Service Industry Forum

Highlights from Forum on Service Industry
February 20, 2003 – Sawmill Inn, Grand Rapids

Panelists: Rick Glorvigen, Glorvigen, Berg, Theis & Lind Company, Brian Nicklason of Woodland Bank and Ed Zabinski of MotherLode North America, Inc.

Keynote speaker: Archie Black, SPS Commerce (shown left)

The sixth in a seven-part JOBS 2020 forum on creating a common vision for the future of the Itasca region was held Thursday, February 20th. Panelists were asked to discuss pressing issues/challenges and current trends in the service industry and the impact those trends have on their business. Panelists were also asked what their business needed from the community in order to succeed.

ACCOUNTING:

Industry Issues, Challenges and Trends:

• Staying competitive with wages, healthcare, and benefits – it is problematic when individually trained accountants leave for other career opportunities
• Finding and selling recurring business services
• Finding the right people to hire and train who can deliver the services (it takes about three years to train accountants and five to seven years before they become “tax ready”
• Managing and understanding the never-ending change in tax laws
• Desire to spend more time helping customers understand their numbers, their businesses and their opportunities and less time chasing tax computations.
• The accounting industry will prevail – tax and accounting issues will always have a role

How can the community help?

• Use local service providers
• Tell others from outside the area about the available services provided locally and encourage them to utilize those services
• Strong tax accounting people are needed

FINANCIAL INSTITUTIONS

Banks and financial institutions are drivers of economic development; this fact is often overlooked and underestimated by community members (Itasca region has 4 of the top 30 banks in Minnesota)

The economic impact local banks have on the community is tremendous – deposits in Itasca County and Woodland Banks (not including Wells Fargo and US Bank) grew by $66 million from 1998 to 2001; loans grew by $59 million in the same period. That growth has continued to grow significantly.

Industry Issues, Challenges and Trends:

• Weather negatively impacts many businesses - motels, resorts, bars, restaurants, etc. which in turn affects banks – banks must be more creative in helping struggling businesses
• Lower interest rates – there has been a 6% drop in interest rates in 1 1/2 years
• Significant Increase in the number of people filing for bankruptcy; increase in the number of overdrafts
• Record levels of charged off loans in the past two years

Options:

• Must grow in order to survive
• Investments must be made in people and technology in order to remain independent
• Seek partnerships – private and public

How Can the Community Help?

• Bank deposits are the lifeblood of a community – money put in the local bank will, in turn, go to work in the local community.
• Provide role for bankers in the future of JOBS 2020
• Local business and government need to support local banks

Panelists: Ed Zabinski, Brian Nicklason and Rick Glorvigen

E-COMMERCE SERVICE (start up business)

Industry Issues, Challenges and Trends:

• Establishing a new business as credible and knowledgeable
• Current systems do not achieve 100% electronic supplier connectivity for the buying enterprise.
• The marketplace demands an e-commerce capability
• Expanding sales reach cost-effectively – reducing business transaction costs
• Acquiring venture capital
• Convincing others – employees, investors, customers, of your viability
• Using the Internet to transform paper-based processes
• Learning to restructure operations based on what the customer needs
• Natural resource industries are not early adapters of e-commerce technology
• Companies develop relationships with suppliers; price matters but so does service
• Maintaining a balance with family lifestyle, a pleasing work environment and making a profit
• Being persistent, patient and keeping the faith are keys of success

How Can the Community Help?

• Buy locally; this is a huge component for local companies attempting to survive
• Angel investors willing to help launch new companies are essential
• Provide incubators for start up companies
• Diversify the area’s economy

Keynote Address:

Archie Black, Senior Vice President and CFO of SPS Commerce was the keynote speaker. SPS Commerce is a supply chain integration service designed for small and mid-sized companies to satisfy the e-commerce requirements for managing the orders placed by their customers. Vendors utilize the service to quickly and easily achieve compliance with a Hub Customer’s electronic supply chain initiatives and to improve the operating efficiencies of their own supply chain processes.

Lessons learned:

• Pick a category you can dominate
• Execute the best
• Focus on small, midsize enterprises (SME’s)
• People are the greatest asset – must have talent, experience, entrepreneurial spirit and a “willingness to change” - recognize and embrace change
• Stick to what you know (Ask, “What knowledge or experience do we have that someone else doesn’t have?”)
• Promote a real, entrepreneurial environment

The nature of a technology business:

• Real value proposition
• Fast and constant change
• Intelligent, educated talent pool
• “Been there, done that” management experience
• Venture capital funding