend of new,refurbished and custom-produced pieces. For example:

� Administrative workstations are remanufac-tured Steelcase Montage panels and Universalcomponents, complete with new paint, newplayful panel fabric and new worksurfaces.

� Dining areas feature custom banquettes andchildren’s tables.

� A tween room sports a Moroccan-themed win-dow treatment.

� A movie room offers reupholstered mobilelounge chairs repurposed from a corporatedonor.

� Guest rooms received custom parson’s tablesas well as custom-upholstered frame head-boards.

� Custom-made cushions using sample fabricsdonated from manufacturers added comfort towindow seating.

“We went far beyond typical office furniture for this project,”said Zarsk who was able to secure significant discounts onbean bag chairs, window hardware, exercise equipment andeven an air hockey table.

“Everyone—from the architect and clients to the vendorsand installers—worked together on a collaborative effort forthis worthy cause. If we couldn’t build it or refurbish it, wefound it. RMH is a prime example of the success generatedby integrated project delivery.”

A smoothly run two week installation wrapped up the year-long project, with BKM having saved RMH more than$100,000 from donations and discounted pricing. And whenit opened to families with sick children being treated at areahospitals, the new RMH provided the perfect setting forhope and healing.

“I’ve never been so challenged and yet so fulfilled in my career,” said Zarsk. “The project was embraced by everyonewe contacted for help and everyone here at BKM. It was atrue labor of love.”

Project Profile continued from page 12

NOVEMBER 2011 OFDEALER PAGE 13

© 201 1 The HON Company

Voi™

DESKING THAT GETS YOU

Voi gets you�...

Voi gets your workplace humming. Its cohesive design unites all manner of personal and collaborative needs. And with compact configurations offering loads of worksurface, it gets your space to work like never before. Find out more about Voi online at hon.com/voi.

Working Collaborating Organized

Using the LinkedIn Status Update box to share pertinent businessinformation is a strategy that will pay big dividends when used correctly. Note the emphasis on the word business in regards tostatus updates.

That is not to suggest you should never use the Status Update boxto share personal information or make personal requests, butstrictly personal information should be kept to a minimum—orshared on Twitter or Facebook, where such material is not only expected but encouraged.

The LinkedIn website states, “LinkedIn connects you to yourtrusted contacts and helps you exchange knowledge, ideas, andopportunities…”

Exchanging knowledge and ideas with your network will build thetrust that is necessary to create an atmosphere for positive collaboration and financially advantageous opportunities.

You are able to share status updates either from your personal profile to your first-level connections or from your company pageto your followers. The latter is a relatively new feature and allowsyour company to now have a voice as well.

Follow these rules when using the Status Update Box, and you willbe on your way to building strong professional relationships thatwill provide a steady stream of sales and referrals.

DO THIS: 1. Share links (using a URL shortener) to interesting articles,

websites or video that individuals in your network might appre-ciate. Don't worry about whether all of your connections will findthe information equally valuable. Use engaging words to grabthe readers’ attention and encourage them to click the link.

2. Pose a question that could lead to solving a problem you have,like: "Does anyone know some good controller candidates?"One of my connections saved $20,000 in recruiting fees by post-ing an update like this a couple days before calling a recruiter.

3. Conduct an informal poll of your network relating to a topic ofinterest to you, such as: "What interest rates are you seeing for

lines of credit in the current environment?"

4. Mention a person or a situation that might be helpful to some ofyour connections; for instance, "I just met with John Jones fromABC Moving Company and found out they are saving companieslots of $$ on moving and relocation services."

5. Talk about an event you are attending or have attended to encourage involvement and/or questions about what youlearned there.

6. If you are a job seeker, don't say, "Hey, I'm still looking for a job."Rather, mention job fairs you are attending, people you are interviewing with, networking events you are going to, etc. Remember—having your name show up on a consistent basison your entire network's home page is extremely importantwhether you are in job-seeking mode or not.

7. Use the "Like" feature when you see a helpful update from oneof your connections. This shares the update with your entire network and is a great way to give the writer of the helpful update exposure to your network that he/she wouldn't normallyhave.

8. Use the “Share” feature. Similar to the “Like” feature, your update is shared with your entire network. However, “Share” enables you to also share this information with your LinkedIngroups, your Twitter followers, directly to individual connectionsin the form of a LinkedIn message, and to others by enteringemail addresses.

DON'T DO THIS: 1. Mentioning personal information—like what you had for break-

fast and the fact your dog is sick today—is unprofessional andsuggests to your professional network that you don't really respect their time.

2. Continually talking about specific products and services takespeople back to the days of big newspaper ads and screamingradio messages. If you constantly talk about the great prices you

NOVEMBER 2011 OFDEALER PAGE 15

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Status Updates: Your Audience is WaitingBy Wayne Breitbarth

LinkedIn continued from page 15

NOVEMBER 2011 OFDEALER PAGE 16

have on your seating and cubicles, your audience may getturned off. This is not the purpose of social media, especiallyLinkedIn.

3. Avoid topics that might be sensitive to some of your audience. Iam too embarrassed to even think about, let alone share, someof the items I see posted as status updates. You know what Imean. If your mother wouldn't want you talking about it, don'tput it in your LinkedIn Status Box.

4. Think twice before posting your physical whereabouts. I haveheard several real-life examples of people's homes being brokeninto after putting out an "I-am-out-of-town" update. (Sorry, allyou Foursquare users, but I had to share that.)

5. The LinkedIn/Twitter interface is causing people to have toomany LinkedIn updates as well as inappropriate updates. If youare using that interface, be selective about the updates youshare between the two platforms. LinkedIn and Twitter are de-signed with different purposes and strategies.

6. The netiquette on LinkedIn is no more than a couple updatesper day, whereas on Twitter you are expected to tweet manymore times per day.

7. Don't waste your time reading updates from people who violateall of the above. By using the "Hide" function, you can stop anindividual's status updates from showing up on your home page.

When you see an annoying status update and decide you do notwant to see any further updates from this person, simply scroll overto the right side of the status update and unveil the word "Hide."Once you activate this function, you will be freed from receivingfurther updates from this individual.

Follow these simple suggestions, and you will be on your way tobeing a model LinkedIn citizen whose position of respect and au-thority will pay big dividends.

Wayne Breitbarth is an owner of M&M OfficeInteriors in Pewaukee, Wisconsin. Wayne beganmoonlighting as an unofficial LinkedIn trainer inearly 2009 and has now led seminars for over10,000 business professionals across the country.He was a featured speaker at last year's OFDADealer Strategies Conference and has recentlyreleased a book entitled The Power Formulafor LinkedIn Success. Contact Wayne [email protected] or by visitingwww.linkedin.com/in/waynebreitbarth

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By Alicia Ellis

Over the years, OFDealer has written

about many different vertical market

opportunities for our readers. We’ve of-

fered advice on growth segments like

healthcare, government and education

and highlighted dealers who have suc-

cessfully targeted them. We’ve written

about growing your green message,

the transactional market and service

opportunities.

What we haven’t discussed up until

now are product categories that deal-

ers should be considering to not only

gain some extra income but also to

bolster their position as a total solu-

tions provider to their clients.

They range from easy add-ons to com-

plex (but highly profitable) ventures

that require strong commitment from

the top and significant investment in

people and infrastructure. In virtually all

cases, they represent an opportunity to

strengthen those all-important cus-

tomer relationships and prevent com-

petitors from finding a way to get a foot

in the door.

NOVEMBER 2011 OFDEALER PAGE 17

PROFIT OPPORTUNITIESOn the Path to New

SURVEY SAYS...In a survey conducted last month by OFDealer, we askedreaders to comment on the new product categories thatthey’ve been exploring recently and asked for their perspec-tive on the opportunities they offer.

Ninety percent of dealers surveyed reported they currently offer productsin all of the following categories:

� Demountable Walls

� Specialty Seating

� Training Room Furnishings

� Computer Accessories

� Files & Storage Products

� Signage

More than half of dealers surveyed reported that they offer products in thefollowing categories:

� Soundmasking – 66%

� Upholstery Cleaning – 65%

� Rental Furniture – 65%

� Decorative Accessories – 55%

Finally, fewer than half of the dealersresponding reported a focus on the following categories:

� Wall coverings – 35%

� Window Treatments – 40%

� Flooring – 47%

� Raised Flooring – 45%

� Lighting – 47%

� AV Equipment – 15%

For some categories, interest among office furniture dealersdepended on a dealership’s size and client base. In the wallcoverings and window treatment categories, about half of thedealers surveyed said they had no interest in carrying thesetypes of products, choosing instead to leave these to the in-terior design community.

“Product offerings are generally brought to us by manufactur-ers' reps or by a direct mail/email from the manufacturer,” saidStan Vuckovich, president of KBM Workspace in San Jose,CA. “Suggestions also come from our salespeople, from in-dustry literature and from customers.”

According to Thomas Huerkamp, president of ProSpace

Interiors, Inc. in Delta, CO, the decision to take on a new prod-uct segment is very much a joint effort.

“Our salespeople gather information about customers’ wantsand needs and then we work with our manufacturers’ reps ora manufacturer directly,” said Hauerkamp. “And, because ofour remote rural location, we often conduct extensive Internetsearches for information.”

“We usually look at the market opportunity with existing cus-tomers—is there a need and what are the resources/invest-ment we must make to go into a new product offering orservice,” said Matt Sveen, president of Intereum in Plymouth,MN. Sveen also pointed out the importance of looking at theanticipated ROI to determine the payback period relative tothe investment.

In addition, noted Ronald Mazany of Mazany Contract Interi-ors in Jamestown, NY, market area exclusivity is an importantfactor to consider.

“As a company we discuss new opportunities together andoffer the new products or services if we feel our customerswill come to us for the items,” said Mazany. “With the econ-omy being so tight in the last three years, all of our competi-tors have been selling their lines with little or no margin. Theprofit is very small on furniture, so we have chosen to focuson alternative products to offer our customers. Diversifyingour offering has allowed us to grow our business.”

According to the OFDealer survey, products currently gener-ating the most interest as potential new sources of income in-cluded AV equipment, raised flooring, soundmasking andlighting.

While the majority of dealers reported that the decision mak-ers in non-office furniture related categories were the sameas with office furniture sales, there are a few exceptions; es-pecially when working within the design or construction in-dustries.

And, for 60% of those surveyed, dealers said they were ableto rely on their salespeople to adequately handle the sale ofnew products to new and existing customers without havingto rely on a dedicated salesperson.

SOLUTION-SAAVY...At Intereum, a product specialist is part of the team that fo-cuses on architectural products. “These specialists are sup-ported with design, project management, and client services,”Sveen explained. The Herman Miller dealer has been offeringflooring and raised flooring over the past three years and isconsidering AV equipment as an extension of its services.

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NOVEMBER 2011 OFDEALER PAGE 18

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“We compensate our salespeople well for selling these prod-ucts to help overcome any concerns they may have about therisk of bringing a new product into their valued account,” heexplains. “We have engaged our salespeople to focus on allof their existing accounts—we already have the relationshipso it is easier to gain access for new products and servicessince they already know us and trust us.”

Mickey Spooner, president of Allstate Office Interiors in Hamil-ton, NJ, has a dedicated salesperson for flooring who hashelped sales of carpet and tile grow by more than 20% in thepast few years.

In addition to Haworth and AIS, Allstate offers a variety of fur-niture and related products including demountable walls, dec-orative accessories and rental furniture. “We market Allstateas a single source solution,” says Spooner.

DEALER EVOLUTION...So too does ProSpace Interiors in Delta, CO. An independentoffice furniture dealer since 1968, ProSpace (formerly OfficeFurniture Design Center) offers a wide variety of products andservices that have evolved over the years based on customerdemand.

“At ProSpace nobody is allowed to be untrained,” said Pro-Space president Tom Huerkamp. Every one of the company’s15 full-time employees is knowledgeable to some degree onall products offered, he added.

ProSpace has expanded its offering over the years to includeraised flooring, demountable walls, specialty seating, artwork,decorative accessories and signage in addition to supervisingoutsourced business to local flooring and window treatmentproviders, Huerkamp reported.

Having previously employed an ergonomics specialist, Pro-Space also offers ergonomic computer accessories like key-board trays and monitor arms and workstations with sit/standcapabilities.

Over the past two years, Prospace has also become activelyinvolved in the sale of furnishing for outdoor spaces.

“A few years ago a customer asked if we could furnish theiroutdoor patio and in my world, we never say no,” laughedHuerkamp. “More and more corporate spaces, hospitals andschools are incorporating outdoor spaces for networking andbreaks. We found a great company with a good dealer pro-gram and have grown ever since. And, making the job evenmore lucrative, ProSpace purchased the machinery necessaryto secure furniture in place.”

Going that extra mile to service and support all of their prod-ucts in addition to office furniture has led to record sales atProSpace over the past two years. Examples of how they’vesuccessfully marketed alternative product categories include:

� Providing free ergonomic evaluations to exist-ing customers

� Training end-users on how to properly adjustoffice chairs

� Not only selling planters for decorative pur-poses but hooking the customer up with alocal nursery that can advise the client on whattypes of plans are best suited to the planterpurchased and what type of soil to use to keepplants healthy

In Toronto, Steelcase dealer Mayhew, with its four locationsand 150 employees, has also implemented an effective totalsolutions approach. In addition to furnishings, Meyhew cur-rently offers just about everything to furnish any size and typeof office including wall coverings, window treatments, alltypes of flooring, demountable walls, decorative accessories,soundmasking and audiovisual equipment.

“Over the course of our evolution as a business, we uncov-ered expanding client requirements and sought creative so-lutions to provide full service in their workplace,” said AndrewHealy, Mayhew’s vice president of operations.

“We recognized that our suite of products and servicesneeded to go beyond the traditional furniture offerings andsaw opportunity to drive greater margin business and addvalue to our clients who were seeking these solutions in theworkspace,” said Healy. “Most prominently, we saw and con-tinue to see how technology has changed the way peoplework. We wanted to ensure we were progressive and that wecould respond to the changing needs of our clients. Havingintegrated technology solutions and supporting servicesstrongly advances our competitive edge.”

Mayhew has actively embraced Steelcase’s integrated tech-nology products including Mediascape collaborative furnitureenvironments, ENO interactive white boards and the RoomWizard room scheduling system. They also have partnershipswith suppliers like LG, a manufacturer of monitors, televisionsand projectors, who further broaden the range of their productofferings and capabilities.

“Specialty products and technology do require deeper train-ing at times that while not a prerequisite for early client en-gagement are needed for closing deals and after-marketservice requirements,” said Healy. “Mayhew takes a consul-

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NOVEMBER 2011 OFDEALER PAGE 19

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NOVEMBER 2011 OFDEALER PAGE 20

tative approach to the marketplace and expects our sales-people to speak beyond mere product features and benefits.Our products business unit is an in-house contingent of ex-perts in design, ergonomics, construction, furniture and re-lated industries.”

For Carrie Setliff, managing partner of Image Business Interi-ors (ibi), a Teknion dealer in Virginia Beach, VA, a foray intoaudiovisual equipment and soundmasking over the past twoyears is adding 15% to yearly revenues with margins thatreach as high as 30%.

“ibi recognized the opportunity to not only increase profits butservice the customer with the ‘One Stop Shop’ approach,”said Setliff. “In regards to AV, we have partnered with a localcompany and we sell their AV equipment and they sell ourconference furniture on AV only projects. We each get a per-centage from the other’s sales and our clients remain ours.”

Setliff’s soundmasking solutions make for a great add-on tobusiness, she reports. “The changing workplace footprintopens the door for the soundmasking sale to not only be aneasy one, but a natural fit which makes good sense to theclient,” said Setliff.

For Schroeder Solutions, a Teknion and Global dealer basedin Waukesha, WI, Logi-Sound is the soundmasking providerof choice. The company’s showroom or “Idea Center,” as theycall it, is a key selling feature and allows clients to actuallysee the products offer installed and in use.

According to Schroeder president Scott Geirhahn, 1/8 of thecompany’s sales are attributed to walls, floor coverings, andacoustical solutions. With margins normally 6-9 points higherthan other products and its own in-house installation team,these categories offer a lucrative opportunity to reach out tonew and existing customers.

Whether it’s trash receptacles, ergonomic accessories,soundmasking, flooring or demountable walls. It’s all aboutkeeping your eyes open to your clients’ needs and finding away to be the one that’s providing the solutions. Not only willyour clients thank you through their continued support, butyour company and your sales staff will thank you for providingnew sources of income.

In last month’s article we discussed the basics of ESOPs, how they work, their advantages, their complications and possibledisadvantages.

In addition, we looked at Steve Victoria, thesole owner of VECI, a 35-person office fur-niture dealership who, having weighed thepros and cons of ESOPs, decided with thehelp of his advisors, to pursue this exitstrategy.

Now, let’s take a look at some of the alter-natives that Steve can pursue dependingon how his dealership is structured (C-Corporation or S-Corporation).

We will primarily look at the tax treatmentdifference between the two different entitiesbut before we do that, let’s just recap theESOP basics from last month’s article.

Also, remember that for the ESOP to besuccessful, it is actually an advantage if thedealership (if a C-Corp.) or its owners (if anS-Corp.) pay significant tax at maximumrates. That indicates significant earnings, aportion of which can be dedicated to sup-porting the ESOP.

Also, recall that the biggest advantage formany owners is the fact that the purchaseby an ESOP is accomplished via pre-tax in-stead of after-tax dollars, because fundingfor the payment of the stock purchase pricecomes from tax-deductible company con-tributions to the ESOP.

What is an ESOP? An ESOP is a qualified retirement plan, typ-ically a profit sharing plan, that must investprimarily in the stock of the sponsoring em-ployer. It is subject to a number of legal re-quirements. An ESOP has three key

differences from other types of qualified re-tirement plans:

� ESOPs can borrow money. No otherqualified retirement plan can borrowmoney. It would be considered a “pro-hibited transaction.”

� ESOPs can engage in transactions with“parties in interest,” unlike any otherqualified plan. Who is included in “par-ties in interest”? Both the dealership it-self and the dealer who owns it.

� ESOPs are allowed to invest primarily inthe stock of the sponsoring company.Again, in other qualified plans this wouldbe considered a “prohibited transaction.”

C-Corporation ESOPsNow, let’s get back to Steve Victoria, andlet’s assume that Steve’s dealership is cur-rently a C-Corporation. If Steve is interestedin either a partial or a complete sale of hisdealership interest, and if he is also inter-ested in deferral of capital gains tax uponthe sale of his ownership, then doing a C-Corporation ESOP could work well for him.

If properly implemented, IRS Code Section1042 allows owners who sell their stock toan ESOP to defer tax consequences of anycapital gains they realize.

Section 1042 has a number of requirementswhich must be met for the tax deferral to beavailable. Steve has to have held his own-ership interest for at least three years, andafter the sale the ESOP must own at least30% of the stock in VECI.

One additional key requirement of IRS Sec-tion 1042 is that to achieve deferral of cap-ital gains upon the sale of ownership, theproceeds must be reinvested in U.S. do-mestic equities (either stocks or bonds).

As long as the sales proceeds remain in-vested this way, no capital gains taxes onthe sale to the ESOP will be due until thereplacement investments are sold.

In addition, if replacement investments areheld until death, then those U.S. equitieswould receive a step-up in tax basis, result-ing in no taxation should the heirs turnaround and sell the investments.

Therefore, it is possible that Steve can sellVECI to the ESOP and never pay any taxeson the gains from the sale.

C-Corporations: Tax Considerations � Contributions to the ESOP are tax de-

ductible (principal and interest)

� ESOP sales proceeds are tax-free forshareholders, provided the rules of IRCSec. 1042 are followed.

� In addition to being able to deductESOP contributions for tax purposes,VECI can also deduct dividends that arepaid to the ESOP.

S-Corporation ESOPsNow, let’s take a look at how Steve’s situa-tion would be different if the dealershipwere currently an S-Corporation (again, pri-marily from a tax treatment standpoint) andif we assume that Steve is planning for a100% sale to the ESOP.

In an S-Corporation, income taxes on prof-its are paid by the shareholders rather thanby the S-Corporation itself. This yields anincredible benefit if all or part of the S-Cor-poration stock is sold to an ESOP. Since anESOP is a tax exempt retirement trustunder the IRS Tax Code, in a 100% sale theESOP becomes the single shareholder ofthe company.

NOVEMBER 2011 OFDEALER PAGE 21

continued on page 22

C & SESOPs: Differences in

Corporation EnvironmentsBy Ken Steifler

ESOPs Continued from page 21

NOVEMBER 2011 OFDEALER PAGE 22

Combining an S-Corporation with theshareholder (i.e. the ESOP Trust), which istax exempt, allows ALL the profits to be taxexempt, making VECI’s effective incometax rate zero!

Therefore, the S-ESOP gets its advantagefrom having its income be tax-free, as com-pared to the C-ESOP, which gets a deduc-tion for its contributions and dividends paidto the ESOP.

An ESOP owned S-Corporation is effec-tively a tax-exempt for-profit business, andtax savings can fund a high percentage ofthe purchase price of the company’s stock.

S-Corporations: Tax Considerations � S-Corporations do not pay tax at the

corporate level, shareholders pay tax.

� ESOP Trust is exempt from income tax.

� Therefore, to the extent of the ESOP’sownership, corporate earnings are taxfree. Taxes are only paid by the em-ployee-participants in the ESOP whenthey receive distributions from the ESOPplan.

Planning IssuesThere are some unique tax advantages toboth the S-ESOP and the C-ESOP. Youmay be wondering if it is possible for Steveto have his cake and eat it, too? The an-swer is Yes!

If Steve’s dealership is currently a C-Corpora-tion, the ESOP can purchase Steve’s stockand he can take advantage of the Section1042 tax deferral on capital gains from thestock sale if he meets the requirements.

Following the stock purchase, the dealer-ship can elect to convert from a C-Corpo-ration to an S-Corporation, and from thatpoint forward it has the tax shield of beingowned by a tax exempt ESOP Trust.

If Steve’s dealership is an S-Corporation, hecould revoke his S election on December 31,2011, then sell 100% of his dealership interestto the ESOP on January 2, 2012.

If you take away anything from this article, itshoud be, “Don’t try this at home.” ESOPs re-quire competent advisors to work through allthese details, as well as the many other issues

that need to be analyzed and discussed be-fore deciding to do an ESOP.

In the right situation, an ESOP can be a ter-rific exit strategy for a dealer, but if the sit-uation is not ideal, then an ESOP shouldnot be pursued.

DISCLAIMER: The information contained inthis article is general in nature and is notlegal advice.

This article includes a compilation of con-tent originally published by Business Enter-prise Institute, Inc. ("BEI") and is used herewith permission from BEI.

Ken Stiefler, CExP is amember of the BusinessEnterprise Institute’sNetwork Of Exit PlanningProfessionals. For moreinformation, contact Kenvia email or [email protected]

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